This vision of the future may not be that far away. The virtual world of products and services offers great opportunities for brands, but there are potential bumps in the road ahead, not least regulation and asset protection.
A new dawn for NFT technology?
It’s fair to say the NFT market experienced a dark end to 2022, with freefalling cryptocurrency prices playing a significant role in the sharp drop-off in NFT transaction volume (a 97% nosedive since the dizzying heights of January 2022 Bloomberg reported, citing data from Dune Analytics).
Whilst some sceptics may question whether the NFT market will ever recover, others posit that the 2022 crash was simply a much-needed shake-up to the system (akin to a financial or real-estate cycle) that will usher in a new dawn for NFTs in 2023. The development of blockchain applications remains strong and the core technological propositions behind NFTs (i.e. as digital authentications of ownership, with attached rights and economical efficiencies) still present exciting potential use cases for brands as we head into the new year.
Innovation of NFTs
We are likely to see a shift away from the ‘bubble’ of expensive collectible jpegs in favour of truly innovative deployment of NFTs across the worlds of fashion, gaming, music, sport, ESG, food and entertainment. Take for example:
- The rise of ‘phygital’ NFT projects in the fashion industry – meaning physical goods that are tied to NFTs – such as Prada’s Timecapsule drops or Spatial Lab’s LNQ. The convergence between NFTs and wearable items will see clothing and apparel serve as points of experience or access to exclusive events for owners.
- Increased integration of NFTs in the video games space – affording players greater ‘ownership’ over their avatars, skins and in-game items and entrenching brand loyalty for the new generation of avid gamers.
- Philanthropic NFTs – big brands in the food industry such as McDonalds and Campbells, and luxury houses such as Louis Vuitton, Nike and Gucci, that are releasing limited-edition NFTs to raise money for charity.
- The expansion in the NFT real estate market – whether to acquire a house, an island, or a piece of land, we are likely to see more opportunities to invest and buy living spaces in the metaverse using NFTs.
How are brands evolving and taking advantage of the metaverse?
Interest in the metaverse is growing at an exponential rate; less than five years ago, no one was talking about it. Then Facebook rebranded to ‘Meta’, adding weight to the next new phenomena in the digital media tech world. Now, businesses and brands are clamouring to be one of the first to engage and be ‘trend setters’ within this new hyper-interactive, digital environment. The likes of Disney, Nike, Warner Bros., Gucci, Coca-Cola, Louis Vuitton are all getting in on the action.
With the metaverse emphasising a new level of importance on brand image, brands must more clearly define their personality, core values and stance on social issues (if they choose to do so) more than ever.
What does the metaverse mean for brands?
The metaverse as a digital space is largely influenced by gaming culture and values community, playfulness, and user empowerment. This shift in the dynamic between brands and consumers can offer opportunities for more creative brand positioning.
The metaverse also offers brands opportunities to engage with a larger and more varied audience (in particular Gen Z) who might not have engaged with them in the real world. According to McKinsey, Gen Z average eight hours per day on screens. The metaverse is a virtual domain open to all.
The value of communities
Developing communities in the metaverse enables users to create an avatar to represent themselves which can meet fellow avatars to collaborate and interact in 3D environments, participating in and building communities together. The metaverse becomes valuable for businesses at this intersection – of tech, creativity and community – by capitalising on a deeper connection with their customers, brands can fulfil desire for value, community and experiences.
Safer, like-minded communities and micro-communities
The future of the metaverse is also embedded in the unique opportunity it affords to build safer micro-communities – featuring inclusive and open engagement for their users, meaningful relationships, all guided by rules and responsibilities. This is a brand win, and a consumer win.
This is an extract from The Collective by Lewis Silkin’s Business in 2023 Report. Click here to read the full article. This article was written by Lewis Silkin’s Wendy Saunders, JJ Shaw, Nicholas Buckland and Amy Earnshaw.
To find out more about The Collective by Lewis Silkin and the services they provide to the retail industry, click here.
This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.