The day started hot for video game retailer GameStop (NYSE:GME) after the company announced an NFT marketplace. Shares jumped 22.3% at the start of trading but started losing that bounce quickly and were trading 8% higher at 10:40 a.m. ET.
The Wall Street Journal reported after the market closed on Thursday that GameStop is building a non-fungible token (NFT) marketplace and partnerships in the cryptocurrency business. About two dozen people have already been hired for the project, and management thinks it can translate the brand to a valuable position in the market.
NFTs allow owners to have digital proof of ownership of a digital good like an avatar or a weapon in a game. And NFT marketplaces will be a place to buy and sell NFTs. GameStop's thinking here is that it has a big enough brand to attract users to its NFT marketplace over others, which will also attract game developers.
This announcement and a new website from GameStop that invites creators to the platform indicate that the company sees a big future in NFTs. And given the fact that OpenSea, Ethereum's (CRYPTO:ETH) largest NFT marketplace, was recently valued at $13.3 billion, it's easy to see why.
What's not clear is whether a big brand like this can break into the world of crypto and NFTs. It's a positive move, but translating a video game retail business to NFTs is a big move. The company may be successful, but there are a lot of smaller players and incumbents eyeing the same space, so there's no guarantee GameStop will take significant market share in NFT gaming, despite today's hype.