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Nike has become a leader in fashion NFTs, largely through its purchase of digital design studio Rtfkt last year. Now, the sports giant is developing a standalone Web3 strategy designed to appeal to traditional brand fans rather than the crypto-literate early adopters.
Today, Nike is announcing Dot Swoosh, a new Web3 platform and ecosystem that lives at the domain Swoosh.nike. The project sits under Nike Virtual Studios, which is led by VP Ron Faris, the former head of Nike’s Snkrs app. Dot Swoosh will be the home of Nike’s virtual creations, Faris says, and it launches this Friday. (People can register starting today, and access begins through an access code.) A first digital collection will drop in January.
The platform will be a place for people to buy, show off and trade phygital and virtual products; unlock access to events and products; and co-create products, says Faris, whose role is to lead Nike’s blockchain, Web3 and metaverse strategies. “When you think of a virtual product like a virtual shoe, it’s not just a shoe; it’s the product and the experience, service or utility baked in.” For example, a virtual shoe might enable holders to preorder a physical counterpart, enable token-gated chats with shoe designers or unlock wearability in a favourite game. “We don't see that virtual product as the end of the purchase journey; it is the beginning of the journey,” Faris says.
Rtfkt’s team and strategy heavily informed Nike Virtual Studios, Faris says, but the Dot Swoosh project is Nike-only. “They pioneered experiences in Web3 and wrote the blueprint for new ways to build digital experiences that connect the community in ways like never before. As Nike looks to see how sport is evolving, it's clear to us that we see new ways to reimagine community, co-creation and loyalty.”
Thanks to NFT sales from Rtfkt, and with it the Web3-native company’s pre-acquisition NFT collections, Nike has already made at least $185.3 million in revenue on Web3 products, and is leading compared to competitors Adidas, which has earned $11 million, and Puma, an estimated $1.3 million. Rtfkt’s CloneX NFT avatar collection accounted for about half of Nike’s total revenue from NFT sales, demonstrating the importance of the acquisition to Nike’s Web3 strategy thus far. Now, with Dot Swoosh, Nike wants to broaden the net of who its Web3 strategy is for, going beyond Rtfkt’s endemic customer base and tapping into its own, who may be less experienced in the world of Web3. The goal is to educate and onboard the Nike community, rather than the Web3 natives, to “level the playing field”, Faris says.
To achieve this, Nike Virtual Studios will host events in six cities — Atlanta, Los Angeles, Charlotte, Tallahassee, Louisville and New York — in the coming months, to distribute access codes, with a focus specifically on inclusion. These cities are not obvious tech capitals, but rather places that might not always get early access to new innovations, Faris says.
It will be at least a month until there’s something to buy. “We're not going to sell you anything right away. We're going to move into taking our time to educate.” The challenge, he adds, is to navigate how to respect the principles of Web3 without alienating a large audience or becoming inaccessible.
The Dot Swoosh project has been underway for some time. In May, Nike reportedly bought ENS domain “dotswoosh.eth” for 19.72 ETH (approximately $38,000 at the time). It also teased the Dot Swoosh microsite through an animation of the Nike swoosh. At the time, Nike chief design officer John Hoke told Vogue Business that, “for us, the metaverse is a wide open sphere to explore. What’s the next generation thinking about in terms of what is avant-garde? How do I want to dress myself or my avatar? How do I still cut through and have a sense of style?”
But, in the Web3 environment, a month can seem like an eternity, and trends change quickly. With the value of cryptocurrencies in a downturn, the promise of shared revenues might not be as lucrative as they once were. This might present difficulties to a slow-and-steady pace. Faris says that the strategy will be dictated by learning what resonates.
A key component will be co-creation, including the ability for people to weigh in on design elements and sell their own co-created products, including earning royalties on virtual goods. Those who win community challenges will be given the chance to co-create and earn a royalty for every virtual product they helped co-create. Through Rtfkt, Nike also raked in $1.29 billion in secondary royalties — so Nike giving co-creators royalties on virtual goods is no small commitment.
While the exact mechanics are still being developed, features might include voting on shoelaces or colours. People will be able to create their own destination under the .nike domain (such as name.nike), to display and potentially sell their goods, he says. “We want to redefine what it means to be a creator, and we believe the future of sport is creative and inclusive.” This is likely to start with Nike-sponsored athletes and celebrities, he notes.
The Web3 community, while piquing mainstream curiosity, is still comparatively niche in terms of actual users, so the reward for truly onboarding a larger audience might be worth the risk. “Now we're at the point where it's time to really broaden things, to make them more accessible to the world,” Faris says, noting that Nike is still in the test-and-learn stage for Web3. “And, if we want to do it thoughtfully and carefully, especially in this climate; we want to make sure that we start with principles that govern our work. The principles are not obsessing about being first. It's really more about building a lasting plan.”
Clarification: Article has been updated to clarify figures for Rtfkt and Nike's CloneX NFT sales. 15 November, 2022
Additional reporting by Madeleine Schulz.
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