Stepping into the Metaverse
You can dip your toe into the metaverse, or you can leap in headfirst. In December 2021 Nike chose the latter, purchasing RTFKT for an undisclosed sum and marking the first acquisition of an NFT studio by a global brand - bringing both legitimacy and an incredible groundswell of interest to the metaverse space. Founded in 2020 by Benoit Pagotto, RTFKT is known as a web3 pioneer, adept at redefining the boundaries of physical and digital value. Prior to Nike’s acquisition, they rose to prominence for their hugely successful CryptoPunk, Atari, and their FEWOCiOUS NFT x physical crossover sneakers.
Nike wasn’t a total stranger to the metaverse, announcing Nikeland, its foray on Roblox in November 2021, but the RTFKT acquisition set the stage for a few massive market shifts. First, as a high profile investment in the metaverse, it helped the tide move from uncertainty to boldness as brands have the greenlight (and roadmap) to follow in its footsteps. Second, the acquisition underscores a massive hiring surge as web2 brands compete to bring in the best, brightest and most up-to-date in the 24/7 metaverse market.
In February 2022, Nike x RTFKT airdropped their first official NFT “MNLTH” to existing Clone X holders, alongside PodX virtual spaces. The brand messaging following the drop has been slow, steady, and mysterious, involving a quest and a momentous reveal date. This is an example of a community-first campaign executed to perfection — stoking both immediate hype and long term engagement. The MNLTH NFT has the potential to establish a template for a defining feature of web2.5 — that of evolving NFT utility.
With a web3-native studio in the hands of a global brand, we see incredible possibilities in shifting the value of physical objects into a digital realm. Remember the Nike ID trend in the early 2000’s? Now the capacity to create the blueprint for cultural collectibles truly exists, blending digital and physical merchandise, customization and experiences into a spinning flywheel of brand touchpoints — an ecosystem that covers all facets of identity. Nike touches sports, music, entertainment and more, and with in-house web3 technologists ready to build out their digital ecosystem, we can’t wait to see what comes next in this nascent space.
Web2.5 Trends in Fashion
Among major consumer industries, traditional fashion has been more hesitant to dive into the web3 space. Though we’re not quite at a clear market fit for traditional fashion and web3, we are seeing a few trends begin to emerge:
The most popular area for NFT activations among traditional fashion brands have been in the still-nascent and often-ambiguous metaverse. We’re seeing particular adoption through leading virtual land ecosystems like Decentraland (Metaverse Fashion Week 2022) and Sandbox (Gucci Vault). Though fashion brands may not be ready to go all-in creating, buying, or selling digital fashion, these limited-scope metaverse activations demonstrate that they recognize the opportunity of bringing fashion into the digital realm. The global fashion industry is worth an estimated $3T, and the gaming skin market is estimated at $50B. The crossover of the two ecosystems is just waiting to be filled.
Physical & Digital
Companies like Nike (through its acquisition of RTFKT), are exploring how to leverage the network effects of NFTs and web3 with physical goods. With may of these traditional web2 brands having already found so much success in their physical goods, figuring out how best to combine web3 with their physical lines holds immense potential.
RTFKT is the company behind the most successful physical/digital NFT activation to date, FEWOCiOUS sneakers. Though Nike may also have long term plans for NFT fashion entirely in the metaverse, it is more likely that they and other major fashion brands continue to build off the crossover of physical and digital in which a company like RTFKT found so much success.
Avatar and Creator Collaborations
The fashion world is no stranger to collaborations, and has found particular comfort in partnering with existing high-profile, high-value NFT projects as a form of brand signaling. Adidas has been the industry leader here, most recently announcing a partnership with BAYC and NFT thought leader and investor Gmoney in a first step towards a multifaceted metaverse activation.
Equally important is what we’re not seeing from fashion brands as they explore decentralized technology.
The 10,000 NFT drop has been the bread and butter of the last 18 months of the NFT space. We have not, to date, seen a notable drop of similar scale and variety from a major fashion brand. Part of that might be simply that the vast majority of these drops are PFPs, designed to be “avatar-able.” Items of fashion are not, by themselves, the most attractive avatars. As more innovative NFT token models and mechanisms arise, we’ll see a variety of solutions to this. Those could be front-ends that allow you to combine your avatar with your fashion pieces, similar to outfitting your character in a game. There could be more backend solutions that actually allow users to assemble two NFTs (avatar and fashion) into one single, outfitted NFT — and then disassemble when desired. Either way, as the virtual ability to outfit avatars becomes more possible, we’ll begin to see the world of gear, fashion, and attributes rise up around it as users seek unique individual identities.
In fact, not having a series of 10,000 NFT collections from fashion brands in the past 18 months in hindsight is likely a great thing for the industry. The fashion industry will be able to leapfrog what has become an inundated market of 1-dimensional collections, rife with scams, hype, and uncreative NFT activations. We’ll continue to see more nuanced and novel NFT mechanisms emerge, which will better suit what the fashion industry needs and wants.
On the other end of the spectrum from the 10,000 piece NFT template is the 1-of-1 market. This is not foreign to the fashion world, with iconic pieces of fashion created, worn, and distributed every day - later to appear in valuable primary and secondary markets. We have not, however, seen notable drops from any household fashion or luxury brand. Largely, 1-1 fashion as of yet has been pioneered and maintained by digitally-native and web3-native fashion shops like The Fabricant, Alterage, and DRESSX.