I was swept into NFT mania alongside countless others in 2021, and frankly, it remains a blast. I’m still on Twitter every day engaging with my favorite projects and searching for that next blue chip, and the communities and personalities encountered along the way make it all the more worth it. There have been many highs, and even more, should I say — frustrations. Having paper-handed a Mutant Ape and World of Women before their respective runs and watched the ship steadily sail on Doodles, Azuki, goblintown, and many others, I have my fair share of regrets. These are lessons for another day, however.
If you were to scroll through the top NFT projects on OpenSea by all-time volume sold, you might be shocked to see that the great majority of projects listed are new brands that were built from the ground up by steadfast leaders and community members in the space. This fact is not all-too surprising, however — despite slowly becoming more mainstream, there is still a bit of stigma surrounding NFTs and the so-called metaverse, and major corporations and existing mega brands are usually slower to act. They have shareholders to consider and reputations on the line, unlike the early NFT communities that are trailblazing their way into history.
However, I expect this trend to slowly change as we progress through 2022 and into next year. We are not without our lofty projections with respect to the size of the metaverse economy, and as more and more companies realize the potential and growth that is occurring in the space, their entrance is inevitable. In this piece, I will highlight a few corporations / established brands that are making an early entrance into the metaverse, as well as various strategies being used. You’re likely familiar with all of these names, but as to their role and activities in the space, maybe less so. All of our bags are ultimately tied to the broader development of the industry, and for this reason, it’s important to keep track of the entrance of large corporations and brands, with an eye towards predicting what’s to come.
What is the Metaverse and How Are Established Brands Getting Involved?
For purposes of this article, I will use the term “metaverse” as an all-encompassing term to describe virtual worlds that parallel our real-life lives (where people can game, work, shop and/or communicate). What generally distinguishes the metaverse from digital worlds that already exist is the incorporation of blockchain technology and digital ownership (i.e., NFTs) into such worlds. See, for example, Decentraland, where players can buy and sell land, estates, avatar wearables, and countless other digital goods. Metaverses exist as parallel worlds to our own and command their own value, with the users building and dictating their future (not centralized authorities).
The metaverse (as well as the technology backing it) is still very nascent and is changing rapidly almost by the day. It can therefore be daunting for companies that are generally set in their offerings to make a leap into the fray. For those bold enough, it is even more unclear how they should make that leap.
To date, companies have generally chosen to enter the space by participating in existing metaverses. A few have also tested the waters with acquisitions and NFT launches. Each of these strategies and certain prominent companies getting involved will be surveyed here. As companies continue to learn exactly what the metaverse can do for their brands or what their brands can do in the metaverse, I expect these strategies to evolve accordingly.
Acquisitions
Acquisitions require significant diligence and capital, as well as the integration of a new company into an existing organization which may be very different culturally. Most companies are also still unclear on exactly how their brands and business lines can be leveraged profitably within the metaverse. For these reasons, it is not surprising that we have yet to see many acquisitions in the NFT or similar startup space. It is still very much a testing period for those involved and looking in. This status quo changed when Nike acquired RTFKT in December 2021 for an undisclosed amount.
The RTFKT acquisition remains the most significant acquisition of an NFT startup by a traditional brand and will accelerate Nike’s digital transformation and entrance into the metaverse.
“We’re acquiring a very talented team of creators with an authentic and connected brand. 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.” — John Donahoe, CEO at Nike
So what is RTFKT? At its most basic it is a digital fashion company with a focus on virtual sneakers. RTFKT’s items exist on the blockchain as NFTs and are planned for use in gaming and augmented reality, among other things. RTFKT also has a digital avatar collection called CloneX, which is a collaboration with artist Takashi Murakami. These avatars can be customized with unique wearables and used across the broader RTFKT metaverse.
With this acquisition it is likely that Nike will direct all things metaverse through RTFKT, at least for the time being. The potential is also great. Nike sponsors thousands of athletes worldwide, nearly all of whom do not have a presence in the metaverse or their own NFT collection. Nike could launch RTFKT-branded wearables for many of these athletes in the future, or even move into esports wearables as a form of sponsorship. Although it is too early to determine whether the acquisition will be a success, for a footwear / apparel company looking to grow its digital presence in the evolving metaverse, it makes sense. The alternative is to build out such products in-house, which would likely be more costly and time consuming. We are still at the frontier with respect to the possibilities that are available for digital fashion and wearables, but as the industry continues to develop and gain both popularity and additional use cases, I expect other brands to follow suit.
Participation in Existing Metaverses
Another more common way that brands are entering the space is by taking part in existing metaverses. This approach is more marketing-focused, and better suited for companies still searching for what exactly the metaverse can offer their brands. Ideally, this participation provides a fresh approach for companies to connect with their audience and engage with a younger base.
See, for example, the brands that are starting to build on Roblox. Roblox is an expansive online gaming platform that allows users to program / build their own games as well as play games created by other users. To date, millions of games have been created and the platform boasts nearly 55 million daily active users. Players can also buy, sell, and create virtual items which can be used to decorate virtual characters that serve as avatars on the platform. Although Roblox did not launch in the Web3 era and for this reason generally lacks the decentralized components that define metaverses currently being built and ones that will likely be built in the future, it serves as a great example of what to expect from newer metaverses that have yet to fully launch.
Gucci is one prominent brand establishing a presence within Roblox. In 2021, the company launched a Gucci Garden space on the platform which served as a virtual counterpart to a real-world installation called the Gucci Garden Archetypes, which was an immersive multimedia experience in Florence, Italy that celebrated the brand’s 100th birthday. This virtual experience ran for two weeks and saw more than 20 million players visit the garden. Gucci just recently followed up on the success of the Gucci Garden with a more permanent space in Roblox called Gucci Town. This space features a central garden that links together various areas, including a space for mini-games, a cafe, and a virtual store where players can purchase virtual Gucci gear for their Roblox avatar.
Chipotle is another brand getting involved. The company launched two different experiences on the platform over the past year in an effort to expand its customer reach. For Halloween, in celebration of the 21st year of the “Boorito,” Chipotle opened a virtual restaurant. The first 30,000 Roblox users who visited the cashier in this virtual space over the course of a few days received a free burrito code for use on actual Chipotle orders (ultimately making $1 million in free burritos available). The company then later created a gaming experience on the platform which challenged players to roll burritos to earn Burrito Bucks (which can be exchanged for entrée codes).
“We’ve tapped into play-to-earn, an emerging engagement model in the metaverse, to launch our newest experience on Roblox that celebrates the iconic Chipotle burrito” — Chris Brandt, Chief Marketing Officer at Chipotle
The examples above are the tip of the iceberg not only for those beginning to build on Roblox, but also for those partnering with newer, decentralized metaverses such as The Sandbox and Decentraland (to name a few). As of January 2022, The Sandbox, one of the leading gaming metaverses, has secured over 165 partnerships, including Adidas, The Smurfs, Care Bears, The Walking Dead, HSBC, and Snoop Dogg. Details of how these brands will develop their presence within the platform are still often vague — however, we can expect something generally similar to that described above within Roblox (i.e., creative builds that engage with customers). How soon we will reach a saturation point in terms of the number of metaverses that brands partner with is yet to be determined, but these early entrants will surely command a large market share among brands at least until the dust settles and we know which metaverses are popular and here to stay.
Other Strategies
A third way that we are seeing major brands enter the space is through NFT launches or similar one-off events made for advertisement purposes or to test the waters in a low-risk setting.
For example, some may be surprised to hear that Disney has already launched numerous NFTs of some of the most recognizable characters in the world, including Mickey Mouse, Homer Simpson, and Spider-Man. The company has a partnership with a mobile NFT platform called VeVe that consistently rolls out digital comics and collectibles of brands under the Disney umbrella. Although Disney is still formulating a broader plan for its involvement in the metaverse, these VeVe NFTs serve as a way for Disney to test the waters in the space while also building its brand exposure through new product launches. For example, in celebration of the first annual Disney+ day, the company launched a series of “Golden Moments” digital collectibles on VeVe which included characters from Disney, Pixar, Marvel, Star Wars, and more.
Other brands have also used VeVe or other platforms such as Recur for similar purposes. For example, to hype the launch of the most recent film in the James Bond franchise (No Time to Die), the film’s production studios partnered with VeVe and released a series of James Bond NFTs.
Elsewhere, Paramount Global announced a multi-year partnership with Recur to similarly bring their brands into the metaverse as NFTs. Star Trek was the first of its franchises to launch NFTs and will be followed with collectibles from Nickelodeon and Paramount Pictures.
Although these NFT launches in isolation lack the general quality of what we would expect from companies that are developing a cohesive strategy for cultivating a sustained presence in the metaverse, they do serve as a clear indication of interest in the space by brands and may be a sign of grander things to come.
Intellectual Property Considerations
As we continue to see more brands enter the space, it is important to briefly note the intellectual property (IP) implications this entrance may have for existing projects. Without mentioning particular names, I’ve personally seen numerous NFT projects launch collections with characteristics that infringe upon another’s IP. For example, consider an NFT collection that launches and includes a few unique NFTs with famous superhero traits, such as Superman’s or Batman’s suit. DC Comics has the right to demand that this collection (or the NFT’s owner) stop their infringing immediately, which could mean either those specific NFTs are taken off the market or the owners face a lawsuit. Although not entirely commonplace, NFT owners should be aware of this risk and hopefully not spend a fortune on an NFT that might be infringing on another’s IP.
What’s Next?
Major brands are entering the metaverse and I expect that trend to only increase in the future. As noted earlier, most companies are still learning exactly what the metaverse can do for their brands or what their brands can do in the metaverse. As demand for digital products increases and new digital industries and business lines continue to develop, it is likely that more companies will view the industry as an actual business opportunity and less a marketing ploy. I therefore expect more acquisitions (such as the Nike / RTFKT example) to occur over the next couple of years as companies begin to identify different ways that NFT and metaverse-related startups can add value to their brands and business lines. For those looking to capitalize on the entrance of major brands in the space, being able to predict which projects can complement real-life business lines (e.g., those focused on fashion, gaming, or sports) will serve them well.
We have a very limited view of what the NFT and metaverse landscape will look like in the next few years. How many of the OG NFT projects will have survived? Will one metaverse rule them all? What unknowns will change the game entirely? What will be the winning strategies for big companies or brands to maximize their presence in the metaverse? It is nearly impossible to predict but there is tremendous potential especially at this early stage. It will be an exciting few years to watch these potential scenarios play out.
Comments ()