The Big Idea: Virtual Insanity
The digital basketball sneaker is an avatar for our age, in no small part because it is, literally, an avatar. There is no consumer good so perfectly Veblenian as name-brand virtual athletic apparel: Digitally rendered ankles don’t need digitally rendered support any more than virtual pets require virtual food. And yet in April, Nike, in collaboration with RTFKT, the NFT collectibles brand acquired by the sportswear giant four months prior, released a digital iteration of its famous Dunk sneaker; within hours, examples of the virtual footwear were being listed on the OpenSea marketplace for an average price of 3 Ethereum, or about $9,000.
For those who didn’t grow up gaming—a demographic that’s shrinking by the day—it’s easy to miss just how profoundly that industry has transformed, and exponentially expanded, the retail universe. Globally, gaming is bigger than streaming music and movies combined, and most of its revenue comes not from the titles themselves but from in-game purchases within those worlds, everything from virtual weapons and land to tools, toys and transportation. Entire generations have now grown up socializing, and spending lavishly, in massive multiplayer online games. Is it any wonder that branded virtual gear has made it onto digital shelves?
It’s easy to be cynical about intangible goods, but cynicism misses the point. Shared virtual worlds—collectively referred to as the metaverse—constitute a major economy whether you’ve visited or not, no different than Macau. And after luxury companies largely sniffed at the need for a digital presence during the advent of Internet 2.0 only to find themselves playing catch-up for the next decade, they’re not going to be caught flat-footed again—especially when it means connecting with the coveted, free-spending youth consumer who might not otherwise stumble across their wares in real life. At the moment, digital collectibles, whether as NFTs or limited-edition in-game purchases, are a frictionless, supply-chain-proof opportunity to transform brand cachet into revenue, and as with all collectibles, from vintage cameras to classic hunting rifles, value is based not on utility but on whatever the market deems it to be.
So while the idea of, say, a name-brand virtual surfboard may seem silly, consider that many would say the same about a mechanical watch in the smartphone age. What matters is demand, and craving for luxury-branded digital goods is not only real but significant and bound to become more so. Companies used to making products for the physical world need to figure out a way to serve that demand if they want to stay relevant.
Besides, it’s not like there’s no such thing as digital craftsmanship, as anyone who has seen the difference between clumsy and hyper-realistic CGI can attest. And after two years of pandemic-induced remote interactions, the idea of mainstream virtual gatherings is no longer so far-fetched. Which begs the question: When it’s time for your virtual off-site atop a meticulously reproduced Courchevel, do you plan to show up with the same generic digital skis as everyone else, or a pair of gorgeously rendered Zai Spadas?