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The transformation from a metaverse outsider to aboriginal identity took only one year for Nike.
Stanford University student Noah Levine recently released a list on the blockchain analysis platform Dune. Based on the data of the Ethereum blockchain, he took stock of the best-selling NFT projects of commercial brands so far in 2022. This list It caused a stir among cryptocurrency enthusiasts.
The list shows that the American sports giant Nike topped the list and opened a gap with other brands with sales of up to 184 million US dollars and nearly 200 million US dollars, which is nearly ten times that of the second place. Another sports giant adidas 18 times.
Italian luxury brand Dolce & Gabbana ranked second with an annual income of $23.67 million, American high-end jewelry brand Tiffany ranked third with an income of $12.62 million, fourth Gucci with sales of $11.57 million, and fifth Adidas is 10.95 million yuan, and the brand has reached a stable cooperative relationship with Bored Ape Yacht Club and gmoney.
Nike’s outstanding returns in the virtual world are clearly thanks to the virtual sneaker brand RTFKT, which the sports giant acquired last December. This is Nike’s acquisition of a trendy sports brand after 14 years after acquiring Converse in 2007. The acquisition also allowed RTFKT to officially join the Nike brand family, alongside Air Jordan Brand, Converse and other brands.
RTFKT has the same pronunciation as the English artifact (artifact). It was founded in January 2020 by Benoit Pagotto, Chris Le and Steven Valisev. At the beginning of its establishment, it was committed to creating Nike in the metaverse. According to RTFKT’s official website profile, the brand defines itself as “a creator-led organization that uses the latest game engines, NFTs, blockchain authentication and augmented reality, combined with manufacturing expertise to create one-of-a-kind sneakers and digital crafts. “.
Many fans of the metaverse and virtual tokens came to know RTFKT in 2020, when photos of Elon Musk wearing CyberTruck-style sneakers at the Met Gala gained widespread attention online. The pair of RTFKT named “Cybersneaker” was synthesized on Elon Musk’s feet. After that, RTFKT auctioned the pair of virtual sneakers on the NFT trading platform SuperRare at a price of 30ETH (Ethercoin), which was about 90,000 US dollars at the time. 65ETH.
Then RTFKT launched The X Evolutions shoes inspired by Air Jordan 1 OG, which can be regarded as a public show of love for Nike.
Just as Nike has done, RTFKT has since started an unstoppable joint road. In early 2021, just 13 months after RTFKT was founded, RTFKT and 18-year-old crypto artist Fewocious launched three NFT sneakers, priced at $3,000, $5,000, and $10,000, respectively. 621 pairs of shoes were sold out within 7 minutes. Netted RTFKT Studios and Fewocious US$3.1 million, drawing widespread industry attention.
In May 2021, RTFKT released sneakers with trend brand Jeff Staple. In view of Jeff Staple’s deep relationship with Nike, RTFKT’s relationship with Nike will undoubtedly deepen. The latter’s “pigeon” Staple x Nike SB Dunk is listed as Nike history One of the most classic and expensive sneakers ever.
RTFKT has not stopped rapid iterations on a monthly basis since then. In the second half of 2021, RTFKT will release the highly anticipated CloneX series of NFT avatars. Based on the market knowledge accumulated by RTFKT before, the cooperation between this series of avatars and well-known trend artist Takashi Murakami added fire to this new project, making RTFKT more widely recognized in the blockchain circle and the mass market.
And Clone X’s iteration of RTFKT itself is also of great significance. It marks that the brand is no longer limited to sneakers or duplication of entities, but to enter a broader, more virtual and native NFT market.
One of the founders, Benoit Pagotto, explained in an interview with Forbes magazine, “Clone X is the beginning of a complete ecosystem of RTFKT, an evolution of our brand, and we think it will redefine how you think about fashion brands beyond ‘clothes’. “
“We’ve been developing all 3D and having 3D files for future clones, which is a game changer because people are not only able to express themselves with their avatars, but also form between the owner and the 3D creator. A new relationship. It’s a whole ecosystem under construction, and NFT avatars are just the tip of the iceberg.”
With the rapid heating up of the global NFT market in 2021, this cutting-edge virtual sneaker brand, as well as Nike’s public admirers, finally ended the ambiguous period with Nike in December 2021 and was officially acquired by Nike. Although the acquisition transaction did not disclose the specific terms such as the amount, the market rumored that the acquisition amount was more than 1 billion US dollars, and the market valued RTFKT at about 33 million US dollars at the time.
Although the market has no shortage of comments on the acquisition, such as Nike is just buying the identity of the original inhabitants of the Metaverse through RTFKT, and this is just another big company buying up new companies to defend against market erosion, but RTFKT seems to be quite satisfied with this result.
After the acquisition was completed, the actions of the two can be described as non-stop. In February of this year, RTFKT airdropped a mysterious MNLTH blind box for some users, a metal cube blind box with Nike‘s iconic Swoosh logo attached. A few months later, the blind box was unveiled and Nike’s first Ethereum-based virtual sneaker NFT series, RTFKT x Nike Dunk Genesis CryptoKicks, was released.
The Nike Dunk Genesis sneakers start at about 3 ETH. As of press time, the shoes have sold a total of 12,900 pairs on Opensea, with a total of 6,600 buyers. The highest price recently sold in the secondary market reached 45 ETH, or about 7 10,000 US dollars or 488,000 RMB.
Here, people may have been able to realize the biggest difference between Nike selling virtual shoes and selling physical shoes in the metaverse world. That is, Nike can benefit from every secondary market transaction, but not a penny from a second-hand resale of a Dunk or Jordan.
The list splits the composition of Nike’s $184 million in revenue this year, including $93 million in primary RTFKT sales and resale in the secondary market, which had reached $1.3 billion before RTFKT’s acquisition.
In the Metaverse, Nike realized for the first time a share of each sale in the primary and secondary markets, which undoubtedly solved its long-standing concern.
As we all know, the high price of sneakers in the secondary market has not flowed into the pockets of sports brands. How brands that sell products at original prices convert the popularity of their products into their own income has always been a problem that brands try to solve. Especially after the growing resale platform of sneakers such as StockX, the relationship between Nike and StockX has become very delicate.
For Nike, the primary market and the secondary market support and depend on each other. The existence of the secondary market proves the value of its sneakers and attracts young consumers.
In 2020, Jordan and Nike are the most popular brands on StockX, with an average premium of 50%. Among the five most popular shoe styles, Jordan and Nike also account for 1 and 3 to 5 respectively. Nike has undoubtedly become the lifeblood of the StockX operation, but Nike, which sells the sneakers at their original price, does not profit from the premium on the resale of the sneakers.
In fiscal 2022, Air Jordan Brand contributed $5.1 billion in revenue to Nike, but this is only a small part of the value Air Jordan Brand actually created, because these revenue only consisted of sneakers sold at the original price, and did not count resale in StockX and others. The premium generated by the platform, and the market value of Jordan sneakers is precisely reflected in the resale process.
With the passage of time, the profound contradiction between the secondary market and the brand has become increasingly prominent. In addition to the issue of fakes that have attracted much attention on the resale platform, StockX’s recent expansion into the field of virtual sneakers has once again moved Nike’s cheese in the virtual market, and has stimulated Nike to launch a comprehensive defense mode.
In February of this year, Nike filed a lawsuit against StockX in New York federal court, accusing the latter of “blatantly misappropriating” Nike’s trademarks and images of sneakers as NFTs through a service called Vault NFT to pay unsuspecting consumers at high prices. marketing and sales.
Nike accuses StockX of blatantly misappropriating Nike’s trademarks and images of sneakers as NFTs
Then, Nike filed a lawsuit against StockX again in May, claiming that four pairs of sneakers purchased by its employees in just two months were identified as fake, including a pair of the most famous Air Jordan 1 black and red patent leather sneakers. Coincidentally, the fake Air Jordan 1 black and red patent leather sneakers that Nike bought at StockX this time happened to be the best-selling one of the Vault NFTs that Nike had been dissatisfied with before, which undoubtedly stirred Nike’s nerves.
Through two successive lawsuits, Nike’s attitude has been very clear. It not only wants to regain the interests and power that should belong to the brand, but also may be thinking about how to let the secondary market platform repay the benefits previously obtained by resale of sneakers.
Sports brands that sell physical sneakers want to bring consumers back to their own digital platforms, which can be seen from Nike‘s huge investment in SNKRS and Nike App in recent years. At the same time, Nike is trying to create a new mechanism that can profit from resale on the secondary market, and the NFT field of the avant-garde Metaverse now offers a ready-made solution.
In the rapid acquisition of RTFKT, Nike has been very clear that the brand’s entry into the metaverse and NFT fields is not just an experimental business expansion, but a timely protection and strategic defense of the brand’s rights and interests in the virtual world.
Virtual and reality are no longer parallel worlds, and the rapidly expanding virtual world will devour the real world and violate the interests of the real world. If we do not accelerate the expansion into the virtual world and make a more comprehensive and strong layout outside of accidental attempts, it is not impossible that luxury goods in the virtual world will replace physical luxury goods. The premise of a brand protecting its interests in the virtual world is that it “exists” in the virtual world.
With the trump card of RTFKT, Nike has completed a big step into the metaverse. Nike created a virtual world “Nikeland” on Roblox last year, becoming one of the first fashion brands to enter the “metaverse”.
The sports giant has also established Nike Virtual Studios and appointed Ron Faris, vice president of SNKRS, as the head of the new department to better lay out the metaverse and seize new opportunities. In addition to the active construction, Nike has also stepped up trademark protection in the virtual world, filing four applications with the U.S. Patent and Trademark Office at the end of last year.
Although RTFKT’s current contribution of $184 million and Jordan Brand‘s $4.7 billion still has a certain gap, the former at least provides a solution to the problem that has plagued Nike for a long time.
In the past, Jordan Brand was regarded as a supplement to Nike’s growth. It not only helped Nike provide new growth points, opened the price band of products, but also helped Nike manage the life cycle of products. In Air Force 1, Dunk and Air Jordan 1 The task of growth is undertaken in the wheel of the carriage.
Today, the overall cooling of global sneaker resale makes Nike’s life difficult. In the fourth quarter ended May 31 this year, group sales fell 1% to $12.2 billion, while full-year sales rose 5% to $46.7 billion. Among them, Nike brand sales fell 1% to $11.6 billion in the fourth quarter, and Converse brand sales also fell 1% to $593 million.
In this market environment, in addition to Jordan Brand, RTFKT has undoubtedly become Nike’s backup force. If Nike and Jordan Brand, which are also deeply involved in basketball culture, often have a certain degree of conflict of interest, RTFKT in the virtual world avoids such a situation because it will not compete with Nike’s physical sneakers.
In addition to practical interest considerations, and more importantly, in addition to the increasingly saturated sneaker market, RTFKT has opened up a new space for imagination, which can extend Nike’s purpose of building a sports ecology and community into the virtual world.
As Benoit Pagotto explained in the interview, “The Metaverse provides a new way for fashion brands to create not only fashion, but an entire ecosystem of living. Being able to create fashion pieces, as well as the characters who wear them, and as a Your identity in the Metaverse is an important new step for the future of fashion brands. We are not bound by tradition and therefore have the freedom to build our brand to transcend fashion and build the world.”
Nike’s original attention and deep cultivation of community culture also made it more advantageous in the metaverse. Take Dolce & Gabbana, which ranks second on the list, as an example. The layout of the brand in the virtual world is not linked to the physical business of the brand, and the actual operation process is also cumbersome.
It is reported that Dolce & Gabbana’s NFT series can only be purchased on Polygon with WETH through the third-party website UNXD, and then airdropped to the user’s ETH wallet a few days later, which is said to be cumbersome. Dolce & Gabbana subsequently agreed to offer physical products to holders of the series of NFTs due to the drop in the resale market value.
Dolce & Gabbana is not an exception. After the early adopter period, more and more sports and fashion brands will seriously consider how to embed the layout of the Metaverse or NFT into the existing business territory to truly attract the target audience of non-speculators.
The question that many brands eager to try out in the Metaverse will eventually face is how to glue their presence in the real and virtual worlds together and establish a systematic and coherent benefit mechanism.
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