Tariff concerns prompt the NFL and NBA to heavily invest in digital goods.

Source: Cointelegraph Original: "Tariff Concerns Drive NFL and NBA to Bet Big on Digital Goods"

As tariff fluctuations increasingly 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 many 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 NBA, NFL, and Disney—have achieved years of success in the digital collectibles space, and we are seeing a lot of brands showing interest in digital collectibles as a way to engage with their fan base in a context where physical costs are more risky and uncertain."

What drives brands to examine digital goods more deeply is a better understanding of the desires of their fan base. The Flow platform now features tradable highlights such as "LeBron Dunk" or "Stephen Curry Three-Pointer," which exist in 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 that they can unlock deeper real-life (IRL) fan experiences, whether at the sidelines or on the field.

"When you see the time people spend 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 simultaneously engage with a more global fan base, rather than in a more restrictive geographic targeting manner, which is more suited for global fans who want to interact with these brands."

As the fan base becomes more globalized, the online experience provides 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 increased by 7% month-on-month, with NFL All Day and NBA Top Shot achieving sales of $2.5 million and $5.6 million respectively," Kahn said. "We also saw the total value locked (TVL) on the Flow platform reach a historic high of $44.4 million, driven by protocols like KittyPunch and other markets providing next-generation investment and trading opportunities – this trend indicates that the use cases for blockchain and cryptocurrencies are expanding beyond just NFTs."

The improved uplink and downlink technologies that have recently gained popularity across the industry help expand blockchain use cases, providing a smoother user experience for those who are just starting to engage with the world of cryptocurrencies and digital goods compared to three years ago.

Kahn stated:

"Many blockchain companies realize that if they do not improve user experience, their user numbers will be limited. We see that improving user experience is the core driving force for adoption, and from a regulatory perspective, the positive moments for blockchain are also very exciting."

With the establishment of clearer blockchain regulations, companies that were initially skeptical of blockchain are now taking it more seriously, as regulators are also taking it more seriously, which helps to enhance confidence in the technology, especially among well-known brands.

"Intellectual property-supported collectibles are winning," Kahn said. "After Flow's recent integration with OpenSea, NBA Top Shot has ranked among the top five hottest collectibles on OpenSea for four consecutive weeks. We delve 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 gone through very thorough scrutiny to ensure they are indeed what the fans want."

Kahn and Dapper Labs CEO Roham Gharegozlou had dinner 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 quick and efficient real-life R&D can more easily influence the final product, as the final product is digital.

"We provide this feedback to our product team and embed these insights into our products to ensure that we create the best fan experience, regardless of the technology we use to achieve this goal," Kahn said. "It's about what fans want, and we leverage blockchain technology to offer fan experiences that may not be available elsewhere."

Other places refer to the physical goods market.

"The technology in our products truly takes a backseat, leaving behind a meaningful, shareable, and valuable collectible," Kahn said. "Digital collectibles unlock levels of interaction that physical goods cannot achieve: they can be personalized, tied to access in the real world, or used for loyalty rewards over the years. They also have mixability, are lightweight, and have been global from day one."

But Kahn does not believe that the physical goods market will disappear anytime soon.

"I don't think brands will abandon their products. It's more about expanding strategies and looking for a few revenue sources that are less affected by fluctuations in 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. However, Kahn believes the next evolution of fan culture is mobile.

"We love being able to carry your most precious items with you on your mobile device, no matter where you are," Kahn said. "Trading in a physical environment is nowhere near as interesting as trading with people around the world from anywhere."

Looking to the future, Kahn believes that brands will continue to expand their strategies by interacting 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 is beneficial to them in the real world—that will be the secret to success."

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