GameStop Enters NFT Market

GameStop has hired a team to facilitate its entry into the market for non-fungible tokens

Pedestrians pass a GameStop store on 14th Street at Union Square in Manhattan, New York, on Jan. 28, 2021. (John Minchillo/AP Photo)

New reports indicate that GameStop has taken steps to develop a marketplace for non-fungible tokens (NTFs), marking the latest development in its ongoing effort to transform its core business.

A source familiar with the matter told The Wall Street Journal that the video game retailer has hired over twenty people to facilitate the creation of “an online hub for buying, selling, and trading NFTs of virtual videogame goods such as avatar outfits and weapons.”

The once-ridiculed company has become a subject of much discussion in the past year as GameStop stock became the center of a widely reported short squeeze, driven and catalyzed in part by the r/wallstreetbets community of the social media site Reddit.

While much of the media coverage at the time portrayed the short squeeze as an ex nihilo invention of the r/wallstreetbets subreddit, the short squeeze has its roots in institutional investors who saw potential in the beleaguered video game retailer. In 2019, renowned investor Michael Burry purchased a 3.3 percent share of the company for his hedge fund, Scion Management. In 2020, Chewy mogul Ryan Cohen revealed a 9 percent share in GameStop, and in January of the subsequent year, he joined the GameStop Board of Directors, kicking off the rally that escalated into a full-blown short squeeze, multiplying the stock’s value many times over.

The surge of cash from the short squeeze has given the company something of a lifeline, allowing GameStop to expand its online operations and creating new opportunities to transition from a brick and mortar retailer to an online-oriented company.

The emerging market for NFTs has been of particular interest to the video game industry, which has some of the strongest foundations in digital markets as an industry in which consumers already spend on exclusive digital content, such as avatars and other downloadable content. With increasing interest in the metaverse, many are hopeful that encryption and NFTs will become essential to the evolving gaming industry.

The NFT market is just the latest of the company’s efforts to make inroads in the digital economy, which could be key to the long-term viability of GameStop as a company. If the gaming retailer is successful in transitioning to the digital economy, it will stand as one of the most incredible and unlikely business turnarounds in recent history.