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Inside Upper Deck’s Strategy To Combine Digital And Physical Collectibles

The last few years have been very good for the collectibles industry and Upper Deck, the Carlsbad, California-based trading card company, is no exception. Upper Deck plays in the major leagues of the $1.5 billion global market for collectible cards and $6 billion market for trading card games, owning the global license for NHL Hockey, premium entertainment brands like Disney, AEW and James Bond, and agreements with individual players and player associations for autographs and memorabilia. But as discretionary spending patterns by consumers are starting to shift and contract, Upper Deck is broadening its focus to create new onramps for fans, collectors, gamers and sports enthusiasts.

Though the privately-held company declined to disclose revenue numbers, they characterized their growth as robust, and not just driven by the pandemic-era spike in at-home hobbies like trading cards. “We’ve seen steady 5-10 percent growth since 2015 with many of our brands,” said Upper Deck President Jason Masherah. “During the pandemic, we probably saw 2-3x expansion of the secondary market as a lot of GenX collectors took the time to go through their attics and rediscover their old collections, but spending is now going toward other areas, and speculative collecting tends to follow broader market trends.”

Besides a changing economic climate, Upper Deck is also facing stiff competition from Fanatics, the burgeoning sports collectibles juggernaut that signed up the NFL and NBA, outflanked Topps for the MLB license, acquired its now-diminished competitor, and may not be finished gobbling up rivals and partners. That leaves Upper Deck with dibs on ice hockey, the NHL players’ association, and alumni, which Masherah characterized as not as volatile as the more speculator-driven leagues (NFL and NBA), while also having long reach in European markets.

Part of Upper Deck’s strategy to hold its own in a competitive environment is diversifying its business. In addition to collectible cards and memorabilia, Upper Deck has developed two popular deck-building game platforms, Legendary and Vs, that give the company a beachhead in the lucrative hobby gaming world dominated by companies like Hasbro’s
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Wizards of the Coast and Asmodee. Upper Deck has licensed properties from Marvel, Dynamite Entertainment’s The Boys, James Bond, WB’s Space Jam and 20th Century’s Alien franchise among others.

In each of these areas, Upper Deck is adding digital components to the gameplay. “We have two digital games, Legendary DXP and James Bond Legendary DXP, in both the Android and iOS app stores,” said Masherah. “Integrating digital and physical cards is a big part of the company.”

The company is also bringing a digital component to physical collecting. Upper Deck debuted ePack, a digital trading card system, in 2016, and recently expanded to toys and comics over the summer with a new digital program called Collect Forever. In both cases, consumers buy digital tokens representing unique physical items that are maintained in a secure facility by Upper Deck. Consumers can redeem the tokens to take delivery on the physical goods at any time, or can buy, sell or trade tokens with other collectors, transferring ownership without shipping the physical item.

The system solves a couple of issues for collectors. “A lot of collectors share living spaces with folks who don’t appreciate collectibles and memorabilia cluttering up the house,” said Masherah. “There’s also a generation that does everything digitally, so we want to be there for them in the digital world.”

Collect Forever extends the program to comics and collectible toys like Funko Pops. Customers can order direct on the Upper Deck site and receive the digital collectible in their account. The physical item is shipped directly from the manufacturer to Upper Deck’s secure facility, where it is inspected for condition, encased in a custom airtight protective sheath, given a descriptive label with tracking code, and marked as “uncirculated.”

For fans who don’t live near a retailer, or are concerned about issues of shipping, damage in transit, customs, or storing unique items in their home, Mosherah says the Collect Forever program is ideal. “We’ve also democratized how variants are handled,” he said, talking about a hot-button issue in the world of comic collecting, where some issues are released with rare variant covers. “Instead of paying through the nose or losing out to a retailer’s best customers, on Collect Forever, if you pay cover price for one of our books, you have a fair shot at getting a variant as a random draw. That provides a nice value add at normal comic book prices.”

One digital innovation that Upper Deck is reluctant to embrace is NFTs. The company sat on the sidelines during last year’s massive crypto frenzy and now looks smart for doing so as the NFT market is off 97 percent from its 2021 levels. “We believe digital collectibles are an important trend going forward, but unfortunately, [NFTs] were more of a gold rush, and not many of the tech companies in the space really understood our industry,” said Mosherah. “We’ve seen situations where people spent a lot of money and lost it overnight. Collectors will stop collecting if they’ve been burned. We’re focused on building a system with integrity and transparency.”

Mosherah said that moving forward, the company is focused on creating more personalized experiences for fans, getting back to the fan convention circuit (Upper Deck exhibited at San Diego Comic-Con and NYCC this year), and expanding the digital programs. He also added that growth in global markets has been impressive, led by a traditionally strong Asia-Pacific region and increasing popularity in Europe driven by Upper Deck’s hockey license and the ePack program.

“We’re a disposable income industry,” he said. “We expect continued growth, but can’t predict or control what happens in the world.”


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