How Panini uses Web3 to create digital markets and collectibles

Globally, Panini is the biggest name in the sports trading card industry – a household name in its own right, with partnerships in place with global brands including FIFA, Disney and NASCAR.

In the past year, the company has begun to move into digital collectibles—particularly by experimenting with NFT technology to create scarcity and value with its digital cards in the same way it does with its physical collectibles.

While the timing of this move may have coincided with a dramatic crash in the global NFTs marketplace, Panini is pressing ahead with its plans. As Jason Howarth, VP of marketing and digital at Panini USA, told me, the main effect of this collapse will be to “weed out” those who simply moved into the market to make money and those who see long-term value in the technology.

He said: “We have focused on building a sustainable blockchain marketplace that is private and controlled, so we don’t have to worry about fake goods entering our marketplace… and the only way you can consume our NFT products is within our private blockchain.”

One reason NFTs make a lot of sense for business is that it allows them to take a cut of the valuable resale market. With cards in the company’s most beloved series, such as FIFA and the NBA, often trading hands for tens of thousands of dollars, this could create a lucrative secondary revenue stream.

Crypto collapse

Of course, NFT and the broader crypto space have been rocked recently by both a dramatic collapse in the trading value of its assets, as well as a series of scams and business failures. Most notable among these are the collapse of crypto exchange FTX and Silicon Valley Bank, which knocked out a number of prominent players and startups in the industry.

Do these failures suggest we’ve reached the end of the great Web3 experiment before it’s even taken off? Well, Panini doesn’t think so. Some believe that what we have seen is simply the equivalent of the dot com stock market bubble crash of 2000. The technology itself is good, but there simply aren’t enough truly valuable use cases to support the industry that has sprung up around it.

Panini USA has retained centralized control over its own marketplace rather than jumping headfirst into big web3 ideas like decentralization and user-owned online communities. The aim is to generate value in the market via interaction with customers and collectors rather than inflated valuations thanks to investments from venture capitalists.

Howarth describes this as building a “sustainable” market for NFT collectibles.

“I think it’s helped us weather the crypto storm,” Howarth tells me.

“We have a lot of exciting elements coming into the blockchain market; it’s going to be much more user-friendly and more user-focused, giving users the ability to see individual card sales data, package data, collector-by-collector collection data … so they really understand what’s happening in the market.”

So part of the philosophy is that while the move to digital collectibles may not provide the same tactile experience, collectors can instead immerse themselves in the statistics and data that can be created using a digital platform.

“We have a showcase where users can showcase their favorite NFTS; you also have the ability to see that if there is an existing NFT for sale, you can see its value and buy it with a single click.”

Unlike the vast majority of NFT marketplaces currently operating, users of Panini’s marketplace buy and sell collectibles using US dollars instead of having to go and obtain cryptocurrencies. This is a process that can be technically difficult for some and can also leave less cautious users vulnerable to fraud and scams.

Howarth says: “There was a lot of uncertainty… and people not understanding how to go out and get a crypto wallet and buy crypto, we wanted to let people just go and buy our product and the best way was to let transactions happen in US dollars.”

Hybrid collectibles

An innovation that drives engagement is the bundling of physical trading cards together with digital NFT versions.

Howarth says: “There are pluses and minuses to both. The physical is never going to go away; it’s the tangible element of having the product in your hand and being able to hold it and show it … that’s something that never is going to change. In fact, we continue to see growth in the physical trading card category globally in places like Asia, Australia, New Zealand and Europe.

“I think you’re going to have these tracks where both share [physical and digital collectibles] coexist.”

According to data from NFT sales tracking website cryptoslam.io, sales of Panini NFTs generate around $2.38 million in revenue per month – this includes retail sales and resale between collectors. This shows that collectibles continue to have a cultural relevance in an age where the attention of the public – especially youth – can be captured by a myriad of competing channels.

“It’s a place where people can separate themselves from the chaos of the world,” says Howarth, “and collect something they value, whether it’s a favorite team or a player. And connect with kids—I know my kids…they go into their rooms , and they’re on social media and playing video games, and you don’t always have that connection, but when you open a pack of cards together and talk about the players … that connection doesn’t go away.”

You can click here to see my full conversation with Panini’s Jason Howarth, where we take a deeper dive into the trading card giant’s future plans for digital collectibles and NFTs.

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