GameStop Corp is getting into the nonfungible tokens industry and eyes the crypto industry to launch its new growth strategy.
What are Non-Fungible Tokens (NFT)?
NFTs are coded on the Ethereum blockchain. Ethereum is a cryptocurrency, but its blockchain also supports these NFTs. NFTs store extra information that programs a piece of code uniquely tying it to a specific item.
This unique and non-interchangeable unit of data is stored on a blockchain, a form of digital ledger. NFTs are usually associated with reproducible digital files such as photos, videos, and audio.
NFTs use a digital ledger to provide a public certificate of authenticity or proof of ownership, but do not restrict the sharing or copying of the underlying digital files.
GME intends to create a division in which a marketplace facilitates the buying, selling, and trading NFTs of virtual videogame goods such as avatar outfits and weapons.
They are also likely to sign partnerships with two crypto companies to share technology and co-invest in the development of games that use blockchain and NFT technology, as well as other NFT-related projects.
This could trigger another avalanche of capital into this new industry that has commanded hundreds of billions of new investments in just a few years.
Crypto is the predictable landing stop for GME as their retail gaming business has failed in the face of the pandemic and their stock was only saved by a Reddit Army bidding up the price of the stock in order to dissuade hedge fund managers to profit off its decline.
The truth is that GME’s business model has been crushed as the gaming industries have been uploaded to the cloud and consumers are opting to directly download titles they want straight from their Wi-Fi connection.
Waiting around malls for people to come and pay in-person is an outdated model and instead of joining the cloud and copying the rest of the industry, this drastic change signals they are ready for something vastly different.
They tried executing a few technical changes in order to stage a turnaround, but its loss widened compared with the same period a year earlier. The revenue growth came from sales of hardware and accessories, while revenue from game software slipped 2%.
GME is involving itself in blockchain and NFT technologies as a last-ditch effort to be relevant again.
Luckily for GME, blockchain and NFT is where all the action is and new venture capital is stacking its chips in the fledgling industry as well.
That doesn’t mean they are going to turn the ship around in one day but of course, you want to be where the pie is growing.
GME shares had plunged by more than 45% over the past six weeks signaling that internally, they are desperate for wholesale changes.
The meme mania has largely worn off and to rejuvenate the mediocre business model they are looking for the magic bullet.
It’s not just GME getting in early, a marketplace called OpenSea said it raised $300 million in venture capital and is now valued at $13.3 billion, greater than GMEs valuation of close to $10 billion.
The videogame industry is more than likely to be first mover in the adoption of cryptocurrency, NFTs, and blockchain technology.
Gamers are poised to be among the first to embrace the technologies because this environment feels like something they could make the next jump to conceptually.
In recent weeks, some of the industry’s biggest publicly traded videogame companies have launched or announced plans to sell NFTs, including Ubisoft Entertainment, Zynga, and Square Enix.
GME is among many that are hoping to front-run other investors before this industry explodes 10X which could easily happen.
They don’t want to miss the big thing and they clearly made errors by avoiding the cloud.
NFT is just one technology that has exploded from blockchain and there will be many iterations of useful software that will need to be decentralized in nature.
NFTs have caught on quite well with famous athletes, actors, and musicians who are looking to secure proof of ownership of a digital good representing their image and likeness.
The idea is genius, but some might question if a stash of code is really proof of ownership.
Naturally, there will be non-believers and believers, but if the stars of the world are convinced, which many have already sold items as NFTs, then I believe it will legitimize an industry moving forward and it will grow 100X in the next 10 years.
Or it could easily evolve into something more secure and complex with the next iteration of NFTs.
To grow a tech company, firms are starting to bet the ranch of decentralized apps and crypto.
This is only positive for the long-term sustainability of crypto as we inch towards the metaverse.
