The Concept of Virtual Experience Economy

The term “experience economy” was first mentioned by B. Joseph Pine II and James H. Gilmore who used it in an article describing it as the “next economy to follow the service economy” back in 1998.[1]

The idea is the following:

“The entire history of economic progress can be recapitulated in the four-stage evolution of the birthday cake. As a vestige of the agrarian economy, mothers made birthday cakes from scratch, mixing farm commodities (flour, sugar, butter, and eggs) that together cost mere dimes. As the goods-based industrial economy advanced, moms paid a dollar or two to Betty Crocker for premixed ingredients. Later, when the service economy took hold, busy parents ordered cakes from the bakery or grocery store, which, at $10 or $15, cost ten times as much as the packaged ingredients. Now, in the time-starved 1990s, parents neither make the birthday cake nor even throw the party. Instead, they spend $100 or more to “outsource” the entire event to Chuck E. Cheese’s, the Discovery Zone, the Mining Company, or some other business that stages a memorable event for the kids—and often throws in the cake for free. Welcome to the emerging experience economy”.

It means creating memorable events for consumers so that the memory of the experience itself becomes the product. The more advanced the experience, the more value, and engagement can be derived from this transformative experience. The rapid pace of developing technologies has resulted in companies, and today, fashion companies being able to deliver increasingly innovative customer experiences. From a digital marketing perspective, this has led to taking user experiences (UX) to new levels. The brands and digital marketing agencies (such as Kairos Esports or Viral Nation) who can respond quickest to the changing trends will be the ones that thrive in a highly immersive, interactive, and shareable reality.

One major example is Balenciaga Afterworld Video:

“Afterworld is a game-changer,” says Sallyann Houghton, Epic Games Innovation Lab. “A guiding light in the industry that allows people to see that interactive media is the future of marketing.”[2]

A survey of almost 2,000 business professionals found that for 46% of respondents, customer experience is a top priority for the next five years. It also said that 86% of buyers would pay a premium for a good experience. A very interesting statement was that by 2020, customer experience would overtake product and price as the key brand differentiator. If we didn’t know it already, this is proof that the experience economy is here. [3]

Discuss

• Describe the virtual experience economy in your own words?

Share your description with your peers in the comments below.

References:
1. B. J. Pine and J H. Gilmore, (2011). The Experience Economy (Updated Edition), Harvard Business Review Press; Updated ed.
2. https://www.prnewswire.com/news-releases/streamline-media-group-showcases-the-fashion-industrys-first-immersive-gaming-experience-with-balenciagas-afterworld-the-age-of-tomorrow-301249317.html
3.https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2021/04/07/winning-in-the-experience-economy/?sh=5244a2c6224f