The keyword Metaverse has become indispensable. It has made its way into almost every industry, particularly dictating how fashion brands cater to young consumers. From digital collection presentations to virtual store openings to immersive online environments, the space has been explored in just about every way imaginable, but being such a new concept, the obstacles involved can be difficult to overcome.
While the online world is often a costly and time-consuming journey for small brands, larger companies hope to capture as much of the market as possible to shape its future. However, size doesn’t necessarily mean success, as illustrated by the troubles faced by big tech companies, which have recently made some significant U-turns in their Metaverse plans.
More than a year after renaming Facebook to Meta as part of its renewed Metaverse focus, the social media giant sees itself with a series faced with ongoing challenges both in its corporate strategy and with the project itself. In addition to billions of dollars in annual losses and the loss of thousands of jobs, Meta’s efforts in the virtual world have suffered due to the lack of acceptance and criticism of the quality of the virtual world not yet profitable. Additionally, the company’s investments in the Metaverse triggered a downward spiral in stock prices, which have fallen 70 percent over the past year. Just last week, shares rebounded, rising 25 percent after recently released fourth-quarter results beat consensus estimates.
Tech giant Microsoft has also partially revised its plans for the Metaverse, announcing that it will shut down its virtual social reality platform AltspaceVR and laying off more than 11,000 workers. Instead, the company said it would shift its focus to artificial intelligence (AI) through a billion-dollar partnership with research firm OpenAI. Microsoft originally acquired AltspaceVR in 2017, stating that the reason for the move was to bring virtual reality (VR) experiences into its own teams. In the live phase, the platform offered user-generated rooms and virtual live events, such as concerts by international artists such as Pitbull and Mix Master Mike.
Industry experts are hesitant to comment on the Metaverse
But why are these big companies failing to gain a foothold in the digital world? Because it’s such a new concept, it’s only natural that technical limitations come into play, but for billionaire companies, that may not be the only concern. It also seems that even those most knowledgeable in the industry are skeptical about the Metaverse’s future. Ahead of the Games Developers Conference in March, the organization released its 11th annual State of the Games Industry Report, presenting the results of a survey of more than 2,300 games industry professionals to gauge industry sentiment through 2023.
When asked which company was best placed to deliver on the promise of the Metaverse, 45 percent of respondents chose not to select a company, instead saying that the Metaverse concept would not work — an assessment that has continued since was met by twelve percent more respondents last year. An unclear definition of what the Metaverse is and a lack of basic interactivity were cited as reasons for their skepticism, pointing to a possible lack of accessible social aspects – namely that there are not enough other users in these digital worlds, with whom you can get in touch.
From the consumer’s point of view, the unaffordable prices also contribute to this reluctance. This is especially true for VR headsets. While the ‘Meta Quest 2’ headset typically retails for around $399 and the Sony Playstation VR for around $299, the HTC Vive Pro 2 costs just under $800, making the Metaverse accessible to many users largely unattainable, especially against the backdrop of skyrocketing inflation.
However, a few platforms dedicated solely to their own Metaverse worlds seem to be doing something right, namely Epic Games’ Fortnite and open-world gaming platform Roblox, which received 14 percent and 5 percent of the votes from State of the World respondents, respectively received the Game Industry Reports. Roblox also reported a successful 2022, stating that a total of 1.8 billion avatar items were sold on the platform. Roblox cited major brand activations with companies like Gucci and Tommy Hilfiger as the driving force behind that number.
So what keeps users coming back to these types of platforms? The most popular virtual worlds are primarily based on the gamification of experiences. While Fortnite itself is a large open-world game where users can also customize their avatars, Roblox goes one step further and allows players to create their own games alongside participating in standard or branded experiences develop. The platform also places great emphasis on opening up its community to the outside world, involving young creators in the development process and providing tools to encourage participation.
Gamification and cultural relevance drive interest
This further contributes to increasing cultural relevance among consumers as younger creators naturally understand and seamlessly connect to the target market. This is also reflected in the collaborations and events on the platforms, often done in collaboration with well-known personalities, such as Ariana Grande’s Fortnite concert or Mariah Carey’s Roblox Christmas experience. But digital fashion is also an important factor here. Such events also incentivize users to come back, as do the play-to-earn models of many of these platforms – a blockchain-based format where players can collect in-game currency or NFTs as they play.
The importance of these features can also be seen in the engagement rates of another open-world platform, The Sandbox. As of early October 2022, the site counted just over 600 daily active users, according to research by DappRadar – however, the legitimacy of this data has been disputed by The Sandbox, which pointed out that these numbers were based solely on transactions related to DappRader. The analytics firm later found that towards the end of the same month, the site’s marketplace saw a sudden surge, with the number of transactions from NFTs used worldwide increasing by 474 percent. This increase could be due to the launch of over 90 experiences as part of the Alpha Season 3 initiative, including one that Paris Hilton attended virtually, albeit in the form of an avatar. In a Twitter post, The Sandbox confirmed the number of its users, stating that the company currently has 39,000 of them daily.
For fashion brands looking to break into this rapidly evolving sector, these factors are essential to consider. Companies must choose a platform that is both relevant to their customer group and supports their approach to digitization. Many now host one-off events that often allow for full participation, while others provide tools that enable product development and marketing opportunities.
However, the big players are not discouraged just yet. This year, Apple announced plans to launch three VR headsets, including a goggle-like design that uses augmented reality (AR) overlays. Meta’s CTO Andrew Bosworth recently stated that despite its shaky foundations, the company will continue to invest heavily in the virtual world in the coming year through long-term research efforts, supporting hardware, gaming experiences and initiatives driven by its Metaverse division, Reality Labs are developed. In 2023, how these players approach the Metaverse and its potential audience will be critical to their survival in the sector. Can the big tech giants keep up when platforms that rely on gaming experiences and offer consumers meaning and attractive incentives come out on top?