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Sportswear giant Nike has acquired two-year-old digital fashion startup Rtfkt for an undisclosed sum. With the purchase, Nike is betting that at least part of the future of retail lies in the metaverse.
Rtfkt has raised $9.5 million to build the “Supreme of digital fashion”. In a statement announcing the deal, Nike called out the platform’s “next-generation collectables that merge culture and gaming”. Nike, Inc. president and CEO John Donahoe said, “This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture,” with plans to grow Rtfkt while expanding Nike’s digital footprint. A representative for Nike declined to comment further.
Rtfkt co-founders Benoit Pagotto, Chris Le and Steven Vasilev, have made waves as digital fashion hypebeasts, partnering with artists and tech platforms on sellout NFT projects and testing its real-time AR fashion on the streets of Paris. In October 2020, it sold digital sneakers for the equivalent $90,000; this April, it sold out of 600 NFTs in seven minutes for more than $3 million. A recent avatar partnership with artist Takashi Murakami has garnered nearly $65 million in transaction volume. In May, Rtfkt raised $8 million led by Andreessen Horowitz, valuing the company at $33.3 million.
“Since we started, we always looked up to Nike, with the goal to create the Nike born on the metaverse,” Pagotto wrote on Twitter. “Two years later, a new chapter begins.” In a statement, he added that this presented an opportunity to benefit from Nike’s foundational strength and expertise to build communities.
Fashion and retail’s interest in digital fashion and the metaverse has swelled this year as virtual worlds became more mainstream, heightened by the pandemic. Nike has recently begun investing in building up its digital presence in the metaverse: it recently opened Nikeland in metaverse platform Roblox, where people can try on a range of high-profile Nike products and play games. Last month, Nike filed seven metaverse-related trademark applications, indicating an intent to make and sell virtual branded sneakers and apparel. It also posted roles for virtual material design. Earlier this year, it appointed Andrew Schwartz as director of metaverse engineering.
Morgan Stanley says metaverse gaming and NFTs will constitute 10 per cent of the luxury goods market by 2030 — a €50 billion revenue opportunity. Facebook, Inc., was so convinced at the opportunity, it renamed to Meta. And Nike rival Adidas has been dripping leaks throughout the month about an imminent metaverse launch and partnership with cult profile picture NFT creator Bored Apes. There’s still overall scepticism from industry observers that the metaverse is, at least for now, more than a marketing move. Matt Powell, senior industry advisor for sports at research firm NPD Group, says he doesn’t see a major commercial opportunity for the metaverse. “The interest in the metaverse appeals to a very small portion of the market,” he said in light of the news.
Nike has made several strategic acquisitions in recent years that reflect investments in tech. This year, it acquired data integration platform Datalogue; previously, it had acquired data science company Celect and data analytics company Zodiac. And in 2018, it acquired Invertex, a computer vision firm. Rtfkt could give Nike a leg up in the next era of the web.
“Nike has led in culturally impactful videos that took branding and their brand to new heights in the web 1.0 and 2.0 eras. This acquisition signals their desire to continue to be leaders in the web 3.0 era,” says Cathy Hackl, chief metaverse officer of the Futures Intelligence Group, a metaverse and web 3.0 agency, which recently worked with Clinique on its inaugural NFT project. “This acquisition shows Nike jumping in not only with both sneaker-clad feet first, but also shows that the company understands where culture is heading, how community is being built and shows they are looking to embrace and encourage evolution in the metaverse.”
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