March 31, 2023

important aspect

  • GameStop hasn’t offered many details about how it plans to navigate the digital future of gaming
  • Instead, it can bet on risky NFTs and the growing market for them

GameStopof (GME -2.47%) The current turnaround strategy is still pretty opaque to investors, but what we’ve seen is primarily non-fungible tokens, or NFTs, digital ledger technology that provides the right to own or use a digital asset.

In May, the video game retailer launched GameStop WalletA self-preservationist Ethereum Wallets that a user controls and can access without their browser, which followed in July An NFT Marketplace Where tokens can be bought and sold.

As the video game industry increasingly transitions to digital and downloaded gameplay, how GameStop will survive remains a mystery. But chairman Ryan Cohen believes that includes driving the trendy cryptocurrency NFT market.

Unfortunately, it also looks like the NFT concept may be a failure and puts GameStop’s own future in doubt.

Crambling crypto

Cryptocurrencies and NFTs are in free fall. Bitcoin, the largest crypto by market value, is down 60% to $19,000 in 2022, while the second largest crypto, Ethereum, is down 64%. NFT marketplace volumes are also collapsing, with OpenC, the most popular marketplace, evaporating 90% of its volume as of August.

GameStop’s Marketplace isn’t doing any better at the moment Crypto winter. The platform got off to a fast start in its first week of business, generating just under $2 million in first-day transactions, and the top 50 collections saw more than $7.5 million in first-week transactions. But that was as good as it got.

GameStop Corporation
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Based on a 2.25% GameStop charge on transactions, GameStop NFT generated approximately $44,500 in sales volume of $1.98 million on its first day of operation. Cointelegraph, however, reports that the NFT fell to a little over $3,750 in late August on a volume of $167,000 in daily revenue and has since fallen further. Dapprader’s data shows that in the last 24 hours, volume has dropped to $85,000, which equates to just $1,912 in fee income per day. Average prices are also falling, down 22% last month.

If GameStop was hoping that NFTs would provide it with some floor until it figures out what to do with its video game retail business, it appears to be falling apart.

The declining role of NFTs in gaming

NFTs are generally falling out of favor, even in GameStop’s primary business, with gaming companies suddenly turning away from their embrace of the technology.

Bloomberg Note Studios first got into NFTs at the height of their popularity, believing the tokens could provide a new revenue stream for gamers to own when they win or buy in-game digital bounties. But now they are running away from it.

Minecraft Developer Mojang has banned companies from creating NFTs for its games and has refused to allow Minecraft World to create them. Blockchain NetworkReversing previous decisions to explore their potential. UbisoftCreator of some very popular titles viz Ghost Recon And Assassin’s CreedAn in-game NFT marketplace has also moved away from being pursued.

Bloomberg said that later Take-Two Interactive Zynga was bought for its blockchain potential, and has studiously avoided discussing it on quarterly earnings conference calls since then.

If gaming companies want to do little with NFT and crypto, how does video game retailer GameStop make it a viable part of its own business?

A foundation built on sand

All this does not bode well for the future of retailers. GameStop has only survived this far because it has smartly taken advantage of it Meme stock Status and raised a ton of money to pay off his debt. So while it’s consistently losing money at the moment ($267 million this past quarter), it’s not going to deplete its bank account anytime soon (it still has about $1 billion in cash and equivalents).

Nevertheless, GameStop needs to come up with a realistic vision of how it will grow its business. Restoring the NFT marketplace and crypto has always been a risky venture. Now even that Gaming company Moving away from them, investors may be better off staying away from GameStop’s stock until it brings a viable plan to the table.

This article Originally appeared The Motley Fool.

Rich Dupre There is no position in the specified stock. The Motley Fool features and recommends Bitcoin, Ethereum and Take-Two Interactive. The Motley Fool recommends Ubisoft Entertainment and recommends the following options: Long January 2023 $115 Call at Take-Two Interactive. There is a motley flower Disclosure Policy.

A screen displays GameStop's logo and trading information on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 29, 2022.
A screen displays GameStop’s logo and trading information on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 29, 2022.
Reuters/Brendan McDermid

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