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At the beginning of last year, someone paid $ 200,000 for a video highlight of a LeBron James dunk.
Here comes LBJ.
The sale sparked a wave of news about digital collectibles and the NFTs making it possible. This year, sports media NFTs are expected to generate more than $ 2 billion in transactions, roughly double last year’s total. And some of the sports world’s biggest teams, leagues and stars are taking action.
So, will early adopters see their digital collections in value, just like more traditional memorabilia? Or are NFTs an asset bubble just waiting to burst?
To answer these questions, it is important to understand where digital collectibles such as their physical forerunners are and where not. Here’s what you need to know.
First, I wanted to talk to the man behind NBA Top Shot, the platform where the LeBron dunk was bought and sold.
So in the beginning of 2021 – February, March – we saw sales of Top Shot moments that were over $ 200 million a month. We’re talking now in the last half of 2021, and that revenue was closer to $ 20 million a month. What is responsible for that dramatic gap?
The most important thing is that we have not actually given up any of the rare and legendary content this season. So you have moments that are relatively common, things that are up to 60,000 or more. And then you have these ultra, ultra rare moments, so legendary moments. They are about 0.1 percent of the total amount of NFTs on the platform.
And that is … some of these moments are out of 32. They are out of 49. And that’s why they’re rarely available on the market.
The LeBron NFT was one of a collection of 49, each with its own serial number to represent when it was hit on the blockchain. As with limited edition trading cards, the fewer NFTs there are at the same time, the more valuable they are in the resale market. But there is more than that.
Should people think of moments as digital trading cards?
I would say they are more than just trading cards. Because they are digital and because they are NFTs, they can actually be used in other experiences. So we think of these products as a new class of products that give their customers different benefits and strengths that they have never really had before.
To learn more about the kind of additional benefits sports collectors can expect from their NFTs, I spoke to Rich Kleiman.
What’s going on? My name is Rich Kleiman, co-founder of Thirty Five Ventures. Oh, do you want more?
Rich is a longtime manager of and business partner with NBA superstar Kevin Durant. Together, they teamed up with Dapper Labs to produce a range of NFT-enabled content. For them, it’s about giving fans more direct access to KD than ever before.
Eventually, NFTs, you know, will become a complementary piece and another form of an athlete talking directly to their fans, whether it’s something built around the NFT or if it’s a distinctive shoe business being supplemented by an NFT that now has another element to be added to the way an athlete promotes and markets something, to the way they earn their IP money, to the way they generate revenue for any of their other businesses, or just in addition to something that might be happening in their life, period.
These transactions take place all over the sports world. Rob Gronkowski, the first professional athlete to launch his own series of NFTs, earned more than a million dollars by auctioning digital trading cards online. The buyer of the rarest card also got the chance to meet Gronk in person, come to one of his games, and even claim GDP access at one of his other franchises.
I let my fans get a piece of the action.
And it’s not just the players who enjoy this opportunity.
You see more and more innovative owners looking at ways to incorporate it into their arena, into their organization in general. And more and more leagues are working on the way the NBA did with Top Shot. And you see, it’s a whole world of revenue that can be generated and a whole world of brand expansion that can be generated.
And I think that’s the crazy, wonderful part of it, is that it’s constantly being unlocked.
One of the latest leagues to get involved with NFTs is the NFL, which actually surprised me. As the largest and richest league in the United States, the National Football League really does not have to rush into an unproven market for the sake of new income. So what are they in for?
We come to this from the perspective, how can I best engage my fans? And we really believe that younger demographics will engage with digital objects, digital activities almost on a primary basis.
This could mean that the younger generation of fans firstly interact with the sport through collectibles, video games and social media and secondly real game experiences. But NFTs can serve as a gateway from one to the other.
Today, anyone can spend hours and hours of time in a given year creating their franchise, creating their team in Madden. Blockchain will allow a player of a video game to spend time, earn against it, and then take all that earnings and take it to another game, to a social experience, to have it somewhere as a to show trophy.
The idea of digital earnings that can be taken from one platform to another can help unlock the metaverse, a fully immersive digital empire where fans can build their own avatar, buy and sell merchandise, and even attend games , all online.
No one knows what the metaverse is going to be, but we all know it’s going to be something, and it’s going to be something transformative. And in the early days it would probably look like things that are, how do I outfit my avatar or my digital self to show my fandom? In the future, you could very easily see it: what is my game day experience in the metaverse? Do I go to some kind of digital stadium to communicate with and encourage other fans of my team in that digital environment?
There really is the true potential for this technology to influence almost every element of the broader fan experience.
If NFTs are here to stay, they could usher in a whole new form of fandom, generating value for fans, creators and leagues along the way. But that does not necessarily mean financial returns. Whether or not this is a smart investment for you really comes down to what you want to get out of them.
This is what the value is to you. You know? You are the one who has to spend the money to own it. And I think this is where it’s going to get a little difficult, are the people who have to make a decision whether to buy NFTs for the true love of collecting it, if they buy it with the idea that they want to make money on it.
What is the true fandom for this category? Is it really .. is it primarily full of speculators, or is it primarily full of people who actually care about the community being created around the asset? This is, I think, the number one way to distinguish a sustainable category, as opposed to a fad.
This is the internet in 1996. That’s where I think we are. We’re going to look back and we’m going to say, there are some great things that happened, and there are some things that probably did not make sense. But next, you know, Amazon, Google, whoever is probably there right now, are starting to think about what that means for the next 10 years.