Last October, NBA fans were greeted by a new online marketplace for basketball collectibles. Called NBA Top Shot, it allows users to buy, collect, and trade video clip packets of NBA players and moments, like a LeBron James dunk or a Vince Carter three-pointer. It uses blockchain technology to authenticate these videos and create an indelible certificate of ownership.
Within just eight months of its launch, NBA Top Shot had reached a million users and notched more than $700 million in total sales. The company behind it, Dapper Labs, is now valued at more than $7.5 billion. And the world of non-fungible tokens, or NFTs, has exploded.
On this week’s Most Innovative Companies podcast, Roham Gharegozlou, cofounder and CEO of Dapper Labs, which Fast Company recognized as one of the Most Innovative Gaming Companies of 2021, talks about how his company is fueling the NTF explosion with NBA Top Shot and its Flow platform, which allows other developers to create and launch their own NFT products and marketplaces.
Gharegozlou acknowledges that one of the biggest triumphs of NBA Top Shot is that it’s not directed at the crypto community: Many of its users aren’t familiar with the world of cryptocurrencies and NFTs, but they innately understand the value of what Top Shot offers. “More than 80% of users just use a credit card. They don’t have cryptocurrency,” he says. “We want them to like [NBA Top Shot] for the benefits it gives them rather than for the details of the technology. The core thing about Top Shot is, if you buy something, you’ll be able to sell it. It’s under your control. . . . It’s kind of analogous to [the idea that] you don’t need to understand HTTPS security to order something from Amazon. You just need to know my credit card information is safe and I’ll get the things within 48 hours.”
With some NBA Top Shot items going for upwards of $200,000—a LeBron James dunk highlight sold for $387,600 in April—the site has attracted some serious collectors. But the game also sells $9 starter packs, with three video highlights apiece. “We want to make sure it’s actually accessible to every kind of NBA fan,” says Gharegozlou, who wants to increase ownership opportunities for everyone. He sees NBA Top Shot as particularly appealing to gamers—especially NBA 2K users—who are used to spending money on swag for their players and teams. “But they don’t actually have ownership of those moments,” he says.
In the future, he says, users will have access to even more experiences built atop Top Shot—games that play with the idea of a fantasy league and ways of displaying collectibles to other people. These will further benefit from blockchain’s transparency. Unlike in the physical card market, anyone will be able to track exactly when a Top Shot collectible was purchased, by whom, and for how much.
While NBA Top Shot makes non-fungible, digital collectibles appealing to the general public, Dapper Labs is busy wooing developers who want to create similar products onto Flow, its blockchain-based platform for apps, games, and the digital assets that power them. The company’s investors include players from the NFL and MLB, and Dapper Labs already has deals with the Ultimate Fighting Championship (UFC) and Fantastec SWAP, a company that makes digital collectibles for elite soccer teams—which means more video sports collectibles for professional leagues are coming.
“This is the first time [these leagues] can actually engage with their fans in a way that sort of gives the fans direct control,” Gharegozlou says. “It gives the league continued secondary sales revenue. It really changed the game in terms of how they think about monetizing their content in a digital world.” (Dapper Labs has growing competition in this space: Sport-merchandise giant Fanatics recently launched its own Ethereum-based collectibles platform and has inked a deal with MLB.)
The Flow platform isn’t just being used for sports. Some 400 companies are already building and testing products on Flow, including the avatar company Genies, which is creating a new marketplace for digital goods. (Dapper Labs recently invested in Genies.) Gharegozlou also points to crypto-native companies that are using Flow to break up NFTs into tokens that could trade on an exchange and Chainmonsters, a massive multiplayer online game that’s a sort of blockchain-based Pokémon.
According to Gharegozlou, NBA Top Shot is just the tip of the iceberg. “We see our role [in the beginning] as: We’re going to build unique, exclusive content that only we can build, and that’s going to bring the initial set of users,” he says. And then, with the adoption of Flow by a community of developers, comes the real flourishing of NFT-based products and experiences: “Everything from there is up to what’s shaping up to be a really impressive community—and we want to support the community.”