- Many brands are now employing a dual-release approach in their products, with one version being offered as a UDA in the metaverse and the other as a physical product.
- University researchers found that UDAs start to lose their value and even relevance when their physical counterparts are available.
Rise of UDAs in the Metaverse
Unique Digital Assets (UDAs) are basically non-fungible tokens (NFTs). Each represents ownership of a particular asset.
Recently, companies have been integrating them as new revenue streams to boost sales. UDAs help them expand their product exposure and brand visibility, creating digital twins of their physical counterparts. Then, consumers can interact with their digital forms via virtual reality (VR) or augmented reality (AR).
Among the well-known brands that utilize this technique to promote their products are sports brands such as Adidas and Nike. Luxury brands also employ the same strategy, including Louis Vuitton, Gucci, Dolce & Gabbana, and Prada.
Physical Products Devaluing UDAs
Researchers from several universities recently delved into the subject to determine how physical products affect their UDAs. The study was conducted by the University of Stirling Management School, the University of Edinburgh Business School, Zhongnan University of Economics and Law in China, and Léonard de Vinci Pôle Universitaire in France.
The universities orchestrated six online experiments covering 1,523 consumers in China to observe their purchasing patterns and interactions. They utilized UDAs and physical products based on fake products to simulate a realistic market scenario.
Releasing the Digital Version First
According to the researchers, launching a UDA alongside the physical version of the product doesn’t usually result in additional sales. It found that if a physical copy of the item already exists, most customers will likely find it unnecessary to purchase its digital variant. To maximize the brand’s performance, it should start releasing UDAs before the physical products are released.
“When brand owners and retailers take a dual-format approach with products—pairing UDAs with physical versions—consumer perceptions of the UDA will diminish,” said Rob Angell, Professor of Marketing at the University of Stirling Management School. He was also credited as the author of the study.
“So when, for example, a Gucci handbag is available in the metaverse and also in stores, shoppers feel that the digital equivalent is less unique and special,” Angell added. “They see that other consumers can potentially own physical versions, so they have less psychological ownership of it.”
In the scenario organized by the researchers, the physical version always overshadowed the UDA. Hence, the digital copy typically loses relevance once the physical product arrives.
“Our research suggests that it would have limited success as the UDA will always be undermined by its physical counterpart,” Angell explained. “Our advice would be to offer a digital-only asset or, if a physical version is also to be released, that marketers and retailers are cautious.”
More Research Needed
The study indeed provides crucial insights into the buying habits of consumers involving UDAs and their physical counterparts. However, the university researchers recommended further studies to confirm if the same results could be replicated in other market jurisdictions.
