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GameStop on Monday announced the long-awaited launch of its online marketplace for non-fungible tokens, or NFTs, in a bid to reinvent its business and capitalize on consumer adoption of cryptocurrencies and blockchain technology.
The platform, which is now open to the public for beta testing, allows users to connect their own digital asset wallets, including the recently launched GameStop wallet, the company said in a press release. They will then be able to buy, sell and trade NFTs of virtual goods. Over time, the market will expand to offer other features such as Web3 games, GameStop said.
It’s the latest push from the video game retailer, now chaired by Chewy founder and activist investor Ryan Cohen, to invest in a digital future. GameStop is experiencing a turnaround after several years of financial difficulties, weighed down in part by its massive real estate footprint and the rapid shift of the video game industry online.
Cohen, whose 2020 investment in GameStop helped fuel a so-called meme frenzy, was tapped last year to lead those turnaround efforts. He brought in a new slate of corporate executives, including current CEO Matt Furlong, formerly of Amazon. He also tapped another former Amazon executive, Mike Recupero, as chief financial officer.
The company is trying to win over investors who may have viewed GameStop as a legacy retailer with too many storefronts in outdated malls. GameStop operated a total of 4,573 stores, including 3,018 in the United States, as of Jan. 29, according to an annual filing. In addition to his eponymous company, he also owns the EB Games and Micromania banners.
Today, the company is tapping into hot areas like NFT to grow. Unique digital assets have generated both enthusiasm and skepticism. Some retail industry watchers expect them to become a hot holiday gift. About half a million NFTs are expected to be purchased from retailers between November and December, representing a total market value of $54 million, according to Salesforce.
Others, however, may consider the market to be a little too late. Sales of virtual digital artworks and avatars could slow after their pandemic-fueled highs. GameStop must also compete with other established NFT marketplaces, including giant OpenSea.
And so far, the company’s digital shift hasn’t been smooth. Last week, GameStop fired Recupero and announced layoffs across all departments. Recupero, who joined the retailer about a year ago, was “fired because he was not culturally appropriate” and was “too indifferent,” a person familiar with the matter told CNBC. He was kicked out by Cohen, the person said.
Recupero was not immediately available to respond to CNBC’s request for comment.
The video game retailer has struggled to stem losses in recent years, even as its hardware, software and collectibles sales surge.
In the three months ended April 30, GameStop posted a net loss of $157.9 million on revenue of $1.38 billion. A year earlier, the company posted a net loss of $66 million on revenue of $1.27 billion.
The company has also not provided a financial outlook since the start of the Covid-19 pandemic. Furlong said in March that GameStop was making investments to retain customers and grow its brand, which weighed on profitability.