Would you pay $263,000 for a digital player’s card of National Basketball Association (NBA) superstar LeBron James?
That’s how much one sold for in February in NBA Top Shots, a platform created by Vancouver blockchain firm Dapper Labs in partnership with the league and its players’ association.
In February, it generated more than US$200 million in sales of “moments” – digital cards that include a player’s video highlight during a specific game.
That accounts for 90% of the US$230 million in NBA Top Shots transactions since the platform launched in October.
“If they can do US$100 million casually a month, they are already pulling in $1 billion-plus in annual sales,” said Sam Chan, vice-president of programs at local business incubator Launch Academy and an NBA Top Shot user.“Right now, Top Shot is looking at a US$2 billion valuation. Two years from now, that $2 billion number could be laughable if it stays on the growth path it is on.”
This isn’t Dapper Labs’ first kick at the NFT (non-fungible tokens: unique digital items traded mostly using the blockchain of cryptocurrency Ethereum) game. In December 2017, its CryptoKitties, which allowed users to buy and sell digital cats, at one point jammed up Ethereum’s servers because it was so popular.
In a statement, Dapper Labs head of marketing and partnerships Caty Tedman said the goal of NBA Top Shots is to create something that feels more substantial for people to own than previous NFT products.
“NBA Top Shot is the next wave of what’s possible in the NFT space: collectibles that feel tangible, even though they are digital, and that are deluxe and valuable, and that can create value for fans and brands alike.”
Tedman added that Dapper Labs is already “in daily conversations with some of the biggest brands in sports, entertainment and gaming” to bring similar products online and that Dapper Labs is using the interest to maximize the potential of Flow, the company’s blockchain designed to support customers’ demand “at scale.”
Before joining Dapper Labs, Tedman headed social media operations for the National Hockey League (NHL) and the National Football League (NFL).
With travel restricted by the pandemic and many younger consumers stranded at home with disposable income, Chan said interest in investing in products similar to NBA Top Shots is growing.
But he said NBA Top Shots is different from previous products that faded with their hype because the platform replicates sports cards trading in the digital sphere. That adds fan emotion and collector value to its “moments.”
“Instead of investing in Tesla (Nasdaq:TSLA) or GameStop (NYSE:GME), you are investing in LeBron James or Steph Curry,” Chan said. “There’s an emotional investment there that you don’t usually have with stock tickers. So there will be cases where you may be offered 100% more than it’s worth for a LeBron James moment, but you don’t want to sell because you like LeBron.”
He added that professional leagues also want to participate because most of them currently have no fans at games and are looking for alternative revenue streams. Players are also looking to expand their brands.
Long-term monetization of digital goods is occurring in other sectors.
For instance, Vancouver musician/artist Grimes sold $6 million worth of digital artworks as NFTs on Nifty Gateway on February 28. One piece in the collection sold for $389,000, and two pieces – with thousands of copies sold – amassed $7,500 each from nearly 700 buyers to generate $5.18 million.
Chan said the NBA Top Shot/Dapper Labs story is also the latest example of Vancouver’s growing strength as a tech startup hub.
He pointed to the US$1 billion acquisition of software provider Galvanize Inc. late last month by U.S. private equity firm Diligent Corp., which, when combined with the success Dapper Labs, shows what Vancouver’s tech ecosystem is capable of.
“It obviously doesn’t happen as much as it does in Seattle and the Silicon Valley, but it happens more than people are willing to talk about,” Chan said. “Why are we not doing more to celebrate this?… There are a lot of people with incredible numbers, but the questions I get is always, ‘I didn’t know these guys are from Vancouver.’” •
