Disney makes NFTs again in partnership with NBA Top Shot Makers Dapper Labs

Disney, the iconic, century-old brand known almost as much for its pursuit of technical innovation as its ever-expanding catalog of entertainment products, is taking another stab at digital collectible non-fungible tokens (NFTs). This time, it’s through a partnership with Dapper Labs, the Vancouver-based blockchain company with experience building successful consumer-facing Web3 apps, including NBA Top Shot.

And so, on Tuesday, Dapper unveiled a new brand, Disney Pinnacle. It’s an “early access, closed release” mobile app for invited users, opening at 9am (aka waitlist to participate in a testing and feedback phase). An official launch will occur “soon after” on the Apple App Store and will then roll out to web browsers and the Google Play Store, a Dapper spokesperson said in an email.

I spoke with Dapper Labs CEO Roham Gharegozlou and VP of Business Development and Partnerships Ridhima Kahn to get a better sense of what Web3’s next big innovative app could be. Dapper has a history of homeruns, starting with one of the first (if not the first) NFT launches ever, CryptoKitties, which clogged both Ethereum NPR’s “Money for the Planet” covered the news.

Then, in time for the 2020-21 bull market, Dapper launched NBA Top Shot in partnership with the National Basketball Association. Essentially just a platform for people to exchange tokenized snapshots of NBA replays, Top Shots has become one of the innovative apps of the NFT craze. Dapper quickly capitalized on the buzz and launched similar products involving other sports leaguesincluding the NFL.

Disney Pinnacle appears to be following suit. Users will be able to trade digital “pins”, inspired by the popular physical collectible category, featuring Disney-related IP. I haven’t tested the app or seen anything online about the tokens offered, but I was informed that the platform will host intellectual property from Lucasfilm, Pixar and Walt Disney Animation Studios. So imagine Baby Yoda, Woody from “Toy Story” and Snow White as tradable assets.

“Digital collectibles based on perhaps the most popular products of all time… are a path to adoption of [Web3 technology] as well as a way to show people what is possible,” Gharegozlou said in a video call. At a time when NFTs have not seen plenty of recovery like other crypto sectors or assets like bitcoin (BTC)the market needs a moment of rejuvenation.

It’s pretty clear that many of the crypto-native attempts to create valuable IP linked to NFTs have gotten off to a rocky start. Some of the biggest projects, at least in the cartoon “PFP [profile pic] space”, has entirely reneged in your Web3 promises. Rugs were pulled, scripts abandoned and projects with money in the treasury they seem to be struggling.

It’s unclear whether NFTs will be used for ticketing in the mainstream, and big brands are experimenting with cool rewards point tokens — like Starbucks and Reddit (before that ended the project) – have remained distant from the term NFTs, preferring the more evocative: “digital collectible”.

That’s why Dapper’s latest project and first serious attempt to move beyond sports collectibles could be significant. It’s telling from Dapper’s promotional material and conversation with Gharegozlou and Kahn that the term NFT was being avoided while an emphasis was placed on Disney Pinnacle’s mass-market appeal.

Disney has fans, probably billions of them, and superfans. Young and old, there are plenty of people interested in all things Disney, including its theme parks, film portfolio, and merchandise (as seen by the company’s net income of about $1.41 billion in the third quarter of 2023).

Using established brands with built-in, engaged user bases has also worked in the past for Dapper. Top Shots, although trading has slowed significantly since 2021, has accumulated lifetime volumes in excess of $1 billion (Dapp Radar) – not bad for the digital version of trading cards. At its peak, Dapper was valued at US$7.6 billion with the company itself becoming a active investor through NFT and metaverse vertices and launching a value of US$750 million ecosystem background for its custom Flow blockchain.

Additionally, Gharegozlou has experience building consumer startups. As CEO of venture studio Axiom Zen, he built several products, including Apple’s 2015 app of the year called Timeline and some of the first Bitcoin-based games, as well as the first AR/VR platforms like Google Glass and Magic. Leap. Meanwhile, Kahn comes to Dapper from A16Z, where he focused on consumer apps, a spokesperson said.

While some of the magic may be lost when translating physical experiences into digital ones (like holding an Eeyore pin), Disney Pinnacle pins have their advantages as “investments,” Gharegozlou said. This includes the social aspects of collecting in general:

“For collecting and trading badges, the feeling of going to Frontierland and Disneyland and meeting a stranger who shares your fandom for a certain IP or badge style and then making your first trade with them is one of the most exciting. feelings,” Kahn said. (This is an experience she may have had; she has been to Disneyland about 18 times since she started working at Disney.)

But these social experiences are amplified and multiplied by the fact that we are online; in the same way that a message board enhances the types of conversations you’d have with collectors in a comic book store. There are just more chances to meet like-minded fans. Plus, there’s something nonsensical about digital collectibles that sheds light on the fact that collecting anything is often an investment:

“You made a decision, invested the money you earned into purchasing this badge. So it requires a little more investment,” Khan said. Of course, this doesn’t mean that there can’t be an emotional or sentimental reason to buy a digital good, or that people can’t become attached to their digital goods.

Which brings us to the question of the day: are NFTs securities? This was the only time the affable Gharegozlou showed any concern on his face during a video call. He addressed the issue, essentially saying it’s a subtle issue. There are “long-standing laws and precedents that collectibles — whether art, trading cards or anything else — are not securities, and that doesn’t change because they are digital collectibles,” he said.

The company – which has yet to draw the ire of the U.S. Securities and Exchange Commission (SEC), the main U.S. securities watchdog that has lately I’ve been interested in pursuing NFT companies – directed me to an example of “proactive engagement” with a Canadian regulator and a statement from the Chamber of Digital Commerce explaining the differences between “financial” and “commercial” NFTs.

“Dapper Labs does not comment on conversations with regulators,” a spokesperson added in an email. The company recently lost a fairly important motion to dismiss a class action lawsuit filed against Dapper Labs and Gharegozlou in New York, in which the judge singled out the NBA Top Shot Moments in question. probably qualify as “investment contracts”, and therefore could fall under the purview of the SEC.

However, it appears that Dapper Labs is taking steps to prevent unqualified users from accessing the Disney Pinnacle website. For example, at launch, Disney Pinnacles will only be open to users 18 and older, while the URL provided by Dapper appears to be geo-blocking New York state or the US entirely.

I asked about other restrictions around the apps, though I didn’t hear of anything geographic, and I should add that the site wasn’t technically active when I was doing the research for the article, which may affect the findings. However, in Pinnacle’s promotional material it is noted: “Fans in Florida can now collect and trade dynamic pins in real time alongside other fans in California, France, India, Japan and other places around the world,” although I not sure if this means just for the waitlist. (Will update if Dapper returns.)

The regulatory issue just shows the obstacles that bad policies can impose on well-intentioned companies. Dapper’s Kahn called it a “partnership” with Disney, one of the most influential companies in history, which has prior experience in Web3 — mainly through a marketplace called VeVe. These assets are unlikely to be highly financialized or end up with maximum leverage on Blur, although they are as tradable as other NFTs, I believe.

During the call, Gharegozlou and Kahn highlighted how Dapper and Disney tried to keep the average Disney fan in mind while building an “interactive, immersive experience” that non-native crypto fans could use. In other words, the user base is digitally competent Disney fans.

For this purpose, payments can be made via credit cards, ACH [via your bank] and various cryptocurrencies, including bitcoin (BTC) and ether (ETH), “without worrying about extra fees,” Dapper said. The login experience also bypasses the standard Web3 wallet portal with a Web2 option; Gharegozlou said you can sign in “as a Disney fan,” likely meaning using the company’s online credentialing system or an email.

There is no official limit for opening the waitlist today, although the company is trying to keep it manageable. He is looking for “qualitative and quantitative feedback” to improve the app before it officially launches.

Dapper, like the rest of crypto, has taken a hit over the past two years. There was at least three rounds of layoffs since the market started falling in 2022, and I have no idea the state of your portfolio investments. It’s still a sizable company (200 employees, 65% working on code) with a serious pedigree, which has also pioneered serious innovations in cryptographic accessibility and technology running in the background (like account abstraction).

When talking to Gharegozlou and Kahn, it’s also clear that they are consummate professionals who know what to say and what to avoid. Avoid deep technical concerns, because encryption should not be about the technology, but about the experiences it provides. Avoid regulatory issues because at this point there is no benefit in saying anything officially. And don’t talk too much about the app… probably because it’s unfinished.

Everything is fine and well. The company, like its latest app, is a work in progress — and perhaps a model for others.

CORRECTION: Corrects the spelling of Ridhima Kahn’s surname and an incorrectly attributed quote.

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