On Feb. 25, executives at Bleacher Report began mulling the idea of selling the company’s first ever NFTs. Ten days later, the Turner unit’s drop of digital basketballs banked roughly $810,000 in sales.
That’s how quickly companies are moving to capitalize on the red-hot market for non-fungible tokens, gaining popularity daily because of the meteoric rise of NBA Top Shot. It’s unclear if NFT is a fad or the future of merchandise and memorabilia, but there’s opportunity right now for those willing to experiment with limited-run digital products.
Bleacher Report actually achieved the bulk of the work in about 24 hours. On that Thursday, discussions about the merchandising approach to B/R Open Run, a 2×2 event held during NBA All-Star weekend, turned to NFTs. By the end of the day there was a running document about the necessary steps, and by Friday evening the digital assets were largely done. The final approvals and sales strategy unfolded over the following week.
“This was definitely an experiment for us,” said Tyler Stewart, the Bleacher Report executive who spearheaded the project. “It proved NFT drops are a viable business given the right circumstances.”
The speed—and success—of Bleacher Report’s first run of digital art demonstrates why entities of all sorts, from the NFL to the Associated Press, are taking a long look at NFTs and the opportunity they present. Though Stewart wouldn’t comment on the specific financials, any product that does $800,000 in sales with no supply chain, instant delivery and less than a week of design input is sure to generate interest, regardless of your business.
In the end, B/R auctioned off 10 “Gold Edition” balls, serial number #1-10, for each of the four rappers participating in the event. Those 40 items sold for 356.6 Ether, the equivalent of $589,000 at the time. The most expensive, the 2Chainz #1, sold for 38 Ether ($62,700).
The company also minted 600 “Silver Edition” balls—150 of each rapper’s design—for 0.4 Ether ($660). By Sportico’s count, the company sold 335 of those, for the equivalent of $221,176. The grand total, not including a cut of resale fees which B/R also receives, was more than $810,000.
Bleacher Report’s All-Star plans were originally delayed by the NBA’s own uncertainty about holding the event amid the COVID-19 pandemic. But by Feb. 22, Stewart, B/R’s vice president of brand and experience, said the company was starting to develop a merchandising plan, which would include collaborations with rappers 2 Chainz, Jack Harlow, Lil Baby and Quavo. Stewart’s initial idea was to create actual basketballs to commemorate the event. It’s a strategy they’ve used before; In 2019, B/R collaborated with Chinatown Market to sell custom balls for $70 each.
Within a couple of days, however, Stewart realized B/R could do more. Inspired in part by NBA Top Shot, which has now hosted over $330 million in sales, Stewart thought B/R’s longstanding blend of physical events and digital connections made it a good candidate for the latest trend.
To get started, he leveraged Turner’s internal blockchain knowledge, connecting that Thursday with Yang Adija, senior vice president of digital league business operations, growth and innovation. Adija helped launch Turner’s Blocklete Games brand, which gives users the opportunity to own, trade and compete with “digital athletes.”
GigLabs, which finds blockchain applications for brand IP, worked with Turner on Blocklete and helped Stewart get up to speed on the state of NFTs. It introduced him to OpenSea, a peer-to-peer marketplace for digital goods that has gone from hosting $1.5 million in sales a year ago to $8 million in January and nearly $90 million in February.
OpenSea co-founder Alex Atallah explained how B/R would “mint” the digital goods by creating a unique token for its online wallet that would be tied to a version of digital artwork. B/R creative lead designer Tyler Cohen created the digital assets—with two-dimensional versions to sell and 3D versions that could be rendered in virtual reality by the token holders. Once the token was assigned, the artwork could not be altered, and a digital signature would forever prove its authenticity.
By Friday night, B/R’s social, PR, marketing and talent marketing teams were already meeting to coordinate the announcement and sale. Over the next few days, the final designs were approved and the pricing for the drop was set.
“I definitely tried to manage expectations for myself and the crew,” Stewart said. Look, he told colleagues. This could work wonderfully. It could also amount to basically nothing. It was an experiment, after all. At worst, all that was lost was a few days’ work.
He breathed a sigh of relief when, at noon Saturday, the silver editions started “flying off shelves”—virtual shelves, of course. This is actually a thing, he told himself.
The first 2 Chainz ball ended up being the most sought after. “The bids kept going, from one Ether, to two, to four, to 10,” Stewart said. “We were like, ‘Wait, what!?’” The auction wouldn’t end until 10 minutes elapsed without a bid. The expected close time of 9:30 p.m. came and went. Ultimately two users, “justrealized” and “merovingen” engaged in a bidding war, pushing the price to 38 Ether, just under $70,000.
The vast majority of the Gold Editions, in fact, were purchased by a pair of users—“justrealized” and “lutz.” They accounted for roughly 84% of the Gold sales (the equivalent of $496,500), according to the blockchain ledger.
The $810,000 in initial sales aren’t the end of B/R’s involvement. Minters continue to receive a preset percentage fee on any secondary sales as well. (Only two of the Golds have been resold, both selling for higher than their original auction price.) An internal Google Drive document tracked the transactions, which steadily continued days after the event.
Now, the company is sorting out what to do with all of the Ether it has collected. Since Saturday, the digital currency’s value has fluctuated but risen in aggregate, and Bleacher Report’s $810,000 worth of Ether was worth more than $890,000 as of Wednesday night. Plenty of financial decisions lie ahead.
Stewart has also spoken with other B/R units this week, including House of Highlights and B/R Kicks, about the potential for NFT events. The WarnerMedia (Bleacher Report’s owner) corporate team is planning its SXSW presence and wanted to explore the possibilities as well.
Bleacher Report never abandoned the physical aspect of its latest merchandising efforts. Instead, it promised an actual basketball for each of the 40 Gold Edition buyers. Of course, those “real balls” are currently on a Pacific Ocean cargo liner. They could still be two weeks out. When the time comes to distribute them, only the gold token holders will be able to redeem them. They’ll do so via a custom link.
(This story has updated Tyler Cohen’s title in the twelfth paragraph.)