Cartoon-ape NFTs are ubiquitous in crypto circles thanks to the success of Bored Ape Yacht Club, but are they just a flash in the pan until something buzzier comes along? Yuga Labs, the company that created the brand, has just trousered $450m of funding led by VC firm Andreessen Horowitz to avoid that fate.
That’s a seed round, believe it or not, which values the company at $4bn. For comparison, Tencent Music’s market cap is currently $8.6bn, while Warner Music Group’s is $18.6bn. The news follows Yuga Labs’ recent acquisition of two other popular NFT brands – CryptoPunks and Meebits – and the launch of an ‘ApeCoin‘ token, with a DAO (decentralised autonomous organisation) to govern it.
These are big, bold plans for a brand that many people initially saw as a novelty. Some novelty: in February 2022 alone Bored Ape Yacht Club NFTs generated around $110m in sales, while in late January you needed the ethereum equivalent of $295k to afford even the cheapest ones.
Besides generating and selling more NFTs, Yuga Labs is expanding into ‘play-to-earn’ blockchain games, including its own metaverse called Otherside which it has teased as launching in April. The company told The Verge that it is working with several games developers on Otherside, and that it won’t just be restricted to owners of NFTs from Yuga Labs’ growing collection of brands.
A recently-leaked pitch deck published by news site The Block revealed that Yuga Labs itself made $127m of revenue in 2021 (note: a separate metric to sales generated by the ape NFTs) and is predicting $455m in 2022 fuelled by sales of virtual land – this is where Otherside comes in.
All of this, and music too, thanks to two partnerships to create avatar bands with Universal Music Group’s 10.22PM label, and with producer Timbaland.
Not everyone is a fan of what Yuga Labs is doing: this article on tech site Platformer, for example, questions the strategy around ApeCoin and whether its separation from Yuga Labs is as clear as the company claims.
This kind of criticism is useful to read alongside the excitable hype (and sky-high valuations) in the NFTs world in 2022, as the music industry continues to explore exactly what this can do for artists and rightsholders in the long term.
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