Metaverse: Opportunity or Risk for Gem and Jewelry Industry?
The term “metaverse” was initially used to allude to another reality where individuals may communicate through avatars in the 1982 science fiction Snow Crash. Almost 20 years later, the COVID-19 pandemic has disrupted the everyday lives of people around the world, restricting their physical meetings and public activities. Digital technologies are rapidly developed and applied to address this challenging situation, including the creation of the metaverse.
What is Metaverse?
Metaverse is the technology designed to connect the real and the virtual worlds. With the help of related devices powered by Augmented Reality (AR), Virtual Reality (VR), and Extended Reality (XR) technologies, people can enter the metaverse and enjoy its 360-degree experience. Recent breakthroughs in online networking, artificial intelligence (AI) and connecting devices enable various forms of meetings and gatherings like those in real life, for example, conferences, performances, remote surgical operations, 3D games, concerts, and transactions of physical or virtual products mainly through cryptocurrencies.
The metaverse also plays an important role for various industries as a parallel world with its own social structure and economic system. Each virtual world offers an opportunity for businesses or brands to advertise, organize events, launch campaigns, as well as design and sell non-fungible token (NFT) products. It offers new options for gaining revenue, raising brand awareness as well as establishing close relationships with customers.
Investment in the metaverse during the first five months of 2022 was over 120 billion USD
or more than twice of the all-year investment in 2021 at 57 billion USD.
Opportunities in Metaverse
The global management consulting firm McKinsey & Company revealed in its report Value Creation in the Metaverse that business investment in the metaverse during the first five months of 2022 was over 120 billion USD. Around 69 billion of this was from Microsoft’s acquisition of the world’s leading video game company Activision Blizzard to obtain its digital technology. The metaverse is also expected to reach 5 trillion USD in terms of value by 2030, of which around 52% or 2.6 trillion USD will come from e-commerce, followed by other industries, including virtual learning (270 billion USD), advertising media (206 billion USD) and video game industry (125 billion USD).
Top Five Purchases in the Metaverse
From Value Creation in the Metaverse 2022
The report also identifies the most popular activities in the metaverse, which include online shopping, social gatherings or gaming, VR exercise, dating, and online educational classes. As for purchases in the metaverse, it is found that the top category is in-game purchases, followed by the purchase of virtual cosmetic items to customize users’ avatars, real-world items, NFTs, and virtual real estates respectively. According to the survey done for this report, around 95% of the senior executives in the Asia Pacific, China, Europe, and the United States agree that even though the metaverse is still in development, it will have positive impacts on the industry within five to ten years. They believe that this technology will contribute over 5% increase to their organization’s revenue within the next five years, and around 24% of the executives anticipate over 15% increase.
As for key barriers in the virtual world, the top three are uncertain return on investment, lack of business models for this new platform, and lack of management capability to embed the metaverse technology into one’s own business. On the other hand, if the business is successful in applying this technology, considerations should still be taken on some risk factors like personal data privacy and cyber security.
Brand Strategies in the Metaverse
Today several brands recognize the potential of the metaverse in offering new opportunities to attract customers. Various strategies are implemented to motivate interactions between the brand and every group of customers in each virtual world of the metaverse. They can be divided into categories as follow:
Engagement and Awareness
This basic strategy is most used by brands in the metaverse. For example, Nike created Nikeland, in collaboration with the famous gaming platform Roblox, to raise consumers’ awareness. Featuring activities, games, and shops that sell items for avatar customization, Nikeland is favored by millennials and gen Zs, who are the main population in the virtual world. It allows for easier engagements between the brand and its customers and raises brand awareness among this group of consumers, leading to product purchases both in the virtual and the real worlds.
Nikeland and Nike’s showroom on Roblox, image from https://marshall-johnstonmm.com
Warner Bros. also collaborated with Roblox, the online game platform with more than 42 million average daily users, in organizing a party for the musical film In the Heights. This event presented a shared experience that attracted engagements from customers around the world. Both brands also work together in various music and film-related events. Meanwhile, the virtual music platform Wave collaborates with artists in its virtual concerts, where fans can closely watch the artist perform through his/her avatar. Famous artists like Justin Bieber, John Legend, and Lindsey Stirling have performed through avatars in these concerts on Wave.
John Legend’s and Justin Bieber’s virtual concerts on Wave, image from https://wavexr.com
Combination of the real and the virtual worlds
Some marketing strategies take advantage of the convergence between the real world with the virtual one. For example, McDonald's presents its food and drinks on several metaverse platforms. Customers can order not only for eating and drinking in the virtual world but also for real deliveries to their homes. This is one of the efforts in approaching its target customers while also offering products and services in the real world.
The Role of Metaverse in the Gem and Jewelry Industry
All luxury brands were facing the same challenging situation during the peak of COVID-19. Watch and jewelry sales dropped more than 25% in 2020. In the meantime, technological advancements bring the digital and the physical worlds together, and several luxury brands decided to enter this new virtual world, in the forms of NFTs in video games or clothing and accessories for avatars. Examples of jewelry brands that enter the metaverse are as follow:
While the development of digital technology is transforming the online world into the world of virtual reality, Bvlgari is one of the world’s leading jewelry brands which seek opportunities in the new metaverse. Its application BVLGARI COLORS was designed in line with the event “Bvlgari Colors: A Journey Between Jewels and Art” in Korea, to enable people around the world to virtually visit the exhibition. This app supports both English and Korean languages. With virtual reality (VR) devices, users can create and decorate their avatars with Bvlgari jewelry. Then they can walk around all the exhibition rooms, presented in 360-degree view with the same product display as the real exhibition. There are also gaming activities for monthly prizes.
BVLGARI COLORS application, image from www.theglassmagazine.com
Bvlgari and 101 games also cooperate in their reconstruction of the metaverse with Unreal Engine 5, the popular game engine used by leading developers today, to present more realistic rendering of virtual objects, light, and shadow.
Images from Bvlgari’s metaverse teaser, https://www.youtube.com/watch?v=6hbVgnQ2xJk
Recognizing new opportunities during the outbreak of COVID-19, Zuzana Bastian founded the jewelry brand JEVELS in March 2021. Noticing that people spend hours working via online conference programs, she searched for fashion and style to brighten up the dull hours of long meetings. Clothing and jewelry created by computer technology and 3D software (digital fashion) inspired her to develop a shopping platform where customers can purchase virtual jewelry and fashion items for wearing in online meetings and video conference platforms like Google Meet, Microsoft Teams, Skype, or Zoom. The products also support AR devices and can be used for avatar decoration in the metaverse.
Screenshots from the clip on how to wear virtual jewelry with Snap Camera, from https://jevels.com/pages/how-it-works
Risks and Issues from the Metaverse
From all of the above, we have seen various opportunities for brands to approach consumers in the metaverse. However, several factors and issues should be taken into consideration before stepping into the virtual world:
The rapid development of digital technology created a new economic market in the virtual world with ever-increasing value. Many businesses plunge into this new world to seek new opportunities, introduce themselves to potential customers, attract engagements and grasp market shares before their competitors. However, this virtual world still has some risks and unknown factors that should be dealt with cautions. Studying and understanding these issues is crucial for brands that decide to step into this recently invented world.
Writer: Budhiphorn Vichaidist
Editor: Wandee Mansrisuk and Wasana Somnate