Games are big business. In the US, spending on videogames hit a new record in the first quarter of 2020, reaching close to $11 billion – primarily from sales of software and in-game purchases. And by 2021, annual gaming revenue is predicted to pass $180 billion.
Games have now officially been bigger than movies and music, in terms of their pure financial clout, for more than a year. And gaming’s cultural cachet among the vital mid-30s demographic is probably even more outsize than its ballooning purse.
Product placement in films has been a staple of high-end fashion’s cross-media promotional strategy for decades, and red carpet premieres are where couturiers really cut loose. Bands and artists, too, are regularly tapped as models and influencers for campaigns. But until recently, videogames haven’t been considered a viable channel for either marketing or sales.
That’s about to change.
As a lifelong gamer and fashion technology commentator, I suddenly find myself capable of acting as a sort of Sherpa for brands that might be observing crossovers like Marc Jacobs making looks for Animal Crossing New Horizons and wondering what it means for them. So throughout this week, I’ll be attempting to draw a map to the intersection point between two industries that have shaped my life.
First up: what does a gamer look like? In my case, they’re late 30s, male, middle class, and what the gaming culture would define as at least partially “hardcore”. I grew up on serial-link DOOM and built my own PCs back when you had to set motherboard jumpers with a pair of tweezers. I’ve finished every Dark Souls game without summons.
That might make me sound like a niche persona, but I’m actually fairly average. Around 65% of American adults play games, with a roughly even gender split – slightly biased towards men – and the average age of a videogame player is 32-34. The type of games they play varies – from breezy mobile titles that kill half an hour on the subway to deskbound, multi-day turn-based strategy titles. But even the most impenetrable, casual-hostile games can draw in excess of 60 million spectators to their marquee live eSports events – approaching 60% of a good in-person and at-home Super Bowl audience.
Niche that is not.
Where big audiences are, that’s where big corporates go. So it surprised almost nobody when Amazon bought game streaming and community hub Twitch – where tentpole eSports events are broadcast live, and where new games are promoted by some of the highest paid influencers on the planet – in 2014. Today, being an Amazon Prime member for your shopping also confers you benefits on Twitch. And while Amazon’s ambition to be a game studio and publisher in its own right has been slow to bear fruit, its first major release came just a fortnight ago.
If that word – fortnight – rings a bell, you won’t be alone. Fortnite, the free-to-play battle royale from Epic Games, is a juggernaut like no other. It’s played by more than 350 million people. It accounts for somewhere in the region of 20% of all gaming revenue by itself. And it’s the form of entertainment that Netflix CEO Reed Hastings sees as its closest and most dangerous competition.
On the surface, Fortnite is a simple thing to explain. One hundred players parachute onto an island, where they collect weapons, construct fortifications, and fight to be the last survivor – either solo or as part of a team. But from these minimal building blocks, Epic – which also licenses the Unreal Engine on which a great many modern games, Fortnite included, are built – has told a multi-year evolving story, with simultaneous world-changing events bringing a massive, multinational community together.
Fortnite is a study in how to do a so-called “live service” game successfully. Its bloodless violence and freeform gameplay have near-universal appeal, its presence on every conceivable modern hardware platform, from phones to Playstation 4s, is a recipe for total market penetration, and its story shifts from season to season are calendar events that make headlines in mainstream media.
But Fortnite is interesting for our purposes because of how it makes money. I mentioned at the start of this article that gaming, as an industry, has passed its previous high watermark thanks to increased sales of both software and in-game purchases. Software revenues come, as you’ve probably guessed, from the sale of boxed or digital games. In-game purchases, or “microtransactions” are smaller-scale but larger-volume sales of cosmetic or gameplay-altering items – mainly the former – from an in-game storefront.
Live service games sustain themselves through these microtransactions, because the games themselves either start life as free to play – anyone can jump into Fortnite without spending a penny – or become free to play after a certain period of time, to acquire a wider audience.
Crucially, this means that none of Fortnite’s world-beating revenue comes from players downloading the game itself, but rather from customers spending money at the game store once they’ve begun playing it. (Fortnite does have a mode that is sold in the traditional way, but its impact on the game’s market performance is miniscule.)
For some additional context, publisher EA is responsible for most of the licensed sports games on the market – from FIFA (soccer) to Madden (NFL). In the final quarter of 2019, it made $317 million from the sale of boxed or digital games, and $993 million from live service microtransactions – making in-game purchases worth more than three times as much as traditional sales. So Epic is by no means the only company making bank from this model.
So what are people actually buying from those in-game stores? The FIFA and NFL games are quite complex – being essentially mash-ups of slot machine and collectible card games. But in Fortnite’s case, the answer is straightforward: players spend money on purely aesthetic items that confer no advantage in gameplay whatsoever. And the biggest tranche of these is new looks for players’ in-game avatars, or colloquially “skins”.
Paid skins are both gaming’s biggest money-spinner and its closest analogue to the sale of real-world fashions. While Animal Crossing runs on community spirit and has no in-game, real-money store (those Marc Jacobs clothes and other brand collabs are being given away), Fortnite and other games have full-blown seasonal and capsule skin markets. Skins sold in-game have different price points and rarities, are only “stocked” for a limited time, and the rarest are never replenished – turning them into status symbols.
Fortnite’s in-game store also offers the clearest look at the potential of licensing agreements between gaming and other industries.
This time last year, a collaboration between Epic’s Fortnite team and Nike’s Jordan brand resulted in two in-game skins – each with customisable versions of the iconic basketball shoe – that were sold, for a limited time, in $18 bundles.
Outside of that agreement, licensed fashion / gaming crossovers have been fairly thin on the ground. But the same cannot be said for film and music. Last week, the latest trailer for upcoming blockbuster TENET had its world premiere in Fortnite’s “Party Royale” non-violent mode, with star John David Washington prefacing the showing by talking about his own history in gaming. And in-game concerts and multimedia experiences from artists like Travis Scott – who drew 12 million players – and Diplo have demonstrated that an in-game presence can translate into success outside the game.
But these licensing agreements have mutual benefits. To coincide with Scott’s concert, a bundle of skins was available to buy for Fortnite players at a cost of around $25. And there is reason to believe that the majority of profit from these sales was kept by the publisher.
Where movies and music are going, fashion seems destined to follow. We are already seeing initial waves from China, where the beauty industry is turning to both casual and hardcore gaming for collaborations. And last year Moschino released a digital-first capsule collection for The Sims 4.
This is, to be clear, distinct from traditional brand licensing agreements of the kind that have had Mario appearing on lunchboxes for decades. While those partnerships flowed one way – from game to garment – the future will be shaped differently; hybrid collections like the crossover between Pokemon Go and Uniqlo, and the goldust-like collab between Death Stranding’s Kojima Productions and techwear brand Acronym are more likely to become the norm.
But looking at the fashion / gaming crossover channel through a physical lens – where there always needs to be an actual garment to put on a rack – is artificially limiting, because of course digital worlds don’t need to be so rooted in reality. And what our characters wear in-game can, if we like, be entirely unpractical and even impossible to manufacture.
To draw a final parallel between fashion and another industry, Sony announced just a few weeks ago that its music publishing business had established a new team dedicated to “reimagining music through immersive media”. I would be shocked if similar teams didn’t already exist within the biggest and most forward-thinking brands.
What might that reimagined fashion look like in practical terms? Look for my follow-up to this article, coming later this week, where I talk to some of the creators working on brands’ in-game presences, and where I set out some of the roadblocks that fashion and gaming will need to overcome together to create a true crossover channel.
(Images contained in the article are the property of their respective brand owners. Those in the header area come courtesy of Nintendo, Kojima Productions, and Epic Games, from left to right.)