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A Next-Gen Entertainment Franchise in the Making

What's obvious in hindsight often looks unlikely in the moment

I'll be taking some time off in July, and there will be fewer posts during that time. Have a wonderful summer and thanks for being a reader.

– Martin

The '21-22 NFT bull run was a wild time. In retrospect, we came out of it with a few key learnings:

1) NFTs can be an efficient capital formation mechanism

2) building an IP franchise is difficult*

*it requires more than an airy roadmap and limited execution skills

Enter Pudgy Penguins.

Luca and his team understand the mechanics of building a sustainable franchise business. The story's been told many times, so I'm not gonna tell it here.

To be successful in building an IP business, you need a few things:

- characters consumers can love

- an attention funnel that grows over time

- a participation model for consumers to traverse

Pudgy Penguins borrows the best practices from great, existing franchises to create this scaffolding.

The Disney playbook for cute characters and merchandising.

Mr. Beast (in my opinion, the "Disney franchise" equivalent of the social media age): social, viral content as an attention top-of-funnel.

They've also crafted an attractive participation model (from toys to premium digital assets).

The announced mobile game and the expanding retail partnerships, incl. Walmart (execution skills), along their rapidly growing web2 social presence is the most potent attention engine in the NFT space.

Future Catalysts

Two things to pull forward:

- L2, the onchain amusement park

- Hollywood’s pickle

The L2 (onchain amusement park)

Pudgy recently announced their ecosystem holding company, Igloo + the acquisition of Framer to build out their own consumer L2. The ambition can be described as that of building an onchain amusement park.

As more and more consumer crypto experiences emerge, they will separate into two categories.

- Planets: strong enough gravitational field to vertically integrate and build an ecosystem

- Moons: benefit from being within the gravitational field of a thriving planet

Pudgy Penguins is well on it’s way to become a planet. It can use the gravitational force (attention) to seed "in-house moons" (new IP). Even more interesting if they can also create an ecosystem that attracts outside moons to their gravitational field.

But, there’s another interesting catalyst, too.

Hollywood’s pickle: 🥒

The traditional entertainment industry is in a state of deep soul searching. IP franchises have driven the success of on-screen entertainment for decades. But, most of the big franchises are over-mature.

Creating and launching new IP is a high-risk activity (creating another Marvel sequel is the Hollywood equivalent to "Nobody every got fired for buying an IBM").

Hollywood is dependent on IP (compounding attention), but it needs fresh IP that resonates with the most attractive audience segment: younger consumers.

You know what's a great solution? Existing IP with an established connection to a fanbase (de-risking). When Hollywood is done buying rights to the 2010-20 era game catalog, they'll turn their attention to the next thing.

In summary, it's refreshing to see someone execute this playbook, building out a franchise with community ownership as the core and ultimate level of participation.

I have conviction that Igloo/Pudgy will be successful, but also create a path for future onchain cultural phenomenons to proliferate and thrive.