The Central and Lucrative Role Fashion NFTs Could Play in the Metaverse
Fashion houses and game studios have strengthened their partnership in recent years as legacy brands look to broaden their appeal. As NFTs enter the gaming industry, how will fashion interact in this three-way dance?
In recent years there’s been an upswell in brands collaborating with games. Where once computer games were outcasted as nerdy pastimes of the pasty and disenfranchised, now they sit front and centre of modern society for large swathes of people from multiple generations.
In 2001 the gaming industry was worth around $9.4 billion, whereas in 2021 it’s estimated to be over $65 billion, and this is only in the U.S. Globally, the games market in 2020 exceeded $90 billion and is projected to be north of $250 billion by 2025.
With the advent of blockchain, it’s more than likely that estimate is at best conservative, and at worst, a long way out. While these statistics are intriguing, burrowing down further into what makes up the revenue can reveal to us the likely trajectory of blockchain gaming.
It’s no secret that microtransactions are a large part of the gaming economy. While many of us shrivel a little at the mere mention of them, they — when combined with Free to Play — invented a new business model for the industry, and a damn effective one.
In 2020, it’s estimated that Free to Play games were worth $22.7 billion, showing that publishers needn’t necessitate player spending. So, what makes up the bulk of microtransactions? That is, what are players buying?
The Rise of In-Game Purchases
There aren’t many gaming goliaths willing to open their books completely to the public, but there are plenty of ways we can infer the sort of revenue they might receive. For example, League of Legends, one of the most popular MOBAs, has made between $1.4 billion and $2.1 billion per annum in recent years, despite being Free to Play.
One of their primary revenue streams are cosmetic items — usually skins for the game’s characters — and so at the very least, League of Legends generates hundreds of millions from skins.
In 2014, Teut Weidemann, an analyst at Ubisoft, noted that around only 4% of players purchased cosmetics for League of Legends. What’s more interesting is that Weidemann said this was significantly lower than the industry standard, which is between 15% and 25% of players making purchases.
We don’t need to know the exact profit generated by games from cosmetic items to be certain they are lucrative and it is growing with the gaming industry as a whole.
Blockchain technology being utilized by games is still in its early stages, with the Play to Earn (P2E) movement accelerating its adoption and profile tenfold. However, what is most exciting about blockchain in gaming is not necessarily P2E (although it is partially baked in), but ownership of in-game items.
I believe this will ignite a type of collaboration between two disparate industries that have flirted with each other several times in recent years: fashion and gaming.
The Dissolution of Disparity: Fashion and Gaming
You wouldn’t need to go far back to see, more or less, no overlap between fashion and gaming, both in terms of the industries and with regards to their respective disciples. While there will of course be people who enjoy both (I’m one of them), generally speaking, they haven’t interacted much.
Now, this could have been due to social stigma — and that likely played a part — but it could also have been that the size of the industries were too far apart.
In 2020, the global fashion market was said to be worth around $1.4 trillion. This number dwarfs gaming’s $90 billion valuation in the same year, however, by 2025, the fashion industry is projected to reach $2.25 trillion and the gaming industry $250 billion.
While the fashion industry will continue to tower over gaming in total value, the projected increase of both is wildly different. The fashion industry’s value is projected to increase by 61% in 5 years, whereas the gaming industry’s value will increase by 178%.
The gap isn’t going to close any time soon, but it speaks to the increased significance of gaming in modern society and the fashion industry has a strong focus on, and influence in, the trends of society. Perhaps this is why we have started seeing major fashion brands begin to work with games.
For example, aforementioned League of Legends partnered with Louis Vuitton to create prestige skins for the World Championship Finals, Burberry created skins with their iconic tartan for China’s most popular game, Honor of Kings, and Marc Jacobs created outfits for Animal Crossing. And that’s just to name a few of the more famous partnerships.
It has also been a two-way street in some cases, with brand UNIQLO having official League of Legends t-shirts for sale.
Although these collaborations have increased in frequency, as well as in the caliber of fashion brands — as seen above, there are some high-end, luxury brands — it hasn’t quite caught on, at least not to any impactful degree. Why it hasn’t is not obvious, but I believe it’s simply that there wasn’t enough value created.
A skin that you do not own in a game you may soon move on from, cannot cost hundreds or thousands of dollars — the value simply isn’t there. And so, it felt as if the gaming industry lacked the technology to truly capture the spirit of fashion.
Why Fashion Brands and the Metaverse are a Perfect Fit
The advent of blockchain in gaming has given us the P2E model, but it has also given us ownership of our items: NFTs. This extends to the metaverse too, where our avatars will be true digital representations of ourselves.
A skin in a game is generally just light vanity rather than some deeper expression of identity, whereas what you look like in the metaverse and blockchain games, the cosmetic items you own, could well become akin to physical garments in terms of importance.
NFTs, therefore, represent a brilliant opportunity for fashion brands to participate in Web3 and all that comes with it, in more than an advertising sense.
Value and scarcity and the interactions between the two mean it’s not only an interesting space to explore for fashion, but potentially a crucial one.
Blockchain is bridging the divide between the physical and digital worlds, and with fashion being an imposing staple of the physical, but unassuming in the digital, this is an important opportunity for them.
This adoption from fashion brands has already started, with two of the above luxury designers, Burberry and Louis Vuitton, already participating.
In fact, Burberry partnered with Mythical Games in June this year and released an NFT Blanko for Blanko’s Block Party. Burberry is certainly one of the most forward-thinking fashion houses today, which given they are a true legacy designer, is all the more impressive.
The only concern I have — which can be easily overcome — is major fashion brands flooding to Ethereum and OpenSea as that is — if you’ll excuse the pun — in vogue. The fashion industry has had a devastating impact on the environment and doubling down on that with a Proof of Work chain would be ill advised.
Thankfully, chains like WAX, that are carbon neutral, make for the perfect home for fashion NFTs, particularly if there is a focus on blockchain gaming.
The introduction of blockchain to the masses has resulted in some wholly unexpected occurrences, some pleasing, some not.
It has undoubtedly healed fault lines between separated industries and continues to tend to the newly smoothed land. We will continue to see surprising collaborations between new tech and heritage industries, and that ought to excite all those involved.
The gaming industry has found great value in cosmetic microtransactions, particularly in-game skins, and the demand for them will swell dramatically as the metaverse takes shape and blockchain gaming expands. You need only looks as far as the Profile Picture (PFP) trend for evidence of that.
This makes it the perfect time for the inauguration of designers whose focus is to work on aesthetics and aid people to create their identities.
The devil may wear Prada, but the avatar wears Burberry.