Disney, the iconic, century-old brand known almost as much for its pursuit of technical innovation as much as its continually expanding catalog of entertainment products, is taking another stab at digital collectable non-fungible tokens (NFTs). This time it’s through a partnership with Dapper Labs, the Vancouver-based blockchain firm with experience building successful, consumer-facing Web3 apps including NBA Top Shot.
And thus, on Tuesday Dapper unveiled a new brand, Disney Pinnacle. It's a mobile-based application with an "early access, closed release" for invited users opening at 9:00 A.M. (aka a waitlist to join a testing and feedback phase). An official launch will follow “soon thereafter” on the Apple App Store and then roll out for web browsers and the Google Play store, a Dapper spokesperson said in an email.
I spoke with Dapper Labs’ CEO Roham Gharegozlou and Vice President of business development and partnerships Ridhima Kahn to get a better sense of what could be Web3’s next big breakout app. Dapper has had a history of homeruns, beginning with one of the earliest (if not the first) NFT launches ever, CryptoKitties, which clogged Ethereum so bad NPR’s “Planet Money” covered the news.
Then, in time for the 2020-21 bull market, Dapper released NBA Top Shot in a tie-up 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 involving other sports leagues, including the NFL.
Disney Pinnacle seems to follow the same track. Users will be able to trade digital “pins,” modeled off of the popular physical collectible category, featuring Disney-related IP. I have neither tested the app nor seen anything on-chain about the tokens on offer, but have been told the platform will host intellectual property from Lucasfilm, Pixar and Walt Disney Animation Studios. So picture Baby Yoda, Woody from “Toy Story” and Snow White as tradable assets.
“Digital collectibles that are based on maybe the most popular products ever … are a path to both adoption of [Web3 technology] as well as a way to show people what's possible,” Gharegozlou said in a video call. At a time when NFTs have not seen quite the bounce back as other crypto sectors or assets like bitcoin (BTC), the market does need 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 largest projects, at least in the cartoon animal “PFP [profile pic] space,” have reneged entirely on their Web3 promises. Rugs have been pulled, roadmaps abandoned and the projects with money in the treasury appear to be flailing.
It’s unclear whether NFTs will be used for ticketing in the mainstream, and major brands experimenting with nifty rewards points tokens — like Starbucks and Reddit (before it sunsetted the project) — have largely stood arms length 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 in Dapper's promotional material and in the 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, likely billions of them, and Super Fans. Young and old alike, there are a lot of people interested in all things Disney, including its theme parks, backlog of films and merchandise (as seen by the company’s net income of around $1.41 billion in Q3 2023).
Using established brands with built-in, engaged user bases has worked in the past for Dapper, too. Top Shots, while trading has slowed significantly since 2022, has accrued lifetime volumes above $1 billion (DappRadar) — not bad for the digital version of trading cards. At its height, Dapper was valued at $7.6 billion with the company itself becoming an active investor across the NFT and metaverse vertices and launching a $750 million ecosystem fund for its bespoke Flow blockchain.
Further, Gharegozlou comes from a background 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 earliest games on top of Bitcoin as well as early AR/VR platforms like Google Glass and Magic Leap. Kahn, meanwhile, came to Dapper from A16Z, where she focused on consumer apps, a spokesperson said.
While some of the magic may be lost when translating physical experiences into digital (like holding a pin of Eeyore), the Disney Pinnacle pins do have their advantages as “investments,” Gharegozlou said. This includes the social aspects of collecting in general:
“To collect and trade pins, the feeling of going to Frontierland and Disneyland and meeting an absolute stranger who shares the fandom that you do for a particular IP or a style of pin and then having your first trade with them is one of the most exhilarating feelings,” Kahn said. (This is an experience she may have actually had; she went to Disneyland like 18 times since starting work with Disney.)
But these social experiences are magnified and multiplied by being online; in the same way a message board heightens the types of conversations you’d have with collectors at a comic book store. There’s just more chances to meet like-minded fans. Plus, there’s something no nonsense about digital collectables that clarifies the fact collecting anything is often an investment:
“You've made a decision, you've invested money that you've earned in purchasing this pin. So it requires a little bit more of an investment,” Khan said. Of course, that isn’t to say there cannot be an emotional or sentimental reason for buying a digital good, or that people cannot become attached to their digital possessions.
Which brings us to the question du jour: are NFTs securities? This was the only moment the affable Gharegozlou wore any amount of concern on his face during a video call. He punted on the question, essentially saying it's a nuanced issue. There’s “long standing laws and precedent that collectibles — whether it's art, trading cards or something else — are not securities, and that doesn't change because it's digital collectibles,” he said.
The company — which has not yet raised the ire of the U.S. Securities and Exchange Commission (SEC), the U.S.’ top securities watchdog that has lately taken an interest in chasing down NFT firms — directed me towards an example of it “proactively engaging” with a Canadian regulator and a statement from the the Digital Chamber of Commerce spelling out 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 major motion to dismiss a class-action lawsuit filed against Dapper Labs and Gharegozlou, in New York, in which the judge noted the NBA Top Shot Moments in question likely qualify as "investment contracts,” and therefore could fall under SEC purview.
However, it does appear Dapper Labs is taking steps to block unqualified users from accessing the Disney Pinnacle site. For instance, at launch Disney Pinnacles will only be open to users 18-years-old and up, while the URL supplied by Dapper appears to either be geoblocking New York State or the U.S. entirely.
I asked about other restrictions around the apps, though did not hear about anything geographical, and should add the site wasn’t technically live when I was doing research for the article, which may impact findings. However, on Pinnacle 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 elsewhere around the world,” though I am unsure if that just means for the waitlist. (Will update if Dapper gets back.)
The regulatory question only goes to show the hurdles that bad policies can impose on well-meaning companies. Dapper’s Kahn called this a “partnership” with Disney, one of the most influential companies in history, which has previous experience in Web3 — primarily via a marketplace called VeVe. It’s unlikely these assets will be highly financialized or end up with maxed out leverage on Blur, though they’re as tradable as other NFTs, I believe.
Throughout the call, Gharegozlou and Kahn highlighted how Dapper and Disney tried to keep the average Disney fan in mind when building an “interactive and immersive experience” that non-native crypto fans could use. In other words the user base is digitally-competent Disney fans.
To that end, payments can be made using credit cards, ACH [via your bank] and various cryptocurrencies including bitcoin (BTC) and ether (ETH), “without worrying about extra fees,” Dapper said. The sign-in experience also eschews 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’s no official cap on the waitlist opening today, though the company is looking to keep it manageable. It's looking for “qualitative and quantitative feedback” to improve the app before it eventually, officially goes live.
Dapper, like the rest of crypto, has taken a hit over the past couple of years. It has had at least three rounds of layoffs since the market started to dip in 2022, and I have no idea the state of its portfolio investments. It’s still a sizable company (200 employees, 65% working on code) with a serious pedigree, which has also knocked out serious innovations in crypto accessibility and the tech running in the background (like account abstraction).
In talking with Gharegozlou and Kahn, it’s also clear they’re consummate professionals who know what to say and what to steer clear of. Avoid the deep technical concerns, because crypto shouldn’t be about the tech but about the experiences it provides. Avoid regulatory questions because at this point there’s no benefit to saying anything on the record. And don’t talk about the app much … probably because it’s unfinished.
All is well and good. The company, like its latest app, is a work in progress — and maybe a model for others.
CORRECTION: Fixes spelling of Ridhima Kahn's last name and a misattributed quote.