What is NBA Top Shot and why is a LeBron highlight worth $208K? ‘This is a real market,’ Mark Cuban says
Pull up YouTube and type the words “LeBron James Nemanja Bjelica” in the search bar. The page will load with clips – one titled “LeBron James Wanna Murder Nemanja Bjelica With Dunk Then Stare Down” – of James firing down the lane and dunking over Bjelica.
Watch it free of charge. Replay it as often as desired.
On Monday, a NBA Top Shot user named “jesse” paid $208,000 for that highlight.
Except in this case, highlight might be the wrong word. So what was purchased? On Top Shot, the latest Internet craze, such highlights are referred to as “moments.” And what “jesse” (aka Jesse Schwarz) actually purchased is the NBA’s intellectual property of that moment in the form of a digital collectible sold through blockchain technology that gave him one of the 49 minted LeBron James Cosmic (Series) 1 Dunks.
Top Shot has received a lot of attention after rapid marketplace growth over the last week. As of Wednesday, the site had more than 350,000 active users and 100,000 purchasing users. Top Shot did more than $37 million in sales over a 24-hour period Monday, according to Cryptoslam, and buyers have surpassed sellers (slightly) in the marketplace.
The NBA and Players’ Association are in a revenue-sharing agreement on each transaction with Dapper Labs, which built and maintains the marketplace. NBA players open packs of moments on livestreams. The rise of Top Shot has sparked debates over the definition of “ownership” and whether this method can provide a blueprint for the future of the collector’s market.
Welcome to the all-or-nothing stakes of NBA Top Shot.
How NBA Top Shot works
The concept of digital ownership is the biggest hurdle to understanding Top Shot. Of course, believing in digital ownership means thinking an intangible item everyone and anyone can access at any time is capable of being owned, and that ownership leads to value.
Non-fungible tokens (NFTs) exist on a blockchain, of which there are an infinite amount. No two NFTs are the same and cannot be divided or multiplied (unlike Bitcoin).
NBA Top Shot launched in closed beta during May before its current open beta became available to the public in October. (Photo: Courtesy of Dapper Labs)
Each moment – a short video from multiple angles – on Top Shot is a NFT. This is how moments (aka highlights) are bought, sold and traded in the digital marketplace.
“NFTs in general, of which Top Shot is the first and a leader, could turn into a top 3 revenue source for the NBA over the next 10 years,” Dallas Mavericks owner Mark Cuban wrote to USA TODAY Sports in an email.
A different James dunk sold for $125,000 on Thursday, two days after a Ja Morant "Holo MMMXX" went for $100,000 — the same price somebody paid for a Zion Williamson block (also the most-expensive non-dunk sale).
Overnight, a Williamson rookie debut card, also a block, sold for $77,777. Vince Carter's final career three-pointer sold Monday for $64,990 — an example that career milestones could carry heightened value.
"It's a lot of fun," Schwarz said on ESPN this week. "I think you can see as the users grow — and they do astronomical numbers every day — I think you can see, like, how good the product is and how addictive it is. It's like day trading meets sports meets fantasy."
A self-proclaimed "huge" James fan, Schwarz has been involved in the sneaker collecting game, and he sees Top Shot as another example of that hobby.
"To me, art is what you want it to be, so now it's Top Shots," he said.
Cuban owns about 50 moments and spent about $600 total. He entered the market when moments were going for $2 and $3, including one of star Mavericks point guard Luka Doncic.
Moments are minted and then released into the marketplace through pack drops. The base set (most common) sell for $9, while more exclusive packs for higher-tiered cards go for more. Packs are currently sold out, but Top Shot has been organizing “pack drops” that double as site stress tests in which 5,000 users can purchase packs.
More than 90,000 people waited in the queue on Tuesday during a base set pack drop.
Once users make an account with Top Shot, they are eligible to purchase packs. If they strike out during a drop, they can hit the marketplace to purchase available moments – the current highest listing is $240,000, for a Morant dunk.
Top Shot’s recent popularity streak has affected the market.
“(It’s) near impossible to get a pack and the lowest cost pricing for a card is escalating quickly as the available for sale supply is being overwhelmed by the demand,” Cuban wrote. “That will be the biggest challenge: maintaining the equilibrium of supporting the existing prices in their marketplace while keeping pricing low for new collectors and investors. They may have to do HUGE mints of new packs and see how the marketplace evolves.”
Between Wednesday and Thursday, Top Shot minted 317,000 moments.
Top Shot's place in collector's industry
The trading card industry, and memorabilia overall, made a comeback in recent years before exploding in 2020.
Top Shot launched a closed beta to an exclusive group of about 30 collectors in mid-May and grew the community to a few thousand before moving to an open beta on Oct. 1.
“We want to figure out a way to bring real value to sports fans,” Caty Tedman, Dapper’s head of partnerships who oversees Top Shot, told USA TODAY Sports. “It’s a really exciting opportunity for fans to take part in a basketball economy.”
Issues in the physical card industry, such as condition and authenticity, need not be accounted for on Top Shot thanks to the blockchain. Additionally, prospective buyers can see exactly how much a moment has previously sold for, who has owned it and all dates of its prior sales.
Daily fantasy users were early adopters of Top Shot, which has already developed a weekly fantasy game for moments, called Swyssh. Hypothetical matchups can be simulated thanks to the digital nature of the item.
“That’s part of what makes the moments on blockchain great, is all of that data is on chain, and someone can tap into it to build something that maybe we never even thought of,” Tedman said. “It wouldn’t be impossible to do that with a physical good, but it would be really, really hard.”
Top Shot has been developing a mobile game, Hardcourt, for the last 18 months that should be released in the near future, Tedman added.
Thinking forward
The league and players’ association began exploring and researching potential blockchain applications, including digital collectibles, about three years ago. In 2019, the NBA, NBPA and Dapper announced a multi-year licensing agreement. (None of the parties would disclose the financial terms.)
Dapper had developed product pitches for several sports, Tedman said, but viewed the NBA in high regard because of its reputation as a forward-thinking, tech-savvy organization.
“They kind of always were at the top of our list of dreams partners,” Tedman said. “It just so happened that at the same time they were start to explore blockchain deeply as well, so when we came to the table together and pitched this consumer product, they loved it and they helped us along the way to make it better and better for their fans. Our pitch didn’t really did not waiver much from what you see today, which is particularly exciting.”
UFC also has a partnership with Dapper, and the company has spoken with basically every major sports league about how it would for their fan base, Tedman said. They’ll all be playing behind the NBA, which pounced on an opportunity to build a digital ecosystem while providing fans with even more ways to connect with the league and its players another revenue source.
Josh Hart of the New Orleans Pelicans is an early adopter of Top Shot and has opened packs on live streams and proclaimed that the concept exudes "swag." The Sacramento Kings’ Tyrese Haliburton hyped the product and attempted to convince teammates to join him on the platform.
My favorite quote from our @NBA_TopShot pack opening with @joshhart#NBA this weekend:
“There’s so much SWAG to this” pic.twitter.com/tgSp738Mcl
“We were surprised to see (player involvement) this early, but not surprised to see it at all … especially the guys who are leaning in and understand how to build a collection and understand pruning that collection and understand the churn of putting stuff back into the marketplace so you can buy more packs, it’s been super exciting,” Tedman said. “It’s super exciting that it’s so positive and we haven’t really gotten anybody saying, ‘I don’t get it,’ which really is a great sign.”
Players are invested: they keep 100 percent of the money from moments of theirs that they personally sell on the marketplace, Tedman said. On the flipside, the buyer will have little trouble proving it was previously owned by that player.
"We are excited about this new and unique partnership with Dapper and look forward to a continued collaboration with them on the future growth of this product offering," Josh Goodstadt, executive vice president of licensing for THINK450, which is the business arm of the NBPA, said in a statement to USA TODAY Sports.
Next up is the WNBA. Top Shot doesn’t have a launch date yet, but women’s moments will be available soon.
‘This is a real market’
Dapper has already seen what happens when a product like this fails.
In late 2017, Dapper launched a product called CryptoKitties. A CryptoKitty named “Dragon” sold for $170,000 after users initially flooded the market, which had essentially evaporated 18 months later.
“We learned that there needs to be scalability in a platform,” Tedman said.
Tedman adde Top Shot grew 10% week-over-week just working through the early days of the product before taking off.
“We need to be able to support that number of transactions if we want to reach our aspirations of being a global basketball product,” she said.
Technical challenges have presented themselves too. Top Shot began promoting a rare pack drop for noon ET on Thursday. The drop was delayed three hours before being pushed to Friday at noon at the earliest.
Concerns of online bots hijacking the queue, thereby locking out customers, drove the decision.
“We want to be responsible about this drop knowing how many collectors are excited for this Premium Pack drop,” Top Shot tweeted.
Top Shot has faced complaints for not having a smoother process to withdraw money; until two weeks ago, Tedman said, one customer service employee handled all of the verification needed to take money out.
The concerns are valid. But the believers are confident products such as Top Shot are the future. On Friday morning alone, a Steph Curry assist from the base set sold for $299, while a Bojan Bogdanović three-pointer (Metllic Gold LE) went for $2,900.
“Make no mistake,” Cuban wrote. “This is a real market with real collectors and real value. That’s not to say there aren’t challenges, there certainly are, but (intellectual property to NFT) is here to stay.”
Follow Chris Bumbaca on Twitter @BOOMbaca.
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