Why did Nike's Web3 brand RTFKT close from acquisition to folding?

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Author: Zen, PANews

In the past few years, the exploration of digital fashion and the Web3 field has attracted a large amount of capital and creativity, and one of the most representative projects is RTFKT. As a groundbreaking team, RTFKT has made waves at the intersection of blockchain and fashion with its unique digital creativity and NFT projects, attracting the attention of Nike and achieving an acquisition in 2021. However, despite high expectations, RTFKT has not been able to achieve the expected success in Nike's strategic transformation.

MNLTH X Blade Drop, launched in collaboration with 3D printed footwear manufacturer Zellerfeld, is the final dance of digital fashion and Web3 platform RTFKT, which also became a failed attempt at Nike's creative transformation.

RTFKT: Unexpected End

The MNLTH X Blade Drop series was released on the Zellerfeld website on January 16th, including six sports shoes: RTFKT Dunk, CodeX Dunk, Bladed Dragon, Undead Evo, Reptile Evo, and Cybr Stomper. In this release, RTFKT also showed their sincerity by abandoning traditional Nike shoe models like Air Force 1 and instead opting for more understated models like Undead Evo. The midsole of this shoe resembles the chin and molars of a reptile, making it creative and unique.

With the official launch of the MNLTH X project, RTFKT's crypto journey has come to an end. However, in the face of RTFKT's farewell, most of the community obviously do not buy it. Some users have expressed, "The shoes are cool, but I don't understand how it would feel to spend more money buying a pair of shoes from a company that no longer exists, in addition to the money spent on NFTs and physical items." Many users have bluntly stated that RTFKT's behavior is a Rug, and urged the project party to close the account as soon as possible and be forgotten in the world.

In early December 2024, RTFKT announced on X (formerly known as Twitter) that it would cease operations. Its virtual creation platform, Swoosh, based on Polygon, will continue to exist in the Web3 space. "RTFKT is not ending, it is becoming what it should be - a relic of a cultural revolution," RTFKT stated. Amidst the surprise, several users expressed interest in taking over its flagship NFT series, Clone X, in a story of replicating Luca Netz and revitalizing it into the top NFT project.

Clone X is a PFP project based on Ethereum, launched in 2021 by RTFKT in collaboration with the contemporary Japanese artist Takashi Murakami. In fact, Clone X itself is also one of the most famous and successful PFP projects in the NFT field, with a trading volume of over $800 million to date. In the slump of the NFT market, the series has continuously slipped from its historical peak of $63,000 in 2022 to the current 0.24 ETH, worth less than $1000. In addition to the poor performance of the market itself, RTFKT has been eliminated from Nike's series brands and business, which may be related to the strategic adjustment of this leading sports brand, starting from the acquisition.

Why did sports giant Nike acquisition RTFKT?

In December 2021, Nike acquired RTFKT for an undisclosed amount. Then Nike's CEO and President, John Donahoe, said it was a step to accelerate Nike's digital transformation, allowing us to serve athletes and creators at the intersection of sports, creativity, gaming, and culture. Donahoe also stated that Nike's plan is to invest in the RTFKT brand, serve and develop its innovative creative community, and expand Nike's digital footprint and capabilities.

Acquisition of RTFKT to enter the strategic layout of the new digital field of NFTs may date back to 2017. In that year, Nike announced the 'consumer direct offense' strategy, which includes enhancing the company's digital influence and establishing more 'one-to-one connections' with consumers.

In 2020, when announcing Donahoe's appointment, Nike's then-CEO Mark Parker said Donahoe was "perfectly suited" to achieve these goals. Based on his resume, Donahoe was indeed the best candidate - he served as eBay's marketplace president as early as 2005 and was responsible for its core business; from 2008 to 2015, he served as CEO of eBay.

During Donahoe's tenure at Nike, the sports giant was actively expanding its DTC (Direct-to-Consumer) business, and digitalization provided Nike with the ability to directly reach and serve consumers. Digital channels not only eliminate the traditional wholesale intermediaries, but also facilitate the collection of consumer preferences, habits, and other data, as well as enhancing the interactive experience between consumers and the brand. This has led Nike to increase its investment in digital business, and the acquisition of RTFKT was also completed against this backdrop.

The Story Behind: Nike's Continued Slump and "Change of Dynasty"

In the past few years, Nike's transition to DTC has not been successful, and Donahoe's Nike has also experienced a back-and-forth in terms of propensity and dependence on traditional wholesale and DTC businesses. In 2021, Nike began cutting wholesale partners to focus more on the DTC business. Cutting too quickly resulted in too high inventories and had to be heavily discounted. Finding that it was too big, in 2023 Nike began to bring wholesale partners like DSW back into its business. As part of the transition to DTC, and to cut costs in the face of declining sales, Nike has also made several rounds of layoffs in the past two years, and many "senior employees" have also been affected.

In March 2024, Nike announced its first decline in digital business in nine years, and its market value has nearly halved over the past three years. Due to poor performance, John Donahoe chose to resign in October 2024, and Nike brought back senior employee Elliott Hill as his successor. Hill has worked at Nike for more than 30 years, starting as a clothing sales intern and gradually rising to the position of President of Consumer Markets. Hill chose to resign shortly after Donahoe became the leader of Nike.

After taking office, Elliot Hill changed the company's business focus, promising to shift the focus and resources to make 'sports once again the North Star of Nike.' Hill said Nike had 'lost its passion for sports' and vowed to get the company back on track. In addition, he also hopes to strengthen the struggling wholesale business, reversing some strategic mistakes made under the leadership of the former CEO, such as the deteriorating relationship with retailers like Foot Locker.

As for RTFKT, which belongs to the old legacy of the Donahoe era, it is completely insignificant in terms of its importance and business scale compared to the core business valued by Hill. In the press release announcing Donahoe's resignation as president and CEO of Nike, the RTFKT logo was not included in its brand lineup. Exiting the NFT field is only a matter of time for Nike.

It is worth mentioning that Nick O'Neill, co-founder of the NFT project BoDoggos, who seems to have already known the "inside story", tweeted in March 2024 that RTFKT would close at the end of the year. The incredible community immediately criticized him, and RTFKT co-founder @Zaptio personally mocked him, saying, "It seems that I also missed the shutdown memo" and stating that Nick was talking nonsense.

In the end, time will still be the ultimate judge of everything.