Gaming Platforms Move Beyond Games Into Selling Virtual Goods in the Metaverse

As the pandemic accelerates the decline of physical shopping malls across America, a new form of virtual space is emerging to provide a futuristic version of the commercial and social experience these institutions once offered young people. While definitions vary for this so-called Metaverse, it usually involves a shared online world of some sort, often depicted with video game-like graphics and populated by digital avatars. Until recently, these worlds have primarily served as hosting grounds for massive multiplayer online gaming platforms like Fortnite and the Roblox game creation service. But now, as gamers have signaled their willingness to spend big on in-game items and quarantine measures have pushed more people into these spaces, the platforms behind them are expanding into areas like virtual apparel, social networking and education. Users on Roblox and Fortnite might primarily play games, but these platforms have also begun to serve as gathering places to stream movies or attend concerts, attend quarantine-era birthday parties and just hang out. And brands are starting to take notice. "Shared experiences in the Metaverse today are about doing fun things together, but in the future, they will be about literally anything people can do together in real life—learn together, play together and work together, including unique and authentic experiences with brands and shopping," said Roblox chief marketing and employee experience officer Barbara Messing. Roblox, which recently went public with a $38 billion market cap, has been testing the waters with more brand collaboration campaigns in recent months as it looks to expand its sponsor business. The platform has a few branded commerce partnerships slated to drop this month, although a spokesperson was not able to give details at this time. In its Robux commerce exchange, users can buy virtual currency through cash transactions or monthly subscriptions. Netflix released a limited-edition set of Stranger Things 3 items, the NFL created virtual versions of its uniforms and Nike offered up its own avatar apparel bundles. Gucci has also partnered with a variety of platforms, including Roblox, virtual world app Zepeto and avatar app Genies. It will offer digital-only releases of apparel items like sneakers, sunglasses and clothing in addition to the release of its own sneaker design app. Meanwhile, Fortnite has also become a hub for entertainment events—like a much-hyped Travis Scott concert the game hosted early on in the pandemic—and special branded worlds and items made for the likes of Disney, Verizon and John Wick. All told, research firm CB Insights estimates that the market for virtual goods, which spans areas such as diverse fashion, real estate and art, could already constitute a $190 billion market. It has grown primarily from the massive popularity of in-game items like character skins. Consumers spent around $9.6 billion on in-game micro-transactions alone in the first quarter of last year, according to a report from NPD research group. The space has been supercharged by quarantine boredom driving more people into these spaces and the current craze around non-fungible tokens, or NFTs, which has helped to acquaint people with the concept of virtual ownership. CB Insights retail analyst Thomas Sineau said these spaces aren't about to supplant traditional shopping malls anytime soon, although there are areas within Roblox that actually do resemble physical retail hubs. But they do offer the same sort of engaged, social shopping experience that is more difficult to recreate through other ecommerce channels. "The way I think about it is not as a replacement,'" Sineau said. "[Instead,] it happens almost naturally because they are already spending a lot of time in these Metaverses. And then suddenly, you also get the option to shop there. So it's more like Instagram in that way." It's not just virtual goods being advertised in the Metaverse, either. Sam Drozdov, CEO and co-founder of startup Bloxbiz, recently launched one of the first programmatic ad marketplaces for the Roblox platform, with formats ranging from billboards to immersive game components. Drozdov said these ads have been attractive to brands, especially in the media and entertainment space because of their ability to weave seamlessly into the surrounding worlds and their interactivity. "There's like a different level of engagement that exists, just from a metric standpoint, for games. And the types of ad formats that exist are really exciting to brands," Drozdov said. "A player can be totally immersed in a playground that is representative of your brand."