How is Nike foraying into the Metaverse?
Shoe giant, Nike, is one of the earliest adopters of the emerging trend of designer shoe NFTs.
Written by Kajal Iyer
With its acquisition of RTFKT, a company that makes high end designer sneaker NFTs, Nike has cemented its foray into the Metaverse. Speculation about the apparel giant’s entry into the digital token market has been around for a while. Last year, reports had emerged about Nike’s 2019 application for a patent for CryptoKicks – a venture where it aims to give a buyer of a physical pair of shoes, rights to its NFT as well. Going by this, it can very well be said that Nike was ahead of the curve in understanding the future marketability of NFT sneakers.
"This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture," CEO John Donahoe said in a statement, about the acquisition of RTFKT. But traditionalists may wonder, why would a shoe manufacturing giant want to invest in this virtual world?
For starters, the NFT market in sneakers has had some real-world success already. RTFKT’s Clone X project unveiled in December 2021 traded over $100 million within days in the NFT market as per a report on the Motley Fool website. Even the cheapest of the NFTs in the series sold at around $20,000. According to a CBS report, the market for transactions in the metaverse was expected to reach $6.1 billion in 2021 and nearly $42 billion globally by 2026. So, profitability is, as of now, looking good. 🤸
There are two manifestations of an industry major joining the NFT market. One, is the possibility of producing physical versions of the innovative NFTs. RTFKT and other such companies have already done this and with the scale of manufacturing that a Nike is capable of, the possibilities for collectors are endless.
Nike’s 2019 patent of CryptoKicks, interestingly, also introduced a new concept of sneaker breeding. Basically, in the NFT world, one could piece together different parts from different NFTs and give rise to a new sneaker altogether. For example, users could like the design of the sole of NFT sneaker A but prefer the outer body of NFT sneaker B. As per the patent application by Nike, a new design NFT sneaker C could be created by splicing both together. The possibilities here seem interesting and wide ranging, but in the physical world, this would, of course, have limitations with respect to material, sizes and other such considerations.
The second manifestation of this is in the digital world, which is increasingly transforming itself into the Metaverse. In the current scenario, most Metaverse games and applications allow users to choose an Avatar, a virtual version of themselves. Just like in real life, now your avatars could wear bespoke, branded apparel.
In fact, Nike is not new to this aspect. Nike has had collaborations with games like Fortnite, where the player could use Nike sneakers for their avatars. Nike also had a successful collaboration with gaming company Roblox, where it has built a virtual gaming zone called Nikeland. With Metaverse expanding beyond gaming, to exercise, virtual events, workspaces and much more, your avatar could turn up in the digital world wearing NFT designs Miranda Priestly would approve of.
While you may be excused for assuming that the collaborations with Roblox or Fortnite are recent brand placements or cross promotions, Nike’s current business direction seems to hint at a well thought-out, long-term strategy. As per a report by CNBC, Nike recently submitted a fresh trademark application in October 2021 for 7 items in the digital space, wanting to register its logos and tagline to them. These items include sneakers, eyewear, headwear, and bags amongst others.
Not one to lag behind, competitor Adidas has entered a collaboration with the Bored Ape Yatch Club for NFTs. With these two players building their stronghold in the market, it seems NFTs are no longer confined to niche geek communities. They are now mainstream enough for big brands to want a piece of the pie. Hungry, anyone?