Candy Digital Pushes New MLB NFTs After Divestment of Fanatics
Major League Baseball is releasing new digital collectibles for the 2023 season with Candy Digital, the NFT startup entering its third season as an official MLB partner. Candy Digital was founded in 2021 when the NFT market rose to new heights, but faced challenges in late 2022 and the beginning of this year.
The firm laid off more than a third of its team of around 100 people in November 2021, a source confirmed to Decryptand then in January, Fanatics sold its roughly 60% majority stake in Candy to a group led by Galaxy Digital.
In an email sent to Fanatics employees, Rubin wrote: “Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business.” However, Candy Digital CEO Scott Lawin told Decrypt on Wednesday that Fanatics has not completely pulled out of the startup.
“Fanatics was a fantastic partner and investor to get started with — they’re still an investor in Candy, albeit at a smaller level,” Lawin said. “We still believe there will be opportunities to work together in the future.”
He added that Fanatics, the sporting goods giant, is “a physical-first company, they make physical sports memorabilia.” Fanatics bought the classic trading card brand Topps, which also has its own NFT initiative. “Candy was from the start and continues to be a digital-first business,” Lawin added.
Candy Digital was announced in June 2021, with founding board members including founder and VeeFriends creator Gary Vaynerchuk, Fanatics CEO Michael Rubin, and Galaxy Digital CEO Mike Novogratz.
The firm quickly achieved a $1.5 billion valuation upon raising 100 million dollars in October 2021 in a round with led by Insight Partners and Softbank’s Vision Fund along with investments from former NFL star Peyton Manning, Connect Ventures and Will Ventures.
When Fanatics was sold, Galaxy and ConsenSys Mesh stepped in and raised a Series A1 round to chart a new path forward. (Mediation: Decrypt was incubated in ConsenSys Mesh but spun out in 2022. ConsenSys Inc. remains an investor.)
“I think when there’s volatility in the markets, people can have different opinions about the viability and focus of the business,” Lawin said Decrypt. He also addressed the resignations.
“We like a lot of players in the area, unfortunately we reduced some of our headcount at the end of last year – really with an eye to an environment that could be lower for longer,” Lawin said. “At the end of ’21 and the beginning of ’22, you had a ton of money flowing into the space and a lot of people jumping in who didn’t really have a long-term vision. They were there to try to make as much money as they could as quickly they could.”
Lawin did not mince words on so-called “tourists” in the Web3 world who have disappeared amid the crypto bear market and reduced NFT sales.
“I think those people are mostly gone,” he said. “The tourists are gone and the settlers are here to keep building.”
A new season
Ahead of opening day on Thursday, Candy Digital released its 2023 MLB Showstopper ICON series, an NFT collection of 43 MLB stars priced at $43 per pack with three player collectibles included per pack. That release sold out Wednesday in about three minutes, Lawin said.
Candy memory game tickets will continue to be offered this season after nearly 200,000 NFT tickets were redeemed by fans attending games last MLB season. A #1 edition of 451 total 2022 Pittsburgh Pirates season ticket collectibles sells for $400 on Candy’s secondary marketplace last year. Candy’s MLB collectibles are minted on Palm, an Ethereum sidechain built for NFTs.
MLB fans will still need to purchase a separate traditional ticket to enter the ballpark, but Lawin envisions NFT collector tickets eventually also providing access to events.
“I think it’s inevitable that the collector’s ticket and the admission ticket will come together over time,” Lawin said. “Being able to create a dynamic digital asset that’s a collectible that has information — potentially updated box scores, video content, etc. — and then being able to track that fan journey on the chain and have that information available to teams where they recognize who their true fans are… we think it’s super exciting.”
“There are a lot of big, established players in the access ticket space,” he noted. “We think the access ticket and the NFT ticket will be one, but that’s probably a little further down the road.”
Last year, Candy used 3D volumetric technology to scan real-life props from the set of Stranger Things into digital collectibles through its partnership with Netflix.
Lawin expects to extend this concept, as well as augmented reality (AR) integrations, to his other digital collectibles projects – which also include deals with the National Baseball Hall of Fame, NASCAR teams, WWE and Getty Images. ConsenSys Mesh will play a significant role in the development of Candy’s NFT products, he said.
Candy is joined in the sports NFT space by other major players such as Dapper Labs, which operates digital collector marketplaces for the NBA, NFL, UFC and LaLiga, as well as fantasy sports NFT company Hurt with which cooperation has been entered into MLBNBA, MLS and English Premier League.
Candy is an “Official NFT Partner” of MLB through its agreement signed in 2021, while Sorare became the league’s “Official NFT Baseball Gaming Partner” in 2022 and launched an NFT-based fantasy baseball game. They may be competitors with a shared MLB license, but Lawin sees a future where they can work together for the benefit of collectors and fans.
“I would love to find a way to work together with Sorare to bring benefit to their customers and our customers on a joint basis,” said Lawin. “One of the factors of sports licensing across any league is that there are different segments of rights on what can or cannot be done with those assets. I think from a fan’s perspective and collector’s perspective, if we could find a way to working together on, that would be a great result.”
