Saturdays in the coronavirus era mean another edition of the Brew’s New Normal series, where we explore the long-term effects of COVID-19 on one particular topic or industry.
I. COVID-19 Speeds Up the Formation of the Metaverse
On Day #600 of lockdown, it’s become clear that Jim Halpert’s fourth-wall-breaking eye contact isn’t enough social connection to sustain us.
One solution: The metaverse, virtual worlds, the digital "third-place"...whatever you want to call it when you and your friends’ avatars hang out online. The cheapest ticket to get there is a game and/or console, and COVID-19 has poured jet fuel on growth.
- Consoles: Nintendo sold a record number of Switches in March, and sales of Sony PS4s and Microsoft Xbox Ones both rose more than 25% over last year, despite all being 3+ years old.
Some people are even going full Ready Player One, with Facebook attributing the lion’s share of its non-advertising revenue in Q1 to Oculus virtual reality hardware.
Going virtual is the non-Zoom option
As COVID-19 shut down social schedules, more people have turned to online games to recreate canceled gatherings, giving us a glimpse of a world reborn in pixels. Here are four in-person events that were converted to immersive virtual spaces this year:
1. Students from Brown, MIT, Penn, and many more rebuilt their closed college campuses and roamed the halls.
2. Parents hosted playdates and birthday parties for their cooped-up kids.
4. One family held an in-game memorial service for a gamer who died of the coronavirus.
While some games (Roblox, Minecraft) were built for this kind of free-flowing donothingness, Fortnite just added a new mode called "Party Royale" to encourage players to spend more unstructured time emoting their way through virtual time and space.
What’s next? Even as Fortnite dance moves return to IRL clubs and concerts post-pandemic, COVID-19 has accelerated the creation and widespread use of a virtual shared space. And industries from music to retail won’t miss the opportunity to meet their customers there.
II. Fashion Brands Are Trying to Sell Through Video Games
Looking cute online used to mean duck faces and Rio filters. But now that video games are our best approximation of socialization, digital avatars have become the hottest new medium of self-expression. And to build the perfect digital outfit on Animal Crossing, more people are turning to the pros.
- Designer Sandy Liang recently sponsored an in-game pop-up shop.
- 100 Thieves, a gaming/lifestyle brand, made its entire apparel collection available for free.
- Valentino and Marc Jacobs shared outfits with players.
But fashion in gaming goes way beyond Animal Crossing. Moschino collaborated with The Sims, and Fortnite partnered with Nike on Air Jordan outfits.
The play: With IRL shopping forever transformed, retailers are looking for ways to get in front of consumers. Some are trying podcasts, Spotify, and Instagram Lives. But getting into gaming can be difficult since many designers aren’t familiar with 3D modeling, a necessary but expensive technique.
Big picture: In 2019, digital game spending hit a record $109 billion, according to Nielsen. Fashion brands will be looking to capture a larger slice of that in 2020, when actual clothing matters little.
III. Why "Animal Crossing" Fascinates Financial Analysts
According to one study, Animal Crossing: New Horizons' “fearless leader” Tom Nook is 40x richer than Jeff Bezos. But that hasn’t stopped the game’s 12 million players from agreeing to his loan terms.
For all those who aren’t playing, here’s why the game fascinates financial analysts:
- Its stalk market (sic) has more hype than a new pair of Yeezys. Players purchase turnips on Sundays, and try to sell them at a profit before they rot at the end of the week.
- Dynamic interest rates reflect real-world shifts. The Bank of Nook did its best Jerome Powell impression and cut savings accounts’ interest rates from 0.5% to 0.05% in April to encourage more spending and less time-traveling (long story).
- Players barter for goods and services using the in-game currency, but also their IRL money. They haggle for coveted characters, argue over exchange rates on rare tarantulas, and even hire interior designers to deck out their new homes.
...a millennial purchasing a house? Not in this economy
The reason so many people are playing out their most mundane financial fantasies in a virtual world is simple: the American Dream is still alive in Animal Crossing, where a Japanese racoon dog can’t wait to finance your third bedroom.
IV. Virtual Concerts Offer Pandemic Alternative for Musicians
Last February, EDM producer Marshmello played a concert inside Fortnite, a video game that now has about as many registered players as the U.S. has residents. The choice may have seemed odd at the time, but as The Verge wrote, “A live concert inside a video game feels like the future.” Now, we’re learning just how prescient that take was.
- Last month, rapper Travis Scott embarked on a tour inside Fortnite. Before the "Astronomical" event kicked off, Rolling Stone reported streams of Scott’s music jumped 26%, with some especially astro-themed songs (like “Stargazing”) seeing a 50%+ increase.
Dillon Francis, Steve Aoki, and deadmau5 followed up last night with an in-game concert called the Party Royale Premiere.
So are virtual concerts the future of live music?
The always-enterprising raver community has tinkered with ad-hoc setups during quarantine, including a rave in the virtual world Second Life that lasted 24 hours.
- But, as one VICE reporter found, it doesn’t quite replicate the experience...most of us don’t have sweaty strangers in our homes.
Our prediction: Virtual concerts might develop a niche audience and open up new monetization opportunities, but they won't replace IRL live shows wholesale.
V. Spotlight: Roblox
Just a gorgeous afternoon for doing some housework in Bloxburg, a city located within the gaming platform Roblox. Let's learn a bit more about this surging company.
Valuation: Around $4 billion following its latest fundraising round in February.
Monetization: Roblox is a platform home to tens of millions of different games. Many of those games are free, so Roblox earns revenue through its virtual currency called Robux. It plans to generate $1 billion in bookings in 2020.
Audience: Huge, and young. Last year about half of U.S. kids age 9–12 used the platform, per Comscore.
Innovation: Over 2 million developers are currently building on the platform.
VI. Advertisers Get Creative With Video Game Integrations
While marketing budgets are usually the first casualty of economic downturns, advertisers are circling video games like Pac-Man ghosts. Facebook noted that video games as a category showed “relative strength” despite a broader decline in ad spend.
That's because digital universes, like the ones in Fortnite and Animal Crossing, offer advertisers the chance to play in a world where physical infrastructure doesn't constrain creativity.
- Thinking big: In his Fortnite concert, rapper Travis Scott’s gigantic avatar wore his signature Nike shoes in front of more than 12.3 million concurrent viewers, offering brand exposure on a scale difficult to replicate in real life.
Denny’s has entered the chat
Marketers go wherever the eyeballs are, and since the widespread lockdowns began...the eyeballs are turned toward video games—in just two weeks in March, the streaming site Twitch reported a 31% increase in viewership.
- If you’ve traded virtual turnips recently with someone named Dennys247, then you were actually conducting business with the diner chain. Denny’s has been playing Animal Crossing and Call of Duty, passing out discounts to some gamers it connects with.
Bottom line: While brands might see digital worlds as a tabula rasa to be filled with promotions, players are hypersensitive to inauthenticity—they want frictionless integrations that enhance gameplay, not disrupt it. “You’re not just dumping content on the audience, they’re participating with you,” Twitch’s Nathan Lindberg explained to AdMonsters.