Manchester City Collaborate with Pudgy Penguins

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Pudgy Penguins 🐧 

Almost exactly two years ago, I wrote about a newsletter titled: what sports can learn from a Penguin NFT project.

It was a weird title, but it resonated.

Pudgy Penguins is IP that started out as an NFT project.

Yes, the type of NFT project that is mostly laughed at and made fun of because a cartoon JPEG was sold for ludicrous amounts of money.

But inside the industry and out, the concept of Non-Fungible Tokens was misunderstood.

The core concept of owning a digital ‘thing’ — be it art, ticket, CV or otherwise — will stand the test of time very well.

But during the NFT bubble, money was being made hand over fist by creators who had no incentive to do anything with their creations beyond… sell them.

For some things, like Art, that makes sense. It is customary for us to do that in the physical world. An artist creates a piece of work, and it is then sold to someone who believes that art is valuable. Or because they just like the look of it.

The issue for most NFT projects was that they had no business model beyond selling NFTs. And unlike artists, they can’t saturate their original supply of NFTs, because that would defeat the purpose of digital scarcity enshrined on the blockchain.

And Pudgy Penguins were no different.

During the hype cycle of 2020-21, Pudgy Penguins saw prices of these assets rocket — before slowly trudging down to 0.6 ETH ($1860 at the time) when crypto markets tanked. The price fall was seen as disastrous by holders.

So much so that they plotted to oust the founders of the project.

The community felt that the project was on the brink of collapse.

In April 2022, a young entrepreneur named Luca Netz offered 750ETH ($2.5m at that time) to buy the Pudgy Penguins project and IP from the founders.

He recalls his reasoning at the time, to NFT publication NFT NOW:

Since the takeover, Pudgy Penguins have once again become one of the most popular NFT projects in the market, reaching a ‘floor’ (buy-in) price of almost $20,000, peaking at $100,000 in December 2024. They have 2 million followers on Instagram, 700k+ on TikTok and 700k+ on X (Formerly Twitter). Their GIFs on GIPHY have reached over 60 billion views.

The success of their audience translated beyond the digital and into the physical.

In September 2022, Pudgy Penguins debuted a toy collection in 2000 Walmart Stores. There were 16 types of Pudgy Toys, ranging from $2.99 to $11.97. Each toy comes with a unique birth certificate that allows the user to claim unique traits for their digital ‘Forever Pudgy’ character inside Pudgy World, an online virtual world, by scanning a QR code.

Fast forward to Jan 2026 and retail sales have hit $13 million+ across more than 10,000 locations - includng Walmart, Target, Amazon, Walgreens. They're on their fourth Walmart reorder. They're projecting $20 million+ in retail sales for 2026, with over 2 million physical toys sold as of mid-2025.

The numbers are pretty remarkable.

Most NFT projects that accrued significant revenue through the sale of digital assets have focused on one market in particular: gaming.

With NFL and FIFA Rivals creators Mythical Games, they created the mobile game Pudgy Party, which saw 500,000 downloads in 2 weeks and over 1 million downloads in its first month, becoming the fastest-growing IP in Mythical’s successful portfolio.

Alongside this, Pudgy Penguins have also created an animated series and children’s books, spreading their IP further into entertainment.

Their sprawling empire, which began as a funny NFT project, is to be admired.

They have answered the complex question:

How do you generate value for your community, whilst driving revenue to your business without selling to your community — or breaking securities laws?

I, for one, am glad I am not solving that equation because it is exceptionally difficult.

Luca Netz, CEO of Pudgy Penguins, summarises it well:

NFTs gave us a way to decentralise IP.

And Pudgy Penguins are utilising it in a defining way.

They have created a way to allow their holders to monetise their digital content, without breaking securities laws, and have generated revenue themselves as a business without selling more digital assets to their existing NFT holders.

They have executed a strategy that allows their holders to monetise, whilst also being engaged in the community in novel ways, and created Web2 distribution funnels that not only strengthen their brand, but also drive real revenue through digital funnels and retail distribution partnerships.

Manchester City Partnership 🌑 

The deal with Manchester City was announced on January 15th, with products launching January 17th. It's a premium merchandise and collectibles line aimed at an 18+ audience - specifically not kids. These will be co-branded products leveraging both the Pudgy IP and Manchester City's crest.

For Manchester City, this is an easy partnership to do. They can leverage their brand and following, create a commercial structure that works for them where they see upside on revenues or even potentially a minimum guarantee.

For Pudgy Penguins, this feels like a pretty big milestone as it pertains to big, global IP, that they can leverage. The monetisation strategy that has worked so well for them ( toys, licensing, retail partnerships, mainstream brand collaborations), they are clearly doubling down.

The partnership announcement didn't mention NFTs. It led with "premium collectible and merch."

This came hot on the heels of Pudgy Penguins announcing an official Pudgy Penguins NHL collaboration for the 2026 Discover NHL Winter Classic. The collaboration includes fan events, limited merchandise, and special promotions running from December through January. They premiered the partnership at Art Week Miami with live activations alongside the NHL.

The pair of partnerships show that Pudgy Penguins are becoming a mainstream brand, built with onchain primitives, but monetised no different to traditional IP.

Concluding Thoughts 💬 

(1) NFTs were never the product

NFTs as the product for so many projects is so frustrating to look back at in retrospect. But it does follow most emerging technology cycles.

(2) Inverting the model

Pudgy’s ability to add business acumen to something that had the potential (and now reality) of becoming big, global IP. They used crypto native primitives to bootstrap community, value and cashflow — and then used tried and tested ways of monetising IP to then drive value back to their business and their holders.

(3) We are going to see a plethora of sports partnerships in 2026

2026 is going to be a big year for crypto and sports partnerships. World Cup 2026. Cryptoassets and blockchain technology are going mainstream. And I think we will see a wider variety of them, too, rather than just sponsorships.

(4) Pudgy are the exception to the rule, but more people should be thinking about IP in this manner

We are, as a planet and industry, desperate for new IP to emerge. It’s why there are so many remakes of movies, and Marvel keeps launching more movies. People love franchises, and once they fall in love with IP they want more. But the creation of original IP is waning and in desperate need of a revamp.

More Sports & Web3 Stories

• From the Street: Avalanche is betting on Payments & Rewards (Read more here)

• Football[dot] Fun debuts FUN token (Read more here)

• Nexo becomes Audi Revolut F1 Team sponsor in 4-year deal (Read more here)

• Scuderia Ferrari HP announces BingX as Team Partner (Read more here)

General ‘Stuff’ that Could Impact You

• Wall Street groups hire traders to wade into prediction markets (Read more here)

• Tom Lee's Ethereum Treasury BitMine Invests $200 Million in MrBeast's Beast Industries (Read more here)

• X Bans Access to ‘InfoFi’ Crypto Projects Amid ‘AI Slop’ Backlash (Read more here)

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