What to expect: 1634 words a 6.5-minute read.
Intro
GM GM, make the wise decision trainer.
Alright so why did I go down this rabbit hole? As most of you know depending on when you started reading this newsletter, I am an avid pokemon card player and card collector. It is a form of gambling, fun and with my addictive nature, it is a release. So why am I writing about this company when they don’t even pay me?
I’ve been thinking about the correlation between sneakerheads and NFTs or TCG collectors vs NFTs. This is a common theme among many of us degens. A lot of the behavior we see in those subcultures are very prevalent in NFT culture.
None of this is new information for many of you, but nevertheless I wanted to explore this intersection of common sectors I like, how they collide and how blockchain tech sits in the middle of all this. In crypto we have a sense of trying to add blockchain to everything similar to how you can put AI in the middle of anything right now and people will eat it up. But there are bull cases where blockchain tech is ripe to change an industry and I think this is one of those cases.
So let’s dive in!
Trading Card Game Background
This is a deep dive into Courtyard.io, a platform powered by blockchain and protected by Brinks. It empowers card collectors to take control of their collection with a true digital ownership representation on the blockchain.
Some background to begin with: the global trading card game market is projected to grow from $6.39 billion in 2022 to $11.57 billion in 2030, almost double the increase. The market is expected to expand rapidly, at an 8% rate.
When looking at this from age demographics, divided into adults and teenagers, the teenager segment accounted for about 65% of the total market share in 2022. It's expected to keep growing significantly. From a card type perspective, character cards, autograph cards, or image cards are anticipated to continue dominating in the coming years.
If we consider sports cards and non-sports cards, sports cards only capture about 40% of the market. So, 60% of the market is non-sports related cards, such as Magic the Gathering and Pokemon. What's driving all this? Innovation and the rise of global liberalization are key growth drivers.
Trading cards are not only used as entertainment but can also be used as educational tools, aiding in critical thinking. If you've ever played Magic the Gathering Arena online or TCG Pokemon online, you definitely need some critical thinking skills to be successful. There are also tournaments that reinforce this.
Another key factor, and this is my personal opinion, is that Millennials are one of the first generations to grow up with specifically non-sports cards, like Pokemon and Magic the Gathering. This is important because as mentioned earlier, only 40% of the market is driven by sports cards. As Millennials move into higher positions and accumulate wealth, our affection for Pokemon cards, Magic the Gathering, and other types of cards like Yu-Gi-Oh, Digimon, will escalate the popularity of unique trading card games and continue driving the market.
This trend will not only strengthen among teenagers but also among adults, as Millennials age. If we look at it from a regional perspective, North America accounted for about 50% of the global market in 2022 and is predicted to continue being dominant. This is largely due to trading card games getting popular in Canada and the U.S., again because Millennials are getting older.
In Europe, higher growth trends and more consumer inclination to purchase cards are expected in countries like the UK, Germany, and France. This trend is evidenced by trading card grading companies expanding into Europe. Currently, European customers have to use an intermediary to get their card graded. But now, PSA is expanding to Germany for the first time, a big development for European enthusiasts.
This expansion will continue solidifying the trading card game market for people abroad and open new avenues for market growth. The games continue to be affordable and cater to both young and adult audiences, especially as Millennials keep getting older.
The current generation continues to age and secure stable jobs. They'll be able to afford all this. Evidence of this is apparent in Post Malone purchasing a $2 million card (yes it was MTG but the thesis remains) and the skyrocketing demand for Pokemon cards (Andre Jikh is a prime example).
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Courtyard.io Background
So, where does Courtyard fit in all this? Courtyard is a Web3 company that recently secured $7 million in seed funding. It's a Y Combinator company. For those unfamiliar, Y Combinator is a prestigious incubator. They take, I believe, 10% of every company that goes through their program. They've successfully incubated a vast array of tech companies, including Uber, Instacart and more.
Courtyard's business model and distinguishing factor is their focus on digitizing and offering digital proof of ownership. They deal with items such as sneakers, NFTs, and Pokemon cards. They also work with a third-party, Brinks, a significant player in the asset security space. This partnership lends them credibility in the market. Courtyard aims to establish a marketplace for sneakers, collectibles, and fine art, similar to what Avant Art is doing currently.
The founders, including Nicolas Lejeune from YouTube and CTO Pauline Anduron from OpenSea, have backgrounds in major tech companies. Their mission is to enable remote ownership of valuable items. This is particularly useful for items like sneakers that can degrade quickly if not stored properly.
Courtyard has recorded over 118 ETH in volume and over 2600 in sales. Their most recent sale was a rare Japanese promo full art Pikachu Mario card, which sold for $49.50 USD - approximately four ETH. The number of holders is consistently increasing, as evidenced by the graphic below.
Courtyard stands out in the market due to its user-friendly approach. Instead of heavily focusing on typical schemes leveraged by other projects they focus on what matters. If you've ever bought cards on TCG trading, eBay, StockX, or similar platforms, you know it can be frustrating. The search function is often inadequate, and items can be misclassified or mistagged. Getting unstructured data and making it structured is never a fun process, but it can lead to amazing results. One advantage of being “only a tcg marketplace” vs others is that they can deliver the best experience to us (crypto and non crypto native folks).
Courtyard is focusing on improving the user experience of purchasing cards. They aim to make the process fun and straightforward. The new features launched on their website are designed to simplify searches for items like PSA 10s. The blockchain's ability to support metadata is also being utilized to its full potential.
Making it more structured leads to easier use and a better user experience. For those unfamiliar with crypto as a whole, there is a custodial wallet with Courtyard. They're able to assist with backups. However, as we're all DeFi or Web3 decentralized maxis, it's crucial to do your own risk analysis or whether you trust their custodial wallet or not (DYOR).
If you want to send your rare cards in, Brinks is a big company; read the T's and C's. It's recommended to take your cards out and put them on your personal wallet. You don't have to worry about that. You can still trade them, sell them easily, and always redeem for the physical card itself via Brinks. This is a really awesome process, with some nice arbitrage opportunities here and there.
Pokemon Go revitalized the trading card game for many people around its 20th anniversary. If you came back around then, like I did, I'm sure you collected up until Aquapolis or thereabouts. After Pokemon Go, the game took off. Many people were playing Pokemon Go when they launched Pokemon Evolutions. That set did really well; it was a 20th anniversary reimagined version of the original set. For all the millennials out there, it was the perfect set to come back into. The popularity has been on the rise ever since. Looking at Google Trends, the rise of Pokemon and trading cards as a whole continues to grow.
S4mmy.eth
Courtyard is currently focusing on Pokemon, but the sky's the limit.
Conclusion
With other TCGs out there like Yu-Gi-Oh, Digimon, and Magic the Gathering, which also have a crazy following and strong IP. Things are looking really good for Courtyard and their positioning in the marketplace. If they can get their sales to be report to Pricecharting and other aggregators more and more casuals will begin to pay attention to Courtyard and what they are doing.
We also have sports cards which make up 40% of the market as well which has a strong following. VeeFriends has some cards as well. Courtyard has also experimented with Sneakers, with an app called Sneaks. The more and more collectibles that exist out there, the more they can position themselves in these markets once they have lockdown one. Let me know what you think below or feel free to share with a friend.
I wanted to thank Jake (not from State Farm) from the Courtyard team for answering any questions I had.
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