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Explained: Why established brands like Porsche are facing criticism for their NFT projects

Explained: Why established brands like Porsche are facing criticism for their NFT projects

Explained: Why established brands like Porsche are facing criticism for their NFT projects
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By CNBCTV18.com Jan 25, 2023 3:58:13 PM IST (Published)

The German automotive giant Porsche launched its debut NFT project on Monday, Jan 23. The collection consists of 7,500 NFTs which pay homage to the brand’s iconic 911 sports car. And with the car marker’s legendary reputation, Porsche’s NFT collection was expected to do quite well. However, much to everyone’s surprise, the project failed to take off, with more than 80 percent of the collection remaining unsold.

Over the last couple of months, several of the most renowned brands and organisations have dipped their toes into NFT waters. However, many of them have been met with severe vitriol from the crypto community, with some projects even remaining largely unsold. The latest to join this unenviable club is renowned sportscar manufacturer Porsche.

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The German automotive giant launched its debut NFT project on Monday, Jan 23. The collection consists of 7,500 NFTs which pay homage to the brand’s iconic 911 sports car. And with the car marker’s legendary reputation, Porsche’s NFT collection was expected to do quite well. However, much to everyone’s surprise, the project failed to take off, with more than 80 percent of the collection remaining unsold.
Troubles started when Porsche revealed the launch price of the NFTs. In a Jan 20 tweet, the company announced that the collection would sell for 0.911 ETH apiece. That equates to around $1,410 at current prices. Given the fact that NFT sales have dipped over the last few months, this asking price seemed extremely steep. As such, Crypto Twitter was quick to respond, with several users calling the collection "clueless" and labeling it a "cash grab". Some even proposed a more appropriate price of around 0.0911 ETH.
Porsche failed to acknowledge the criticism and went ahead with the launch of the collection. The result? The project failed to take off, with less than 2,000 NFTs selling at 0.911 ETH on Porsche’s website. On secondary markets too, NFTs from Porsche’s collection were available for 0.905 ETH, which is much lower than on the project’s official website. Faced with stuttering sales and severe backlash from the community, Porsche finally paid heed to criticism and hit the brakes on the collection.
"Our holders have spoken. We’re going to cut our supply and stop the mint to move forward with creating the best experience for an exclusive community. More info in the next hours," said Porsche in a tweet yesterday.
Porsche is not alone in its NFT woes. A little over a week ago, renowned nature magazine, National Geographic, also faced a backlash against its maiden NFT endeavour. The collection - titled ‘GM: Daybreak Around the World’ – featured photos of sunrises from around the world, captured by 16 world-renowned photographers. Each photographer would submit one image, and each of these photos would have 188 copies, resulting in 1,888 NFTs.
However, the announcement was met with severe criticism. Users felt like the excitement surrounding NFTs had already fizzled out and the magazine was late to the party. The situation worsened as Nat Geo’s NFT partner, Snowcrash, experienced technical difficulties during the minting process. This resulted in many users having to wait for hours before they received the NFTs they had purchased.
Netflix faced similar issues with its Stranger Things NFT project. In June 2022, the streaming giant tied up with NFT platform Candy Digital to release 11,111 unique tokens. Users were asked to participate in minigames to earn these NFT posters of the show’s main characters, i.e., Eleven, Mike Wheeler, Jonathan Byers, Will Byers, or Argyle. The collection received mixed reactions; while some users enjoyed the minigames, others took to Twitter to make their displeasure known.
"I deeply love Stranger Things, but I’m profoundly disappointed that Netflix decided it’d be a good idea to run an NFT grift on its fans," one fan wrote. A grift is a small-scale scam or scheme to swindle unsuspecting individuals. Other users called the collection "bullshit" and replied to the announcement post with puking and crying emojis.
A few months prior, English soccer giants, Liverpool, decided to launch their own NFT collection, called "LFC Heroes Club". The collection consisted of 24 'Legendary' NFTs illustrating the club’s high-profile players and 171,072 'Hero' NFTs of the remaining  squad. However, the collection backfired with more than 90 percent of the NFTs remaining unsold.
Even the ones that did manage to find buyers saw their value drop considerably in the coming weeks. For instance, some LFC NFTs sold for roughly £57 each. However, a month or so later, some of these tokens were reported to have sold for as little as £9 each. As such, the collection was only able to raise around $1.4 million as compared to the $8.5 million it was expected to amass. Most of this was due to declining crypto prices and the overall negativity around digital assets at the time.
Users claim that LFC was aware of these poor market sentiments but went ahead with the collection anyway. "Liverpool have spent a long time assessing external sentiment around NFTs in recent months and were warned about potential harms to investors/the environment but proceeded anyway. Presumably, the financial gain outweighs any backlash as far as they’re concerned," said David Lynch, a football journalist that covers Liverpool in specific.
Conclusion
NFTs soared to popularity in 2021. These virtual assets attracted massive price tags as the digital art trend reached its pinnacle. However, several experts claim that the NFT bubble has burst since then, and overpriced digital images have no place in the current market. Recent sales figures are a testament to declining user interest, with the leading NFT marketplace, OpenSea, reporting a massive drop in trading volumes and floor prices toward the end of 2022.
Fortunately, NFTs have staged a slight comeback over the last month. OpenSea sales for this month (January 2023) have already exceeded figures from December 2022. However, judging by the poor response these leading NFT projects have received, other brands and organizations will think twice before foraying into the digital asset industry.
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