Refreshed for 2022, our regular analysis selects one or more news stories from fashion technology, and presents The Interline‘s take on why they matter to our global brand and retail audience – as well as what they might mean for the longer-term future of fashion. As always, this analysis is also delivered to Interline Insiders by email – and signing up continues to be the best way to get a fresh look at the fashion technology news, completely free, in your inbox.
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Why fashion is right to focus on videogame partnerships whilst taking a “wait and see” approach to the Metaverse.
The videogame industry is a juggernaut – to the extent that it’s often called the largest entertainment sector, and is routinely cited as being bigger than film and television, or music, or both combined. And while this isn’t strictly true – lumping together theatrical releases and streaming “home entertainment” content brought that market to a combined $328 billion in 2021 – videogames come a close second, with revenue scratching at the gates of $200 billion this year, and predicted to approach $300 billion within five years.
Examining the composition of that market also spotlights another monetary giant: mobile gaming. Of that near-$200 billion total, more than $150 billion came from spending on mobile games – the vast majority of which adopt a free-to-play model, with the bulk of their transactional volume coming from in-game or in-app purchases.
This is important context for anyone in fashion who’s stood on the sidelines this week, watched the announcements from Burberry (a partnership with Minecraft, to create an on-brand adventure) or Ralph Lauren (a partnership with Fortnite to sell in-game cosmetics and to promote a physical collection), and wondered who, exactly, they were trying to reach. Because the answer is: orders of magnitude more people than any Metaverse experiment to date.
Fortnite has maintained a peak daily player count of at least 24 million every month this year. Minecraft has comfortably stayed above a peak daily player count of 17 million throughout each month of 2022, as well. By comparison, Decentraland (home of the much-hyped Metaverse Fashion Week) revealed last month that it has around 8,000 daily users – a statistic the company released to head off accusations that its daily user count had dropped to double figures.
To save you the bother of calculating it yourself, this means that Decentraland, which remains the poster child for fashion’s crypto-centric Metaverse ambitions, has roughly 0.03% of Fortnite’s playerbase. If you’re looking to either sell digital styles, or to create a new channel of engagement with an audience, which platform would you choose?
In that context, these are extremely logical initiatives from a pure exposure perspective. They make headlines in fashion circles (and especially in fashion technology circles, hence the focus on them for this analysis) but the value calculus is also going to be much more comfortable and much less speculative for brands. Unlike the uncertainty of Metaverse strategies, which even Mark Zuckerberg expects will not be truly viable until the next decade, these investments will feel much closer to the kinds of digital advertising that fashion businesses are already familiar with – ways to get a product, a collection, or a lifestyle in front of large numbers of people.
And make no mistake about it, these are people with money to spend. Fornite made its parent company, Epic, more than $5 billion in its first year, and Minecraft made $380 million last year.
No doubt you will already be aware that Fortnite makes its money through sales of its in-universe currency, which players then spend on cosmetics – both from within the stable of Fortnite characters, and from across a smorgasbord of cross-cultural and cross-media sources. And although Minecraft remains a paid title (one that players need to purchase in order to play, on any platform) it also generates revenue from the sale of its own currency, Minecoins, which are used to buy cosmetic items, mods, environments, texture packs and much more through the Minecraft Marketplace – which is also where the Burberry experience is accessed.
So videogames themselves rake in plenty of revenue, but what about the ecosystem that exists around them? As the revenue breakdown we linked to earlier suggests, there is also a significant amount of money being made from videogames, by companies that are, strictly speaking, ancillary to the videogame business. Apple, for example, charges a commission on the transactions that take place when players acquire in-universe currencies through their platforms (a policy that led to a widely-publicised disagreement between the platform holder and the Fortnite owner). This makes them a direct beneficiary of a large volume of in-game purchases, and has turned Apple into one of the largest actors in an industry that it’s only really tangentially involved in.
This, in The Interline’s opinion, is good news for fashion – provided brands are able to make sense of, and take action on, the opportunity to forge videogame partnerships. And for beleaguered Metaverse departments who may be staring down dwindling user engagement and baked-in unpredictability, the possibility of reaching a large, guaranteed audience, will be a welcome one.
Unlike Metaverse strategies, which presuppose some level of engagement with NFTs, interactivity barriers in the form of deeply questionable user experiences and wallets, and other rough edges, major videogames offer a streamlined pathway to essentially all of the key benefits, but without any of the uphill struggle. Which is not to say that successfully breaking into the videogame market will be easy, but the chances of it being more turnkey (thanks to huge leaps in the accessibility of tools like Unreal Engine) and more in tune with an established market will be vastly increased over other, more issue-prone and more nebulous Metaverse initiatives.
Will this translate into the same business opportunity for actually selling digital goods, without the token backing of NFTs? It’s currently difficult to say. The entire world has watched NFT transaction volumes climb significantly down from their peak, which paints a dim outlook for the current infrastructure for digital fashion marketplaces. But while that model may recover (more on that in our upcoming DPC Report) there is no sign of the market for videogame cosmetics slowing down, suggesting that, of the two ways fashion could explore selling digital clothes, established storefronts and well-populated intellectual properties offer the most compelling business case.
It’s also important to note that the this week’s collaboration between Ralph Lauren and Fortnite represented a milestone for the brand’s most recognisable mark. This was the first time in history that the Polo logo had been redesigned to this extent, incorporating the iconic Fortnite lama piñata. Confusingly, the brand is quoted as seeing this as a step into the Metaverse (which it may well be), when from The Interline’s perspective it’s much stronger evidence that what happens in videogames is being felt strongly in fashion. The question now is whether our industry will be successful at making sure fashion’s impact is felt just as strongly in videogames.
Because while it’s one thing to place a logo on a digital item, or to use a game as a promotional vehicle for a physical collection, there’s a lot more that can be done with tighter integration between the aims of fashion brands and the established industry and consumer culture of gaming – with the help of a little imagination. And imagination, luckily, is something that the videogame and fashion industries both have in ample supply.