Retailer launching a division dedicated to buzzing new technologies amid a push to turn profits
The people said that GameStop is close to signing a partnership with two crypto companies to share technology and co-invest in the development of blockchain and NFT technology, as well as other NFT-related projects. The retailer expects to make similar agreements with a dozen or more crypto companies and invest millions of dollars in them, the people said.
Grapevine, Texas-based GameStop is working to reset its business after years of losses. The company was at the center of a stock-trading frenzy last year, which propelled its share price, which sparked increased interest and optimism from individual investors.
Despite the pandemic’s negative impact on foot traffic, many see the potential in GameStop, and even though consumers are choosing to download and stream games over the Internet, rather than the kind the company specializes in selling hard copies.
Last year, GameStop changed its executive team and board of directors, with active investor Ryan Cohen as chairman. Mr. Cohen, who founded online pet-products retailer Chewy. co-founded Inc.
and sold it in 2017 for $3.35 billion, pushing GameStop to be more tech-focused.
Attempts to change GameStop’s financial performance have yet to show significant results. In the October quarter, the company said revenue grew, but its losses widened compared to the same period a year ago. Revenue growth came from sales of hardware and accessories, while revenue from game software declined 2%.
“We believe that our emphasis on the long term is preparing us to build what will eventually become a big business,” GameStop chief executive Matt Furlong said on an earnings call with analysts last month. Mr. Furlong, who joined the company from Amazon.com last year Inc.,
It was then mentioned that Gamestop was exploring business opportunities involving blockchain and NFT technologies.
There have been signs that some investors are losing patience. Through Thursday’s close, GameStop shares were down more than 45% over the past six weeks, though the stock has remained up much since investors began piling on GameStop shares a year ago. The stock rose more than 20% in after-hours trading following the publication of the news by the Wall Street Journal.
Diving into the crypto and NFT space puts GameStop on a rapidly growing list of companies trying to capitalize on these nascent and largely unproven technologies. A handful of NFT marketplaces already exist and some are tokenized by game publishers. Earlier this week, a marketplace called OpenSea said it raised $300 million in venture capital and is now valued at $13.3 billion, more than GameStop’s $10 billion valuation.
Analysts say the videogame industry could play a major role in driving the adoption of cryptocurrencies, NFTs and blockchain technology. Gamers are expected to be the first to adopt the technologies as they are already spending a lot on virtual goods. Virtual real estate in videogames, as well as videogame collectibles, is a rapidly growing segment of the NFT market.
In recent weeks, some of the largest publicly traded videogame companies in the industry have initiated or announced plans to sell NFTs, including Ubisoft Entertainment.,
and Square Enix Holdings Co.
Some industry executives and players, however, have expressed concerns about the value of NFTs and the developers’ motives for creating them.
By entering the crypto and NFT space, while it is still in its infancy, GameStop hopes to avoid missing out on opportunities to be part of an emerging trend, as it did with computer-game downloads nearly a decade ago. It was, people familiar with its plans said. GameStop tried to get into videogame streaming at the time but abandoned the effort. Today the trend of downloading and streaming games is increasing rapidly.
Write Sarah E. Needleman at [email protected]