Closed Alpha: Marvel, Disney & Superman fly into NFTs

October 04, 2022

Each week we take a deeper dive into a web3 company, welcome to Closed Beta. This week a New Zealand company called VeVe.

Digital collectable marketplace VeVe launched in September 2021. It's the child of Singapore based parent company Ecomi. But don't be fooled it's very much a New Zealand company and its quietly been growing an impressive loyal fanbase with subtle web3 integrations.

Using immutascan we can get a picture of how well the company is doing as a whole.

  • 646,533 unique owners have a VeVe NFT

  • They mint between 10k-60k NFTs per week in blind box format with varying rarities

  • Collectibles mint at $7-$60 depending on the release

  • Royalties start 2.5% for standard NFT's + 8.5% for Marvel, Disney & DC

  • Currently you can only buy and cash out via USD (Fiat) with the later incurring a 10% fee.

VeVe sells NFT versions of famous comic books and collectables from Disney, Marvel, Batman, Monster Hunter, NFLPA, DC Collectibles, Superman and more. Comics like Amazing Fantasy #015 the first appearance of Spiderman released on the platform last month with the secret rare edition (250 copies) fetching $20k on the secondary market.

The Vision & Team

It's 1999 you wake up at 7 am but before you go to school you grab your bowl of cereal and sit too uncomfortable close to the TV, you need to know what that yellow creature called Pikachu is up to this week.

I probably described your childhood or your kids just now. That wouldn't have been possible without a company called 4kids which brought Pokemon and Yugioh to the west from japan and onto television in the late 90’s. Its founder Alfred Kahn is now the Head of licensing at VeVe. Additionally, David Yu and Daniel Crothers VeVe's co-founders probably played a role in how you were able to open a pack of Yugioh or Pokemon cards in the 90's if you lived in APAC. This team understands intellectual property partnerships.

Veve takes this nostalgia and packages it up and sells in its digital collectables with an insanely profitable blind box format (gachapon).

Platform & Solution

You won’t find VeVe NFT’s on the Immutable marketplace, Opensea, Sudoswap or the likes. VeVe has taken a conservative approach to showcasing web3 features to its user base, operating a private orderbook on immutable's L2 blockchain. There is little mention of crypto or NFT’s in its marketing, favouring the term digital collectable and the majority of its volume happens on its mobile app through gems that can be purchased with Fiat currency.

It doesn’t feature any extensive interoperability as of yet, opting to hold NFT’s in custodial wallets for its users and enabling KYC for purchases to help alleviate bot problems for collectable drops and enable payouts off the platform.

This drives a very smooth minting and collecting experience. Purchasing a comic from either the secondary marketplace or a primary release is delightful, including stocking up my wallet with gems. I have experienced several issues with 2FA and the browser application.

It also focuses heavily on another emerging industry Altered Reality (AR) allowing you to showcase your comics and collectables in digital vaults or read them on your table.

Business Model

Veve probably differs the most from current marketplaces solutions. Due to its choice to run a private order book and not feature extensive interoperability with custodial wallets, it can afford to charge high fees increasing its control as a distributor.

Secondary Market Fees

  • 2.5% for standard collectables in addition to Licensor fees

  • 8.5% for Disney / Marvel / High profile IP

Payouts

  • Must have at least $1000 gems in wallet ($1k USD)

  • No payouts over $50k in a 7 day period

  • 10% fee on payouts from their platform and only into USD

Custodial WalletsWanting to make the platform as seamless as possible for web2 users it features custodial wallets for all its users, so its account is effectively a custodial wallet the user doesn't have direct access to in their order book on the immutable l2 chain.

Blind Box Format

The core of Veve is its blind box format. Which standardizes the purchase "mint" price of its collectables to give you a chance of getting between a common to the secret rare version of a collectable. The difference between versions is the art on the cover of the comic, nothing inside the comic changes itself. This encourages people to continue to be active for drops that release at a standardised time on the platform each week.

They list the chances of these drops before release, below we can see the chance of the most popular drop they released on the platform the first appearance of Spiderman at 20,000 comic collections.

Common: 1 in 1.63 Uncommon: 1 in 4.48Rare: 1 in 21.39Secret Rare: 1 in 42.78

Revenue

Revenue as a platform for Veve is extremely appealing as they control the entire distribution for their popular IP. They are a publisher as well as a marketplace for their IP.

For a standard mint you can break it down as the following:

  • 20,000 comics at $6.99 = $139,800

  • 9,301 Disney Poster Series at $60 = $558,060

It's fairly standard for Veve to release between 3-4 of these collections per week.

It's harder to track secondary volume for these projects as it operates on the private order book. The prices on the secondary market also fluctuate massively with more popular collections like amazing fantasy fetching $330 for its common and $12k for its super rare version. While less popular comics like nova common are sitting at about 1/3 of mint price.  

Let's look at the primary revenue as app sales according to sensor tower we can see VeVe from launching on January 21' to Nov 21' when eth was at its peak bull run. It saw $112.5m in consumer sales during this period, taking into account iOS IAP (In-app purchases charges) and licensing fees, it's still completely reasonable to say Veve cleared $50m in revenue from purely primary sales in its first 12 months outside of its high rate for cashout and transfer fees. With everything held in custodial wallets, it doesn't seem unreasonable that they may be earning a small % yield on these accounts as well.

Probably Nothing?

As the crypto industry focuses on gaming with billions in funding pouring in. VeVe looks at alternate beach head to reach the first user milestones as the market grows. Traditionally collectables and comics have demanded a more prolonged and more storied cult following than video games whose IP has only surfaced in the last decade.

Veve end goal seems to be betting heavily on the concept of a Veve-verse where users can showcase their NFTs and collectables to other users and is working in the background to make this happen.

DYOR

The risk with collectables and comics is globally the relevance and nostalgia of the market decreases as more entertainment shifts online. Physical IP for Pokemon, Yugioh and Marvel remain relevant only as their IP on streaming platforms, games and cinema continue to grow. Will we enter a market where nostalgia for these goods from gen z and beyond will only exist digitally as they bypass physical interaction with IP? This could stagnant the demand for reproductions of physical goods.

As a tool to onboard users from web2 to web2.5 Veve has excelled due to its restraint in providing web3 features to its users, which increases its success and retention and also protects it from the volatility of the market at large. This also restricts its access to web3 native users that are not asking for backwards compatibility and want interoperability with other ecosystems like Ethereum and Solana. As it currently stands Veve NFTs are locked in fiat purchase and selling through Gems. Looking at any project I think you need to compare against the ecosystem as a whole which is harder to do with projects like Veve that don't operate with extensive interoperability. There are profits to be made and Veve is a solid platform for collectors but be prepared for its centralised approach, which decreases risk for users.  

this newsletter is probably nothing, but subscribe and send it to a friend... in case it's something.Not financial advice.

Cover photo prompt: spiderman in a cyberpunk world, fantasy, gaming, HD