Paper 32: How Nike Is Killing Their NFT Competition
The lowdown on how brands have entered the metaverse
Contents
Why Nike Is Killing Their NFT Competition
This Week in NFT World
Thought of the Week
Meme of the Week
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1. Why Nike Is Killing Their NFT Competition
Nike have generated >$150m in NFT revenue more than the next most successful brand entering the metaverse.
Dashboard capturing NFT revenue by @nlevine19
Here you can see Nike’s numbers broken down by the 14 individual NFT collections which add up to their total revenue.
An important note to preface this information is that Nike revenue includes CloneX sales and royalties pre-acquisition of RTFKT (the web3 native fashion/lifestyle company who Nike purchased in late 2021).
So what are some of the factors that Nike can point towards for their success?
First movers - RTFKT had been producing NFTs engrained in web3 culture before anyone on the brand list above. They started in early 2020 to make virtual sneakers and digital artefacts for the metaverse.
RTFKT is cool - By acquiring RTFKT, Nike bought in directly to a company which understood and was already successful at creating and capitalising on web3 culture. This means Nike had direct access to cryptocapital, as opposed to other brands who may have to educate their non-crypto-native customers.
More collections = more sales - RTFKT has dropped 14 different collections - all of which secured secondary sales revenue, and some of which had a primary sale too. Most other brands are only on their 1st or 2nd collection.
Across culture - RTFKT has not limited itself to digital sneakers: it has also created avatars - CloneX - and digital spaces - SpacePods - in which NFT holders can display their digital assets.
CloneX - 20,000 Digital Avatars
Build anticipation without revealing - When Nike dropped the MNLTH, it tooks weeks and weeks for it to reveal (show the real NFT inside of it). This built up a huge amount of anticipation and curiosity regarding what was inside that black box (which in turn drove a huge amount of secondary sales). They even involved the community in the process of the reveal by hosting community tasks which needed to be completed to make the reveal happen.
Increase utility at a later date - the SpacePods are going to be burnable so you can upgrade your digital living space for a better/cooler one (if you trade in 2 you get a slightly better space, or trade in 3 for an even better one - though there are no certain details yet). When people find out this sort of information already-existing products become more desirable, thus driving more secondary sales revenue.
My @RTFKTstudios Space Appartement! I bought a music NFT for vibes in my space pod 😎🎶 oncyber.io/jaemz #spacepod #rtfkt #clonexRewarding holders - CloneX holders were given (for free!) SpacePods and MNLTHs. This is thousands of dollars of value given away for free to loyal holders. This encourages brand loyalty as people hope to benefit from being in such an ecosystem.
Web 3 Infrastructure built out - RTFKT discord was already set up to facilitate 24/7, 365 communications with the community. This compares with Adidas’ entry into the space, where they needed to share the Pixel Vault discord for a period of time until they were ready to establish their own.
2021 bull market - 2021 was a bull market and speculation was high; market sentiment, in both crypto and normal markets, is much bleaker in 2022. The macro situation is bad, and NFT hype has died down and there is less wild speculation compared with last year. As such, the landscape has shifted and brands will not find it as easy to access crypto-capital.
These are just my views on why Nike/RTFKT have had such a headstart on their competition until now.
I am looking forward to see how brands choose to navigate a more experienced and critical metaverse in the rest of 2022.
2. This Week in NFT World
Pudgy Penguin 400 ETH sale - The Pudgy Penguins had a real revival last week with this unique, “the only left-facing” penguin selling for $630,000.
NFT Twitter Account Hackers Accused - Since May 2022 many popular Twitter accounts have been hacked. In this thread ZachXBT alleges that Cameron Redman, HZ & Popbob were those involved with the hacks to the tune of $1M. It is a wild read - but please note these are allegations at this stage.
PROOF Grails II - Every PROOF Collective NFT holder was able to mint a “Grail”, an NFT which they could preview before buying without knowing for sure who the artist was. The highest sale on the secondary market was Snowfro’s “The Bookends” which sold for 25ETH (approximately $40,000) after it had been bought on primary for 0.05 ETH (approx. $70) a couple of days prior.
Snowfro, Bookends 2022
NFT Market Recovers With Fewer WETH offers accepted - WETH offers at one point in the last week were comprising more than 50% of sales on most top collections. This typically suggests collectors are panicking and selling for cash. The fact WETH offers have declined suggests the NFT market has calmed down (a touch).
More than $100M worth of NFTs stolen since 2021 - It’s been estimated that scammers have stolen more than $100M worth of NFTs since 2021, with the most tokens stolen in July 2022 (4,647 assets) and the most value stolen in May 2022 ($23.9M)
3. Thought of the Week
Don’t sue people for defamation unless you have thought about it very carefully.
Bitboy, a prominent crypto-youtuber, decided to sue Atozy for defamation after he produced content in essence calling Bitboy a scammer.
Atozy then received huge moral and financial support (Cobie sent him $100k) to deal with the situation.
After the public appeared to turn against Bitboy, the case was dropped.
Key message: it is not wise to try to sue people (i) as a first course of action without reaching out to the party first; (ii) if you don’t believe strongly in your case; and/or (iii) if you haven’t considered the PR.
If you want information to go away, it might not be wise to litigate it which is a huge opportunity to dive into it more.
I think Depp and Heard won one case each (one in the UK and the other in the US) but they both came across as maniacs and losers in the end.
4. Meme of the Week
Not a meme as such but a pretty good take of Zuck getting grilled by Rogan. @beeple does it again.
Have a great week,
B
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Disclaimer: The content covered in this newsletter is not to be considered as investment advice. It is for informational and educational purposes only.
I hold some of the NFTs mentioned in these newsletters.