Is Fanatics Live About To Drop A Bomb On The Sports Card Breaking World?
The major trend in the hobby right now is leveraging market share from one field into another. PSA, eBay, and Fanatics are the most aggressive actors in this regard. Each seems to push its relative advantage to the limit to push out competitors, which they further demonstrated with the limitations placed on hobby shops.
The latest episode in this trend is the entry of sports memorabilia and card-producing giant Fanatics into the fray. They announced this week they would put a good deal of money and effort into a live-streaming platform named Fanatics Live. Will it work, and how will this influence the hobby at large?
The launch of Fanatics Live
Fanatics is already the biggest player in the card world and is set to completely dominate the hobby over the next few years. They currently own the rights to MLB cards and have secured deals to take over NBA and NFL rights as well.
They recently raised $700 million to fund this venture and others. The company is currently valued at a remarkable $31 billion worth of overall assets.
Now they are launching Fanatics Live, which will make up a new business division for the sports platform company. They will stream breaks of their products live on an app that will be launched later this year, most likely towards the of 2023.
The company has put Nick Bell in charge of the initiative. Bell is the former Vice President of Snap Inc., the parent company of Snapchat. Before that, he was Vice President of digital media at Fox News Corporation.
Among his contributions to Snapchat was the introduction of the Live Stories and Discover features. So, by bringing him in, Fanatics is putting a genuine heavy hitter in the social media space on the job.
And he is bringing that Snapchat spirit to the table. Bell said the following:
“There’s a lot of development to do around the format – shopping should become a byproduct of entertainment rather than how I think a lot of folks have been thinking about it, which is more akin to how we would think about QVC where it’s just about the shopping. So I think we’re moving to a slightly different world where it’s actually about the content and the community, and the shopping is the byproduct.”
Why is Fanatics launching Fanatics Live?
We are all aware of the entry of livestream platforms into the hobby. The most significant player in that space is currently Whatnot. But there is no shortage of livestream breaks and players. It is an important emerging market for sports card enthusiasts.
But the phenomenon of livestreaming far transcends our hobby, big as it may be. It has made particularly large strides in the fashion accessory and cosmetic fields. Alibaba, the Chinese e-commerce giant, launched Taobao Live in May 2016.
They linked their e-commerce stores up to entertaining online shopping experiences, using charismatic and relatable hosts. Soon everyone on earth was copying them.
In 2020 they made 7.5 billion dollars in the first 30 minutes of a single promotional presale event. The platform was just ridiculously successful.
Livestream Shopping Comes To America
Now everybody wanted in. Western brands began to follow in droves. Everyone from Tommy Hilfiger to Amazon has given it a try. Walmart launched Walmart Live (yeah, maybe Fanatics should come up with a more original name) and is doing massive valentines Day events as we speak.
American efforts so far lag far behind their Chinese counterparts. But considering that the US remains a more lucrative domestic market overall, that may soon change. And Fanatics is one of the American corporate giants leading the way.
Using this system has some significant advantages for sales platforms. First, the immediacy of seeing the products and interacting with hosts leads to much greater conversion levels than traditional advertising.
For example, a good ad may enjoy a 3% conversion rate, but a good live stream sale can pass 30%. So, the increase in profits can be truly monumental.
But perhaps the most critical advantage is brand loyalty, especially among the coveted younger demographics. Some brands have reported an increase in reach of 20% among consumers under 25 after launching a successful live stream platform.
What will Fanatics Live look like?
We don’t have much information about how Fanatics Live will operate. After all, the project is very much in its infancy. But considering the executive, they brought in and his background, you can bet they will try to make the live streams as gripping and entertaining as possible.
Bell explained, “This is not just about taking a product and selling it; it’s about creating this entertaining format and experience.”
We imagine they will steal; sorry, we mean to be influenced by the successful Whatnot formula. Appealing hosts, sales, and promotions will dominate. And because Fanatics has a massive reach and a ton of money and influence, they will be able to get any athlete or celebrity they want to host sales.
So, while Whatnot and others often have minor celebrities and retired athletes, you can expect massive names on Fanatics Live. Maybe not every day, but often enough. And they should be able to get the best talent to work as their regular breakers.
The increased reach of Fanatics Live
The positive side of this latest development is that it will increase the reach of the hobby. Fanatics has the money and know-how to bring new users onto the platform. Fanatics have the ear, and wallet, of most sports fans in America. I mean, what fan hasn’t bought a jersey, t-shirt, or cap of their favorite team?
And since Fanatics has a monopoly on that market, you have more than likely done it through them. Unless you are into the counterfeit stuff. Hey, we don’t judge.
“All collectors are fans, but not all fans are collectors. We have a big opportunity to really grow the hobby by bringing in people who wouldn’t necessarily classify themselves as a collector today and open them up to this hobby by the way of entertainment and a community where they can hang around like-minded people.”
When Fanatics bought Topps, they were already hinting at this step. CEO Michael Rubin said, “This hobby has so many people in the middle of it and is perfectly set up to have an integrated direct-to-consumer experience.”
Fanatics and breaking
Fanatics has announced that one of the main focuses of the new platform will be breaking. That surprises no one, as breakers have been raking in the big bucks in recent years. We will see an unprecedented link here as the card producers break their own products.
Is this a good thing for the hobby? In theory, this format will regulate the breaker system. However, as we have covered here extensively, the world of breaking is a veritable wild west.
Several shady actors are involved, and there are increased suspicions of inside deals between the breakers and card companies like Panini. The removal of some of the more unscrupulous outfits from the picture would benefit customers and the hobby as a whole.
An Unfair Advantage?
But there is no way around it; this is leveraging Fanatics’ control over the card production industry into other subfields of the hobby. Here they will threaten the breaker and live industry, the livelihood of many people and families in the business.
Now, the breaker world is not ideal, and many of us would not mourn the weakening of Backyard Breaks and Platinum Card Breaks. But many honest family outfits of breakers may go out of business. On the other hand, we recently released an approved list of the best breakers, and there is much to love there.
Then there is the problem of inside dealing and loading of breaks. There have been rumors, and even pretty compelling evidence, that Panini is providing marked boxes to their preferred breakers.
That is a real problem, and we will continue to cover it. But wouldn’t combining the most prominent card company with a streaming platform just make the situation worse? At least the potential that loaded boxes will be sent to breaks to encourage participation and make their products seem stronger than they are.
Then send weaker boxes to private customers. The temptation to increase profits by doing so might be too much for Fanatics. After all, the bottom line is the only genuine concern for large corporations of this sort.
Will Fanatics Live succeed?
It is hard to see how Fanatics Live doesn’t do well in the current environment. First, there is a large audience used to tuning into breaks. Fanatics has the muscle to freeze out the competition by refusing to provide them with the newest and most exciting boxes they need to compete.
As a result, fanatics will undoubtedly be able to out-promote their competition. And it is much easier to have a one-stop shop for breaking than look around for the best deal.
Fanatics also has another massive built-in advantage. A database of sports, well, fanatics, that it can leverage to its advantage. Between all the people who have purchased Fanatics apparel and Topps products, they have the details of close to 100 million relevant consumers.
Competition From eBay
eBay is the only actor with the potential to stand up to this juggernaut. The eBay Live app (yes, originality is at a premium nowadays) announced it would start selling cards back in June 2022. The e-commerce giant is undoubtedly aware of the potential of selling sports cards on eBay Live.
Their launch event featured: “Jess Mineo of Bleecker Trading will showcase iconic collectibles, including a 1995 Topps Finest Michael Jordan M1 Red Bordered Refractor PSA 9 MINT and a 1998 Kobe Bryant Skybox That’s Jam PSA 10.”
These will be the two platforms to watch in the sports card live streaming space. Which will succeed more? There is probably room for both. I can see eBay specializing in older cards and other brands, including the massive TCG market.
Indeed, the e-commerce platform is aware of its relative advantage in that space and plans to capitalize on it. That’s why eBay purchased TCGplayer, a marketplace for collectible card games like Pokémon.
The deal was worth $295 million and allowed eBay to take over their 600 employees, millions of customers, the base of online retailers, and even a few brick-and-mortar stores.
Meanwhile, Fanatics should be able to dominate breaks of new sports card releases. Both should be able to rake in hundreds of millions.
The final word on Fanatics Live
It feels like every major story in the hobby over the last two years is leading in the same direction. Monopolization and the leverage of advantages, some would say unfairly, into new streams of revenue. These big companies’ attempts to own every aspect of the market theoretically place them at odds with antitrust laws.
We like to prevent one company from being too dominant because, according to the Federal Trade Commission, it is crucial: “to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.”
Unfortunately, the expansion of Fanatics into breaking threatens to undermine this principle. Once other breakers are gone, what will stop them from jacking up Breaker prices?
Why should they keep quality up with no additional card producers? Why would they sell us the sound boxes when they can break the loaded ones for inflated prices? All these are problems we will be dealing with for years.
Regulating the breakers and getting more people in them will help control the breaker world. That is good because it’s like the wild west out there. But is it really an improvement if it replaces cowboys with robber barons and inflated prices?