Jim Stop corp.
It is launching a division to develop a marketplace for non-fungible tokens and forge crypto partnerships, according to people familiar with its plans, propelling the company into very encouraging areas as it tries to transform its core video game business.
The retailer has hired more than 20 people to run the unit, which is building an online center to buy, sell and trade NFTs for virtual video game goods such as token clothing and weapons, according to the people. People said the company is asking select game developers and publishers to include NFT in its market when it launches later this year.
People said GameStop is about to sign partnerships with two crypto companies to share technology and jointly invest in developing games that use blockchain technology and NFT, as well as other NFT-related projects. The retailer expects to enter into similar agreements with dozens or more crypto companies and invest tens of millions of dollars in them this year, the people said.
Texas-based GameStop is resetting its business after years of losses. The company was at the center of a stock-trading frenzy last year that drove its stock price up dramatically, fueling interest and optimism on the part of retail investors. Many have seen potential in GameStop despite the pandemic’s negative impact on foot traffic and even though consumers are increasingly choosing to download and stream games online, rather than buying the kind of hard copies the company specializes in selling.
Last year, GameStop overhauled its executive team and board, and appointed activist investor Ryan Cohen as its chair. Mr. Cohen, who co-founded Chewy an online retail pet products store company
Selling for $3.35 billion in 2017, it was a push to make GameStop more tech-focused.
The turnaround effort did not show significant results in GameStop’s financial performance. In the quarter ending in October, the company said revenue grew, but its loss widened compared to the same period a year earlier. Revenue growth came from sales of hardware and accessories, while gaming software revenue fell 2%.
“We believe our long-term focus puts us in a position to build what will eventually become a much larger company,” GameStop CEO Matt Furlong said on a call with analysts last month. Mr. Furlong, who joined the company last year from Amazon.com company ,
He then mentioned that GameStop has been exploring business opportunities that include blockchain and NFT technologies.
There are signs of impatience for some investors. GameStop shares have fallen more than 45% over the past six weeks, although the stock is still much higher than it was when investors began accumulating GameStop shares a year ago.
Diving into the world of crypto and NFT puts GameStop on a rapidly growing list of companies trying to make money from these emerging and largely unproven technologies. There are already a few NFT marketplaces and some tokens from game publishers. Earlier this week, a marketplace called OpenSea said it had raised $300 million in venture capital and is now valued at $13.3 billion, which is more than GameStop’s valuation of nearly $10 billion.
Analysts say the video game industry is likely to play a major role in embracing cryptocurrency, NFT, and blockchain technology. Gamers are expected to be among the first to adopt the technologies because they are already spending so much on virtual goods. Virtual real estate in video games, as well as video game collectibles, is a rapidly growing segment of the NFT market.
In recent weeks, some of the largest publicly traded video game companies in the industry have launched or announced plans to sell NFT, including Ubisoft Entertainment.And
and Square Enix Holdings company
However, some industry executives and players have expressed concerns about the value of NFTs and developers’ motivations for creating them.
By entering the coding and NFT space while it’s still in its infancy, GameStop hopes to avoid missing opportunities to be part of an emerging trend as it did with PC game downloads about a decade ago, people familiar with its plans said. GameStop attempted to get into video game streaming at the time but abandoned the effort. Today, downloading and streaming games are fast growing trends.
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