What Most Are Missing About Nike’s Move Into the Metaverse
Athletic fashion in the metaverse? No, this is not a new fitness trend about exercising from your couch.
When Nike acquired RFTKT in December 2021 for an undisclosed sum (RFTKT was recently valued at $33 million), eyebrows were raised. Nike’s acquisition of RTFKT is significant in several ways.
First, it means that the metaverse went from being a nebulous, distant concept to something that is actually happening — and that we need to do something about it. In fact, an arms race of sorts has started for brands to put their foot down in this new wild west that the metaverse represents.
[See also: NRF 2022: Direct-to-Avatar Strategy Imperative for Brands Prepping Metaverse Entry]
The gold rush is on, and brands are scrambling to figure out what that means for them and are getting FOMO.
Second, this gold rush is significant because it signals that the metaverse is more than technology. More importantly, it’s about figuring out the business model, governance structure, and growth strategy in the metaverse.
Just like in so many other areas, supporting technology — such as blockchain, AI, and big data — is like the blood that fuels the system in the metaverse, and has been in existence for a long time. The game is not about waiting for a far-out technology; the game is about understanding what the metaverse can do for brands and what brands can do in the metaverse.
An Ecosystem That No One Brand Can Dominate
What should brands consider as they devise their metaverse strategy? Several key points are missed in most comments on the topic. First, Nike’s acquisition shows that it’s not about “dominating” in the old-fashioned, military strategy sense of the word. Rather, it is about building a coalition or creating an ecosystem of partnerships, where value can be created together and exchanged.
What Nike is not trying to do is define a “do-it-alone,” lone-wolf strategy. Nike is looking for appropriate partnerships across the ecosystem, bringing together a set of players that can create value together.
[Related: Nike Accelerates Digital Supply Chain Investments for More Advanced Analytics]
In addition to RTFKT building out its own NFT drops, the company collaborated with other crypto creators to design items like physical shoes that used imagery in other NFT projects, including CryptoPunks and Bored Apes. This brand collaboration is very likely to be the model of the metaverse going forward — a fluid network rather than a market with established dominant players.
A New Model of Value Creation
What makes the metaverse interesting is not just combining reality with VR and AR, but how the digital ecosystem can serve as an “Interaction Field” (in Erich Joachimsthaler’s words), where players collaborate to solve problems that haven’t been solved before.
The metaverse isn’t about creating a new market where brands can transpose their existing model and sell more of their existing goods, as they would in new geography. Instead, it’s about envisioning an entirely new value creation model, a new way of doing business, a new way of solving problems through interactions.
NFTs are not simply physical goods transposed into the virtual sphere. They are interaction enablers, creating the language and context in which interactions can occur. Virtual sneakers are not about physical utility; they are about communicating identity, status, and belonging to a specific group.
Take, for example, the Bored Ape Yacht Club — where the price of entry is over $200K — which Adidas chose to partner with. All needs that brands also serve in the physical world, but taken here to logarithmic power, are stripped of functional utility altogether. It will be interesting to observe the networks, power structures, and group dynamics formed in this new word — and how these, in turn, affect relationships in the physical world.
Will the Bored Ape Yacht Club become more powerful than alumni networks? Will the ability to create a following in the metaverse translate to the physical world? Will metaverse leadership intersect or parallel-track to leadership positions in the analog world?
Anne Olderog, Senior Partner, Vivaldi
