People familiar with the plans say GameStop plans to launch a division that will develop a nonfungible token (NFT) marketplace and set up cryptocurrency partnerships, pushing the company into a much-hyped marketplace as it tries to revitalize its core videogame business.
A full staff has been hired to run the division. This will build an online marketplace for buyers, sellers and traders of virtual videogame goods such as character outfits, weapons, accessories, or anything digital gaming related. NFTs will be listed on the company’s marketplace when it launches later this year, the people said.
Additionally, GameStop is in talks with two crypto companies about sharing technology resources and investing in the development of games using blockchain and NFT technology, as well as pursuing other NFT-related initiatives. GameStop expects to enter into similar agreements with a dozen or more crypto companies and invest tens of millions of dollars in them this year, the people said.
GameStop has attempted to revitalize its business after years of extreme poor performance. After becoming the darling of the #wallstreetbets crown GameStop has been revitalized and given energy through large sums of cash.
The board of directors of GameStop was overhauled last year, and activist investor Ryan Cohen was named chairman. GameStop is being pushed in the direction of the tech giants.
GameStop has yet to show significant results in its financial performance from the turnaround efforts. Revenues grew in the quarter through October, but losses expanded compared to the same period a year earlier. Hardware and accessory sales grew, while sales of game software fell by 2%.
There have been signs that some investors are losing patience. Over the past six weeks, GameStop shares have fallen by more than 45%, though the stock is still far above where it was when investors began to heap money on GameStop shares a year ago. After The Wall Street Journal broke the news regrading the NFTs and related services, the stock surged more than 20% in after-hours trading.
GameStop joins a group of companies increasingly trying to capitalize on these nascent and unproven technologies by entering the crypto and NFT space. In addition to a handful of NFT marketplaces, some offer tokens from game publishers. OpenSea announced earlier this week that it had raised $300 million in venture capital, and is now valued at $13.3 billion, an amount greater than GameStop’s valuation of close to $10 billion.
Analysts claim that cryptocurrency, NFTs and blockchain technology will be heavily influenced by the videogame industry. Since gamers already spend a lot on virtual goods, they are expected to be among the first to embrace the technology. As a segment of NFT, virtual real estate in videogames and videogame collectibles are on the rise.
Recently, some of the biggest publicly traded videogame companies have started or announced plans to offer NFTs, including Ubisoft Entertainment, Zynga Inc. and Square Enix Holdings Co. Nonetheless, some industry executives and players have expressed concerns about the value of NFTs and the motivations of developers.
As with the download of computer games about a decade ago, GameStop hoped to avoid losing out on opportunities to be part of a young trend by getting into the crypto and NFT space during its infancy. GameStop tried to get into the streaming of videogames at the time but abandoned the effort. Today, the downloading and streaming of games are rapidly growing trends.