Why games became luxury fashion’s NFT on-ramp

Burberry / Mythical Games


Some luxury brands have experimented in the world of gaming, while others have dabbled in digital fashion and NFTs. Now, those worlds are merging.

Burberry will introduce its first NFTs through a collaboration with Blankos Block Party on 11 August, a one-year-old game modelled on the vinyl toy industry, offering both characters and accessories that are NFTs. And on 14 August, Louis Vuitton will begin awarding its first NFTs to players of “Louis the Game,” a new game created as part of its 200th anniversary celebration, which launched last week.

Connecting the dots between digital scarcity and the metaverse, NFTs (non-fungible tokens) offer a way to create digital items that retain value, which mimics physical luxury goods.

By linking up with the gaming industry to experiment with NFTs, brands “already have a captive audience of consumers and a ‘safe space’ to operate in, relying on the expertise of the game developers,” says Moin Roberts-Islam, the technology development manager of the London College of Fashion’s Fashion Innovation Agency. Global video game revenue is estimated to be at $180 billion this year, much of it from in-game assets. By serving up NFTs through a gaming environment, they’re also speaking to a next-gen audience that already values digital assets.

Still, these remain experiments with high costs and opaque outcomes in a world that is mostly foreign to luxury fashion conglomerates. Some, like Rtfkt co-founder Benoit Pagotto, even warn that legacy brands entering games is akin to cultural appropriation.

“Creating a standalone NFT is a real risk for luxury brands at this point in time,” Roberts-Islam says. He believes that, in addition to environmental concerns of Ethereum-based blockchains, the uncertainty, and legal and storage issues of the current iteration of fashion NFTs means they don't hold long-term value. “That puts all of the risk at the door of any luxury brand that goes ‘all in’ on a paid NFT. However, by releasing free, or low-value fiat-purchased, NFTs within existing video game platforms, they can remove a lot of these risks within the confines of a tried and tested environment,” he says.

Appealing to the next generation is crucial. “The most important factor is that you don’t have to educate gamers to place value on digital-only products — they’re the ones who defined it in the first place,” says Roberts-Islam. “It’s a much easier segment to persuade of the value of owning these as NFTs, with implied scarcity, tradability and sell-on value.”

Luxury scarcity, multiple approaches

Starting tomorrow, Burberry will issue in-game NFTs through a series of drops. Only 750 of the “Burberry Blanko” character will go on sale, inspired by the Burberry TB Summer Monogram collection, for $299.99 each; and 1,500 editions of a jetpack accessory for $99.99 each. Additionally, it will mint an unlimited number of $49.99 pool shoes and $24.99 arm bands for two weeks ending 25 August. The limited edition items have a total value of $395,000. Burberry gets proceeds from every sale, and a percentage of every secondary sale among players of Blankos Block Party, who can set the price at whatever they wish.

The Burberry Blanko and accessories will be available in the in-game store and the game's webstore starting 11 August, priced from $24.99 to to $299.99, all with limited quantities or time availabilities. Burberry / Mythical Games

Louis Vuitton took a different approach. It is offering a total of 30 free NFTs, as 10 editions of three designs each, awarded to players of its newly developed mobile game “Louis the Game”. The standalone app, created in partnership with an external developer, launched on 4 August. It forms part of the 200th anniversary, and features an animated character, Vivienne, who hunts for 200 monogrammed birthday candles. Players must play to reach a certain threshold, then can enter in drawings for the NFT. Louis Vuitton worked with events startup Wenew to create the NFTs, which are minted from the Louis Vuitton Ethereum wallet. Wenew was co-founded by artist Mike Winkelmann, known as Beeple, who sold an NFT artwork through Christie’s for $69 million, and previously collaborated with Louis Vuitton on its Spring 2019 ready-to-wear collection. Beeple created one of the three NFTs issued by Louis Vuitton; the other two NFT “moments” are historic postcards from the life of Louis Vuitton. (Louis the Game has postcards within the game experience, but they are not NFTs.)

Burberry is entering the space by pricing and selling NFTs through a platform that has a built-in audience and is inherently designed around the concept of buying and trading NFTs. Attaching value to items risks seeing that value deteriorate and takes a bet that players will pay for Burberry-designed wares. On the other hand, Louis Vuitton, by designing its own game, has more control of the environment but must convince people to download another app. By giving away a very limited supply of free NFTs, it doesn’t risk price sensitivity, but is banking on only hype as a measure of success. For the 30 people who do win an Louis Vuitton NFT, the NFTs can’t be withdrawn until January 2022, so the brand misses out on the potential for immediate secondary market sales that often come with soaring values.

These different approaches illustrate the nascency, complexity and potential opportunity of luxury fashion NFTs, even when anchored through the concept of a game. “Gaming has been part of our thinking for a few years now,” says Rachel Waller, Burberry’s global vice president of channel innovation, whose job it is to explore new ways to show up for the consumer. She points to Burberry’s Shenzhen store that opened a year ago, which created a “social retail” concept to reward consumers for engaging with the brand, both online and in store, and included animated animal characters. “That whole language and thinking around your social currency between your digital and your physical self is something that we think is really important, and really interesting,” Waller says, adding that the core goal is finding consumer “passion points”.

Louis the Game's mascot is an anthropomorphism of the company's monogram, which can wear various skins throughout the gameplay. Louis Vuitton

Gaming is a passion for the luxury consumers that Burberry is interested in, Waller says. “In many ways, it is quite exciting to play with the monogram when it's something mentally so traditional. I think it gives us a lot of license to be playful. We've been really interested in the idea of NFTs and creativity more broadly, and these are all things that are in the ether of consideration as we build these strategies.”

To create the Blankos Block Party NFTs, Burberry’s in-house design team — the same one that produces its collections — worked closely with the team at Mythical Games, the parent company of Blankos Block Party. The goal was to create items that felt on-brand while taking advantage of the perks of digital clothing, according to Waller. A digital collection allows the brand to “create things you would obviously never create in real life — it has a jackpack! — so we are also pushing the boundaries of what you would create with a monogram collection,” she says.

“When I was younger, I used to wear cool sneakers at recess. Now that happens in the digital world, where you show off the cool item you purchased,” says Rudy Koch, `Mythical Games co-founder and SVP of business development. Because of this, Koch says, digital spaces have become venues for brands, artists and musicians. Previously, traditional game assets didn’t include the concept of scarcity. “We have reached a perfect storm of a combination of trends that have collided, and NFTs have come in and ignited it all. Now you can have exclusivity and scarcity in games, and it allows us to bring a brand like Burberry in and ensure we are bringing the authentic brand into the game — that vibe of premium and exclusivity can now exist,” he says.

Koch says that, since the Burberry partnership was originally teased in June, Mythical Games has been “getting bombarded” with interest from luxury brands. “Everybody is trying to figure out what it means for their business,” he says.

Precedents and complications

While this is the first luxury fashion partnership for Mythical Games, a July partnership with musician Deadmau5 offers a precursor to how its audience might respond. The drop sold out of a total 3,000 items, whose prices added up to $240,000, in 20 minutes. Some of these were immediately resold. And previously, one early character with the serial number of 1 (all items are serialised) sold for $25,000 on its in-house resale marketplace.

Superplastic virtual characaters Janky and Guggimon have modelled Gucci (left), and Superplastic has also tapped artists to create NFTs auctioned by Christie's, including this one by Trevor Andrew, known as Gucci Ghost. Superplastic

Similar to real-world collectibles, Blankos Block Party items come in a digital box, with owners having to make the choice of opening it and using it in the game to “level up,” or leave it boxed to retain value. Some players buy more than one of the same item for this reason, Koch says, just as one might do with sneakers or physical collectibles. All secondary sales ultimately give a percentage of the sale price to the original creator. If Burberry items are resold, Burberry would benefit. This “flips the script” on the eBay model, Koch says.

There have been a few other tangential precedents. In July, “virtual influencer” company Superplastic, whose digital toy-like characters wear digital Balenciaga, Louis Vuitton and Gucci, hosted two NFT drops, which ultimately sold out and garnered more than $5 million. Individual digital luxury items are also being created, sold and resold at a profit in other spaces. In May, Gucci created an experience on Roblox that sold limited-edition digital accessories. One $6 purse was resold for more than $4,000, but Gucci did not participate in the first sale, and the item was not an NFT.

Creating NFTs is complicated, which is why gaming partnerships make sense, Roberts-Islam says. For example, Louis Vuitton’s NFTs were also temporarily available for people to register to win on Wenew’s website, but that page is no longer accessible on its homepage. (Louis Vuitton and Wenew declined to comment.)

Of course, for brands like Louis Vuitton, Gucci and Burberry, participating in the cultural zeitgeist might be more valuable than immediate monetary gain, as former chief digital officer of LVMH Ian Rogers recently told Vogue Business.

“It's all about culture, and NFTs are having a cultural moment,” Burberry’s Waller says. “I don't think there's anything wrong with leaning into moments in culture and experimenting. We have to be playing with all of these things because, you know, I'd be a billionaire if I knew which one was going to be the answer. It's more about being aware of the culture and the conversation, as much as the technology. Otherwise, the tendency can be to get excited and carried away by technology, but actually understanding the culture and how you can show up in a relevant way with technology — this is the sweet spot.”

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