Will watch brands master the metaverse?
How much would you pay for a watch you own but can’t wear or even touch? A tenner? A big ? Following? Or how about spending your hard-earned money on a luxury watch to dress up a virtual version of yourself? You know – in the metaverse?
The answer may be zero for each of the above points, but for the watch industry and many of its customers, the questions suddenly become real. Already, there are signs that the Metaverse and NFTs — lumped together here because there’s so much overlap — are well on their way to watchmaking.
This, despite the fact that the understanding of this new virtual Wild West is still in creep mode.
NFTs, or “non-fungible tokens”, about which few short explanatory sentences have yet been written, are unique digital assets, immutably inscribed on a blockchain, which can be bought and sold like any other commodity or merchandise.
Expensive, encrypted jpegs or gifs, if desired.
The metaverse, already a shoo-in for the word 2022, is a virtual world where you can play, consume, and live the life you’ve always wanted, without having to worry about covid, STDs, or anyone finding out who you are. really are. I gather.
Luxury brands are scrambling to get in on the act. In the never-quite-parallel world of high-end fashion sits Dolce & Gabbana, which a few months ago moved its first nine-piece NFT collection “Collezione Genesi” for a barely believable $5.7 millions of dollars. Tommy Hilfiger is now working on “v-commerce”.
And in watches, last spring Jacob & Co. created an NFT version of its SF24 Tourbillon, a unique digital piece that sold at auction for $100,000, ushering in a new era of virtual watch ownership. .
No mistake, a new era has begun.
And that will leave many scratching their heads. Why would anyone want to spend huge sums on watches they can’t wear? And in any case, wouldn’t the luxury watch brands that bet on the timeless traditions of artisanal mechanical watchmaking consider manufacturing NFTs, or virtual watches for avatars? Would they?
Well, they might. Not that we’ve seen it yet, but many already are. NFT chatter behind the scenes has become bar stool gossip, and by the end of this year, it seems increasingly likely that it will be headline news.
In January, I spoke with LVMH Watch Division President Stéphane Bianchi and TAG Heuer Managing Director Frédéric Arnault about their NFT plans.
Both became very animated by the subject, admitting that they are working on an NFT strategy, but without revealing any details. Like the rest of us, they are still figuring it out.
Meanwhile, Mr Arnault is quite comfortable talking about his responsibility as a “tech company”, while Mr Bianchi added that TAG Heuer has “legitimacy” in the field due to its strategy. now well-established connected watch.
In the same breath, we can be sure that Hublot will also come to the virtual table. It was the official timekeeper for January’s Crypto Finance conference in St. Moritz, which is part of the same universe.
And as for the luxury metaverse, analysts have already decided it is coming. Morgan Stanley said the virtual market for luxury goods could reach $50 billion by 2030.
Industry figures are also joining in. Canadian businessman and avid watch collector Kevin O’Leary, known for his longtime role in the US version of Dragon’s Den, Shark Tank, says he is funding a white paper to standardize a watch protocol NFT and that in July it is going to hit NFT watches for the secondary market.
These encrypted dial scans, he says, will accompany the physical product and act as digital authentication certificates, useful for transactions and insurance, as well as for brands and retailers wanting to keep track of their watches. Maybe the market will decide if these have their own value.
If that seems to be coming too quickly, especially for an industry that prides itself on slow luxury, consider this: for some, it will already be too late.
Why? Let’s go back to the real world, where, for now, manufacturers are making real watches. The problem is that the Swiss watch industry has a huge volume problem.
In 2021, Switzerland moved 25% fewer watches than in 2019, a thorny issue that is currently being varnished by a 3% increase in the overall value of exports.
In no time, and fueled by a pandemic, the average export price of a Swiss watch jumped almost 40%.
But how long can brands count on this trajectory? What happens if volumes drop further? We are at around 15 million watches exported from Switzerland today, and some predict we will slide to 10 million by the end of this decade, if not sooner.
So what? Can prices increase exponentially? Or does the average bettor find a lower limit than the brands imagine?
Recognizing this trend, smart brands have already started branching out into the virtual world. Some are sitting on products that will be injected into the metaverse, expecting a dramatic rise in revenue. H
ow many of the three billion gamers in the world have to spend 10 V-Bucks (the virtual currency on gaming platforms such as Roblox that is purchased with real money – ask my kids) on a watch from luxury they can wear across the metaverse before the “creator” of said watch generates high-margin profits?
Add an incentive – win a physical watch? – and you start to alleviate those volume worries.
But, of course, it is easier to write the future than to realize it. Swiss watchmaking has its progressives, but many are steeped in the past, trapped by what economists call active inertia – the tendency to follow established patterns of behavior, especially when they have previously proven profitable.
The same could be said of the consumer, for whom the idea of spending money on virtual assets will surely be secondary to the buy-it-own-it-wear approach for some time to come. There is also another obstacle.
Brands and buyers know, and often freely admit, that no one needs a luxury mechanical watch. How much less do we need watches that don’t actually exist? So much less that we’ll draw the line at buying them?
But if there’s a virtual image to hold and profit to be made by owning and marketing an NFT watch to consumers, the needle could move faster than even the most optimistic predictions. Into the new Wild West we go. On a virtual horse.
And if I’m wrong, you can shoot me with your Smith & Wesson NFT (currently trading at $15,000, by the way).