The large video game retailer GameStop has announced their plans to create a marketplace for non-fungible transactions(NFTs) using partnerships with cryptocurrency companies to do so. Shortly after this news, the corporation’s shares experienced a 24% boost to $163.50. This is the second time in recent years that the company’s share prices exploded, with the 2021 687% jump caused by a war between retail and institutional investors being the first. GameStop is likely following in the footsteps of Ubisoft, which already started an NFT platform in late 2021.
GameStop has formed several $100 million funds to use towards cryptocurrencies and video game studios for this project. The company will invest in games with NFTs and persuade developers to use the new marketplace for selling their NFTs. They will also work on developing blockchain and NFT technology with crypto companies.
GameStop has multiple strong reasons to follow through with this bold idea. First of all, the company has been struggling lately, even after its 2021 success. Since GameStop relies primarily on its brick-and-mortar locations for revenue, it is experiencing massive losses in this era of digital purchases. GameStop’s chairman, Ryan Cohen, has been working to transition to digital spheres to prevent the acceleration of these losses. Furthermore, gamers are a great target market for NFTs, since they have purchased virtual items in-game long before the rise of NFTs. However, it should be noted that previous attempts at infusing NFTs into the world of video games have been unsuccessful, with backlash occurring after developers such as GSC Game World announced similar plans. Despite this opposition, the NFT market continues to expand dramatically, with NFT trading growing from $100 million in 2020 to $22 billion a year later.
GameStop’s new plans may be viewed as incredibly risky for some, but others might see NFTs as a fresh opportunity for the dying corporation. Only time will tell to see where NFTs take GameStop financially.
Non-fungible transactions (NFTs)- a unique, non-interchangeable(non-fungible) unit of data that can be bought or sold with blockchain technology; NFTs are often connected with files like photos, videos, or audio
Cryptocurrency- a digital currency that is exchanged using a network that is not controlled by a government, bank, or other central authority
Blockchain- a record of cryptocurrency transactions; a type of digital ledger
Retail investor- a non-professional investor; in the case of the 2021 GameStop stock surge, these investors were comprised largely of Reddit users who were trying to punish Wall Street hedge funds for relying on GameStop’s decline to borrow shares
Institutional investor- a professional investor; the opposite of a retail investor
Sharma, Rakesh. “GameStop (GME) Soars on NFT Play.” Investopedia, Investopedia, 7 Jan. 2022, https://www.investopedia.com/gamestop-soars-on-nft-play-5215230.
Porter, Jon. “GameStop Reportedly Has a Whole Unit Working on NFTs and Cryptocurrency.” The Verge, The Verge, 7 Jan. 2022, https://www.theverge.com/2022/1/7/22871714/gamestop-nfts-cryptocurrency-blockchain-marketplace-hub.