Uncertain times lie ahead for the previously hyped metaverse and Web3 sectors as we near the end of the first quarter of 2023. Last year’s race among luxury and fashion brands, auction houses, and cultural institutions to jump on the Web3 bandwagon is giving way to greater caution as the conversation shifts toward artificial intelligence (AI) platforms like ChatGPT.
Mere months ago, luxury’s burgeoning interest Web3 was on clear display as Tiffany & Co. released $5,000 CryptoPunk-inspired pendants and global K-Pop sensation BlackPink held a wildly popular virtual concert series. This year, luxury brand interest in NFTs and the metaverse has remained somewhat stagnant following steadily growing investment in 2021 and 2022 spurred by unpredictable COVID lockdowns in China – which often confined luxury-hungry consumers to virtual spaces – and high-octane VC-backed hype.
There are exceptions and holdouts. Prada, for one, has maintained its monthly phygital Timecapsule drops since their debut in December 2019, and Parisian label Balmain is set to launch a series of NFTs based on its Unicorn sneaker in collaboration with Web3 fashion brand Space Runners. Other brands continue to steadily validate the Web3 space with a particular eye on more practical benefits, such as product authentication or VIP perks.
This has manifested in a shift away from the utopian lexicon of 2021-2022 towards more low-key terminology, particularly among luxury brands. As Jing Daily recently noted, one way that brands have done this is by demystifying the tech, especially the related jargon, and making it more accessible.
As Adriana Hoppenbrouwer, co-founder and CMO of digital fashion house The Fabricant, notes, “We deliberately don’t use any of the traditional Web3 language on our website, because we don’t want to exclude anyone that doesn’t understand it,” she adds. Similarly, brands Zero10 and The Institute of Digital Fashion (IoDF) avoid the overuse of metaverse jargon, instead favoring terminology such as “tech-forward,” “AR-solutions,” and “digital collectibles.”
This is in line with a trend among marketing and branding professionals to minimize the use of terms and phrases associated with the crypto boom-and-bust of 2021 and 2022, moving away from the likes of “NFT,” “blockchain,” and “crypto” and towards “decentralized systems” and the aforementioned “digital collectibles.”
But while luxury and fashion brands maintain a cautious approach, cultural institutions could throw the Web3 space a lifeline in 2023, as art museums and auction houses continue to invest in NFTs and metaverse-based initiatives while lending much-needed credibility and validation.
Despite recent signs of recovery that saw NFT trade volume in January 2023 reach levels not seen since June 2022, NFTs – or digital collectibles – are not out of the weeds following a damaging “crypto winter” saw valuations tumble over the second half of 2022. Today, investor enthusiasm is a shadow of the heady days of August 2021, when the market hit its all-time high of $4.9 billion. Meanwhile, the hype cycle has shifted away from Web3 and towards artificial intelligence (AI) platforms like ChatGPT, although the luxury use cases for these tools remain questionable for the time being.
In the midst of this fluid situation, it could be major art institutions that lead the way and essentially save the Web3 space from losing the attention of luxury brands. Recent acquisitions of dozens of NFTs by the Los Angeles County Museum of Art (LACMA) and the Paris-based Centre Pompidou indicate that some respected institutions are eager to document the history of crypto art. In the case of the latter, the acquisition was supported by the French Ministry of Culture.
As we recently pointed out, the involvement of art institutions could also help the NFT art marketplace return to its original function of supporting a new form of artistic expression in the age of Web3. While the current hype for all things AI-related has put discussions of Web3, the metaverse, and NFTs on the back burner, it has also helped calm lower the temperature of Web3 discourse, with current and upcoming considerations likely to focus less on investment opportunities and more on the quality and meaning of art. (Or, in the case of high-end brands, luxury goods.)
As such, rather than seeing luxury brands fully lose interest in the metaverse, or phygital NFTs, or “crypto” – however they choose to rebrand it – we will likely see them follow the cues set by major arts institutions. This means a shift away from splashy NFT drops and towards practicality and user experience, moving into a more sustainable phase insulated from “crypto bros” and fickle news cycles.