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Nike NFTs: Dot Swoosh is in the Building
Nike continue their Web3 conquest with the first drop on their NFT platform .Swoosh
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The Web3 market is very strange right now.
On the one hand, retail is as the kids say ‘rekt’ and it feels very much like the market did in 2019.
On the other hand, the big brands are still here - building.
Nike are one of those. They have been doing ‘stuff’ in Web3 for a while now, and the retail market environment has not dampened their appetite one bit.
🔌 PS. If you’re hiring for any interesting roles in sports, entertainment, gaming or media that touch Web3 - please email me back at this email address! I’m creating something cool I’d love you to be a part of :)
Nike NFTs: Dot Swoosh is in the Building
The Sporting Crypto Newsletter is supported by The HBAR Foundation.
One of the most highly anticipated brand drops (ever) began last week.
Nike’s Web3 platform .Swoosh began rolling out its inaugural collection; OF1.
In this newsletter I’m going to cover:
👟1) Nike’s NFT Story so far
🚀2) Launching .Swoosh
📦3) Our Force 1
👓4) Test and Learn
👟1) Nike’s NFT Story so far
Nike’s love affair with NFTs spans ~18 months now, and the most notable pillar of the start of this story is their acquisition of RTFKT in late 2021. There were some rumours this acquisition was worth up to $1bn but there are no exact numbers.
The why can’t be answered simply, but there are a plethora of reasons it made lots of sense at the time, and still does to this day.
Nike do not acquire companies often, though. In fact, since taking over Converse in 2003 - Nike has only acquired 4 companies including RTFKT. So it’s safe to say they’re not a business that acquires companies without a strong reason to do so.
At the time of Nike’s RTFKT acquisition - Facebook had just shifted to ‘Meta’ and Adidas entered the metaverse with their first NFT drop. Now, a cynic might say Nike saw this and simply didn’t want to be left behind — but the diligence and patience that they have built with since says otherwise.
Nike saw that crypto had gone from being this financially speculative, nerdy digital gold ‘thing’ to a cultural thing.
The explosion of NFTs in the two years prior to their RTFKT acquisition showed that crypto had crossed that ‘cultural chasm’ and was more ready for the mainstream. Nike and others are kings of culture. It’s a fit that makes more sense the more you think about it.
Nike saw the trees from the forest in an incredibly hyped, frothy market that culminated in a big lull starting in March 2022.
And at this time, in April 2022 - Nike actually launched .Swoosh — the home for Nike’s virtual collections.
It was stealth dropped and there wasn’t anything tangible users could do, but in fact, this was to be Nike’s ‘home’ of digital goods.
🚀2) Launching .Swoosh
.SWOOSH is the home for Nike’s virtual creations.
To gain traction, Nike gave away over 350,000 Nike IDs, which essentially acted as a passport for those interested in Nike’s digital creations.
An NFT in itself, but also a pass to everything that is to come.
This represented another evolution in Nike’s business model, essentially future-proofing them by creating an aggregated platform that houses anything digital. Brand side Web3 has a ‘lack of aggregation’ problem. Most brands will do a bunch of partnerships but not have a focal point they interact with users on all things Web. Nike building this first and foremost from the bottom up is something I’m a fan of.
The platform is for people to buy, show off and trade phygital and virtual products; unlock access to events and products; and co-create products
Nike have basically created an NFT marketplace without the technical complexity or jargon. Without the frustrations and confusion, a digital wallet brings. All to onboard a digitally native generation of sneakerheads.
If we look at the site step by step, we can break down exactly what Nike are building with .Swoosh and why.
Three key bits of information from this simple paragraph:
Community experience: A lot of brand NFTs are poor because they don’t harness the power of their community. And even those that do, don’t tend to create sustainable business models beyond NFTs.
Co-Create: Your customers co-creating with your designers is the ultimate feedback loop.
The future of Nike: Nike are pretty headstrong about Web3 being a big part of their future from a business perspective. And when you consider what covid did to supply chains and manufacturing costs, compared to the money the likes of Fortnite are making from digital skins, it makes a lot of sense.
The entire reason fashion is an important cultural thing for humans is that we like to style ourselves and show off. That is now breaching the digital domain in a big way, and the last 5 years are evidence of that.
The most interesting takeaway for me here is:
Video games: This is super interesting. I wonder if Nike will partner with any Web3 native games, or if this is a distant stretch goal that is being used short term in order to market to GenZ…
Immersive experiences: I’m fairly sure this indicates some sort of AR play. They have the in-house experience with RTKFT and it makes a lot of sense.
By being an active or early participant in this community, Nike are saying you:
Are going to get special access to products, experiences and first dibs on future drops
Might get some token-gated content and experiences that you can only consume on their platform provided you hold specific digital items
Now we have the context, let’s explore their maiden drop - Our Force 1 (OF1)
📦3) Our Force 1
What’s in the box?
Nike dropped the Air Force 1 sneaker in 1982…and over 30 years on, they dropped this video on social.
The concept is simple - Nike are selling ~106,000 of these boxes for the price of $19.82 each. This could and should see Nike generate over $2.1m in revenue when the public sale happens later this week.
Every box will open at a later date to reveal a digital shoe with a unique generative design.
How do you get one of these?
To increase that selective and exclusive feel, Nike airdropped an OF1 poster to a select number of .Swoosh ID holders.
Not only was this an ‘art NFT’, but it’s also acted as a ‘mint pass’ for those looking to buy an Our Force 1 box.
Of the ~84k posters that were airdropped, ~22,500 were redeemed in exchange for the early access OF1 boxes. Holders buy one of two of those boxes — “Classic Remix or “New Wave” — each costing $19.82. Each box came with a 3D file that the owner could potentially use to export the digital sneaker
The rest of the ~75,000 boxes will be sold via general sale on the 24th of May.
👓4) Test and Learn
There were always going to be teething pains for Nike.
We have to remember that there’s no real playbook to what they’re doing, so honestly, I think they’ve done really well so far.
There were, understandably, a lot of questions for Nike as recently as late April.
What will the fees on your marketplace look like?
What about physical sneakers?
Will we have access to our digital items in other marketplaces?
Again, all pertinent questions, and it shows that even a business of Nike’s size and resources doesn’t have every base covered.
They’re learning in public, and whilst the audience is small and the feedback loop is tight — I don’t think it’s a terrible thing.
I’m hoping Sarah doesn’t mind me stealing her screenshot from her newsletter; SW3
Looking at the more mainstream, broader audience — there’s even more confusion.
It shows that what Nike are doing is interesting and really well thought out, but still quite niche.
This NFT thing still hasn’t clicked for your average consumer. Which is fine. It’s the price you pay for being at the bleeding edge. You can be swimming against the tide while skating to where the puck is going.
My personal favourite: “but it’s not real” — really shows just how far brands have to go if they want to be serious about Web3 at scale.
Nike also had to push back their general access sale to the rest of their .Swoosh ID holders to the 24th of May.
Nike pointed to the excess demand… and that their tech wasn’t quite ready for 350k+ .Swoosh members are expected to try and snag a pair of digital kicks.
Nike don’t mention crypto, Web3 or NFTs anywhere in their comms.
It just happens to be the technology that allows them to facilitate the ownership of digital items they’re creating.
In a world where Nike’s margins have been gobbled up since covid due to supply chain issues, their push for digital has made a world of sense.
Some quick stats on the sneakerhead market that make this make even more sense:
$76B in revenue in 2023 at a 5% growth rate
The avg US person spends $10 per yr on sneakers
In 2020, the global sneaker resale market was valued at around $6 billion, and it is projected to reach $30 billion by 2030 (it had 13.5M traders in 2021)
4. Young customer base, with 70% of sneakerheads being under 35
The sneakerhead market and the NFT market have a lot of similarities. But the latter needs to stop being the obnoxious, know-it-all teen. It needs adults in the room who can build sustainable businesses.
.Swoosh by Nike is one of those.
Nike have executed at a really high level so far and they haven’t rushed, they’ve been patient.
The conclusion of their drop will probably be a success this week, and I for one can’t wait to see what they build in the future.
💡Sporting Crypto Spotlight
Brought to you by SEG3: Returning to London June 28/29
SEG3 is the meeting place for sports, entertainment and gaming organisations to connect with the global leaders in Web3 and experience the latest products, platforms and projects that are changing the game.
Today’s newsletter was all about Nike’s dot.swoosh project, in which Nike focus on combining physical and digital experiences, as well as utilising web3 to build engaged digital communities. SEG3 has brought together innovators from Salesforce, Sorare, Yield Guild Games, Accenture and more who will share their insights and experiences into both of these important topics on June 28 & 29 at the Emirates Stadium (the best stadium) in London.
I’ll also be speaking and you can get a 10% discount on tickets if you’re a Sporting Crypto subscriber via the button below!
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