Does the Metaverse still hold out hope for retail brands?

Like moths to a flame, brands flocked to virtual reality (VR) and popular online gaming platforms such as Roblox and Fortnite, seeking to gain a foothold in what was at the time widely touted as the market of the future.

For a time, excitement about the metaverse became a borderline cultural obsession. Books about the metaverse were published at a rapid pace; advertising conferences such as Cannes Lions and New York Advertising Week were full of talk about the future of marketing in the metaverse; a futuristic image of this virtual space was printed on the cover of Time magazine under the headline: “Into the Metaverse: The Next Digital Age Will Change Everything.” Meta CEO Mark Zuckerberg, who changed his company’s name just over two years ago to signal its refocus on the metaverse, confidently declared his belief that virtual experiences represent “the next chapter for the Internet.”

For many, this brief period of sensational excitement about the metaverse may seem like a hazy memory of a dream. Things changed quickly; It’s only occasionally that you’ll see a headline announcing that a well-known brand has invested large sums of money in virtual reality. Moreover, the staggeringly rapid penetration of AI into the popular consciousness appears to have largely eclipsed public interest in the metaverse (which remains a vague concept with no single, generally accepted definition).

All of this can leave many marketers feeling stuck. After so many brands have invested such a huge amount of time, energy and capital into the virtual realm, is it possible that everyone has simply forgotten about it and moved on to the next tempting tech trend? There have been a few bad PR moments (such as the collapse of crypto firm FTX, which caused widespread disgust at anything associated with the terms “decentralized” and “web3”, and an unflattering virtual selfie shared by Mark Zuckerberg on social media). ) is it really enough to thoroughly poison the entire metaverse?

Not everyone thinks so. Some marketing experts believe that while public excitement about the metaverse has certainly waned over the past year, it’s poised for a major comeback—and that retail brands should remain hopeful about this virtual realm.

Separating the myth of the metaverse from reality

Technology evolves in unpredictable and often surprising ways. Let’s take AI for example. A few decades ago, it was widely believed that intelligent algorithms would quickly lead to robotic assistants and self-driving cars, and very few people would have said that they were going to push people into creative roles such as graphic designers and musicians. producers are leaving the labor market. Today, the incredible growth of large language models (LLMs) has turned these expectations on their head. We now have models that can write entire novels in the style of Tupac Shakur or Dostoevsky, but we are still a long way from the widespread use of autonomous vehicles or robotic cleaners in every home.

Experts are quick to point out that the same principle of indeterminate evolution applies to the metaverse—and that precisely because the initial hype cycle has died down, the original dream of humanity’s virtual future still has enormous potential.

“I don’t think the metaverse is a lost cause at all,” says Jen Jones, chief marketing officer at Commercetools, a company that helps brands develop e-commerce capabilities. First of all, Jones says, she has noticed a significant change in the language used to discuss virtual experiences. “The meta, which borrowed the term metaverse, almost killed the metaverse,” she says. “I don’t think it’s the Metaverse (anymore)—everyone has parked that language a little bit.”

So what do people mean when they talk about the metaverse these days? According to Jones, the concept refers to “the merging of online and offline, our physical and digital lives… it’s (still) a really hot topic, especially in retail.”

The Metaverse has always had a special appeal for retail brands. Perhaps prompted by Meta’s name change at the end of 2021, a slew of major brands—from Walmart to PacSun to Lacoste—began launching virtual experiences that almost always had some kind of commercial component, such as a fitting room where avatars could try on virtual goods that could then be would be bought in the real world. The market for virtual clothing and accessories began to explode as brands realized that young people were beginning to crave such products as a new form of self-expression.

Beyond virtual clothing, the metaverse also gives the individual the freedom to explore new ways of personal identity—there is no set of rules that says an avatar must resemble a physical body. This, according to Decentraland’s lead marketer Kim Currier, is the main reason why young people are flocking to the virtual environment (followed by a legion of brands). “Maybe they identify with a different gender than they do physically; maybe in the real world they are shy people, but in the metaverse they love to have fun. “Something about not having to show your face allows you to be a little more free and creative with how you look every day.”

Jones, a mother of two, says she is drawn to the quality of freedom and mobility. “When I’m in the metaverse, I have a really cool neon rave outfit and pink hair,” she says. “I can’t (wear) this regularly, but it would be a lot of fun; I’d love to hang out at Coachella and listen to some really fun music, but I’ll probably just put the kids to bed and wear my sweatpants.”

Jones, who is also a mother, says she’s been impressed by how excited young children are to spend time on platforms like Roblox. “They are obsessed with it,” she says. “Boys, girls, artistic kids, math kids, athletic kids, they all love it… that’s where they hang out.”

While the Meta’s failure to achieve its user goals in Horizon Worlds may have dominated conversations about the metaverse for a time last year, and while some may have concluded that the metaverse was a rocket that ultimately failed to launch, one can It’s easy to forget that platforms like Roblox, Decentraland and Fortnite, considered by many to be as much a part of the metaverse as virtual reality, remain strong. Roblox reported last week that it averaged approximately 70.2 million daily active users in the third quarter of 2023, up 20% year over year.

“As a brand owner,” Jones says, “you have to think: What is your next market? Who are you trying to expand to? For anyone looking at Gen Z and below, they are here.”

Inflection point (?)

For now, the metaverse may be mostly populated by kids hanging out and playing games on Roblox. But advances in hardware may soon see this change, leading to a much larger portion of the population moving to virtual environments.

In June, Apple unveiled its long-awaited AR/VR Vision Pro headset. It has a sleeker form factor than previous headsets, which tended to be blocky and rather awkward, and can be operated without handheld controls—another departure from the norm. But while its looks may be attractive, its price ($3,499) will likely turn off many potential buyers.

That same month, Meta unveiled its Quest 3 headset, which will cost a relatively inexpensive $499. Zuckerberg called the headset “the first mainstream mixed reality device,” meaning an experience that combines physical and virtual elements. Quest 3 hit shelves last month.

If this new generation of headsets becomes popular among a wider audience, others are sure to follow. Brands, in turn, could then begin to create experiences around these headsets, just as many have launched their own apps in response to the widespread adoption of smartphones.

Again, technology evolves in unpredictable ways, and no one can yet say for sure what the brand experience in the metaverse will look like in a year, much less in ten years. However, the surge in innovation in the AR/VR headset space is making Decentraland-based Currier optimistic about the future. “With all the new technology coming out, we’re excited to see what’s possible,” she says. “I think 2024 will be a big year for the entire space.”

Commercetools’ Jones urges brands to keep a close eye on the metaverse, regardless of the fluctuations of the hype cycle. “Technology continues to move forward,” she says. “Don’t get too caught up in the bubble, but don’t get discouraged by the failure that inevitably follows a bubble… try to take a pragmatic view and just keep testing and learning.”

Read more in The Drum’s latest in-depth look at The New Retail Landscape.