Merger and acquisition activities are heating up in the NFT ecosystem

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The non-fungible token (NFT) ecosystem has continued to grow in popularity in 2022. Despite the downturn in the global stock and crypto market, venture capitalists have poured millions of dollars into the sector in H1 2022. Amid the growing interest in the sector, tech and non-tech businesses alike are exploring merger and acquisition opportunities as they seek to prepare themselves for the Web3 and Metaverse world.

Notably, at the end of 2021, many established businesses were seen boosting their presence in the NFT ecosystem through merger and acquisition activities. For instance,

• In December 2021, Nike announced the acquisition of RTKFT, the firm which specializes in the creation of virtual sneakers and other digital collectibles in the form of NFTs. Notably, in 2021, RTKFT, in partnership with Fewocious, sold 600 real sneakers that were paired with virtual sneakers and released at NFTs in just seven minutes. The project generated a revenue of US$3.1 million for RTKFT.

The acquisition of RTKFT marks another step in the digital transformation ambitions of Nike. In December 2021, Adidas, one of the biggest competitors for Nike, also announced that the firm had partnered with NFT projects such as Bored Ape Yacht Club and PUNKS Comic. These efforts by Nike and Adidas to establish their presence in the growing NFT ecosystem demonstrate how consumer-focused businesses are refocusing their investment and merger and acquisition strategies to NFTs to capture young generation consumers worldwide.

This trend of merger and acquisition, which picked up momentum in 2021, had further accelerated in 2022. For instance,

• In January 2022, OpenSea, one of the leading NFT marketplaces, announced that the firm had acquired Dharma Labs, the firm which is focused on simplifying the process of on-ramping from fiat currency into crypto. Even though more and more marketplaces are emerging in the NFT ecosystem around the world, OpenSea remains one of the leading players, and reducing the barriers from fiat currency to NFTs will further assist OpenSea in acquiring more users.
• In April 2022, OpenSea also announced the acquisition of Gem, the leading NFT aggregator firm. The US$238 million acquisition of Gem is part of the firm’s strategy to better serve its users. Notably, Gem enables users to buy NFTs across different marketplaces through a single transaction and with any ERC-20 token rather than just Ethereum. Moreover, users can also view sales volume, rarity-based ranking, and floor prices.
• In March 2022, Yuga Labs, the developers of Bored Ape Yacht Club, announced that the firm had acquired the intellectual property rights of the CryptoPunks and Meebits collections from its creators, Larva Labs. Notably, the deal offers Yuga Labs the ownership of the branding and logos for CryptoPunks and Meebits. The two collections from Larva Labs are quite popular, having over US$2.5 billion in combined secondary market sales.
• In August 2022, Distributed Finance announced the acquisition of Rand Gallery, an Algorand-based NFT marketplace. The acquisition is part of the firm's strategy to promote the growth of NFTs along with decentralized autonomous organizations in the Algorand ecosystem.

Along with firms that are already operating in the NFT ecosystem, new players are also entering into merger and acquisition deals to build their presence in the growing market. For instance,

• In June 2022, eBay, one of the leading global B2C e-commerce marketplaces, announced that the firm had acquired KnownOrigin, a Manchester-based NFT marketplace. The acquisition of KnownOrigin, which allows users to create, buy, and sell NFTs, comes one month after eBay launched its first-ever NFT collection. The acquisition is part of eBay's strategy to drive incremental revenue and growth for its business.

From the short to medium-term perspective, TechInsight360 expects more merger and acquisition activities in the NFT market as businesses across a range of industries continue to look for commercial opportunities in the evolving NFT and metaverse ecosystem. Moreover, as the NFT market continues to expand over the next three to four years, it is likely that big players, such as OpenSea, will look to acquire smaller rivals as part of their strategy to create market leadership in the NFT industry. 

To know more and gain a deeper understanding of the global NFT market, click here.