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Twenty-six-year-old Simon Burgess has been playing Roblox since he was 12. After an internship at the virtual world platform in 2018, he began developing Roblox games through the studio he co-founded, Abracadabra, while amassing a collection of high-value Roblox items. He owns at least 2,000 digital Gucci pieces, including 400 of the highly coveted Dionysus bag. His most prized piece is a rare ‘Dominus’ hood, made in the early days of Roblox and now valued at around $400,000. “It’s like the Birkin bag of the Roblox world,” he says.
Earlier this month, Burgess bought a one-of-a-kind necklace from Adidas, designed in collaboration with Roblox creator Jonathan Courtney (or ‘WhoseTrade’), for $2 million Robux, or about $20,000. This is the most expensive user-generated, limited-edition item ever sold, and it was gone instantly, with a handful of potential collectors virtually crowding around the necklace in Roblox during the last moments before Burgess claimed it.
The digital gold and diamond chain includes the Adidas name, its famous three stripes and a gold pendant in the shape of its F50 football boot, which the brand is relaunching this month. In addition to the digital item, Burgess also received two physical pairs of customised, one-of-a-kind Adidas shoes.
This sale is unique because previous high-value branded items sold on Roblox have been via peer-to-peer secondary sales, meaning that brands like Gucci and Carolina Herrera — whose limited-edition items were resold for thousands of dollars — didn’t ultimately reap any revenue from the secondary transactions. Because the Adidas item was a primary sale, Adidas gains a percentage of the revenue. For a sale like this, 30 per cent goes to Roblox, and the rest to the creator (30 per cent) and the publisher (40 per cent) — which in this case, are both Adidas. (Adidas and Courtney declined to share the terms of their partnership, but Courtney offered that typically in partnerships like this, he prefers a revenue-sharing structure instead of a flat fee.)
This record-breaking piece, which isn’t a digital replica of a physical item, is part of new efforts at the sportswear company to lean into gaming and in-game assets as an alternative revenue model. “We essentially never had a positioning in gaming — the largest entertainment industry in the world,” says Thomas Wehner, head of gaming at Adidas, who is leading a new business unit dedicated to expanding the brand’s presence in multiple gaming environments. “We are set up to not just give money into the gaming ecosystem, but to actually earn money from the ecosystem.”
For the better part of the last year, Wehner and a team of about six have been looking into virtual products and experiences across traditional gaming, with more platforms in the pipeline. This is separate from the company’s Web3 team, which oversees the NFT strategy.
At a time when NFT hysteria has waned and brand innovation strategies have diversified, gaming has maintained significant traction and a much larger audience. Last year, 62 per cent of adults and 72 per cent of children in the US played video games, with revenue expected to reach as high as $665 billion by 2030. Nike’s virtual product studio, called .Swoosh, is prioritising gaming by introducing a line of virtual products designed to be worn in video games; they also give access to physical pieces, as long as customers link their game accounts to Nike. Balenciaga also just released its own game to promote a collaboration with French composer and musician Bfrnd; the physical merchandise includes an NFC chip that unlocks a fourth level to the game. Hugo, through its new denim line Hugo Blue, created a limited-edition jacket with an embedded NFC chip that provides access to a Roblox avatar skin.
“We did not want to compete with the NFT market, and it was not to say we sold the highest-priced virtual item. It was to say we wanted to sell the highest-priced item on Roblox,” Wehner says. “[Gaming] is where the mass application already is, and we didn’t want to just stick with a niche, but really wanted to make sure that we use kids’, teens’ and young adults’ favourite pastime to have an authentic way of talking about Adidas.”
Pivot to revenue
The first pilots from Wehner’s team have been in Roblox, which reported almost 78 million daily active users and revenues of $801.3 million (up 22 per cent year-on-year) in the first quarter of 2024. In December, Adidas began by testing pop-up shop integrations in existing Roblox experiences, selling limited-edition digital fashion and accessories in collaboration with Roblox creator Rush Bogin (known as ‘Rush X’) for up to 500 Robux, or about $5. Wehner says these pop-ups drive immediate views and provide data that informs Adidas’s approach.
In March, it opened a standalone Adidas store on Roblox, called ‘Adidas Outfit Creator’, where it sells more than 800 items, including digital versions of its most well-known shoe silhouettes. In April, timed to April Fools Day, it converted its traditional sneaker into a playful blue box (aka ‘bloxy’) shape that fits the traditional Roblox look and feel — a “love letter from Adidas to to the Roblox community”, says Puja Chakraborty, head of product at Adidas’s gaming division.
Designing a digital necklace wasn’t entirely random, Chakraborty says, referencing the 1980s rap song ‘My Adidas’ by Run-DMC (whose members wore chains), along with the “off-pitch” (meaning off-duty) style of sports stars. “There’s a whole culture that is influenced by sport, which is the ‘off-pitch’ culture, and chains are an integral part of that.” (More recently, a collaboration between Gucci and Adidas also featured a gold chain.)
Burgess says he wanted to buy the necklace in part to support Courtney, who he met in Roblox before meeting in person, and because, as a collector of both digital and physical memorabilia, owning one-of-one, customised pieces from Adidas “is amazing”, he adds.
This combination is part of the secret sauce that can lead to successful, high-value branded items, says Courtney, who at 25 has also turned his childhood Roblox hobby into a full-time occupation. (In September, he partnered with electronic music label Monstercat on a series of six one-of-a-kind digital Roblox necklaces that sold for up to $10,000.) “These items were only possible because of what we both bring to the table,” Courtney says. “I was able to make an item that players and collectors will like, but on the other hand, I couldn’t have sold this without the brand being attached to it. We really compliment each other.”
As Roblox’s community grows, Roblox is pushing more intentionally into commerce, increasing the opportunities for both Roblox and brands to generate revenue. A year ago, it made an update that enables user-generated-content creators to sell ‘limiteds’, a term referring to limited-edition items that often claim higher prices. This spring, it opened its Marketplace to more creators, with the ultimate goal of enabling anyone to create and sell on Roblox. In April, Walmart tested the option to integrate e-commerce sales of physical goods into its Roblox experience, meaning that Roblox players can click on a digital item to be taken to the physical item’s product page on Walmart’s website, without leaving the platform. There are plans to expand this to other brands and categories.
“We’re trying to help brands capture the full funnel, from brand awareness to the pass-through for purchase. And on the other side, we’re enabling our community to not leave the platform to do something that is the next step in their engagement,” says Winnie Burke, head of fashion and beauty partnerships at Roblox.
The high price of the Adidas necklace shows that product creation on Roblox isn’t relegated to multitudes of low-cost goods, says Tom Von Simson, who works with Walmart at Geeiq to provide data and insights into the gaming and metaverse worlds.
What’s after Web3?
This is not Adidas’s first gaming foray. It owns real estate in blockchain-based virtual platform The Sandbox and made an appearance in Decentraland’s Metaverse Fashion Week, selling digital Adidas as NFTs. While Wehner attests that the Web3 strategy is still very much in play, it’s not a stretch to consider that this gaming team is just a new way of approaching the same cultural and technological shift towards digital goods and virtual worlds.
“The question is whether this trend is hype or a step towards the mass adoption of digital collectible assets,” says Emmy Pollock, who works with brands including Givenchy Beauty and Hugo Boss at Geeiq.
Early adopters of Decentraland and The Sandbox “saw the metaverse as a broad landscape of potential, despite the nascent stage of its development”, says Terry Weldon, director of digital at fashion innovation consultancy M7 Innovations. Now, he says, “it has become apparent that their investments in virtual real estate were more akin to acquiring undeveloped land in a remote, uncharted territory, rather than securing prime real estate in the heart of Manhattan. [Adidas] realised that digital presence is still important and that they need to be where the audience is. It’s not an ‘if you build it, they will come’ situation.”
Adidas’s goal — to generate revenue in games — is “a bit different” from most brands, who often come at it as a marketing play, Burke says. “Adidas sees it as an opportunity to test product and test what the virtual version of their physical looks like. They have been given a long leash in terms of experimentation and innovation.” She says that while its strategy started with more literal replicas, it has evolved into limiteds that don’t necessarily mimic real-world products. “Scarcity does drive interest and urgency around purchases,” she adds.
Wehner says that in the future platforms planned, the team will take a similar “pyramid” approach, with limited high-priced items driving interest in more accessible pieces. The Bloxy sneakers, for example, were 55 Robux, or about $.05.
“The more comfortable place for brands to start is twinning the digital to the physical,” Burke says. The more progressive brands are starting to experiment with the reverse, she adds — using digital trends to inspire physical pieces. Already, Forever 21 manufactured a physical beanie after it made a splash on Roblox. Fenty Beauty solicited input from its Roblox community for a Gloss Bomb fragrances, and Carolina Herrera held a community vote for the design of its Good Girl Blush perfume bottle.
Adidas’s Chakraborty isn’t ruling out a world in which digital designs influence physical pieces. For now, the goal is for Roblox’s top spenders and influencers, like Courtney and Burgess, to influence the wider community, Wehner says. “We wanted to send a signal we are here to stay, and we are mirroring our real-world strategy by being a collaborative brand with the best designers in the marketplace,” Wehner says.
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