Nike Buys Virtual Fashion Startup RTFKT

The sportswear giant Nike has made a massive leap into the future by investing in the metaverse.

They recently announced that they will acquire RTFKT. A virtual fashion startup. The virtual platform are famous for creating virtual sneakers. tHIS is a major move for the global sportswear giant.

Details of the deal have not been disclosed but Nike's decision to invest in virtual fashion highlights a massive shift that is about to take place in the creative realm.

RTFKT came into existence in January 2020 and they are known as the pioneers in the field of virtual fashion. They have gained a cult following by producing limited runs to the market. They have also joined forces with major artists such as Takashi Murakami and Jeff Staple to name a few.

Since its launch RTFKT has seen massive growth. The estimated revenue for May 2021 was approximately $4.5 million. In 2020, their revenue stood at about $600,000. They also received $8 million in funding in 2021, the future looks bright for RTFKT.

Nike will play a major part in managing the evolution of the brand.

Chief executive of Nike John Donahoe said:

"Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike's digital footprint and capabilities."

There has been no mention of future plans however, industry players believe that Nike plans to push RTFKT as a seperate, standalone brand that runs within Nike's ecosystem.

For some context, Nike acquired Converse in 2003 for more than $300 million however, Converse runs as a standalone brand, it doesn't feature Nike logos. This might be the case for RTFKT, we just have to wait and see what the future holds for the virtual fashion brand.

This is not Nike's first move into the digital realm however, in 2019, it collaborated with Roblox to produce various digitial characters and they also introduced Jordan sneakers to the Fortnite game.

At the end of 2019, Nike inked a patent that gave them permission to connect a digital asset to real-life sneakers by utilizing blockchain tech.

In early 2021, Nike applied for trademarks for virtual assets and has also posted job listings for virtual designers. There was another collaborative deal with Fortnite focusing on the Jordan brand and a huge new Roblox collaboration called Nikeland.

Although Nike has recently shown a significant interest in digital assets, there is still a long way to go. The majority of their revenue in 2021 came from physical sneaker purchases. With an estimated annual revenue of $44 billion.

Recently Matt Powell from the sports analyst company NPD group said:

"I do not see a commercial opportunity for the metaverse. Owning virtual shoes will only appeal to a tiny sliver of the market."

Despite Powell's analysis of metaverses's potential as a viable investment opportunity, about 50% of US retail consumers would like to invest in digital goods. In November 2021, Morgan Stanley released figures relating to the luxury NFT market. The report states that the market could explode to approximately $22 billion in the next ten years.

One area that could see greater gains is the gaming skins industry.

Recently, Adidas have joined the digital fold and released their own plans for digital expansion. They announced a collaboration with cryptocurrency market giant Coinbase. They also acquired a piece of the virtual universe The Sandbox and announced a creative partnership with the NFT outfit Bored Ape Yacht Club and Punks Comic.

Nike's investment in RTFKT will certainly not produce immediate financial gains however, it is a forward-thinking business move as the digital world cannot be ignored at this point.