Over the past decade or so, consumers have moved from more traditional entertainment channels such as broadcast TV shows and movies to online gaming. Online gaming is a $150 billion industry, according to Newzoo, and has doubled in size over the past decade. It’s expected to reach $180 billion by 2021.
For Steven Ekstract, brand director of the Global Licensing Group, a unit of Informa, this growth has opened a door for luxury brands.
“From Hermès’ mobile app H-pitchhh to Dior and Guerlain’s branded interactive games, heritage brands from around the world are embracing gaming platforms with the hopes of increasing engagement to seduce Millennial consumers,” he noted.
Here, Ekstract explains what’s behind this trend and how more brands can take advantage of the growth of gaming.
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WWD: What is driving this trend? How will it evolve globally?
Steven Ekstract: Video games are the OG of digitally native brands. Gaming is now a 40-year-old industry that crosses three generations as well as gender. As a form of entertainment, videogaming eclipses both film and television in revenue and players spend significantly more time on games, creating a loyalty and fan base for specific game brands. Video games are interactive, placing the player in the center of the game, which creates a critical emotional connection not seen with passive entertainment like film and TV.
Millennials and Gen Z are the new luxury consumers — they grew up with video games and are comfortable with game play. Most importantly, luxury and gaming are both about fantasy. People don’t buy luxury products for need; they buy luxury products to fulfill their dreams. Luxury products create an emotional connection with the consumer that makes them feel more attractive, more intelligent, more successful. When you look at the intersection between video game play and luxury products, they both appeal to the same part of the brain, the amygdala, which is the center of emotional processing.
China is the shining star for luxury brands using video games as a marketing tool as a result of being more advanced in its digital infrastructure, comfort level and equality in male/female play demographics. Add to this a significant population growth of well-educated and upwardly mobile Gen Z who grew up gaming, have a need for status through luxury. For luxury brands, learning how to be successful in China using gaming as a marketing tool represents their ability to succeed with other emerging markets like India, South East Asia, Africa, the U.S., Latin America and Europe.
The lesson learned from China, that gaming is a medium to reach younger consumers, is now fully understood.
WWD: What can luxury brands do to leverage this trend? Where’s a good place to start?
S.E.: Research is key. It’s important to identify what the demographic of the customers the luxury brand is looking to reach, from age, sex, education level, geographic location, household income, to spending habits. Also, what are the emotional drivers (cause-related, politics, group affinities, video game play) and how much time do they spend playing video games and watching games being played — this information is easily targeted using Google Analytics or through buying targeted ads on social media like Twitch, YouTube, Facebook and Instagram.
Gen G just launched Team Bumble, the first all women’s e-sports team, which is a great opportunity for luxury brands to sponsor, such as luxury brands or companies such as Chanel, Gucci and LVMH.
WWD: And what should be the strategic considerations?
S.E.: The strategy should be specific to each demographic being targeted. Luxury brands must tailor their marketing campaigns to each specific demographic they intend to reach and be much more disciplined about their marketing approach. The old-school concept of running a luxury ad in a glossy magazine like Vanity Fair won’t work for Millennials and Gen Z. Both groups get their information online, often through social media.
All luxury marketing should be using analytics to pinpoint every segment of customers they are looking to reach, and the campaigns need to be specifically tailored to those demographics using social media channels. Additionally, video-on-demand services with gaming-specific channels like Twitch, YouTube Gaming, Mixer, Facebook Gaming, Steam TV and Caffeine allow luxury brands to hyper-target specific demographics at relatively low cost.
Another area luxury brands can target is sponsorship opportunities with e-sports. There are three areas to focus on: the leagues, the teams, and the individual players.