The global digital avatar market is expected to reach $156.19 billion by 2032, developing from niche metaverse communities to mainstream acceptance.
Transcending their initial gaming origins, digital avatars, also known as a graphical representation of a user or a user’s character, are evolving from one-dimensional characters to protean virtual influencers, charismatic ambassadors, and hyper-realistic alter egos.
“Avatars have a central role between brand and consumer, porting the consumer with them across the brands own digital properties but also externally to other virtual worlds, games, and social channels,” Aileen Carville, co-founder of digital avatar studio Colonii, tells Jing Daily.
Big numbers, bigger opportunities#
While digital avatars have been in fashion’s periphery for the past few years, the opportunity is finally coming into focus.
“Digital avatars, while not new, are gaining traction in luxury fashion mainly due to recent technological advancements and a shift in consumer behavior,” Cai Felip, CEO of Union Avatars says.
Roblox’s study, conducted in September last year, found that more than half of Gen Z users are willing to spend up to $10 each month styling their avatar. In 2023 alone, Roblox users purchased 1.65 billion digital fashion items, up 15 percent compared to 2022.
Fashion-centric activations in gaming platforms, where players can purchase and style digital avatars with branded wearables, are drawing millions of devoted users daily. For instance, the Gucci x Roblox's Gucci Garden pop-up, launched in 2021, has amassed a total of 19 million visits, as reported by the metaverse data platform Geeiq.
Today, avatars are also thriving beyond gaming ecosystems. Social hub Snap, an early exponent of the digital avatar trend with its Bitmoji, reports that 74 percent of its users dress their Bitmoji in brands they wear in real life. The platform also states that 85 percent of Gen Zers living in the US have created their own Bitmoji avatar, with 250 million people using them every day.
Meanwhile, the recent boom in virtual influencers has given rise to stars like Lil Miquela and China’s Ayayi. The market is estimated to increase by 26 percent by 2025, up from its current valuation of $4.6 billion, according to Territory Influence.
Self-expression, subcultures, and style#
With emerging technologies increasingly blurring the lines between the physical and the virtual, younger demographics are finding liberation in the fluidity of expression that digital avatars afford.
Roblox’s report notes that 84 percent of respondents agree that their physical style is at least “somewhat” inspired by their avatar. Simultaneously, digital avatars are outlets to play with self-expression and explore styles that users feel too shy to try out in the physical world, from bolder hair colors to different gender identities.
As avatars begin to dominate social mindshare, digital avatar and fashion platforms like Colonii, Genies (which secured $150 million in funding in 2022), and Brand New Vision are investing in high-fidelity, state-of-the-art personas that are not only novel but also fashionable.
Founded by Carville and AI artist Luke Nugent last year, newcomer Colonii offers digital personalities with distinct styles that are heavily influenced by physical runway collections and underground subcultures.
Colonii’s digital avatar Anja wears a “Velocity” dress, for example, that borrows silhouette cues from the Jil Sander SS24 show, while virtual ego Hung’s “Botanical Dandy” cropped tuxedo jacket and tailored trousers bears resemblance to Stella McCartney’s SS24 Paris collection.
Digital fashion house Blueberry, whose wearables are available via Roblox, Zepeto, and Second Life, is also bolstering its fashion expertise to attract users. Late last year, the platform brought in Hollywood stylist Kate Young, who has worked alongside Margot Robbie, Selena Gomez, and Chanel, as a senior advisor to up its style credentials.
Can luxury level up?#
Digital avatars and their wardrobes have been steadily gaining cultural and financial value in the post-Covid-19 era. “During the pandemic, there was a natural shift towards digital platforms for connection and engagement. Social media’s evolution and the rise of gaming have made digital identities essential for online interactions,” says Felip.
In 2020, in line with stay at home mandates, the number of gaming platform users reached an all-time high; research from media analytics leader Nielsen noted that 82 percent of global consumers played video games and watched video game content during the height of the pandemic lockdowns.
For the hyper-online Gen Z and Gen Alpha, that appetite for digital twins and wearables remains larger than ever. In 2021, a digital twin of Gucci’s Dionysus bag sold for more money than its physical counterpart, raking in approximately $4,115, while a virtual version of Carolina Herrera’s SS23 yellow floral gown was resold for over $5,000 in Roblox in 2022.
So, why has luxury been so reluctant to dive in? “Interoperability, or lack thereof,” Richard Hobbs, founder of Brand New Vision, says. Hobbs outlines how brands jumping too early onto the bandwagon can also be counterproductive, noting the rush of luxury players recently entering the gaming realm as an example.
“What we have seen so far with brands creating [digital avatar-powered] gaming experiences has been uninspiring,” he says. “Dropping a brand into a game without respecting the lore and narrative of the game can be problematic.”
Another boundary is quality. “Earlier, avatars were primarily simplistic and cartoonish, not aligning with the luxury sector’s emphasis on detail and craftsmanship,” Felip says.
Carville echoes this statement, and believes that a lot of luxury brands’ hesitancy stems from the fact that the digital avatar market is nascent. “Existing avatars have not been up to the task to sell and articulate luxury,” she adds.
Looking ahead#
But as the growth of digital avatars accelerates, the market is poised to eclipse other emerging tech trends in 2024. This global uptick in attention is galvanizing luxury brands to finally harness their full potential.
Carville predicts that the popularization of virtual egos will be fueled by their prospective market versatility, acting as dynamic canvases for campaigns, content, collaborations, and more. “Their performance, characteristics, and even their language can be fine-tuned to niche consumer groups and territories,” she says.
What is the ideal role of digital avatars, according to Colonii? “We envision brands and consumers interacting with our characters as virtual influencers, brand muses across brand channels, and also within the Colonii game habitat as playable characters,” Carville adds.
Hobbs also has high hopes for the industry but notes that there is a long way to go until avatars can reach their full potential.
“We are a long way from a single avatar or persona being able to move seamlessly across different environments,” Hobbs says. “The biggest question we face is ‘Great, I have an avatar, but where can I take it?’ We have options now, and even more in the works.”