At this weekend’s Toy Fair in New York City, Israeli toy manufacturer PMI Toys brought piles of penguin-related merchandise like key hangers, action figures, and breakable igloo blind boxes. The Pudgy Penguins weren’t related to a television show, movie, or comic book. If you saw them in the store you’d just think they were your average kid’s toy. Which is to say, you’d never guess that the figures were born on the blockchain, as tie-ins to an NFT project that wants to revolutionize the toy industry.
“We want to be the face of penguins and we want to be the next generation of what today is a Hello Kitty or a Pokemon,” CEO of Pudgy Penguins Luca Netz told Passionfruit.
NFT Icy Chill
In July 2021, during peak hype of the NFT boom, a small group of teenagers formed the Igloo Company and released 8,888 avatars of penguins wearing clothing like shades, jackets, top hats, and monocles. The project was an immediate success, selling out in 19 minutes, raising over $81 million in sales (at the time), and had a profile in the New York Times.
But just a few months later in January, the original founders were voted out by the community after they failed to deliver on promises to create merchandise and allegations that they misused treasury funds. But while in the midst of turmoil, doubt in the NFT space, and a plummeting price, LA-based entrepreneur Netz, purchased the intellectual property for 750 Ethereum, which was roughly $2.5 million at the time.
“The founders weren’t capable of building it. It was probably the biggest drama in NFT and Web3 history,” the 24-year-old said. “I Kind of brought it back from the dead.”
Under Netz’s leadership, who had made his money in venture capital and online startups, the project raised $9 million in funding, started sharing new social media posts, created new media ventures, and has now amassed over $400 million in transaction volume since it started.
“I think Pudgy Penguins are just magical,” Netz said. “I don’t know what it is, but I think every time I see a Pudgy Penguin, it makes me feel a little bit better. It makes me smile, it makes me happy.”
Penguins in Toyland
Netz knew that he needed to bring the penguin out of the igloo so he went to PMI, whose COO Omer Dekel described his business to Passionfruit as “one of the edgiest toy companies out there” that wants to “be above the trend constantly.” Over the past 25 years, the Israeli manufacturer had focused on safer licenses like Star Wars and Marvel but more recently, PMI has gone for more obscure IP, like mobile games Brawl Stars and Stumble Guys.
“I can tell you that it was a very hard decision as a business owner because the investment we had to put into it was tremendous and so were the efforts to present the brand,” Dekel said. “It wasn’t an easy sale, but Luca promised that he would deliver and he did,” Dekel said.
According to Netz over the next “six to eight months” ensemble characters will be added to the mix, with stories written by John Derevlany, who has written for LEGO and Cartoon Network.
In addition, the Pudgy Media group has already made a fully open-world game where players can equip new traits to their penguins by inputting codes found on toys.
The toy line has already proven to be an immediate hit, selling over $500,000 of products on Amazon in under a day. Last week, the penguins launched at 2,000 Walmart stores, and according to Omer, the toys will soon be available in 132 countries.
Surviving the Winter
Since the NFT surge in 2021, most of these online collectibles have lost most of their value. Justin Bieber’s Bored Ape allegedly cost the singer 500 Ethereum (around $1.3 million at the time) but is now only worth about 26 ETH (or about $43,000). According to dappGambl, which analyzes crypto patterns, 95 percent of all NFT collections have lost all their value.
But Pudgy Penguins, with their cute avatars and plastic figurines, have survived where most NFTs have failed. The community for the series, which congregates on their Huddle site has managed to remain completely active and users who own one of their NFTs share in the royalties when something in the brand gets sold. But as to why these penguins have survived the NFT nuclear winter, it’s anyone’s guess.
“I think if you look at the NFT and really what it accomplishes, it’s very much a collectible with all of the pros and none of the cons that current collectibles have today,” Netz said. According to Netz, real-world collectibles can be faked and there’s no way to tell how rare something is, but because NFTs are on the blockchain, everything is cataloged and on the ledger.
Now, Netz just has to keep the momentum going.