Nike is making waves in Web3 and the metaverse.
In November 2021, the athleisure icon unveiled a virtual experience in the online gaming platform Roblox. Since then the space – dubbed Nikeland – has attracted 6.7 million global visitors and over 21.6 million total visits. It’s not quite Vans’ 82 million visits, but Nike CEO John Donahue deemed the campaign successful enough to extend “the positive momentum and energy'' as part of the company’s digital strategy.
Jake Stott is the co-founder and CEO of Hype, a Web3 agency.
In December 2021, The Swoosh took a deep dive into Web3, acquiring non-fungible token (NFT) studio RTFKT. On the back of its new purchase, Nike launched a series of NFT drops in the following months, starting with its Cryptokicks – a collection of 20,000 sneaker NFTs, including one designed by artist Takashi Murakami that sold for an eye-watering $134,000. The company has since also toyed around with exclusive drops for NFT holders and other phygital (physical plus digital) items.
By the numbers
Nike’s Web3 play has paid off – big time.
Data shows The Swoosh has raked in almost $185 million in NFT sales revenue, lording over names including Adidas, Gucci, Dolce & Gabbana and Tiffany & Co., which have collectively generated less than half of that revenue.
But this all comes with a massive asterisk.
Nike hasn’t disclosed the terms of the RTFKT acquisition, and its latest earnings call hasn’t offered any clarity into the operational costs of its Web3 venture. It’s impossible to say how much of a financial success – or failure – these campaigns have been. For reference, Nike’s projected annual revenue for 2022 is $46.7 billion.
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One thing is for sure, though: Nike has quickly clinched a spot as one of the most beloved brands in the nascent Web3 space.
The numbers don’t lie, either. RTFKT’s Discord server currently boasts just under 232,000 members. By contrast, Adidas sits at almost 57,000 at the time of writing. Web3 natives like CryptoPunks and Bored Apes Yacht Club (both owned by Yuga Labs) are also trailing behind, with 71,000 and 172,000, respectively.
For the culture
Crypto Twitter has praised Nike for its community-building savvy. But more than a successful case study in community building, Nike’s Web3 move is a perfect example of tapping into emerging cultures to reach new audiences and get ahead of the competition.
Culture has been at the core of Nike’s strategy throughout the years. Branching out from sports performance, the brand has secured its status as a cultural icon in sports, music, lifestyle and art. It’s no surprise it’s taking the same approach in the budding Web3 and metaverse spaces.
In an earnings call in 2019, Netflix co-CEO Reed Hastings dropped a poignant one-liner: “We compete (and lose to) Fortnite [an online video game] more than HBO,” he said. “I think of it as us winning time away – entertainment time – from other activities.”
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The race, in Hastings’ view, wasn’t the so-called streaming wars. As strong as Disney’s catalog was, he understood the real battle was for people’s attention – a big chunk of which was going to YouTube and gaming behemoths like Fortnite.
It seems Nike has had a similar realization about Web3 and the metaverse. The Swoosh isn’t simply in a sales contest with Adidas, Under Armour and other apparel giants. It’s fighting for cultural relevance with challenger esports brands and upcoming digital fashion houses, many of which are gaining momentum with Gen Z and gaming circles.
Although still far from Fortnite-tier mainstream penetration, digital fashion brands and gaming orgs have carved out a niche for themselves in internet culture and the digital economy, hawking skins, wearables and collectibles. Capitalizing on their mainstream popularity, some have even expanded into physical merchandise. The same is true for Web3 favorite Yuga Labs, which was recently valued at $4 billion.
FaZe Clan expected revenue of $50 million in 2021. This pales in comparison with Nike’s $12.7 billion for the first quarter of 2023 – and the sports giant wants to keep it this way.
By the time Netflix realized it was in a race with Fortnite, the contest had already heated up out of its control. The Swoosh doesn’t seem too keen on making the same mistake. Instead, Nike has embedded itself into the fabric of Web3 culture before the competition has even taken off.
That’s the brilliance of its Web3 play. Unlike other traditional brands looking at Web3 as a new technology, Nike has figured out that technology is only one facet of something much bigger: a new cultural movement.