Investors are still mostly unaware of GameStop’s current turnaround strategy, but what we do know is that it is largely based on non-fungible tokens, or NFTs, a type of digital ledger technology that grants ownership or usage rights to digital assets.
GameStop Wallet, a user-controlled, browser-based Ethereum wallet that was first introduced by the video game store in May, was followed in July by an NFT marketplace where tokens could be bought and traded.
The future of GameStop in a video game market that is increasingly moving toward digital and downloaded playtime is still unclear. Ryan Cohen, the chairman, however, appears to think that it also entails riding the popular cryptocurrency and NFT markets.
Unfortunately, it appears that the NFT concept may be a flop, which raises concerns for GameStop’s own future.
NFTs and cryptocurrencies are falling precipitously. By market value, Bitcoin, the greatest cryptocurrency, has fallen 60% to $19,000 in 2022, while Ethereum, the second-biggest cryptocurrency, has fallen 64%. The volumes on NFT marketplaces are likewise falling; through August, Opensea, the most well-known marketplace, had 90% of its traffic disappear.
The market at GameStop isn’t doing much better during this crypto winter. Just under $2 million in transactions were generated on the platform’s first day of operation, while the first week saw more than $7.5 million in transactions for the top 50 collections. That was the best it got, though.
On its first day of business, GameStop NFT generated around $44,500 in revenue off of sales of $1.98 million, based on the 2.25% fee that GameStop imposes on transactions. However, according to Cointelegraph, by the end of August, the NFT’s daily earnings had decreased to little over $3,750 on a volume of $167,000, and it has continued to decline since then. According to Dappradar data, volume has decreased to $85,000 over the last 24 hours, translating to a daily fee income of just $1,912. Average prices have decreased by 22% during the past month, as well.
GameStop appears to be in trouble if its hopes that NFTs would give it some support as it considered its options for the selling of video games.
decreasing use of NFTs in gaming
NFTs are losing popularity in general, and even in GameStop’s main industry, the gaming industry is abruptly retreating from its acceptance of the technology.
According to Bloomberg, game developers jumped heavily into NFTs at the height of their popularity because they thought the tokens could give players a way to own the digital rewards they had won or purchased in-game while also giving them a new source of income. However, they are currently escaping from it.
In reversing earlier decisions to explore their possibilities, the maker of the popular video game Minecraft, Mojang, has prohibited businesses from developing NFTs for its game and disallowed the construction of Minecraft worlds on blockchain networks. The developer of some hugely successful games like Assassin’s Creed and Ghost Recon, Ubisoft, has likewise decided against developing an in-game NFT market.
According to Bloomberg, Take-Two Interactive has studiously avoided bringing up blockchain in any quarterly earnings conference call since it acquired Zynga in part because of its potential.
How will video game store GameStop make NFTs and cryptocurrency a sustainable component of its own company if gaming companies don’t want anything to do with them?
a sand-based foundation
The future of the retailer doesn’t look good in light of all this. GameStop has only been able to live this long because it wisely capitalized on its status as a meme stock and raised a sizable sum of money to settle its debt. It is currently routinely losing money ($267 million in the most recent quarter), but it still has about $1 billion in cash and equivalents, so it won’t run out of money anytime soon.