The NBA made news last year when it signed a deal with a relatively unknown startup named Dapper Labs to package and sell highlights from NBA games. That decision seems to have been vindicated in a huge manner now, with the company recording over $50 million in sales in just one month. It is also interesting to note that Dapper Labs is a blockchain startup, and is using the technology to provide its content to fans, thereby demonstrating the potential that this technology has for various other uses and sectors as well.
Dapper Labs is basically creating something similar to trading cards on the NBA Top Shots platform, but in the form of videos. The highlights and best moments from games are selected by the NBA, with Dapper Labs then choosing which ones to publish on its blockchain in the form of ‘digital packs’. Fans can then buy those packs in a similar manner to buying a pack of trading cards, with each pack having multiple highlights. These packs can sell from anywhere between $9 and $230, depending on how rare it is as well as the star power of the players showcased in the highlights. Fans can store them in a digital wallet and potentially resell them as well. The most viral moments from the NBA have already been sold for nearly $100,000, with one example being a dunk from Los Angeles Lakers icon LeBron James, which was traded for over $71,000.
This has proven to be masterstroke, with Dapper Labs having sold more than $228 million worth of these collectables in five months since October 2020. The vast majority of these transactions are through the secondary market, such as the trade mentioned above, with less than $6 million from direct purchases of these digital packs. Dapper Labs has made around $13 million from these trades, as it earns 5% of these secondary market transactions. Dapper Labs’ success is an excellent example of how blockchain can be used to revolutionize a sector, and there are some other examples globally that can showcase this as well. One of these is from the online gambling sector, where crypto and blockchain have also begun to transform the way businesses work. Various casino operators have begun to use blockchain to support their websites and games, making them safer, more reliable and therefore more attractive to players. They have also begun to offer the option to place bets through cryptocurrencies, so, for example, we have Ethereum slot games and Bitcoin blackjack, and various other casino table games where players can use crypto to make bets. This has proved to be quite popular with users, and has completely changed the dynamic of the online gambling industry as a result.
It is a somewhat similar scenario with Dapper Labs, which is providing the blueprint for how to leverage the popularity of a sports league for selling content to fans. The use of blockchain means that the authenticity of such digital products can be instantly confirmed, with price history and other details also available and stored on a public ledger. Dapper Labs is using the Flow blockchain to support this network, while it had earlier created a similar ecosystem with the ‘CryptoKitties’ network, where users could buy, sell and trade in virtual cats. That provided the testing background for this project, and we can already see the benefits.
Dapper also timed this product right, coming at a time when crypto has been in the news like never before, and Bitcoin has crossed a trillion dollars in market capitalization. This increased focus on the crypto markets has also helped the company raise finances, with $250 million reportedly being raised from Coatue Management at a $2 billion valuation. It had previously raised over $50 million from the likes of Warner Music and Samsung, and all of this shows how Dapper has been able to create a successful system for using blockchain for selling digital assets.