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Daniel Langer

This article is part of STYLE’s Inside Luxury column
No topic has both intrigued and scared the luxury industry recently as much as the metaverse. In the last two weeks alone, I had at least 20 independent discussions with different luxury brands either on how they should react to the emergence of the metaverse, or what implications it could have on strategy and leadership.

While many luxury brands are strategising, tech platform companies are already making moves that will significantly impact the future. Facebook recently renamed itself Meta Platforms, a clear signal from the world’s largest social media company that the metaverse is the next iteration of the internet and is to be taken seriously.
Facebook was an early mover in the field with the acquisition of Oculus VR in 2014. At that time, virtual reality (VR) seemed to be little more than a more immersive way to enjoy computer games. From there though it soon became critical for certain advanced engineering and simulation tasks, from designing new cars to training pilots. But until recently, success with the average consumer was limited.
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The latest generation of Oculus, the Quest, has already changed that. At affordable price points, not needing a computer to operate it and with its own app store, the Quest has been a hit with customers. Apps spanning everything from games to meditation, from project management software to virtual meetings, are propelling the technology into the mainstream. Apple is rumoured to be about to jump into the market, and that will, undoubtedly, open VR to the masses. That will change everything.

This explains Microsoft’s audacious US$68.7 billion move to acquire Activision Blizzard, the game company responsible for blockbusters like Call of Duty. The move can be best described as the nuclear option. The unprecedented size of the acquisition – Microsoft’s biggest ever – catapults the company into position as a leader in gaming, and even more, as a leader in the metaverse.
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Games are increasingly becoming social networks and marketplaces where gamers spend a significant amount of their time and money. Companies are offering goods and accessories for avatars, gamers’ virtual representations. Want to outfit your avatar with a Louis Vuitton bag, Dior trainers or a Canada Goose parka? Now games are offering a multibillion-dollar marketplace where the limits of the virtual and the real fuse.
Meanwhile, virtual real-estate sales are at an all-time high, and the emergence of NFTs (non-fungible tokens) has created an entirely new segment of digital art, which some reckon may become bigger than physical art within this decade.
The metaverse will take the internet from a two-dimensional experience where there is separation between the person and their actions on a screen, to an immersive reality where they feel part of those scenes being displayed. It will change everything, from working in teams to travelling and shopping.

For luxury brands, it means redefining what a customer experience is and making it consistent across multiple access points, from classical bricks-and-mortar experiences to virtual flagship stores. A more complex customer journey means that companies need to rethink all aspects of customer interaction. They also need to strengthen their storytelling significantly, as the virtual world will require much more exciting experiences, and it will be much easier for clients to compare brands and their execution.
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Storytelling is a traditional weak spot for luxury brands, an industry that has relied for centuries on craftsmanship. And this has already proven deadly for many brands during the last decade, when digital transformation opened them up to larger audiences. The metaverse will require a much more radical approach that many brands are not prepared for at all.

Speed will matter. Microsoft’s move proves that the tech platform players are already trying to control consumer access. It will be the real estate of the future. If luxury brands play “wait and see” again, as they did at the start of online shopping, they will pay a significant premium later on. For many, it will be too late. Moves like Balenciaga’s attempt to launch a metaverse department seem clever at first sight, but risk creating a silo within the organisation instead of turning the whole company towards the metaverse.
The metaverse is now the biggest call to action for brands. The price tag for Activision Blizzard signals just how valuable this future real estate is. Now it’s up to luxury brands to not miss the window during they can still help to lead the change.
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Technology

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Virtual reality and augmented reality (VR and AR)

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Luxury brands

NFTs

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Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


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