Yuga Labs Inc. helped popularize nonfungible tokens with its Bored Ape Yacht Club collection, first introduced two years ago. The cartoon illustrations of slack-jawed primates, decorated with various accessories and expressions, sold for millions of dollars at the peak of the NFT frenzy last year.
Now the bloom is firmly off the NFT rose, as it is with most things linked to cryptocurrencies these days. But for Daniel Alegre, the former Activision Blizzard Inc. executive who joined Yuga as chief executive officer last month, NFTs still have a bright future by serving as a room key to a world of gaming, events and e-commerce.
The company, whose 100 employees all work remotely, began its expansion into video games last year, developing time-limited titles such as Dookey Dash and in the background, its own virtual world called Otherside. Growing the latter has been an area of focus for Yuga since Alegre joined, he said, as part of a shift toward a blockchain-based version of the internet known as web3.
Yuga is also exploring ways to make its existing NFT collections, including CryptoPunks and Meebits, more useful than just digital artwork and offering them as a link to entertainment and shopping experiences through partnerships with retail brands including Gucci and Puma.
“Web3 can really transform community, creativity and connection,” Alegre said in his first media interview since taking over. “That’s what I’m here for.”
It’s a familiar mantra, proffered by every NFT project and aficionado over the last 12 months in a bid to make these icons more than just an expensive profile picture. But proving their utility and gaining mainstream users is easier said than done. Yuga’s gaming releases so far have been restricted to temporary mobile games and two short demonstrations of its upcoming metaverse — a far cry from the level of engagement the company says it’ll achieve.
Broader NFT market numbers aren’t in Yuga’s favor either. Global NFT sales were $736 million in March, according to data from CryptoSlam as of Wednesday, down 29% from the start of this year and marking a fall of 89% from the sector’s $6.4 billion sales peak in January 2022.
Like others in crypto, Yuga is also contending with an aggressive regulatory crackdown by US authorities on the nascent industry. The US Securities and Exchange Commission is investigating whether sales of its digital assets violate federal law, Bloomberg reported. A spokesperson for Yuga reiterated that it’s committed to cooperating with authorities on the matter.
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Game On
Despite the headwinds, Alegre remains sanguine, noting that the company plans to increase users’ access to its games and allow other companies develop products and events for Otherside. Since joining, he’s spent most of his time reorganizing Yuga internally to look more like a traditional business, splitting each of its NFT collections into their own mini-franchises.
Founded in 2021, Yuga was last valued at $4 billion after closing a $450 million funding round in March last year. It doesn’t plan to raise any additional funding this year, Alegre added, declining to reveal whether the business is profitable.
“We owe it to our community to be able to provide more frequent touch points, to let them see how the platform is evolving and be able to experience it more often,” he said.
A former Google executive, Alegre was announced as Yuga’s incoming boss in December, replacing former CEO Nicole Muniz. The move was a major step change from his previous role as president and chief operating officer of US gaming giant Activision where he oversaw the launches of some of the firm’s biggest franchises including Call of Duty: Modern Warfare and Overwatch 2.
But his time at the helm of the company also coincided with a period of turbulence, joining the firm at the tail end of a years-long scandal over sexual discrimination and harassment allegations, which culminated in employee strikes and a major lawsuit against the publisher. Alegre declined to comment on the matter, but said setting the right culture was an important part of his role at Yuga.
A lack of quality games that can compete with those of traditional publishers has been a thorn in the side of both Yuga and web3 gaming studios more generally, something that Alegre hopes to rectify. The company is still considering whether it will eventually move beyond web and mobile-based games toward getting its brands on consoles, he said.
The firm’s latest game Dookey Dash — a three-week venture where players dodged obstacles through a never-ending sewer in a bid to make the leaderboards — produced average revenue per user figures that “were numbers that I as president and chief operating officer of Activision Blizzard would die for.” As the game was free to play as long as users held one of Yuga’s NFTs, income was generated through selling passes to outsiders and in-game add-ons. He declined to provide specific figures.
Part of Yuga’s appeal, Alegre said, was that it had already done the hard work in becoming a brand that attracted influential users and kept them engaged — something that he argued gaming studios had yet to fully crack. “Realistically, large gaming companies would have to fundamentally upend their economic model in order for them to really think about how others can own part of the ecosystem,” he said.
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Tackling that market, though, has come with other downsides for traditional games publishers. Some of those who did venture into NFTs faced waves of criticism for getting into the space from players and staff, including French giant Ubisoft, which was forced to shutter an early experiment with the collectibles for its Ghost Recon franchise.
--With assistance from Christopher Palmeri.
