otal investment in the metaverse exceeded $120 billion in the first five months of 2022, according to McKinsey’s “Value Creation in the Metaverse” report. That’s up from $57 billion in the whole of 2021. The global consulting firm believes the luxury and retail industries “are among those most likely to harness the metaverse for both consumer and business uses” and “generate impact across the value chain”.
As a concept, the metaverse has been around since 1992. It became a mainstream topic only in October 2021 when Facebook’s parent company rebranded as Meta. Since then, there has been a boom in metaverse-related news. In February this year, J.P. Morgan became the first bank to establish a presence in the metaverse, opening a lounge in blockchain-based virtual platform Decentraland, and predicting a market opportunity of $1 trillion.
The overarching idea is that a real-time and persistent 3D virtual universe will integrate with consumer and infrastructure technologies to become an extension of reality itself. So far, however, this grand vision shows little signs of materialising. No platform seems to be making game-changing strides in bringing an immersive new reality to life. Shares in Meta have continued to tumble in value this year – hitting levels not seen since 2015 in November – as investors voice their scepticism about betting on the metaverse.
“Consider what is required to put two individuals in a social setting in an entirely virtual environment. Now, imagine solving this problem at scale – for hundreds of millions of users simultaneously.”
Jumping into the meta-pool
Nonetheless, for metaverse devotees this has not deterred interest or investment. Luxury companies, in particular, have been some of the most notable early movers to enter the space. While the metaverse is still in its infancy, first-mover activations may allow brands to reach untapped captive audiences, create relevance, and win mindshare when few players are around. Several watch brands are taking advantage of that with their first forays. IWC launched on metaverse platform Spatial during Watches & Wonders Geneva 2022. The virtual 3D environment with three themed worlds was devised as “the gateway to all of IWC’s future Web3 initiatives”.
- At Europe’s biggest start-up and tech conference, Viva Technology, virtual character Livi introduced herself as the hostess for LVMH’s own microverse – an augmented version of its physical stand.
Bulgari launched a space on Asia’s largest metaverse platform Zepeto. “Bulgari Zepeto World” showcases selected products and includes a pop-up store featuring accessories for avatars. Chronoswiss has set up shop in Decentraland with a ‘virtual atelier’ selling limited-edition digital wearables for avatars, and a timepiece that can be produced in real life. And in November, Hublot unveiled the largest space to date on Spatial called the “Hublot Loves Football Metaverse Stadium”.
“If you look at social media, it’s like a metaverse. People show their lives with the prism in a specific way. It’s not their real self, it’s more of a digital representation of who they are.”
An enormous lack of computing power
Although some early efforts were surrounded by considerable hype, delivery was disappointing. Users reported loading issues, app crashes and a lack of activity. It quickly hits home that the promise of the metaverse still has some way to go, relying as it does on advances in key technologies, including software, hardware, systems, and networks. As Intel Corp remarked in its first statement on the metaverse this time last year, the constant streaming environment of the metaverse will require “a 1,000-times increase in computational efficiency from today’s state of the art”.
- Last August, Bulgari opened its virtual world on Zepeto, Asia’s biggest metaverse platform. It includes a pop-up store and provides visitors with online and offline experiences.
Raja Koduri, a senior VP and general manager of the Accelerated Computing Systems and Graphics Group at Intel, stresses that his company is “committed to plumbing the internet of tomorrow” and that “the dream of providing a petaflop of compute power and a petabyte of data within a millisecond of every human on the planet is within our reach." He is nevertheless keen not to downplay the current challenges: “Consider what is required to put two individuals in a social setting in an entirely virtual environment: convincing and detailed avatars with realistic clothing, hair and skin tones – all rendered in real time and based on sensor data capturing real world 3D objects, gestures, audio and much more; data transfer at super high bandwidths and extremely low latencies; and a persistent model of the environment, which may contain both real and simulated elements. Now, imagine solving this problem at scale – for hundreds of millions of users simultaneously – and you will quickly realise that our computing, storage and networking infrastructure today is simply not enough to enable this vision.”
“There’s already a metaverse”
Notwithstanding the current situation, these technologies will mature in time. The nebulous clusters of innovations will gather pace. In the process, their users will converge in the metaverse. When that happens, the possibilities for watchmaking could extend to product simulation, creative developments, education and training, museum or manufacture walk-throughs, etc. And that may not even be a distant future. “The metaverse is where a quarter of us will be working, studying, shopping, and socialising for at least an hour a day by 2026,” according to a study published by Gartner this year. The technology research specialist also predicts “the metaverse will impact every business that consumers interact with every day”.
- Users of the Decentraland metaverse can explore the digital atelier of Chronoswiss and equip their avatar either with a luxury 3D wearable or be one of eight to get hold of the brand’s Decentraland exclusive Open Gear ReSec Sugar Rush timepiece.
TAG Heuer CEO Frédéric Arnault thinks this is already the case. “Even if you look at social media, it’s like a metaverse. People show their lives through a specific prism. It’s not their real self, it’s more of a digital representation of who they are, using the codes that are imposed by the platform. I think there’s already a metaverse – it’s going to get more and more sophisticated, people are going to spend more and more time. It’s already happening,” he says.
For many, the metaverse ecosystem has the potential to become the next generational evolution in technology, in the same way that the development of the internet led to the advent of e-commerce. As the World Economic Forum notes, “The internet today is often the main entry point for millions of us to access information and services, communicate and socialise with each other, sell goods, and entertain ourselves. The metaverse is predicted to replicate this value proposition - with the main difference being that distinction between being offline and online will be much harder to delineate.”
The day the technology really becomes mainstream, brands will be promoting their image and products on the metaverse, and also defending them against new threats.
Exclusive and mass-market platforms
With this in mind, the question for many watchmakers is when and how, rather than if they should consider this new frontier. In assessing product-market fit and business readiness, the same principles that apply to real-world models should be applied to the virtual landscape.
Understandably, the situation is complicated by the different types of digital experience. There is augmented reality (AR) which adds a digital overlay to the world; virtual reality (VR), which is a fully digital world; mixed reality (MR), which blends real and digital worlds; and extended reality (XR), which combines AR, VR and MR. So far, the most common way to experience the metaverse is via a video game played on a VR headset. However, this is also the main barrier to mass adoption, and one of the key factors in the slow uptake of Meta’s Horizon Worlds metaverse.
- IWC has taken its first step into Web3, opening an immersive metaverse environment for a tokenised community. The Swiss luxury watchmaker collaborated with renowned architect Hani Rashid and leading Web3 solutions platform Arianee to create the IWC Diamond Hand Club.
Nevertheless, a whole host of metaverse platforms have sprung up to address the challenge and serve different stages of user readiness. There is high variability in the quality and style of experiences, depending on the platform provider, the community, and geography. Popular platforms Decentraland and Sandbox have huge user bases but tend to be more gaming and crypto-native oriented. Spatial has become the platform of choice for companies looking to engage a more layman audience, including several luxury names and media titles, such as IWC and Hublot. Billed as “the Web3 home for luxury brands in the metaverse”, Spatial is still very much an ‘experience’ platform for social interactions and marketing activations.
Web3 technology firm Exclusible says it has now identified over 140 metaverse platforms. “We have reviewed some 60 of them and there are certain photorealistic metaverses we will or have chosen to work with to build luxury experiences,” says co-founder and Chief Commercial Officer, Olivier Moingeon. After starting out as a NFT marketplace for luxury brands, including Frederique Constant and Louis Moinet, Exclusible has doubled down on metaverse projects despite the current bear market, and its order books are full well into 2023.
- Hublot partnered with Spatial, a Web3 platform dedicated to helping creators and brands build 3D spaces, for the brand’s first foray into the metaverse.
Another platform, Journee, is positioning itself as a “metaverse-as-a-service” provider, creating stunning high-definition visual environments for luxury experiences. The demo spaces shown during a video interview were quite literally out-of-this-world. The multi-award-winning platform offers interoperability with companies’ existing data systems to enable social and e-commerce integration via virtual spaces. That allows brands to create their metaverses with a view to linking products for sales.
“Feeling” a virtual watch on your wrist
According to Boston Consulting Group, “a recent study conducted by Creative Content revealed that 3D immersive marketing could lead to a 66% uplift in customer engagement, especially when related to luxury goods. This is mainly driven by the ability to showcase greater details and usages of luxury products when applying 3D technology and augmented reality helping potential customers to picture themselves with the products already. This could also be applied to virtual try-ons.”
In China, technology giant Alibaba is testing the waters. The retail platform’s Tmall Luxury Pavilion has recently rolled out an immersive luxury shopping metaverse. General Manager of Tmall Luxury Janet Wang highlights for us: “Watches are great examples to showcase in our metaverse. Tmall LP customers can visualise and try on watches virtually with our innovative XR or AR experiences.”
- In China, Tmall Luxury Pavilion recently rolled out an immersive luxury shopping metaverse.
The metaverse can certainly offer luxury brands a new commercial channel to exhibit their savoir faire. However, just as in the early days of e-commerce, the same challenges of retaining and delivering heritage, brand image, quality, exclusivity and customer service on a luxury level, are bound to surface. If the metaverse is indeed the new dimension of the internet, issues such as security and property rights, among others, will require scrutiny from global regulators and policy makers.
Some watchmakers may willingly enter the metaverse space today, in search of early opportunities, but the technology is a long way from maturity. The day the technology really becomes mainstream, brands’ interests will range from promoting their image and products in the metaverse, to defending themselves against new threats. Just like in real life.