The virtual economy is here and fashion retailers need to take notice. Virtual goods, defined as non-physical, intangible objects and currencies purchased for use in online communities or game platforms, are already a billion-dollar market. Video game companies are making billions of dollars selling virtual goods in-game and for special events. Social media platforms are making millions selling stickers and filters/lenses. We as humans have a drive to express ourselves, and our behaviors in the physical world are transferring to the digiverse (digital universe). Our digital existence creates a great opportunity for fashion brands to add virtual goods as a new revenue stream. The virtual economy will provide a new revenue stream for retailers who choose to participate and capitalize on the consumer shift to living and expressing themselves in the digiverse.
The video game industry exemplifies the potential of the virtual goods market. Fortnite made $2.4B in 2018 selling in-game digital goods like skins and apparel. Valentino and Marc Jacobs created collections for the popular video game Animal Crossing. I delved into the world of gaming a couple of years ago, playing a game called Destiny 2. It was fascinating to observe how clans were created and how you could identify people by how they dressed and what clan they belonged to. The way we dress and who we hang out with translates into digiverse as we still desire to belong to a clique, or in this case, a clan. Also, signaling continued to have strong motivational power in this digital world. Whenever I saw someone with a cool outfit or pair of shoes I did not own, I became jealous and wanted it! I played endless hours to own these virtual goods and felt elite status when I finally owned them. (Sound familiar to all you LV handbag totin’ ladies? I also gave myself carpel tunnel from playing too much. Was it worth it for those moon boots I sought? Yes!) What I took away from this experience and what the gaming industry benefits from is that we as humans still have a strong desire to express our identity, be it true or imaginary, in any environment we inhabit, including the digiverse. Ka-Ching!
How does this apply to fashion brands? Well, unbeknownst to many of you, user generated content already copies your designs for use in these gaming virtual environments (sounds a little bit illegal…just saying). What this proves is that there is a market and opportunity to sell virtual apparel for virtual environments and brands should take ownership. Add this channel to your omni-channel strategy. The past year, COVID-19 accelerated many brands to embrace 3D product development. But the digital twin of your apparel does not need to be only a product development tool. Virtual apparel is a commodity in its own right. In the future, I see that consumers will have the option when shopping for apparel to purchase the physical item or the virtual good. We may want to wear the hoodie on the weekend or maybe to a Fortnite concert.
A new opportunity is on the horizon and fashion brands need to take notice. I used the video game industry as an example of a market where virtual goods are driving revenue into the billions. Our desire to express ourselves coupled with an increase in time spent in virtual environments creates a new opportunity for brands to dress us both physically and virtually. Virtual goods already generate substantial revenue, and the future will bring more virtual opportunities for them to exist. Take the time now to rethink your revenue stream and how virtual goods can become a new channel in your sales strategy. Soon, consumers will have the option to buy a physical or digital version of your product to wear in the real world or in the digiverse.
If you are interested in the virtual economy, please leave comments below. I would love to connect and continue this conversation!