GameStop Is Creating an NFT and Crypto Division
Diversifying Away From Video Game Sales
GameStop (GME) is launching a cryptocurrency and NFT division as it looks to pivot away from strictly video game sales. Sources say the company will build out an online hub to buy, sell, and trade NFTs that tie into video games, like special weapons and costumes. In fact, GameStop is reportedly close to inking a partnership with two crypto companies.
People familiar with the company say it will pursue over a dozen similar partnerships including investments exceeding $10 million. This all comes as GameStop looks to overcome years of losses, with consumers increasingly choosing video game downloads over hard copies. Still, many investors saw potential in the outfit despite these trends, evidenced by the wild ride the stock endured last year.
Riding the GameStop Frenzy to New Business
GameStop stock’s frenzied rise in 2021 led to debates over institutional vs. retail investors, yet also bred optimism that the company could navigate the changing climate. Company executives responded by making leadership changes and focusing on a more tech-centric vision. Earnings haven’t seen positive effects yet, and as of Q3, 2021 losses surpassed those from the previous year.
While GameStop has reported increased revenue from hardware and accessory sales, software revenues are down. During an earnings call last month, GameStop Chief Executive Matt Furlong said the company’s focus is on long-term strategy. He then mentioned plans to explore money-making tactics grounded in NFT and blockchain technology.
Betting on Crypto and Hoping Investors Remain Patient
While GameStop executives say they’re in it for the long haul, investors may not stick around for the ride. Though the stock trades well above levels seen prior to the short-squeeze surge, share prices fell more than 45% over the last month and a half. Moreover, there’s no guarantee NFTs or cryptos are the key to success, as an ever-growing list of companies are jumping into the space and the technology remains unproven.
Still, analysts predict video game companies are likely significant players as NFTs, crypto, and blockchain technology grow. Gamers are accustomed to spending money on virtual goods like digital real estate, unique characters, avatars, and related items that help drive growth in the NFT space. Accordingly, GameStop aims to rank among video game companies set to benefit from crypto investments. How well the market develops and its success in adopting the technology could possibly make or break the company and is yet to be seen.
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