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LVMH Looks to the Metaverse
Digital luxury. It makes sense that established luxury brands are looking to the metaverse. They sell perception and status, typically exhibited through high-priced physical objects of desire (clothes, cars, jewelry, etc.). In a future where metaverse participation becomes commonplace, a brand can employ artists to render 3D goods for a virtual space but keep all the pricing and status dynamics in the physical world. It’s pure luxury without the constraint of real-world supply chains.
From Jean Jacques Guiony, LVMH’s Chief Financial Officer:
“I think I would make a fool of myself if I tell you exactly what we have in mind and that [the metaverse] is very clear and that we know exactly what we will be doing in the future,” he said. “There are many initiatives that could possibly lead to business developments […] rest assured that whatever happens, we will be a part of it. But for the time being, whatever happens is unknown to us.” [The Block]
As Guiony alludes to, these brands' interest in the metaverse concept is merely speculative. There is little risk by rendering some digital objects and conceptualizing a metaverse strategy.
As many skeptics have noted—the metaverse as a ‘thing’ that people can interact with is only beginning to exist. There are a few metaverse concepts on the market today: Decentraland is one, and The Sandbox is another. OM by 6529 is another compelling concept for an open metaverse. But the metaverse concept is more idea than reality at this point.
That’s what makes strong signals from luxury companies so interesting. What modern luxury companies do best is strategize the placement of their brands across products, experiences, and the culture at large. The most important metric they control is perception. One of the more common ways of capitalizing on perception is by association, and one of the best ways to gain the benefits of association is to associate with a new concept before anyone else.
Being early is a competitive strategy for the modern luxury brand. Thus, these companies have become very good at identifying concepts early and often and assessing the risks and benefits of association based on the public perception.
That’s what makes Guiony’s comments important. If LVMH and well-known consumer brands are making their way into the metaverse, we can only assume that the perception has tipped, and the risk-reward of moving into the space makes more sense than it might have even last year.
Consider Adidas’ most recent metaverse offering. Looking at the secondary market pricing, we can see steadily rising floor and median prices.
Unique holders have also risen steadily after the initial spike on launch.
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