3yrs later… Nike’s NFT patent yields $180m in revenue
3 years ago we reported on Nike's NFT patent covering NFT-based footwear that described a system for minting and exchanging digital assets in the form of digital shoes that are linked to physical shoes in the real world. This milestone marked a new era in the commercialization of NFTs with Nike at the forefront.
In this article we will report on:
- Nike’s Acquisition of RTFKT to focus NFT strategy
- What a digital wearable is and how they work with NFTs
- How Nike NFT holders can interact with virtual worlds
- How Nike is rewarding loyalty and creating community with NFTs
- Our speculations for the future
December 2021 Nike acquires RTFKT (pronounced ‘artifact’) to focus NFT strategy
The acquisition allowed Nike to get a running start by partnering with established and respected creators in the NFT space. RTFKT had previous experience working with FaZe Clan on the WAX Blockchain in 2019 to sell NFT digital shoes that could later be redeemable for a pair of physical shoes.
RTFKT found success on the Ethereum Blockchain as well, selling out 20,000 NFTs days before the Nike acquisition. This NFT project of “next-gen Avatars,” by RTFKT and artist Takashi Murakami, is known as CLONE X.
Clone X NFTs holders gain access to:
- Limited edition physical merchandise drops
- Virtual and in-person events
- Commercialize their NFTs — Personal Brand Building, and Partnerships.
- Accessories — in the form of NFT digital wearables
Clone X’s “next-gen NFT Avatars” serve as unique representations of individuals in digital worlds, allowing holders to display NFT accessories on their Clone X Avatars across virtual worlds and in AR with real-time filters.
The RTFKT founders expressed their admiration for Nike as a brand. They noted that Nike is the only brand that shares their passion for innovation, creativity, and community.
“WE GOT ACQUIRED BY NIKE to fuel the digital future! 🚀 Feels like a dream, we started RTFKT inspired by Nike 2 year ago. Today we merge forces to take the Metaverse to a new frontier” — Steven Vasilev Co-Founder RTKFT
The acquisition of RTFKT by Nike represents a fusing of two important areas of interest:
- Nike’s innovative sneaker designs
- RTFKT’s vision to bring together the digital and physical realms in new and innovative ways.
NFTs and Digital Wearables
A digital wearable is a virtual item of clothing or accessory that can be worn by a digital avatar in a virtual world or online game. We see this often in popular games like Fortnite and Call of Duty.
Nike's 2019 patent protects the technology needed for holders to collect, trade, and sell digital accessories or wearables as NFTs.
By linking the NFT to the digital wearable, using the technology outlined in 2019, the owner of the NFT can prove that they own the virtual item and can use it in a variety of ways:
NFT wearables have utility that allow holders to
- display it on their online avatar
- use it to unlock in-game boosts
- upgrade or evolve the NFT
- trade with other players
- sell items collected or earned in-game on the open market.
NFTs also allow for the creation of limited edition digital wearables, giving them scarcity and potentially increasing their value. NFTs can be used to surprise and delight holders and reward brand loyalty.
Nike NFTs and the Metaverse
Virtual worlds provide brands with an immersive extension of their existing social channels, allowing fans to interact with brands and connect with products in new ways.
Doritos has recently partnered with RTFKT to create an experience in Decentraland, a 3-D virtual world, or metaverse, that is user-owned and Ethereum-based. During this 3-day event, $25,000 in giveaways can be earned by players. Limited edition NFTs can be earned in online activations during the event.
Nike NFTs turn Audience into Community
Nike’s NFT owners can now connect, interact and engage with one another using blockchain technology to identify and verify community members. NFTs have the power to bring like-minded individuals together under a common interest.
3 Key features of Nike NFTs that create Community from Audience
- NFTs as a Gateway to Community Membership: NFTs serve as access points to communities and provide Brands with a way to turn consumers into insiders. Brands can use NFTs to give their audience exclusive access to art, events, merchandise, and more. Ownership of a Nike NFT grants the holder exclusive access to materials and groups, adding value and rallying the audience to become part of the exclusive community.
- NFTs as Gamification Tools: Nike NFTs can be used as tools and currency to gamify the customer experience and encourage participation. Nike can use NFTs as a reward system, incentivizing customers to engage and interact with the brand in unique, fun, and engaging ways.
- NFTs as a Medium for Token-Enabled Experiences: Brands can use NFTs to populate virtual worlds, create interactive experiences, and even power entire ecosystems. The use of NFTs in these experiences adds a layer of ownership and exclusivity, making the experience even more valuable and desirable to the audience. NFTs provide a new way for brands to connect with their audience, creating a sense of community and shared interests in both virtual and real-life settings.
Nike is using .SWOOSH to further build out their community, engaging with creators and focusing on access to collect, trade, and unlock limited edition drops and community events.
“We are shaping a marketplace of the future with an accessible platform…In this new space, the .SWOOSH community and Nike can create, share, and benefit together.” — Ron Faris, VP of Nike Virtual Studios
Nike’s use of NFTs has been a major success and has set the bar for others to follow. The company’s innovative strategy has opened up new monetization opportunities and provided an exciting experience for customers to interact with virtual and physical assets.
Review of Nike’s NFT Timeline:
- December 2019: Nike issues a patent for CryptoKicks
- December 5th 2021: RTFKT launches CloneX NFT
- December 13 2021: Nike acquires established NFT builders RTFKT
- April 2022: CryptoKicks NFT auction on Opensea
- November 2022: .SWOOSH launches, building community with NFTs
- February 2023: Doritos partners with RTFKT to reward with NFTs
With the rise of NFTs in commerce, it will be exciting to see what new innovations emerge from Nike in the years to come.
With the success of CloneX NFT and the CryptoKicks patent, Nike has already set the standard for how footwear and fashion brands can be integrated into virtual worlds. This may open up new opportunities for collaboration with video game publishers and metaverse companies.
By blurring the line between physical and digital, creating evolving digital collectibles, and leveraging virtual shoes in the gaming world, Nike has created a new level of value and excitement for collectors.
Three years from now I expect to report on how Nike carved a path for success that other brands followed, partnering with established creators in the space and offering utility in new and exciting ways.
Quotes From Nike Co-Founder Phil Knight
The use of NFTs by Nike aligns with its brand values of innovation and creativity and demonstrates its willingness to experiment with new technology to offer unique experiences to customers. These quotes from Nike Co-Founder Phil Knight might explain why Nike has and continues to be a trendsetting Brand:
“When you see only problems, you’re not seeing clearly.”
“You cannot travel the path until you have become the path yourself.”
“We were trying to create a brand, I said, but also a culture!”
“Instead of cherishing how far we’d come, I saw only how far we had to go.”
All three Authors will be speaking at NFT.NYC on April 12th 2023:
1. Tim Livingston
Born in Western New York, Tim has been an NFT Artist since leaving his teaching job in 2021. Shortly after going full time NFT, Tim volunteered at NFT.NYC 2021 and has been working full time with the event company since April 2022. Tim is all in on what NFTs can do to build relationships, and scale communities, brands, and personalities.
2. Noah Eisenbruch
Born and raised in NYC, Noah continues to explore the vast world of emerging technologies. Currently a Product Manager at NFT.Kred, Noah previously co-founded Augmented Review, a platform that allowed industrial design teams to view, interact with, share, and collect feedback on 3D designs in augmented reality.
3. Jodee Rich
Born in NYC, lived in Australia, New Guinea and Paris
Jodee and his team produce the largest NFT only (non-fungible token) conference in North America — www.NFT.NYC
He is the CEO of PeopleBrowsr and NFT.Kred — a platform for creating and sharing NFTs.
He is a frequent speaker about disruptive change and unlocking human potential, at social media, digital marketing and blockchain conferences.