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Nike’s Success & Shortcomings In Web3

Nike’s Success & Shortcomings In Web3

Breaking down Nike's success and shortcomings from its investment in Web3…

Matt O'Brien
October 10, 2023

GM frens,

In today’s edition of The Ground Floor we are breaking down Nike’s success and shortcomings from its investment into Web3…

Nike’s Expensive Lesson

Nike is no stranger to Web3.

In December 2021 Nike acquired RTFKT ~ one of the most successful Web3 brands at the time with their premiere profile picture collection CloneX ranking as one of the top #5 PFP collections.

(CloneX)

The Good, The Bad

In the time since, Nike has doubled down on its investment in this space, launching .SWOOSH ~ described as “a web3-enabled platform that champions athletes and serves the future of sport by creating a new, inclusive digital community, experiences and a home for Nike virtual creation”.

Nonetheless, Nike’s foray into Web3 has yielded mixed fortunes.

RTFKT, the company it’s estimated Nike paid $1 billion to acquire, has struggled to live up to the expectations of providing value to their token holders, with the collections floor price having fallen a cool 90% in the last 12 months.

Why is the floor price falling?

The floor price of nearly every NFT collection has experienced a double-digit decline over the past 18 months, yet there is a deeper narrative at play.

Nike is struggling to strike a balance between providing value to their token holders while recouping their investment to acquire RTFKT ~ best highlighted by the approach to RTFKTs monolith 2, an asset that sold for $1,500+ days before Nike announced it would entitle token holders to receive $300 off $750+ shoes.

This disappointing devaluation of assets in the RTFKT eco-system has unsurprisingly resulted in many community holders leaving the RTFKT eco-system, and with creator royalties reaching record lows, Nike's purchase of RTFKT seems to be one of their less successful acquisitions.

(The Good)

While RTFKT's performance has been less than satisfactory for token holders and Nike shareholders alike, Nike's internally developed Web3 program, .SWOOSH, appears to be on a much more promising trajectory.

Since the launch of .SWOOSH, a whopping 372,000+ .SWOOSH ID’s have been claimed, and in May 2023, over 30,000 people purchased 100,000+ digital Our Force 1 boxes resulting in almost $2,000,000 in revenue for Nike.

In June 2023, Nike revealed that .SWOOSH NFTs would be integrated into EA Sports video games ~ a massive milestone for NFTs.

1 week later, Nike announced the release of their unique Fortnite experience whereby .SWOOSH holders who linked their EPIC games account to .SWOOSH would receive first access to a future .SWOOSH Air Max virtual collection.

From Digital To Physical

Building on the back of this success, Nike recently announced they are providing their Our Force 1 holders with the opportunity to access an exclusive drop.

This release will grant token holders exclusive access to the Air Force TINAJ for $120, with participants also receiving a digital version.

This announcement has been met with much excitement, with the primary criticisms coming from the people who are unable to participate in the primary sale as a result of not purchasing a Our Force 1 back in May 2023.

In stark contrast to the positive response this announcement has received, many members of the RTFKT community have once again been very vocal in expressing their criticism of the company’s approach to reward token holders by providing holders with access to shoes that will cost 82% more, $222 per pair.

The Challenges

Nike’s acquisition of RTFKT should serve as a cautionary tale for companies seeking to acquire existing brands in Web3, as the path to do right by the RTFKT community they acquired, while simultaneously ensuring a positive return on this acquisition for Nike shareholders remains a significant challenge.

In contrast, the success Nike continues to experience with .SWOOSH showcases the potential for established brands to succeed in this space.

By providing its existing customers with a free to claim pass to participate in its Web3 initiatives, Nike has put itself in a perfect position to continuously under promise and under over deliver ~ all the while making millions in revenue.

Looking Forward

It’s entirely possible that Nike could have achieved its success with .SWOOSH without its acquisition of RTFKT, however, one could reasonably argue that a significant percentage of this success can be attributed to the valuable lessons that the company has obtained through its acquisition of RTFKT.

Does this validate its acquisition of RTFKT?

Likely not, however, it does demonstrate that even the biggest brands are required to take risks to succeed in space.

Fortunately for Nike with a $148 billion market cap ~ they have more than enough financial resources to make such strategic gambles.