Author | Huo Huo
Produced by｜Baihua Blockchain
As Bitcoin broke through the $100,000 mark, altcoins led by Ethereum began to take off, and the NFT track also seemed to be reviving.
On December 6, the floor price of the NFT blue chip project Pudgy Penguins rose by more than 20% in 24 hours, reaching a maximum of 22.2 ETH (currently about 27 ETH), briefly surpassing BAYC (22.1 ETH). Moreover, Pudgy Penguins has been ranked among the top three in NFT market value since the beginning of this year.
From the "team strife" in early 2022 that caused the floor price to drop to 0.519ETH, to the current increase of more than 50 times, what has enabled Pudgy Penguins to get out of the trough and stand firmly in the ranks of NFT blue chips? What has the team behind it done?
01. Crossing the bull and bear markets
In fact, before November, the NFT market was in a very depressed state. In the second quarter of 2024, NFT sales fell by 45% to about US$2.28 billion compared with more than US$4.1 billion in the first quarter. In the third quarter of 2024, NFT market transaction volume fell by another 50% to US$1.1 billion. However, after the overall recovery of the cryptocurrency market in November, the NFT market also heated up, but it was not worth mentioning compared with the increase caused by Pudgy Penguins’ announcement to issue tokens.
Moreover, as early as February 17 this year, according to Blur data, the floor price of Pudgy Penguins briefly exceeded that of BAYC, which was the first time in the history of BAYC since 2021 that it was overtaken by other projects. In addition, Pudgy Penguins has maintained a strong upward trend in the first quarter of this year, with a cumulative increase of several times.
On May 12, Pudgy Penguins' Pudgy Toys series and newly licensed Lil Pudgys are now available in the collectibles section of Target stores, the second largest retail store in the United States. Pudgy Toys transforms digital collectible characters into popular physical product lines, seamlessly blending the physical and digital worlds for consumers.
On July 10, Pudgy Penguins teamed up with Web3 domain provider Unstoppable Domains to allow users to access Pudgy World through their own .pudgy domain. With the new integration, users will no longer need to submit Web2-based credentials (such as Google or Apple accounts) to log in to the virtual world. In addition, the integration also allows users to log in to their accounts without traditional passwords.
Then on July 16, the mini-game Pixelverse announced that it would introduce the fat penguin character "Pudgy" into the game, joining the popular elements of other cryptocurrencies such as the Dogecoin community. This integration allows players to play as characters in the Pixelverse game, and the Pudgy Penguins game will be officially released in 2025.
So how did Pudgy Penguins develop step by step to where it is today?
02. A bad start
Pudgy Penguins is a series of colorful penguin avatars launched in July 2021, which symbolizes "love, compassion and mercy". The vision is that the image of the fat penguin will become a beacon of good mood and positivity for everyone. A total of 8,888 pieces were issued on Ethereum, with a mint price of 0.03 ETH. They were sold out in less than 20 minutes after being issued. Although the price was flat in the few days after they were sold out, the price of Pudgy Penguins soon rose under the influence of the "zoo" market brought about by BAYC at the time, and the increase was 100 times compared to the launch price.
Subsequently, Pudgy Penguin holders called themselves "The Huddle" (the team) and "Pengus" (penguin friends), and early holders were able to obtain exclusive experiences of the fat penguin, related activities, intellectual property (IP) licensing opportunities and other benefits.
In the hot market at the time, Pudgy Penguins attracted celebrities such as NBA star Stephen Curry and Reddit co-founder Alexis Ohanian to buy it.
However, due to problems with the initial founding team, the project had a bumpy start. Former founder Cole Villemain was accused of operating a scam and misusing funds. Disharmony between the team and major investors in the project also triggered conflicts between them, causing Fat Penguin to open high and close low, and it soon lost market popularity.
In December 2021, the former head of operations of Pudgy Penguins failed to reach an agreement with the team on salary and responsibilities. Of course, due to his dissatisfaction with his boss, he once threatened to "restore Pudgy Penguins Fud to zero."
Then, in early January 2022, community members published a long article accusing the Pudgy Penguins founding team of failing to fulfill their promises in game production, recruiting developers, etc., and suspected that they wanted to "run away with the money."
This caused the community to be extremely dissatisfied with the founding team of Pudgy Penguins, so much so that they voted to remove the founders in Discord in early 2022. At the same time, the floor price of Pudgy Penguins also fell to a historical low of 0.519 ETH.
Angry community demands change, Image source: x.com
The project was subsequently acquired in April 2022 by a new group led by Los Angeles entrepreneur Luca Schnetzler for $2.5 million.
Pudgy Penguins has turned around after Luca Netz took over.
After taking over the project, Luca quickly launched new measures, including hiring a new COO, applying for X and OpenSea blue labels, launching Web2 and Web3 platforms such as the official Instagram account. After the account was opened, the Luca team remained highly active on Twitter and Instagram, and actively participated in various NFT activities, including establishing a Fat Penguin yacht party in Miami, producing community-exclusive Fat Penguin toys, releasing Soulbound Tokens, establishing a Fat Penguin-exclusive secondary trading market, selling Fat Penguin-exclusive peripheral clothing, etc., to increase social media exposure.
It can be seen that after the new team took over, Pudgy Penguins' price spiraled upward in the following year. In May 2023, Pudgy Penguins completed a $9 million financing led by 1kx, and then soared all the way in early 2024.
So in addition to media publicity, what other actions has the Pudgy Penguins team taken to make Pudgy Penguins the leading NFT PFP after Crypto Punks and BAYC?
03. The road to growth
From taking over in April 2022 to early 2024, Pudgy Penguins has accumulated and precipitated experience in brand building, IP development, and online and offline cooperative marketing. The mutual coordination of various links has laid the foundation for Pudgy Penguins' outstanding performance.
1) Focus on IP marketing to increase visibility
In April 2021, Yuga Labs launched BAYC, which attracted a large number of holders with the help of the bull market and continuous Airdrop, enhancing community cohesion. However, with the lack of development in the later stage, Luca learned lessons and realized that in a bear market, relying solely on Airdrop is difficult for the project to sustain. For NFT projects to develop in the long term, they must establish a sustainable source of income.
Referring to the development experience of Web2, Luca realized that intellectual property (IP) has great potential. For example, in the 24 years since 1996, Pokémon's revenue has reached nearly 100 billion US dollars. He then adjusted his goal to make Pudgy Penguins a world-renowned Web3 brand.
Source: createandlearn.net
Before the acquisition, the initial team had already had a rich understanding of the Pudgy Penguins NFT series. Therefore, the ecosystem is relatively complete. Luca believes that doing a good job in IP marketing will be one of Pudgy Penguins' most important core competitive advantages.
Pudgy Penguins has adopted a series of targeted strategies to convey Pudgy Penguins' brand concept and product information to the target audience through channels such as social media and offline physical product sales.
First, use social media channels to gain exposure and increase awareness. Pudgy Penguins has more than 17,300 related GIFs on the animated GIF image search engine, with a cumulative total of 24.3 billion views.
Pudgy Penguins has 1.6 million followers on Instagram, with tens of thousands of likes for each post. Pudgy Penguins has nearly 520,000 followers on TikTok, the overseas version of Douyin, with a cumulative likes of 16.6 million, of which the first pinned video has been played nearly 17.7 million times.
Pudgy Penguins Tiktok Account
From May to July 2024, Pudgy Penguins also launched the "#SaveThePenguins Challenge" campaign to raise awareness of penguin protection and raise funds for environmental protection organizations through augmented reality (AR) filters on TikTok and Instagram.
Pudgy Penguins also participated in a series of online marketing and offline activities, such as the Miami Art Basel, and collaborated with other industries.
In 2022, Pudgy Penguins collaborated with Green Kids Club to launch children's books; in 2023, it collaborated with Hologram Labs and Retail Monster to launch 3D models and penguin toys respectively; in May of the same year, Luca released Pudgy Toys, a physical toy based on its intellectual property.
On December 11, 2023, Pudgy Penguins announced the gaming platform Pudgy World, which will launch brand-related hero characters such as Pudgy and Peaches to enhance the player experience.
2) IP licensing enhances community cohesion
In order to deliver value to the community, Luca has established a closer connection and a shared win-win value concept with Pudgy Penguins NFT holders by sharing its success and commercial value with holders. He said that Pudgy Penguins plans to become the first franchise IP in the Web3 field, and the company has also launched the IP licensing platform OverpassIP to promote NFT authorization and materialization.
Pudgy Penguins has two licensing models: producing physical products through licensing the image of the holder and sharing the profits, or increasing brand awareness through social media exposure.
3) Produce physical derivatives to generate income
The main sources of income for IP include derivative sales, games, and film and television box office, among which derivatives and games are the key to monetization.
In this regard, Yuga Labs' IP development focuses on games and cooperates with physical brands to realize product monetization. In 2023, Azuki launched the PBT agreement and Ambush's joint venture, and is also exploring the monetization path of combining physical goods with digital experiences.
Luca chose IP derivatives. Starting from taking over Pudgy Penguins, he has been committed to IP licensing and product planning, such as the launch of physical dolls, plush dolls, decorative pins, etc. According to relevant reports, Pudgy Penguins' physical toys sold more than 750,000 physical toys in seven months and have been stationed in 3,100 Walmart stores in the United States.
On May 13, Luca said that sales of Pudgy Penguin plush toys have exceeded one million in the past 12 months.
In addition, the Pudgy Penguins brand has expanded beyond the NFT field and applied for trademarks in the fields of printed comic books, collectible trading cards, essence fruits, seasonal foods, board games, hoodies, hats, virtual goods, multimedia, etc.
According to reports, the Pudgy Penguins team will also plan to launch two arcade games and the Pudgie World game, of which Pudgie World is supported by zkSync.
04. Disputes and risks
The Pudgy Penguins project has also caused some controversy during its development. In addition to the unfulfilled promises of the early founders and team mentioned above, which led to a decline in community members' trust in the team, there are two other points worth noting:
1) Centralization Controversy
Although NFT projects generally promote decentralized governance, Pudgy Penguins' management rights change process is considered to be driven by a minority, which to some extent goes against the original intention of decentralization. In addition, some community members have questioned the management style of the new leadership team and are worried about the future development potential of the project.
2) The speculative nature of NFTs
Like other NFTs, the price of Pudgy Penguins fluctuates greatly. Some people believe that the project still relies more on market hype than real value creation. The physical doll user audience and Web3IP lack a good fit, which is not enough to promote the further development of Pudgy Penguins in Web3. Some users also complained that it was difficult to make a profit in the secondary market after purchasing NFTs.
05. Summary
Pudgy Penguins' goal is to create the world's first great web3 IP company and become one of the first globally recognized brands and IPs in the NFT field. At present, there is still some way to go to achieve Pudgy Penguins' lofty ideal.
Due to various opportunities, Luce has allowed Pudgy Penguins to achieve relative success in this cryptocurrency winter through similar two-layer games and IP-centric models. However, given the slightly "outdated" NFT narrative, it remains to be seen whether Pudgy Penguins can revive the industry's tone and continue to develop.
What do you think about the future of Pudgy Penguins? Feel free to leave your comments.
