Feb 22, 2024 - Business

Pudgy Penguins' Luca Netz on democratizing brands

Photo illustration of Luca Netz surrounded by a repeating pattern of penguins, with one penguin in gold.

Photo illustration: Axios Visuals. Photo: Courtesy of Pudgy Penguins

Luca Netz, the CEO of NFT line Pudgy Penguins, the one NFT line that's bucked the downward trend in the blockchain market over the last year, has got his eye on making it the number one brand in the space.

Why it matters: Non-fungible tokens have made something new in the world: a proven means to get a new IP brand off the ground as early supporters profit from its success.

  • "When you look at where the future is going, people want upside for their fandom. That's why I believe the stuff is going to completely flip the IP business on its face," Netz told Axios in an interview.

Between the lines: The Pudgy Penguins, a collection of 8,888 procedurally generated profile pictures of penguins, has had an excellent year.

  • It's closing deals with major brands, recently expanding a collaboration with Walmart to 3,100 locations where customers can buy penguin toys connected to the characters of previously existing NFTs.
  • It's the third ranking NFT collection by market cap. Its floor price, the price of the cheapest NFTs in the set, is around $58,000 — closing in on blue chip brand Bored Apes.

What they're saying: "If we become the number one NFT project, I don't believe that's a net negative. I think that's a huge net positive," Netz said.

  • The penguins are ideal to lead the market, he contends, because they have such a pleasant, positive image with broad appeal, one that can appeal to anyone in the world.

What we're watching: The Huddle (a shorthand for the brand's community of holders) will soon launch an interactive experience called Pudgy World. All holders of its NFTs and its newest toys will have access.

  • The brand is a long way from the first to try this. Bored Apes have an open world under development, as does the DeFi-oriented Aavegotchi, along with extremely open Decentraland and even a cadre of B-team projects have banded together to make a shared universe.
  • The difference for the penguins will be distribution, Netz says. His team has been cranking out content on Tik Tok, Instagram, and — notably — Giphy.
  • With that last one, it's getting millions of personalized, Pudgy branded messages in front of people on a 1:1 basis. With that brand connection with the public, it believes it can sell people on trying out its game.

Netz hinted archly at what to expect, "The idea of hundreds of penguins playing around in an open world ... is something that the world has seen before," Netz said, without adding more detail.

  • "I don't believe gameplay is the underlying factor of what makes games fun. What makes games fun is making friends and playing with other people."

The intrigue: As CEO of the brand, Netz has authority of the broad direction of all its IP, but individual owners can profit off their penguin NFTs.

  • And when Netz cuts a deal that involves the use of a specific penguin in the collection (like with the Walmart collaboration), he licenses it from the person that owns that NFT.
  • In fact, his team has created a mechanism for outsiders to license specific NFTs from their owners.
  • That's direct upside. There's also indirect upside: As the brand becomes more recognizable, the value of all its NFTs rise. So every time he closes a deal, that should lift the collection's renown a bit.

The bottom line: Netz said the company's success since he acquired from its creators it in 2022 has come down to "doing what the space has ultimately what the founders wanted to do, which is build a real business."

  • "I think everyone's now emulating us."
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