Pioneering web3 fashion brands are profiting handsomely from early forays into metaverse and NFT-focused products, as new revenue streams coming from digital and ‘phygital’ experiments are explored.
Capitalizing on the emerging crypto-native communities, and drawing in traditional customers to engage in the metaverse and collect web3 digital collectibles along the way has been a massive success for Nike in particular, with their purchase of the metaverse-wear-focused RTFKT Studios proving to be a masterstroke based on early indicators.
“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 … and extend Nike’s digital footprint and capabilities” (John Donahoe, President and CEO of Nike, Inc.)
“ … we’re excited to grow our brand which was fully formed in the metaverse.” (Benoit Pagotto, Co-Founder of RTFKT Studios)
The digital fashion market shows no sign of slowing down as more players enter the space, leveraging their brand identity and history whilst incorporating web3 elements such as Tiffany’s NFTiFF collection of physical jewelry based on the OG NFT collection CryptoPunks.
Furthermore, the emerging direct-to-community/customer (D2C) economy is being shaped by the innovations led by brands daring to try new channels of community and customer engagement, with brands like Nike and Adidas airdropping bonus items to reward their early web3 adopters and create FOMO that entices increasingly more curious potential customers.
As metaverse investment continues its upwards trajectory, it will be interesting to see if established fashion brands entering the metaverse can dislodge current leaders in the metaverse and NFT space such as Yuga Labs from their places. At the same time, metaverse native brands are already offering physical merchandise. Only time will tell how the landscape of phygital brands will evolve.
Crashing the party some eight months after Twitter allowed its users to display their NFTs as profile pictures, Meta has wasted little time in allowing NFT sharing between both Facebook and Instagram social networks.
Despite continued backlash and controversy surrounding Facebook’s handling of user data and their content standards policies, it still boasts over 2.9 billion monthly active users (source: Statista). Instagram meanwhile, despite being tainted by the same Meta brush and losing market share to upstart competitors such as TikTok still has over 1.2 billion users worldwide (source: Statista).
“Creators today are using non-fungible tokens (NFTs) to take more control over their work, their relationship with their communities, and how they can monetize … we think NFTs will be critical for how people will buy, use and share virtual objects and experiences … we’re exploring as we build for the metaverse” (Meta blog post).
The effect this will have on marketing and digital collectible sales will be an interesting space to watch, as brands increasingly leverage social media influencers and merge concepts trialled out in web3 native communities.
For example, the timing of the announcement comes just a day after Snoop Dogg and Eminem performed at MTV’s VMA awards in a mixed physical and virtual concert where their avatars turned into Bored Apes resembling the NFTs owned by the duo.
The performance itself perhaps showed why existing fans of digital collectibles, especially holders of Bored Apes, are so excited by such developments, seeing the exposure of the BAYC IP including plugs to the Otherside metaverse being broadcast to 3.9 million viewers worldwide.
At the same time, there were many aspects of the mixed reality performance that left neutrals otherwise unimpressed.
Watch the performance and decide for yourself here:
With a reported 40 million social media interactions for the awards show in total, eclipsing the Oscars and the Super Bowl - this was the most social VMA of all time according to MTV.
Add this to Snoop Dogg and Eminem’s combined following of 138 million on Facebook and 100 million on Instagram, Meta’s NFT sharing between the two platforms could accelerate the metaverse and NFTs into the mainstream sooner rather than later.
After a year in which the Web2 social media accounts of Bored Ape Yacht Club and their employees were hacked such as Twitter, Instagram and Discord resulting in millions of dollars worth of digital collectibles being stolen, it would come as no surprise if parent company Yuga Labs decided to develop their own Web3 social media platform.
The vulnerabilities of Web2 platforms to insider hacks, social engineering and other phishing scams have come into the spotlight ever since successful crypto, metaverse and blue chip NFT communities became targets of cybercriminals aiming to profit from the naivety of inexperienced investors, regardless of their celebrity status.
This included their community manager’s Discord account being compromised and subsequently posting phishing links that were taken at face value by the community.
The exploits raised questions over which parties were to blame. Web2 users who practised poor security (such as poorly set up 2FA) and clicked on malicious links? Or were the Web2 platforms to blame for being unsuited for Web3 communities uneducated about the risks involved with current Web3 wallets and digital signatures?
Yuga Labs looks like they’ve chosen to go their own road and in doing so, wean themselves off their dependence on centralized Web2 social media. Given the recent controversies surrounding Twitter’s security and scam accounts, the use of Web3 technologies to make account verification more robust and secure makes sense. It is an interesting move that other blue chip projects will likely follow.
