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metaverse fashion week
The entrance to Metaverse Fashion Week.
Courtesy of Metaverse Fashion Week

After years of post-pandemic hype, endless Ted Talks and lofty promises of becoming the “future of e-commerce,” the metaverse has hit some turbulence.

In recent weeks, many companies once bullish on the web3-powered platform are pulling back on their spending in the space. This can be seen at companies like Disney, which eliminated its entire 50-person metaverse team in late March as part of larger cuts. At Walmart, the big-box retailer shuttered its “Universe of Play” on Roblox late last month after only six months. And even Meta — which rebranded from Facebook Inc. in 2021 in anticipation of the metaverse taking off — has hit some speed bumps and announced it would lay off 10,000 more employees last month on top of the 11,000 cuts it revealed in November.

“There has definitely been a slowdown in metaverse activity,” said Tobi Ajala, the founder and CEO of digital agency TechTee and former Apple software engineer. The Forbes 30 Under 30 tech expert went on to explain that there are a variety of reasons why the market is seeing a cool down in metaverse activity.

“We started to notice a recoil in projects back in October as economies across the world continued to slow down due to inflation,” said Ajala, whose company has worked on several high-profile metaverse activations such as creating the Gucci Garden and the Ssense x Converse block party. “Thus, marketing budgets were cut. Metaverse experiences are probably one of the most expensive marketing efforts that luxury brands have made, and often have ended in less of a return on investment than big physical activations. So the cost is just prohibitive at this point.”

Clarks, Metaverse Fashion Week
The Clarks Arcade at Metaverse Fashion Week.Courtesy of Clarks

Ajala went on to note there has also been a shift in focus to other technologies. “Since the rise in popularity of AI and OpenAI’s ChatGPT, many companies have come to me expressing interest in activating in this space,” Ajala said. “Many, however, don’t really understand what AI is and often mistake it for machine learning. Nevertheless, AI is just as expensive as metaverse. We’re not talking about the $50,000 to $100,000 you would spend for a campaign. [It’s] $3 million at the bare minimum and a team of 20 people to make all these things happen.”

But it’s not all bad news for the metaverse. Many brands are still activating in the digital realm and remain confident in its future. Just last week, Metaverse Fashion Week (MVFW) held its second annual event, where more than 60 brands held virtual activations on the Decentraland platform.

One of the footwear brands that participated in MVFW was Clarks, where it launched “Clarks Arcade,” described as “part carnival, part rooftop nightclub.” It offered arcade games, dance battles and opportunities to wear digital wearables based on Clarks’ Wallabee silhouette.

Clarks chief marketing and digital officer Tara McRae told FN that the metaverse is still “very relevant” and is following the same trend cycles as any other recent digital innovation. “What can be seen as a ‘cooling off’ with regard to media and consumer enthusiasm is instead a moment where brands are taking a more measured, considered approach to testing the possibilities of the technology and learning what works for them and their consumers,” McRae said.

Gaian, Metaverse Fashion Week
Gaian’s Metaverse Fashion Week store front.Courtesy of Gaian

Yasha Gruben, co-founder and CEO of wearable tech startup Gaian, which also showed its ‘MNWLKR’ energy-generating sneaker at MVFW last week, agreed. “There definitely was a cooling-off period in terms of market activity and active users in the NFT and metaverse spaces, but the initial rush was not sustainable and this is to be expected,” Gruben said. “We are in a different phase — a building phase. The people who stayed in this space after the crypto market went bear are the people building the infrastructure and culture that will onboard the masses during the next bull run.”

For Gruben, who founded Gaian with Maral Kalinian, a former VP of footwear innovation at Yeezy, the metaverse is ultimately a place to build community. “It democratizes access to Gaian events. With traditional fashion brands, most events are only available to people in populated cities of first-world countries,” Gruben said. “It’s hard to put the metaverse in a box, but I see it as a new form of social media, mixed with a new way to do commerce.”

Community is another reason McRae is bullish on the digital realm. “[Clarks sees] the metaverse as another way to connect with our consumers in a new way. So if they are there, and there’s a way to integrate Clarks into the space in an authentic way, then we will pursue it,” she maintained. “As long as our audience is there, and there’s an authentic and fun way to include Clarks in the conversation, I can see Clarks playing more in the space in the future.”

adidas, metaverse fashion week
The Adidas activation at this year’s Metaverse Fashion Week.Courtesy of Metaverse Fashion Week

So where does the metaverse go from here?

Many experts see phygital goods and experiences as key elements in how the platform progresses.

Dr. Giovanna Graziosi Casimiro, head of MVFW and senior XR producer at Decentraland Foundation, predicted that we will see an “immense birthing of creativity” in this space at future Metaverse Fashion Weeks. “We had many physical events at MVFW, like an augmented reality runway in Milan, which was hosted by Over and Pinko and demonstrating how ‘IRL’ fashion houses can offer authentic, elegant, collections in the digital world,” Dr. Casimiro said. “I would also expect the line between IRL and URL fashion weeks to blur even further in 2024 and beyond.”

For McRae, the future of the technology is really exciting. “The immersion that the metaverse enables is truly a reinvention of what’s possible in how brands connect with their consumers,” the executive said. “I’m excited about this current moment in digital innovation — not only for what is possible for Clarks but for how brands can be empowered to reenvision the way they connect to their audiences at every level, from concept to consumer.”

The bottom line, as TechTee’s Ajala concluded, is that the metaverse is still very relevant. “I believe the next step is for brands to normalize their digital experiences in campaigns, in e-commerce and across all of their channels,” she said. “It will eventually get to a point where it’s not just an announcement, but an expectation that your company is activating in web3.”

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After Years of Hype, Is the Metaverse Still Relevant?
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