After the launch of GameStop's NFT market based on Ethereum Layer 2, it has attracted great attention. The former protagonist of the "Occupy Wall Street" incident in the US stock market is now rejuvenated by NFT.
According to data from January 2022, GameStop is still the largest video game retailer in the world, mainly offering the latest or second-hand video game consoles, accessories and themed games, including physical game discs and games in digital format, as well as various game related products. Figures, collectibles, board games, etc. However, as game purchases have shifted from physical products to digital downloads, GameStop has been losing money year after year in recent years, with a loss of $381 million in the last fiscal year.
In fact, GameStop has been looking for financial models, transaction methods and sales channels to seek transformation. Before entering the encryption circle,GameStop has attracted a lot of attention for being the "number one player" of the meme stock. In January last year, Ryan Cohen joined the Board of Directors of GameStop. This post-85 American entrepreneur and investor has always been respected by retail investors on social networks. Because investors believed that Cohen would lead the company to successfully transform, the company's stock price began to rise. However, short sellers on Wall Street also focused on GameStop and bet that the company was on the road to extinction, but this ignited the "reverse" mentality of retail investors, buying and squeezing short. The short sellers didn't succeed, but GameStop became famous through the meme stock.
This seems to be an inspirational story of grassroots retail investors attacking the upper elite. Can this wave of operations bring GameStop back to life? The answer is naturally no. Traditional game retailers have long-standing disadvantages. They cannot keep up with the times and are eliminated by users. This is the root cause of GameStop’s decline. The three main problems it faces are: first, consumers’ purchasing and payment habits have changed; second, traditional The operating cost of retail stores is too high; finally, the investment methods of individual investors have become diversified.
New entrants to the NFT space in a bear market
In order to solve the problems of the traditional game retail industry, GameStop not only deploys e-commerce, but also begins to enter the blockchain encrypted wallet and NFT field. Since the GameStop NFT market was launched during the bear market in the encryption circle, this node has made its performance pay special attention.
On the day of launch on July 12, the trading volume of GameStop reached 2 million US dollars. According to the 2.25% handling fee, the transaction fee on the first day was about 45,000 US dollars. This figure is almost as large as Magic Eden on Solana, the second largest NFT market on the Dappradar rankings, and more than 11 times larger than the NFT market of Axie Infinity, which is regarded as an extremely successful P2E game star project.
But the figures have since slipped. According to the data company ArsTechnica's statistics on the GameStop NFT market data, the total trading volume of the GameStop NFT market in the first week was about 5254 ETH (calculated at the price on the 19th, worth about 7.8 million U.S. dollars), and the average daily total trading volume was about 750 ETH. ETH ($1.17 million). This means that the company’s average daily direct income from the NFT market in the first week of launch is: an average of 16.9 ETH (approximately $25,000) per day. Although the average daily income has declined compared to the first day, compared to the cumulative trading volume of 1,913 ETH since the launch of the Coinbase Global NFT market on May 4 (data reported in a Coindesk article on July 20), the GameStop NFT market The total transaction volume in the first week is about 174% higher than the total transaction volume of the Coinbase NFT market in more than 2 months. Gamestop's wide range of users has helped it deliver much more impressive results than Coinbase's NFT market.
According to the public data on the GameStop NFT market webpage, there are currently about 300 series in its NFT market, many of which have limited editions of different styles. These NFTs include initial sales by creators and subsequent sales by second-hand buyers. The GameStop NFT market currently only has access to its NFT market page in some countries, and the official said that it will be opened to more countries and regions in the future.
Failing game retailers rejuvenate with NFTs
Although compared with the first day of its NFT market launch, the later data has declined, but GameStop's NFT market still opened three important attempts for it:
First, it helped GameStop offer consumers new ways to trade. During the transformation process, GameStop first completed the upgrading of traditional payment methods, opened new payment methods and unique transaction methods, such as the buy-sell-trade mode: players can use the games they already own, game consoles, game peripherals and other consumption Electronic products can be exchanged for cash or in-store credit to purchase new products; in addition, there are GameStop exclusive credit cards, Rent-to-Own and other transaction methods.
After entering the NFT field of the blockchain, GameStop will be able to provide a more cutting-edge transaction method - selling game content or peripheral products through NFT. While GameStop's marketplace doesn't currently support assets for Web3 games like Axie Infinity, it says it will add them in the future.
In fact, game retailers and operators have been committed to turning players into payers in various ways. Now some online games have launched NFT to supplement or even replace certain payment items in the game. However, such a change is not easy, because players have begun to feel tired of the various payment methods of game operators. How to find a balance between "introducing new payment methods" and "not affecting the game experience of players" is a difficult problem when the traditional game industry transforms to the blockchain.
Secondly, NFT enables GameStop to provide investors with new investment methods other than stocks, and fans can obtain income by investing in NFT. Through NFT, players can truly obtain the ownership of game assets, and these assets can also be circulated in different NFT markets. In the past, the assets purchased by players in the game were completely controlled by centralized game companies, without any possibility of liquid appreciation. The market value of NFT largely depends on the recognition and willingness of the encryption community to buy the NFT, and GameStop naturally has a community advantage. After all, it was founded in 1984 and has been working in the game industry for 38 years.
Finally, and most importantly, the NFT market can save GameStop’s huge operating costs. On the one hand, the revenue of the NFT market is almost insignificant relative to GamesStop's total revenue. GameStop's net sales (sales revenue less cost of sales) for its last full fiscal year were $16.5 million per day. If calculated according to the average daily direct income of its NFT market is 16.9ETH ($2,5113), then this income is only about 0.15% of GameStop's net sales.
But on the other hand, the NFT market can help GameStop save huge costs in terms of selling game content and peripheral products in the future, which is the long-term value that GameStop sees. Although the net sales data of GameStop's traditional business is very large, the net sales only deducted the current sales cost (including discounts, discounts, sales returns, etc.), but did not subtract the huge operating costs (this is the rule of financial statements Caused). GameStop's thousands of retail stores incur huge costs in physical inventory, shipping, warehousing, retail employee salaries, or physical store maintenance. Those costs are largely responsible for GameStop's $381 million loss in its last fiscal year, despite its solid revenue. And the huge operating costs of these physical stores are not needed in the NFT market.
In contrast, GameStop's fully decentralized NFT business runs on the Layer 2 network Loopring, a Layer 2 solution running on Ethereum. While GameStop has reportedly invested tens of millions of dollars to launch its NFT marketplace, these investments are “set and forget” compared to the transaction fee income it continues to generate from it.
Based on the customer base of the traditional game industry, march towards Web3
At this stage, GameStop is betting on its accumulated customer base in the traditional game industry to promote transactions in its NFT market, because it does not offer sales of well-known NFT series such as Bored Ape Yacht Club, Doodles, Cool Cats, etc. GameStop believes that such The price of NFT is too high for players in the game circle.
But using the fan traffic of the traditional game industry is only the first step. In fact, from the very beginning, GameStop planned to expand the business core of the blockchain sector to Web3 games, which is very dependent on NFT and digital currency-related games. With this in mind, GameStop adopted the method of cooperating with the Ethereum Layer 2 network solution Immutable X-first cooperated to create GameStop's digital wallet. At the same time, after GameStop cooperated with Immutable X, it also provided a $100 million bonus to Web3 designers who are interested in joining the business.
According to reports, it is expected that GameStop may, like Magic Eden, the second largest NFT market, invest in Web3-related projects while building its own Web3 games. After all, Immutable X is a famous platform that focuses on Web3 games. There are several star-level Web3 games running, which is likely to be valued by GameStop.
GameStop CEO Matt Furlong (Matt Furlong) said in a recent email to employees that as the company continues to discover new ways to trade and launch more new projects through the blockchain sector, GameStop will It will make steady progress towards Web3.
