NFT disruption in platform competition: Evidence from trading card collectibles

The emergence of blockchain technology has sparked the creation of innovative product categories distinct from traditional ones. However, the literature has yet to address how the entry of new product categories on blockchain-based platforms impacts existing product categories on traditional platforms. This study fills this gap by examining the impact of NBA Top Shot (NTS) – a blockchain-based platform offering digital collectibles – on the pricing of sports trading cards (physical collectibles) on eBay. Using detailed transaction data, we find that the entry of NTS led to a 5.2% decline (US$ 27.7) in the prices of cards, along with a 4% drop in sales quantity and a 7% decline in sales value, suggesting that NTS cannibalizes demand for physical collectibles. Further analyses suggest that this effect is primarily driven by the demand side, with buyers’ willingness to pay decreasing by 10.3%, while sellers’ reservation prices fell by only 5%. We further examine the differences between eBay and NTS to understand how they drive price changes, arriving at three key findings. First, the cannibalization effect is concentrated on cards with digital alternatives, rather than causing a broad market shift. Second, cards with less scarce digital counterparts experience sharper price declines. Third, contrary to the conventional belief, high-quality cards and those sold by reputable sellers suffer steeper price declines, while low-quality cards and non-reputable sellers are less affected. Furthermore, we find that the substitution effect is not uniform. It is most salient for high-quality and unpopular cards. In contrast, for low-quality and popular cards, we observe a market expansion effect: NTS appears to attract new collectors to the hobby, increasing demand for affordable, widely recognized cards and even driving price increases in this segment. These findings contribute to our understanding of product-specific competition within platform ecosystems and highlight the nuanced economic effects of blockchain-based platforms. They also provide actionable insights for platform managers, collectors, and policymakers navigating the dynamic landscape of digital and physical collectibles.