1/9/2024 0 Comments Fashion over hype clothing![]() ![]() Brands will need to turn to established gaming and platform partners to find inroads. The multi-billion-dollar gaming market will continue to offer opportunities for fashion - the market for gaming skins could reach $70 billion by 2024, up from $40 billion in 2020. Gucci sold a virtual version of its Dionysus bag for the equivalent of $6 on Roblox, which later led to bids of more than $4,000 per bag when resold on the secondhand market. The potential revenue generation of in-game outfits and accessories can be significant. Meanwhile, users on online gaming platforms such as Roblox update their avatars with new skins regularly, even daily in some cases. For example, digital fashion start-up DressX, which sells virtual clothing that can be added to a photo and posted on social media, has partnered with brands such as H&M to launch digital collections. Some companies are using augmented reality (AR), to enable users to alter photos and videos, and are creating digital skins to change the appearance of a user’s avatar. In virtual spaces and on social media platforms, the appetite for creating and adapting online identities is high: approximately 70 percent of US consumers from Gen-Z to Gen-X rate their digital identity as “somewhat important” or “very important.” A similar appetite for virtual goods can be found in China, where 70 percent of luxury consumers have purchased or will consider purchasing virtual assets. We identify two clear use cases for virtual assets that have long-term potential: AR Fashion and Virtual Skins For others that want to capture the commercial opportunity, the biggest short-term revenue potential lies with virtual assets that can be traded, transferred or used for payment. ![]() Mass consumer adoption could be a significant hurdle - 78 percent of people who have already ventured into virtual worlds say they miss physical interaction when doing so.Īs a result, many players will likely hang back to see evidence of commercialised use cases and a tangible ROI before investing. Tech players as well as fashion start-ups and brands need to develop technologies that help evolve today’s unrefined virtual experiences into mature, immersive realities. The pace of adoption will be driven by technological advancement, the interoperability between virtual environments and social acceptance. While it is uncertain whether a meaningful number of consumers will develop fully fledged virtual lives and spend most of their time in the metaverse, significant revenue opportunities for fashion brands will emerge. The bears predict that the hype around the metaverse will fade as technologies fail to meet expectations or users prove reluctant to use virtual spaces as extensively as some business plans are counting on. Looking beyond a five-year horizon, some bullish observers expect mass consumer adoption of virtual worlds, creating the biggest opportunity for the fashion industry since e-commerce. ![]() Over the next two to five years, fashion brands focused on metaverse innovation and commercialisation could generate more than 5 percent of revenues by investing in virtual activities today. The next frontier for leading brands will be to translate unproven technologies into sustainable revenue streams, effectively separating hype from reality. Global spending on virtual assets reached around $110 billion in 2021 and is expected to grow at roughly the same rate as the gaming market to be worth around $135 billion or higher by 2024. ![]() But brands’ experiments with metaverse principles, such as virtual fashion, extended reality, gaming and non-fungible tokens (NFTs), demonstrate the impact that virtual activities can have as marketing and community-building tools for fashion. Granted, a fully formed metaverse - comprising an interconnected, virtual ecosystem that overlaps with or offers an alternative to physical reality - is not yet possible given technology constraints. Pioneers in the metaverse have shown there is a business case for fashion brands to invest in virtual worlds. This article first appeared in The State of Fashion: Technology, an in-depth report co-published by BoF and McKinsey & Company. ![]()
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