Economic Observer: Why do sports brands enter the Metaverse

The Metaverse track is like the early Internet. At first, everyone could not understand it, but when it was understood, the valuation was too high to participate. At present, the Metaverse is a track of hundreds of millions of dollars, but the market has changed. Very fast, with more and more players and consumers entering the game, “the future is a market with no ceiling”.

The Metaverse enthusiasm of sports brands is being transformed into one digital collection after another.

On March 22, Adidas introduced to reporters that its first domestic digital collection (NFT) work “Playing Native Products” series was sold out immediately, the payment amount increased by 32 times, and the payment conversion rate increased by 22 times. On March 20, Xtep released its first digital collection “160X-Metaverse”. This month, Skechers also announced the signing of a lease with the Decentraland fashion block, officially entering the Metaverse.

The sportswear companies that have joined the Metaverse are not the only ones. In the past few months, Nike, Li Ning, and Anta have all set foot in the Metaverse.

NFT has become a whirlwind sweeping the brand side, not only the brand side and consumers are involved, but also the enthusiastic participation of entrepreneurs and investors. Why are sports brands entering the Metaverse and releasing digital collections? What is their purpose?

On March 25, Wu Shichun, the founding partner of Meihua Venture Capital, told reporters that the Metaverse Track is like the early Internet. At first, everyone could not understand it, but when it was understood, the valuation was too high to participate. Look, the Metaverse is a track of hundreds of millions of dollars, but this market is changing very fast. As more and more players and consumers enter the game, “the future will be a market without ceilings.”

Digital Collections for Sports Brands

Xtep’s first digital collection “160X-Metaverse” was released at the Xtep 321 Running Festival. Xtep has held the running festival for seven consecutive years. It wants to spread the concept of healthy life through the running festival. Therefore, in terms of the number of releases, 160X-Metaverse sold a total of 321 copies. , and the distribution channel of 160X-Metaverse is on the WeChat account of “Special Running Group”, from the “Running Festival Top Goods” menu to enter the digital collection mall platform, which makes many consumers pour into the traffic pool of Xtep private domain.

According to Xtep, 160X-Metaverse is created for 321 “meta-residents” of Xtep Metaverse. Each digital collection has a unique number and enjoys special privileges. There is no obstruction in Xtep Metaverse, and all activities have the right to speak. and participation rights. Xtep also revealed that in the future, “yuan residents” will receive more hidden benefits.

Wu Lianyin, general manager of Xtep’s running business department, said that 160X-Metaverse is Xtep’s first digital product and Xtep’s first attempt to enter the virtual field.

In March of this year, Skechers announced that it had signed a lease with the Decentraland fashion district, officially entering the Metaverse.

Skechers plans to create an experiential store in Decentraland to deliver a new Skechers brand experience to customers and audiences in a creative way. Skechers is also the first athleisure brand to sign a lease in Decentraland’s fashionable neighborhood.

In addition, Skechers is also deploying the Metaverse in other ways to actively prepare for new growth opportunities in the future. Skechers recently filed trademark applications around the world for future sales of virtual goods such as footwear and clothing.

Michael Greenberg, global president of Skechers, once said, “The cooperation with Decentraland is an investment in future trends, and we are very much looking forward to entering this virtual era and constantly exploring creative ways for brands to interact with consumers.”

Not only that, in January 2022, Anta released a virtual digital space – Anta Ice and Snow Spirit Realm, and created the first digital collection of the Chinese national ice and snow team; in 2020, GUCCI released the brand’s first digital virtual sports shoes, Gucci Virtual 25, which users can order online. Virtually try on, take photos or record small videos and share with friends. In March 2022, GUCCI announced a partnership with technology company Wanna to launch the first virtual shoes. Users can purchase virtual shoes for $11.99 (approximately RMB 77.9) on the GUCCI App.

consumer madness

The digital collections released by sports brands have received an enthusiastic response from the consumer group. The price of the Xtep digital collection 160X-Metaverse is 1603 yuan, and 70 minutes after its release, all 160X-Metaverse were sold out.

In 2021, star Curry released the NFT version of the sneakers he wore in the game that made him the NBA’s all-time three-pointer. Each pair sold for $333, nearly 3,000 pairs, and they were sold out as soon as they were released.

In September 2021, Li Ning’s first NFT artwork was successfully auctioned at a price of 1,127,000 yuan at Poly Auction House. This is the first sneaker artwork auctioned by a domestic sports brand in the form of non-fungible tokens (NFT). The author is Zhou Shijie, chief designer of Li Ning Wade shoes. It is reported that the work is called “Wizard Shop in ESSENCE”, with the electronic signature of American NBA player Dwyane Wade.

Is it worth buying digital collectibles? A consumer told reporters: “If you think it’s just a number or a pair of shoes, it’s narrow, it has become a social currency, or even a social luxury, a symbol of a circle’s status.”

The positive response from consumers has also strengthened the brand’s confidence and opened up market space.Morgan Stanley said in a report that by 2030, Metaverse games and NFTs will bring $56 billion in revenue to the luxury market, and that NFTs and social games provide two major opportunities for luxury brands. Luxury brands can monetize their IP, and second, consumer demand for NFT collectibles can also promote consumer demand for luxury goods.

Morgan Stanley pointed out that major luxury goods companies are exploring cooperation models with game and Metaverse platforms and reaching revenue sharing agreements, which will increase the total potential market of the luxury industry by 10 billion to 20 billion US dollars. But the report also acknowledges that virtual worlds will take years to develop and perfect, and because of this, planning ahead is of strategic significance for the long-term development of the luxury industry.

Close to Gen Z

A person in the apparel industry said that the gradual maturity of the digital economy has given birth to changes in the way brands operate, and direct-to-consumer marketing has become the focus of many brands. For Internet aborigines and Generation Z, who are gradually becoming the main force in the consumer market, their needs are also developing in the direction of experiential, creative, and interactive, showing a diversified trend. Under such circumstances, how to innovate marketing methods and deeply reach Generation Z has become a “must-answer” for every company.

Adidas hopes that by creating new social topics, it can have more positive interactions with Gen Z groups. This interaction includes adidas neo’s ability to hear the voices of consumers and establish a two-way linkage between brands and consumers. In this context, in December 2021, adidas neo released the first digital collection (NFT) work “Playing with Native Products” series. During the same period, adidas neo also held a number of offline pop-up events in Shanghai and Shenzhen.

In December 2021, Nike announced the acquisition of the virtual sneaker brand rtfkt. John Donahoe, President and CEO of Nike, once said that this acquisition is another step in Nike’s accelerated digital transformation, which can serve those in sports, creative , athletes and creators at the intersection of games and cultures.

Nike said that the future of retail lies in establishing and deepening the connection with consumers, “We know that when consumers come to Nike stores, they not only want the latest shoes and apparel, but also seek to establish a connection with Nike. From Apps, stores, e-commerce to the whole market, we put the consumer at the center of the Nike ecosystem”, Nike believes that the market is integrated, they are increasing investment, through retail innovation, strategic partnerships and other means to achieve market integration to deliver the products, services and experiences consumers want, exactly when and where they want.

From the point of view of the buying crowd, these brands reach their desired users.

Guo Xu, founder and CEO of J-ART, a digital commodity distribution platform, said that male users account for 60.81% of the users who currently buy digital fashion shoes, and female users account for 39.19%. The buyers are mainly 18-22-year-old generation Z. crowd. These young consumers who love to collect digital trendy products are themselves gamers, sneaker collectors and hip-hop music lovers.

Will consumers with digital collections have a better brand awareness? Guo Xu believes that the answer is unquestionable. User portraits with digital collections are very concrete. Who they are, how old are they, where they are, and even what they are paying attention to can be seen in the background. If the brand wants to interact with these users , you can take a more precise method, such as pushing a new product to their WeChat, or airdrop the product changes to users who hold digital collections, and the brand can decide which users to interact with. The conclusion that “half of advertising is always wasted”, the users they contact are all interested in them, and their delivery is effective.

NFT capital fever

In January 2021, after receiving an investment of 10 million yuan led by NetEase, StarHeir Technology, a virtual digital developer, completed the financing of Meihua Venture Capital within one month.

Shiyue Xingcheng was established in March 2021. It is a Metaverse company focusing on fashion trends and subdivisions. So far, it has successively launched five virtual human IP matrices of Reddi, Vila, Vince, E-dimensional Mr.Meta, and Nami. Partners include Gucci, Clarins, Max Mara, Sennheiser, AirJordan, SKP-S, China Li Ning, Vivo mobile phones, etc. The company launched China’s first Metaverse trend digital sports brand MetaStreet Market.

Wu Shichun believes that the founder of Shiyue Xingcheng has a deep understanding of the industry, and has organizational skills, strong psychology, and a broad pattern. Shiyue Xingcheng is one of the very few on the Metaverse virtual human track with full-process independent CG technology and fashionable content. A professional company with integrated operation, and realized the strategy of the Metaverse Industry Alliance and the company’s global development layout in a short period of time, and Wu Shichun believes that the virtual digital human can develop in many directions in the future, and can become a lot of brand promotion, Metaverse The infrastructure of life services becomes any NFT+X model, and there is a lot of room for imagination.

But Wu Shichun also pointed out that the current industry is only an exchange of internal value, and has not yet constituted a large commercial value. When NFT collections have an impact on the surrounding economy, and more and more outsiders enter the Metaverse, greater value will be created. .

Meta Street Market has successively launched XNOR-100, Tiger Step, NOR-Blossom-“Flower” series sneakers on Lexiang Art. How does an idea become an NFT product?

Guo Xu introduced that the core value of digital goods still lies in the goods themselves, and for content, value creation is taking place in every link from creativity to production. Meta Street Market has a top-level planning and content production team. After the content production is completed, the chain, distribution and circulation are completed on the Lexiang Art platform. “Our value as a platform is to continue to find high-quality content and distribute it through the platform’s value network, so that every consumer can get their favorite and truly valuable digital goods.”

More and more brands want to move physical objects to the Metaverse. They need technology and platform. Faced with the project party who came over, Guo Xu believes that high-quality content providers are relatively scarce now, and in the current boom , most consumers do not have the ability to discriminate and judge the quality of content, so the responsibility of the platform is to establish a set of standards and pass it on to both content producers and consumers.

Guo Xu said that he completed the angel round of financing at the end of last year, and is currently growing rapidly, and is also planning the next round of financing. “This industry is developing very fast, and we are actively looking for more capital, but we still hope to find suitable investors to push the industry forward together.”

Guo Xu also said that the digital commodity economy is still in the early stage of development. With the influx of participants and consumers, the industry is growing rapidly, and some bubbles are inevitable. He also hopes to work with content creators through the value selection and transmission of the platform. Promote the progress of the industry and meet the needs of consumers.

Wu Shichun said that in such a rapidly developing industry, he is looking for a team that can innovate and do things practically. He believes that the market should be handed over to innovators. Investors should not be deceived by the booming bubble. They must identify who is doing things and who are leaving after a single vote. A good market is good money to drive out bad money. He also believes that the best Metaverse application has not yet been born, and the “Tencent” and “ByteDance” of the Metaverse have not yet been created. At this time, we can only continue to learn and integrate into entrepreneurs.

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