Source: Cointelegraph
Original: “Tariff Doubts Prompt NFL and NBA to Bet Big on Digital Merchandise”
As tariff fluctuations impact more businesses, some executives, such as Dapper Labs' Vice President of Business Development Ridhima Kahn, believe that the impact on the cost of physical goods provides another shining use case for blockchain-driven digital markets.
“I see a lot of brands rethinking the sources of revenue and fan engagement,” Kahn said in an exclusive interview with Cointelegraph. “Many of the franchise brands we work with—such as the National Basketball Association (NBA), the National Football League (NFL), and Disney—have had years of success in the digital collectibles space, and we see a lot of brands showing interest in digital collectibles as a way to engage with their fan base in a context where the costs of physical goods are more risky and uncertain.”
What drives brands to examine digital goods more deeply is a better understanding of fan desires. The Flow platform now features tradable highlights, such as “LeBron Dunk” or “Stephen Curry Three-Pointer,” which exist within the NBA app, and there are commemorative non-fungible tokens (NFTs) related to NFL game highlights on the NFL All Day platform.
But through Super Bowl ticket stubs and other blockchain-driven digital memorabilia, digital goods are proving they can unlock deeper in-real-life (IRL) fan experiences, whether at the sidelines or in the arena.
“When you see the time people are spending in online or digital environments, that time is only increasing,” Kahn said. “This really motivates brands to identify where their fans are spending time and where they can reach those fans. It’s also a great way to engage with a more global fan base rather than in a more restrictive geographic manner, which is better suited for global fans wanting to interact with these brands.”
As fan bases become more global, online experiences provide a faster and more accessible environment for digital goods, especially collectibles, while the current physical goods market is hindered by mysterious tariffs.
“Average NFT sales have increased by 7% month-over-month, with NFL All Day and NBA Top Shot achieving sales of $2.5 million and $5.6 million, respectively,” Kahn said. “We also see the total locked value (TVL) on the Flow platform reaching a historic high of $44.4 million, led by protocols like KittyPunch and other markets offering next-generation investment and trading opportunities—this trend indicates that the use cases for blockchain and cryptocurrency are expanding beyond just NFTs.”
Helping to expand blockchain use cases are the improved upstream and downstream technologies that have recently become widespread across the industry, providing a smoother user experience for those just starting to engage with the world of cryptocurrency and digital goods compared to three years ago.
Kahn stated:
“Many blockchain companies realize that if they don’t improve the user experience, their user numbers will be limited. We see improving user experience as a core driver of adoption, and from a regulatory perspective, the positive moments for blockchain are also very exciting.”
With clearer blockchain regulations being established, companies that were initially skeptical about blockchain are now taking it more seriously, as regulators are also taking it more seriously, which helps to boost confidence in the technology, especially among well-known brands.
“Intellectual property-backed collectibles are winning,” Kahn said. “After Flow's recent integration with OpenSea, NBA Top Shot ranked in the top five hottest collectibles on OpenSea for four consecutive weeks. We dive deep into specific fan groups to understand user behavior, and we conduct A/B testing on our experiences, which means that the products we ultimately launch for fans have undergone very thorough scrutiny to ensure they are indeed what fans want.”
Kahn and Dapper Labs CEO Roham Gharegozlou dined with a group of VIP collectors during the NBA mid-season tournament and openly solicited their opinions on what content they would like to see more of on the platform. This rapid and efficient real-life R&D can more easily influence the final product since the final product is digital.
“We feed these insights back to our product team and embed these insights into our products to ensure we create the best fan experience, regardless of the technology we use to achieve that,” Kahn said. “It’s about what fans want, and we leverage blockchain technology to provide fan experiences that may not be available elsewhere.”
Elsewhere refers to the physical goods market.
“The technology in our products really takes a back seat, leaving behind a meaningful, shareable, and valuable collectible,” Kahn said. “Digital collectibles unlock levels of interactivity that physical goods cannot achieve: they can be personalized, associated with access to the real world, or used for loyalty rewards over the years. They also have mix-and-match capabilities, are lightweight, and are global from day one.”
But Kahn does not believe the physical goods market will disappear anytime soon.
“I don’t think brands will abandon physical goods. It’s more about expanding strategies to find a few revenue sources that are not affected by the fluctuations of physical goods as a way to further engage with fans.”
Outside of the internet, sports and media fans are limited by their location when purchasing and carrying physical goods. But Kahn believes the next evolution of fan culture is mobile.
“We love the ability to carry your most prized possessions on your phone, no matter where you are,” Kahn said. “Transacting in a physical environment is nowhere near as interesting as transacting with people from all over the world, anywhere.”
Looking ahead, Kahn believes brands will continue to expand their strategies by engaging with fans in the digital space.
“If the value proposition exists, consumers will also be more willing to adopt new ways to interact with brands in the digital space,” Kahn said. “If we can continue to provide utility for fans in the digital space—and what they do in the digital space benefits them in the real world—that will be the secret to success.”
Related: The Necessity of Cross-Border Collaboration to Drive Digital Asset Development
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