Move over the Bored Apes. Thanks to a deal with Walmart to sell stuffed versions of cute aquatic birds, Igloo Inc. is home to some of the world's most popular NFT collectibles.
by Maria Gracia Santillana LinaresForbes staff
aisland 17 The Walmart Supercenter in North Bergen, New Jersey is one of six supercenters that specialize in toys and games for children. The Christmas season is long gone, but one product is still flying off the shelves, even though the cartoon-style stuffed animals and plastic figurines inside the boxes are flightless birds. The adorable stuffed animals known as “Pudgy Penguins” are selling fast at more than 3,000 Walmart stores, as well as Amazon.com and his Ebay. For example, Polar Pete is an 8-inch yellow penguin who holds a carrot and wears a white pullover hat with a polar bear's face on it. Cowboy Carl, his 4.5-inch penguin, looks ready to make friends with his black sunglasses and tall cowboy hat.
The stuffed penguins are actually physical versions of non-fungible tokens (NFTs), digital collectibles that are currently selling for as much as $500,000 each on the cryptocurrency market. The cuddly toy equivalents of these virtual world collectibles sell in stores for $8 to $30. These include the upstart NFT brand Pudgy Penguins and the company that sells it, Miami-based The Igloo Company, which is currently thriving, while NFTs like Yuga Lab's Bored Ape Yacht Club and Chiru Labs' Azuki This is a major reason why leading companies are in decline.
Mary Beth Koss writes for Forbes
According to Dapp Radar, NFT trading volume in 2023 plummeted by more than 50% to $12.6 billion. His lowest prices for profile photo collections such as “Bored Ape Yacht Club”, “Doodle”, and “Azuki” have fallen by nearly 60%. In contrast, the virtual world price paid for Pudgy Penguins NFTs has more than doubled. Currently, the total market value of Pudgy Penguin NFTs has reached more than $400 million, with the cheapest virtual penguin selling for $45,000.
LLaunched in July 2021, Pudgy Penguins was created by four college friends who decided to get into the NFT mania. Just months after graphic artist Beeple sold a collection of NFTs for $69 million at Christie's auction house, the computer-savvy quartet has generated 8,888 images of stubby penguins, each worth about 0.03 cents. Minted as an NFT at a cost. Their collection cost him about $90 apiece and he sold out in 20 minutes, making a profit of over $800,000. Unlike other popular NFT collections of the time, where avatars were often pixelated, edgy, and grotesque, the stubby penguin featured bright colors, a small beak, and an adorable round face.
Pudgy Penguin was so successful that shortly after the first collection debuted, the founders launched the 22,222 edition of Lil Pudgy, a smaller version of the original collection. Their success did not last long. NFT prices began to fall along with the crypto market at the end of 2021, and to make matters worse, the Pudgy Penguin ownership community became disillusioned with the way the founding team managed their collection. The founding team, led by Cole Vilmain, a student at the University of Central Florida, had made grand promises to release a children's book and a game about a stubby penguin, but it was unclear when those would materialize. Their Penguin was even briefly delisted by NFT marketplace OpenSea. It all came to a head when Villemain hinted at a significant decline in December 2021. Many holders had speculated that it would be a virtual game, but were disappointed to learn that it was just a fishing rod accessory for Penguin. By Christmas Day 2021, Pudgy Penguin's price had fallen from its post-launch high of 2.7 ethers (approximately $10,200) to 0.55 ethers (approximately $2,330 at the time).
“We were inexperienced college students,” Villemain says. “I couldn't do what I wanted to do.”
Serial entrepreneur Luka Schnetzler, then a 23-year-old high school dropout known online as Luka Netz, primarily uses his influencer fame to sell branded merchandise such as T-shirts and hats. He has a track record of supporting.His clients include: Musician Kendrick Lamar, influencer brothers Jake and Logan Paul, TikTok collective The Hype House, and more. Nets also had success getting influencers to sell the costumes he bought and his jewelry on his AliExpress. Netz, 18, claims to have already become a self-made millionaire, and in his early 20s he served as chief marketing officer for clothing company Von Dutch and NERF competitor Gel Blaster.
penguin flying in the sky
Pudgy Penguin NFT prices have increased nearly 10x since March 2023, turning a $10,000 purchase into $105,000. Bitwise’s Blue Chip NFT Index Fund, which is comprised of the top 10 grossing NFTs, rose only 12%.
The Nets saw great potential in the struggling Pudgy Penguin NFT brand. After purchasing his Pudgy Penguin NFT, he immersed himself in the Pudgy Penguin online community, and after months of contract negotiations, he acquired Pudgy Penguins copyright ownership and first creator address (royalties) in April 2022. 2.5 million for $2.5 million. His strategy was simple. Build trust with Penguin owners, deliver on promised projects like video games and books, and expand revenue streams for your business, especially in the physical world.
Netz, now 25, says, “There are very few times in life when you have the ability to shape your future. This was an opportunity for me to do that.”
One of the first things the Nets did was secure funding for a Pudgy Penguin reboot. He sought out venture funds, sent direct mail to crypto investors, and ultimately closed a $9 million seed round led by crypto venture firm 1kx Capital in November 2022, the week FTX went bankrupt.
Strategically, Netz determined that Pudgy Penguins would be less reliant on royalties than most NFT companies. One of the big draws for artists and companies like Yuga Labs who create NFT collections is the ability to always recoup a 5-10% cut of secondary sales, which can help founders and creators earn billions of dollars. means receiving a fixed revenue stream from your transactions. Activities. However, a problem arose with this idealistic system. Since royalties are not automatically applied to payments, enforcement of these fees was left to his NFT marketplace. As the cryptocurrency market and NFT prices and volumes declined in 2022, marketplaces began lowering fees to remain competitive. The first payment was a royalty.
Pudsey Penguins has only earned $8 million in royalties since its inception, according to crypto data research firm Nansen. “Loyalty is not sustainable,” says Netz. “You can't control the price of Ether, and you can't control whether the market will enforce royalties.” Since its founding, Yuga Labs has made $59 million from Bored Apes, and Chiru Labs has made Azuki NFTs. The company has earned $43 million from the company, but royalties have dropped significantly in the last year.
Next, the Nets went to work building the Pudgy Penguin brand outside of the NFT enclave. By posting cute animations of colorful stubby penguins experiencing everyday challenges of Gen Z, such as taking a good selfie or going through a skincare routine, the stubby penguin NFT collection He has amassed a total of 1.3 million followers on Instagram and nearly 9 million views on TikTok. To monetize content as part of the Platform's Creator Fund.
Perhaps Netz's most unexpected innovation is Pudgy Penguin's presence on Giphy, a meme creation platform that allows brands to create short reaction clips that are sent via iMessage, WhatsApp, and other text messaging platforms. The stubby penguin's account recorded his 16.6 billion views, surpassing Disney's 16 billion views.
“The goal is to make Pudgy the most recognized brand in the world. It doesn't really matter what happens to it,” said 1kx Capital partner and lead investor in The Igloo Company's seed round. says Peter Pan, who is home.
Next came the retail boost. Netz's plans include everything from hats, pins and stickers to stuffed animals and plastic figures, and he was able to partner with his PMI Toys in Israel for manufacturing and merchandising. The first drop of physical products sold out in 48 hours through Amazon in May 2023, generating $500,000 in sales, the company said. Netz was then able to secure distribution in retailers such as his Five Below and Macy's. Finally, in September 2023, the Nets landed at Walmart, giving Pudgy Penguins his 2,000+ store launch. The company has sold more than 1 million of his toys to date through retail partners, generating $10 million in sales. Walmart is re-strengthening for next season, adding 1,100 more stores, and Pudgy Penguins will be available at Target in April. According to Omer Dekel, the Pudgy maker's CEO, the exclusive Pudge Penguins player could soon be coming to Walgreens.
NFT prices have been soaring as products have started flying off retail store shelves. Since Walmart's launch, the lowest price for a Pudgy Penguin NFT has risen from 4.2 Ethereum to a recent high of 20 Ethereum, or about $58,000. In total, Pudgy Penguin NFT sales have exceeded $800 million since Netz took over in 2022.
“They are nothing short of a masterclass in brand building,” said Juan Leon, senior crypto research analyst at Bitwise Investments of Puzzies.
○There's a big driver behind me. The success of the stubby penguin NFT This is an approach that shares royalties from physical toys and stuffed animals with current digital collection owners.
Because NFT holders actually own their own Pudgy Penguin intellectual property, royalties will accrue based on the sale of the associated physical version of the non-fungible token. Essentially, Netz's Igloo Company is licensing out the rights from the owners of the corresponding NFTs. As a result, the lucky owner of Wal-Mart's popular stubby penguin will earn his 5% royalty on net profits. To date, nearly 130 NFTs have been licensed as physical products.
To obtain a license, Pudgy Penguin NFT owners submit their NFT to a pool of potential characters within Igloo Company's in-house Overpass IP platform. Companies can choose to use them for their next toys, books, and even future games. Take, for example, “Pudgy Man Plushie,” a penguin who wears a superhero costume and reflective sunglasses. This toy can be purchased by Pudgy Penguin on his website for $29.99. Or you can buy it at various other online toy retailers. In January, someone paid $110,000 for an NFT, resulting in a small portion of the sale of the popular stuffed toy going to its new owner.
Netz's real-world loyalty scheme for NFT holders is not the first. Bored Ape Yacht Club and the owner of the Crypto Punk NFT own the intellectual property rights to the images and grant the owner the right to license them. A few products, including clothing, hot sauce, and even a cannabis company, have used images of bored monkeys and cryptopunks, but sales are limited.
But Luca Netz's adorable penguin seems to be a game-changer for the Metaverse. It proves that embracing NFTs is not only possible, but profitable as well.
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