GameStop launches NFT marketplace as it chases online growth

GameStop announced on Monday the long-awaited debut of its online marketplace for non-fungible tokens, or NFTs, in an effort to reinvent the business and monetize consumer use of cryptocurrencies and blockchain technology.

The platform, which is now open to the public for beta testing, allows users to connect their own digital assets, 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 marketplace will expand to offer other features such as Web3 games, GameStop said.

This is the latest push from the video game retailer, now led by Sticky founder and activist investor Ryan Cohen, to invest in a digital future. GameStop is undergoing a turnaround after years of financial struggles, weighed down in part by its massive real estate footprint and the video game industry’s rapid shift online.

Cohen, whose 2020 investment in GameStop helped fuel a so-called meme frenzy, was tapped last year to lead this turnaround. He brought in a fresh slate of company executives, including current CEO Matt Furlong, formerly of the Amazon. He also tapped another former Amazon executive, Mike Recupero, as CFO.

The company is trying to win over investors who may have written off GameStop as an older retailer with too many storefronts in outdated malls.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 its namesake, it also owns the EB Games and Micromania banners.

Now the company is tapping into busy areas like NFTs for growth. The unique digital resources have attracted both enthusiasm and skepticism. Some retail industry watchers expect them to be a hot Christmas gift. About half a million NFTs are expected to be purchased from retailers between November and December, bringing the total market value to $54 million, according to Salesforce.

However, others may see the marketplace as coming a little too late. Sales of virtual digital artwork and avatars may cool from their pandemic-driven highs. GameStop also has to compete with other established NFT marketplaces, including giant OpenSea.

And so far, the company’s digital-first turnaround has not been without bumps in the road. Last week, GameStop fired Recupero and announced layoffs across departments. Recupero, who joined the dealership about a year ago, was “fired because he didn’t fit the culture” and was “too hands off,” a person familiar with the matter told CNBC. He was pushed 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 sales of hardware, software and collectibles grow.

In the three-month period ended April 30, GameStop reported 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 $1.27 billion in revenue.

The company has also not provided any financial outlook since the start of the Covid-19 pandemic. Furlong said in March that GameStop is making investments to drive customer loyalty and build the brand, which has weighed on profitability.