Disney, the iconic, century-old brand known almost as much for its commitment to technical innovation as it is for its ever-expanding catalog of entertainment products, is making another attempt 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, Disney is launching Pinnacle, a mobile application that will be unveiled at 9 a.m. in an “early access, closed release” for invited users (aka a waitlist to participate in a testing and feedback phase). An official launch will follow “shortly thereafter” on the Apple App Store and then roll out for web browsers and the Google Play Store, Dapper Senior Product Manager Rachel Rogers said in an email.
I spoke with Roham Gharegozlou, CEO of Dapper Labs, and Ridhima Kahn, vice president of business development and partnerships, to get a better idea of what Web3’s next big breakthrough app could be. Dapper has had a history of home runs, starting with one of the first (if not the first) NFT launches ever, CryptoKitties, which clogged Ethereum so much that NPR’s “Planet Money” covered the news.
Then, in time for the 2020-2021 bull market, Dapper released NBA Top Shot in partnership with the National Basketball Association. Essentially just a platform for people to trade tokenized snapshots of NBA replay footage, Top Shots became one of the breakout apps of the NFT craze. Dapper quickly capitalized on the buzz and launched similar products for other sports leagues, including the NFL.
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Disney Pinnacle seems to be following the same path. Users can trade digital “pins,” based on the popular category of physical collectibles, with Disney-related IP. I haven’t tested the app or seen anything about the tokens offered, but I’m told 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 ever… are a path to both adoption of Web3 technology and a way to show people what is possible,” Gharegozlou said in a video call. At a time when NFTs have not yet fully recovered like other crypto sectors or assets like bitcoin (BTC), the market is in need of a moment of rejuvenation.
It’s clear enough that many of the crypto-native attempts to create valuable IP tied to NFTs have had a rocky start. Some of the biggest projects, at least in the realm of cartoon animal “PFP profile pictures,” have fully delivered on their Web3 promises. Carpets have been pulled out, road maps abandoned and the projects with money in the coffers appear to be faltering.
Also see: Report suggests 95% of NFTs could now be worthless
It’s unclear whether NFTs will see mainstream use for ticketing, and major brands experimenting with nifty reward point tokens — like Starbucks and Reddit (before the project was shut down) — have largely distanced themselves 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 a big deal. Dapper’s promotional materials and conversation with Gharegozlou and Khan indicate that the term NFT was avoided while emphasizing Disney Pinnacle’s mass-market appeal.
Disney has fans, probably billions, and super fans. Young and old alike, there are many people interested in all things Disney, including its theme parks, its backlog of movies and merchandise (as evidenced by the company’s net income of approximately $1.41 billion in the third quarter of 2023).
Using established brands with built-in, engaged user bases has also worked for Dapper in the past. Although trading has slowed significantly since 2022, Top Shots has built lifetime volumes of more than $1 billion (DappRadar) – not bad for the digital version of trading cards. At its peak, Dapper was valued at $7.6 billion, with the company itself becoming an active investor in the NFT and metaverse vertices and launching a $750 million ecosystem fund for its custom Flow blockchain.
Furthermore, Gharegozlou has a background in building consumer startups. As CEO of venture studio Axiom Zen, he built several products, including Apple’s App of the Year in 2015 called Timeline and some of the first games on top of Bitcoin, as well as early AR/VR platforms like Google Glass and Magic Leap. Khan, meanwhile, came to Dapper from A16Z, where she focused on consumer apps, a spokesperson said.
While some of the magic can be lost when translating physical experiences to digital (like holding an Eeyore pin), the Disney Pinnacle pins do have their merits as “investments,” Gharegozlou said. This includes the social aspects of collecting in general:
“Collecting and trading pins is the feeling of going to Frontierland and Disneyland and meeting an absolute stranger who shares the fandom you do for a particular IP or pin style and then having your first trade with them, one of the most exciting feelings,” he said. (This is an experience Gharegozlou may have had; Kahn, for her part, said she’s been to Disneyland 18 times since she started working at Disney — Gharegozlou didn’t give his number.)
But these social experiences are magnified and multiplied by being online; similarly, a message board increases the kind of conversations you would have with collectors in a comic book store. There are simply more opportunities to meet like-minded fans. Plus, there’s something no-nonsense about digital collectibles that often makes collecting something an investment:
“You made a decision, you invested the money you earned from purchasing this pin. So it requires a little bit more investment,” Gharegozlou said. Of course, that’s not to say 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 possessions.
Which brings us to the question of the day: are NFTs securities? This was the only moment when the affable Gharegozlou showed any concern on his face during a video call. He sharpened the question, essentially saying it’s a nuanced issue. There are “long-standing laws and precedents for collectibles – whether they are art, trading cards or anything else – are not securities, and that doesn’t change because they are digital collectibles,” he said.
While the company, which has yet to draw the ire of the US Securities and Exchange Commission (SEC), the US’s top securities watchdog which has lately shown interest in going after NFT companies, referred me to an example of that “ proactively engaged’ with a Canadian regulator and a statement from the Digital Chamber of Commerce detailing the differences between ‘financial’ and ‘commercial’ NFTs.
“Dapper Labs does not comment on discussions with regulators,” a spokesperson added in an email. The company recently lost a fairly large motion to dismiss a class action lawsuit filed against Dapper Labs and Gharegozlou in New York, in which the judge noted that the NBA Top Shot Moments in question likely qualify as “investment contracts” and therefore could fall. under SEC jurisdiction.
Of course, this is all well and good. And it appears Dapper Labs is taking steps to prevent unqualified users from accessing the site. For example, at launch, Disney Pinnacles will only be accessible to users 18 and older, while the URL provided by Dappers appears to be completely geoblocked to New York State or the US.
Also see: Dapper Labs’ ruling could spell trouble for other centralized NFT projects
However, I asked about other restrictions around the apps and didn’t hear anything about geographic information, even though the site wasn’t technically live when I researched the article. Promotional materials say, “Fans in Florida can now collect and trade Dynamic Pins in real time along with other fans in California, France, India, Japan and elsewhere around the world,” although I’m not sure if that just applies to the waitlist. (Will be updated when Dapper returns.)
The regulatory question only highlights the hurdles bad policies can impose on well-intentioned companies. Dapper’s Khan called this a “partnership” with Disney, one of the most influential companies in history to have prior experience with Web3 – through something called VeVe. These assets are unlikely to be highly financialized or ultimately gain maximum leverage on Blur, although they are as tradable as other NFTs, I believe.
During the conversation, Gharegozlou and Khan highlighted how Dapper and Disney tried to keep the average Disney fan (and superfans) in mind when building an “interactive and immersive experience” that non-native crypto fans could use. In other words, the user base is made up of digitally competent Disney fans.
To that end, payments can be made using credit cards, ACH through your bank, and various cryptocurrencies, including bitcoin (BTC) and ether (ETH), “without having to worry about additional fees,” Dapper said. The login experience also eschews the standard Web3 wallet portal with a Web2 option; Gharegozlou said you can log in “as a Disney fan,” which likely means using the company’s online login system or an email.
There is no official limit on the opening of the waiting list today, although the company aims to keep it manageable. And the company places the highest value on “qualitative and quantitative feedback” when developing its consumer-facing app.
Dapper, like the rest of crypto, has taken a hit in recent years. It has had at least three layoffs since the market started falling in 2022, and I have no idea about the state of its portfolio investments. It’s still a significant company (200 employees, 65% working on code), with a serious background that has also pushed out serious innovations in crypto accessibility and background technology (such as account abstraction).
It is also clear from conversations with Gharegozlou and Khan that they are consummate professionals who know what to say and what to avoid. Avoid the deep technical concerns because crypto should not be about the technology, but about the experiences it offers. Avoid regulatory questions as there is no point in saying anything official at this point. And don’t talk much about the app… probably because it’s not finished yet.
All well and good. It is a work in progress and perhaps a model for others.
