By JJ Shaw, Associate at Lewis Silkin LLP.
“Fashion” is an industry known for pushing boundaries, being creative and embracing the new – so its latest fixation with video games is perhaps a natural development. We’ve already seen the likes of Animal Crossing which allows players to dress their avatars in Prada, Off-White, Ratberry (by Burberry) and Gucci Arcade take the “Lux x Gaming” world by storm this year, creating an unlikely demographic of new gamers.
Gaming is no longer just a teenage hobby – the $120bn industry has evolved from strength to strength in recent times, benefiting from another explosion in popularity during COVID-19 lockdown (Verizon recently reported that video game playing hours are up 75% since the pandemic first began). It represents big business and a major opportunity, which is why we are now seeing new partnerships emerge between well-established video game developers and luxury brands seeking to tap into the huge audience engagement.
Take ‘Louis Vuitton x League of Legends’ – the Paris fashion house announced its official partnership with the video game back in September 2019. Developed and published by Riot Games, ‘LoL’ is a powerhouse title in the world of professional esports, boasting more than 111 million players worldwide. The partnership has seen Riot Games release official Louis Vuitton in-game ‘skins’ (designed by Nicolas Ghesquière), which can be purchased by players for around $10. In turn, Louis Vuitton released a December collection branded “LVxLOL”, featuring a $5,000 League of Legends branded leather jacket.
Lux brand tie-ups in this space are not new – in fact, they can be traced back as far as 2012 when Prada launched its new collection modelled by characters from the Final Fantasy video game series. Fast forward to modern-day and we live in a world of ‘Moschino x Sims’ drops and limited edition Gucci watches released in collaboration with eSports juggernauts, Fnatic. What a time to be alive.
This can be an especially lucrative arrangement for the game developers themselves. Collaborations like these bring a touch of real-world authenticity to the digital realm, providing gamers with an opportunity to add the luxury brand to their digital personality – often for a price. The popularised “freemium” revenue model for games (allowing players to download the game for free initially, with the option of purchasing cosmetic add-ons, skins or outfits within the game) has made luxury brand tie-ups all the more profitable for developers who enjoy increased in-game sales.
Alternatively, some games allow players to buy ‘virtual currency’ with real money, which can then be used to make similar in-game purchases. Swatch (owner of the Tissot brand) recently announced 113,309 Tissot watches had been “purchased” virtually in NBA 2K20 by gamers looking to add a luxury watch to their basketball character’s wrist. Game developers benefit from a surge in demand for the virtual currency, whilst the brand reaps the rewards of a powerful marketing tool and increased brand exposure. Today’s young gaming audience is tomorrow’s luxury fashion customer base, which makes this a clear win-win.
“But what about the legal issues brands face with this kind of a deal?” – I hear you ask. Well as specialist commercial and IP lawyers, we at Lewis Silkin regularly advise on brand partnerships and tie-ups – from traditional sponsorships to in-game collabs like those mentioned above. Like all successful brand partnerships, both parties really do need to operate as true “partners” to get the best out of the relationship.
For brands looking to partner in the games space, here are 3 basic legal tips:
- Carefully document your deal – the brand partnership contract is ultimately what it all boils down to, and the devil really is in the detail. Involve the lawyers to ensure clarity and consistency around your contractual rights in the partnership. In particular, always look to set clear objectives and measurable metrics for payment in the contract.
- Consider how you will maintain brand integrity – no partner in a collaboration should jeopardise its brand or reputation as part of the deal. Typically, each party will license the right to use its brand to the other (usually on the condition that any use conforms to set brand guidelines). Approval rights are a crucial mechanism to give brands control over any final campaign materials and consider how you should be able to terminate the relationship if things turn sour.
- IP is V.I.P – intellectual property is at the heart of both the lux and gaming businesses, so it’s important to set clear do’s and don’ts regarding its use, establish who owns what, and also think ahead about what the tie-up might mean for future deals/future collections (i.e. is it exclusive?).