The world, specifically the world of business, is getting increasingly virtual. From the explosion of online video games and e-sports to advances in VR and AR technologies, the virtual economy is booming — and a huge opportunity for brands has opened up! The team here at BlockStar is pioneering the creation, sale, and use of branded virtual goods. Our work is opening up endless possibilities for companies and digital publishers to generate new revenue, reach new audiences and provide innovative new value to consumers on the virtual frontier.
The virtual goods market
Virtual goods are items and products that exist in online platforms, video games and apps and can be purchased for use and exchanged between users in these digital worlds. Recently, the exponential growth of social media and gaming has transformed the virtual goods industry into a $50 billion-dollar market. And this sector is expected to grow to $250 billion by 2025! Video games Second Life and Fortnite each have sold more than $3 billion in virtual goods, while Game of War reported an average spend of $549.69 per paying user. People are clearly willing to shell out the cash for virtual goods.
Brands are missing out on this lucrative market, as game developers are usually the sole issuer of goods on their platforms. Additionally, in-game and in-app items are generally exclusive to the game or app in which they are issued. With the inability to use these items across platforms, their value is being significantly limited. And because of the increased risk of unauthorized use and fakes online, companies are weary of how their image and products are conveyed online.
The role brands can play
BlockStar’s innovative technology can help make in-game virtual assets more valuable, liquid, and worth collecting, giving players the ability to truly own their virtual items. Trading in-game virtual assets on the blockchain through smart contracts enables peer-to-peer transactions that anyone can access, negating the need for centralized control. At the same time, it removes all of the issues connected to fraud.
Brands have the unique opportunity to take advantage of this growing market while adding new revenue streams and giving consumers new ways to engage with their favorite brands online. In the past, brands and products were largely a physical experience, but now, the development of social media, gaming, and augmented reality has opened up a new world of ways to interact in the virtual space:
- companies like Volvo and Audi are providing test-driving experiences in virtual reality;
- luxury apparel brands like Gucci are allowing you to wear their fashions on your avatar; and
- video games now allow you to purchase, use and exchange licensed items in their environments
The companies that embrace these innovations are able to stand out from the crowd and provide their patrons with something special, which will ultimately lead to better sales, higher customer engagement, and access to newer (and typically younger, tech-friendly) audiences.
Branded virtual goods
Branded virtual goods can be used in the same way that goods are in the real world. A brand can sell a pair of virtual Nikes that a buyer can then wear in their video games, on their avatar, and see on their feet in virtual reality. They are also owned in the same way, meaning that the buyer can take them from platform to platform, sell them, or trade them for other goods (virtual or real). Many virtual items are highly sought after and collectible due to their limited quantity and desirability, and often increase in value from being sold in secondary markets. These qualities make it ripe for companies to want to bring their brand and products into the growing digital space.
And smart companies have already started making the move. For example, Louis Vuitton has partnered with the popular League of Legends video game to offer designer wares and playable items in the game. The NFL worked with mobile game Fortnite (which has generated more than $1 billion in revenue from in-game items) to offer limited edition jersey and player skins for characters. This benefits not only brands’ bottom lines, but also increases awareness for the game, helping both to reach new audiences — all without having to manufacture the product. Rather than video game publishers having to research what items its players may like, it can bring in virtual goods from already-established brands for more guaranteed success.
Over the coming years, we will see a great increase in branded virtual goods, as consumers continue to want to create and express their social identities online in a unique way.
BlockStar is pioneering the branded virtual goods market by working directly with brands to create and issue licensed digital goods across a number of online environments such as VR/AR, video games, avatars, and social media. Our technology serves as the middle layer between brands and publishers to make it easy for branded virtual goods to be developed, managed, and deployed across multiple platforms. We are currently working with iconic cycling apparel brand De Marchi to offer a series of exclusive reissued jerseys worn by legendary cyclists, each with a unique Digital Twin that can be worn in VR and displayed on social media. Our vision is to enable consumers to purchase and use their products from their favorite brands in the virtual world, just as they would in the real world, and we are working with select brands and digital publishers as we make this a reality.
For more information on BlockStar and Digital Authentic Goods™, visit block-star.com.