The Metaverse, built on technology ushered in by Web 3.0, is bending time and space and in its wake changing everything regardless of where you sit or what you sell. The days when a luxury goods retailer used its brand solely to inspire membership in a club only a few could join are over. Now these marketing and design leaders are racing to hire people who can build immersive experiences that complement their brand and executives from across industries are deep in discussion about how to leapfrog ahead to their next move in this space.
And it’s not just Gucci and Cartier who are affected. Sports executives are wondering how they will fill stadiums when a family of four can experience being in the stands without the worry of unaffordable ticket prices or an unsafe subway ride. Instead of understanding how a virtual experience might complement a sporting event, sports executives are worrying over whether these technology-enabled scenarios will act as a substitute for in-person events, or even ultimately replace them all together. And it seems these executives have reason to worry based on what we’ve learned: the Metaverse is a “flattening technology”.  By decentralizing governance, ownership, and identity, the Metaverse opens the flood gates on any competitive landscape. The Metaverse has the potential to dramatically change the game and create tipping points across industries, whether you are in tourism, sports, luxury goods, real estate or just about any other profession for that matter.
Michael Porter had highlighted the criticality of understanding emerging modes of competition when he first wrote How Competitive Forces Shape Strategy. We saw it in action in 2D when advertising and media agencies were caught off guard by Google’s and Facebook’s unprecedented influence. These agencies saw their traditional position, as the driving creative force in developing memorable and effective marketing campaigns, dramatically challenged by tech savvy companies who began to own, influence, and in some cases, control the conversation between brands and their consumers. More change is already underway with the Metaverse enabling individuals to become creators of everything from content to communities. Everyone, it seems – whether you’re an institution or an individual -- is thinking about the transition from 2D to 3D and the impact it will have on our lives.
A fundamental question for leaders and strategists – one that goes well beyond industry and brand identity -- looms large as we attempt to negotiate these seismic shifts: What impact will the Metaverse have on my strategy and the path we are already on? What, how, and where should we focus our efforts? How can we learn, train, and inform ourselves to build the necessary capabilities to compete?
As you might have guessed, the answer is complicated, but here’s a shot.
Three levers – influence, experience, and capability -- appear to strategically matter in the Metaverse and serve as the seat of power, with a sense of community solidly positioned around the perimeter.
The impact of influence on luxury goods branding, although a good example, is only one of many. Influence has already emerged as a critical lever and accelerant in marketing efforts. Influence helps to form communities … and communities tend to have power… and power in turn affects not just reach but impact … and this determines how far your brand resonates, with whom and how deep a relationship you can build with customers and consumers. A simple question regarding brand then becomes many questions. How do I continue to have and maintain influence with my brand? How do I protect my brand while honoring the distributed and interactive nature of the Metaverse? How do I build and maintain trust in this new environment? How do I reflect or refract my identity and purpose in this decentralized world? Given the important role of influencers in social media and their emerging power in some corners of the Metaverse, we believe there isn’t a retail company or consumer brand operating today that isn’t already mulling over these questions. Estee Lauder even created a new department with over 60 people to worry about identity in the 3D world, and Crate and Barrel recently promoted an executive into new position of Senior Vice President for Product Design, Development and Metaverse.
When it comes to using experience to your advantage – that is, the new experiences made possible by the evolution of Metaverse technologies – the question still is: How does this experience better serve my customer in trying solve their problem, and how might it influence their behaviors, or ultimately what they are buying? In the end, an experience can generate a range of new insights for consumers and influence behaviors across a broad spectrum of audiences and industries. Education will look a lot different when first graders are able to interact with a dinosaur in the classroom, travel is redefined when the tourism industry makes it possible to see Michelangelo’s “David” up close at the Uffizi Gallery without ever having visited Florence. An eSports experience will boost a fan’s relationship with a specific sports figure by bringing the fan closer – physically and virtually -- to the player with instantaneous gaming, messaging, and replay. For Nike, the question might be: How can I create the greatest physical and virtual experience that translates into a lasting and loyal bond – one not just based on ownership but also based on building a community?
The use of capability – yours and others -- seems like an obvious lever, at least on the surface. But for us, it’s about identifying and choosing which capabilities to invest in: How can I get access to the best and most innovative capabilities in the world? Which capabilities can I use or tap into to deliver the greatest value? What collective set of capabilities do I need to invest in to get me further, faster? How can I use these capabilities to transcend the benefits consumers have traditionally gleaned form an experience, or from physical ownership? How does that translate into an ecosystem that has connecting power and will be its own community? Real estate provides a stunning example of how the industry is moving from a physical, location-specific environment to a digital future with new capabilities.
The Metaverse Group (the Group), which owns one of the largest portfolios of properties in Metaverses, provides a solid case study. The Group defines itself as “Building Premier Metaverse Experiences.” A significant amount of what makes a property in a Metaverse valuable is its ability to connect to customers, create communities, and build brand. Hence, the real estate company is also helping other companies ramp up their virtual brands, which allows the Group to extract additional value from the Metaverse. Last month, Executive Chair, Andrew Kiguel announced, “Our team offers clients a full range of services from virtual store design, event planning, NFT creations and now, land acquisition consulting. We position brands and businesses with resources to succeed in the Metaverse.”
But the Metaverse Group is not only advising on branding, they are also facilitating and hosting events. Recently, the Metaverse Group partnered with BOF (The Business of Fashion) to host the first Metaverse fashion show and played a number of roles during the event. Later this year, the physical will meet the virtual when the Group live-streams the Bob Woodruff Foundation’s “Stand up for Heroes” event featuring a live stage, a donation booth, and virtual items for purchase by your avatar. Like a traditional real estate company, the Metaverse Group is invested in acquiring and brokering land. But the balance in how investments are made and how the Group uses its capabilities is dramatically different, allowing them to translate and sell their services into an ever-expanding ecosystem of opportunity.
To get the most from the Metaverse, we see influence, experience, and capability providing value and success in different ways but only if supported by a community that is accessible, safe, healthy, and growing. As Porter formulated the essence of strategy is coping with competition. It may have migrated to creating communities.
Elizabeth Haas is senior adviser to the Dean of the NYU School of Professional Studies. Michael Diamond is the academic director of the NYU School of Professional Studies, Division of Programs and Business, Integrated Marketing and Communications Department, and a clinical assistant professor of marketing.
Look for our next blog where we detail how NYU SPS is using these strategic levers to create value in the Metaverse.