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December 16, 2021

RTFKT acquisition by Nike is a stepping stone for the M&A industry in the metaverse

By GlobalData Thematic Research

The metaverse has emerged as the new buzzword in the tech world, and GlobalData defines the metaverse as a virtual world where users share experiences and interact in real-time within simulated scenarios. The metaverse is in the very early stages of development but is rapidly becoming a critical theme in the digital media domain. Nike’s announcement that it is acquiring NFT (non-fungible token) start-up RTFKT will be a steppingstone for M&A activity around the metaverse theme, especially for companies looking to maintain their market-leading positions.

The adoption of new technologies through M&As

Christmas has come early this year for metaverse technology. It would not be wrong to say that Nike has made a founding step into the metaverse by announcing the acquisition of RTFKT for an undisclosed sum. RTFKT makes digital sneakers, and this deal underlines the fact that Nike sees enormous financial potential in the new immersive reality. RTFKT has an innovative background in metaverse technology, combining NFTs, augmented reality (AR), virtual reality (VR), and MetaMask wallets with a consumer-centric approach for a next generation shopping and merchandise experience.

This deal is the first of its kind and other companies are going to be looking out for similar opportunities; Roblox, Epic Games, Tencent, Tinder, Magic Leap, Gather, Meta (Facebook), Google, Binance, and Microsoft are already betting big on metaverse technology. However, those already active in AR and VR technologies can do so with more credibility than their rivals. Nike was already experimenting with metaverse technology, in collaboration with Roblox, building its virtual world ‘Nikeland’.

A few companies are also aiming to go public through SPACs as well. On the same day as Nike’s announcement, metaverse company InfiniteWorld announced its plans to go public in a $700 million deal with the SPAC Aries I Acquisition Corporation and aims to debut early next year. Technology has been playing a growing role across all sectors in recent years, slowly transforming every sphere of life. The idea of the metaverse is fascinating and metaverse technology is likely to become a lot more real in the relatively near future.

There will be more metaverse M&As in the coming years

Several technology companies have already started investing in metaverse-related companies to transform the future of digital media. In the TMT sector, 2021 saw AI become the most common theme—followed by digital media—as per GlobalData’s deals database. Using an acquisition strategy to adopt new technologies and capabilities is nothing new, with the Nike-RTFKT deal likely to be the first of many linked to the metaverse. This kind of vision for a sports footwear company is commendable and this will influence other tech companies (and non-tech companies) to merge and acquire to accelerate their own metaverse strategies.

This new technology has been gaining interest and traction over the past year, so the race to develop the metaverse is already underway. Companies investing in the metaverse will also increasingly focus on its associated themes, including AI, AR, VR, 5G, and Cloud computing. Ultimately, the successful development of the metaverse will depend on the pace of advancement in these themes. A lot of interest in the metaverse comes from its potential application in the entertainment industry, while its use in the office is already being realized. We expect to see competition between leading companies as they target innovative start-ups. But regardless of who grabs the largest market share in this new technology, the world will see rapid innovation and development in this area in the coming years.