GameStop, which rose to prominence in 2021 as one of the meme stocks, is now seeking to enter the NFT space. According to an exclusive report by WSJ, the video game retailer is creating a division that will work on an NFT marketplace. The new unit will comprise over 20 experts.
Details Of The NFT Division
The WSJ report states that the company has created a new unit that comprises over 20 experts. They are working on an online platform where users can buy, sell, and trade NFTs for in-game assets such as avatar outfits, weapons, and more. The company plans to enter into partnerships with leading crypto firms to work on the underlying technology as well as invest in blockchain-based games.
Attempt To Reinvent Its Business Model
The entry into the NFT space appears to be an attempt by GameStop to reinvent itself as its business model has faltered in recent years. This is because most gamers today prefer to get their games online instead of getting physical copies.
NFTs are a good strategy, as noted by the WSJ report. It states that gamers are seen as potential early adopters of NFTs. This is because gamers are already comfortable with spending money on virtual items like in-game avatars, skins, and weapons. Various online gaming giants such as EA and Square Enix have already publicly expressed interest in NFT technology. In late 2021, Ubisoft, another gaming giant, launched an NFT platform.
GameStop’s Rise To Prominence
GameStop came to prominence a few months ago when stock traders on Reddit went to battle with short-sellers. As a result, it led to the rise of GameStop’s stock price, and huge losses for the short-sellers. However, GameStop’s business model has still not garnered enough traction. The only thing keeping it alive is the windfall from the massive short squeeze, which they used to sell stock and raise capital.
Shortly after the NFT news was announced, the company’s stock rose sharply, which will be welcome news for longs that saw the GME stock fall to the lowest levels since March 2021 this week.
Another company that saw its stock prices rise, thanks to traders on Reddit was AMC, a movie theater company. To appeal to the younger generation, who now constitute the bulk of its shareholders, the company has also entered the NFT space. In December 2021, the company announced that it would gift NFTs to those going to watch the latest Spiderman film. While no solid plans have been announced, AMC has also revealed that it has been looking into cryptocurrencies.
Summary
The NFT space is still relatively young and it has a lot of critics. Even within the gaming community, NFTs have not received overwhelming support. For instance, GSC Game World, the developer behind the Stalker 2 game, was forced to walk back on its NFT plans after receiving widespread criticism from the gaming community. Some gamers note that NFTs do not have any impact on the overall gaming experience.
However, despite this criticism, the NFT space is undoubtedly growing in popularity. For instance, data from DappRadar showed that sales in the NFT market grew to $22 billion in 2021, up from just $100 million in 2020. As such, GameStop might be looking at the long-term development of this industry with its latest investment, instead of the short-term criticism by gamers.
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