WSJ News Exclusive | GameStop Entering NFT and Cryptocurrency Markets as Part of Turnaround Plan

GameStop is also close to signing partnerships with two cryptocurrency companies to share technology and co-invest in developing games that use blockchain and NFT technology, as well as other NFT-related projects, the people said. The retailer expects to enter into similar deals with a dozen or more crypto companies and invest tens of millions of dollars in them this year, the people said.

GameStop, based in Grapevine, Texas, has been working to reestablish its business after years of losses. The company was at the center of a stock trading frenzy last year that boosted its share price, sparking a surge in interest and optimism from individual investors.

Many saw potential in GameStop despite the pandemic's negative impact on foot traffic and while consumers increasingly chose to download and stream games over the Internet, rather than buy the kinds of hard copies the company specializes in. sell.

Last year, GameStop revised its executive team and board of directors, appointing activist investor Ryan Cohen as president. Mr. Cohen, who co-founded the online retailer of pet products

Tough INC.

Y sold it for $ 3.35 billion In 2017, he's been pushing for GameStop to be more tech-centric.

The restructuring effort has yet to show significant results in GameStop's financial performance. In the quarter through October, the company said revenue grew, but his loss was widened compared to the same period of the previous year. Revenue growth came from hardware and accessories sales, while gaming software revenue fell 2%.

"We believe our emphasis on the long term is positioning us to build what will eventually become a much larger business," GameStop Chief Executive Matt Furlong said in an earnings call with analysts last month. Mr. Furlong, who joined the company last year from

amazon.com INC.,

He then mentioned that GameStop was exploring business opportunities related to blockchain and NFT technologies.

There have been signs that some investors are losing patience. As of Thursday's close, GameStop shares had plummeted more than 45% in the past six weeks, although the shares remain well above where they were when investors began piling on GameStop shares a year ago. The shares were up more than 20% in after-hours trading after the news was published in The Wall Street Journal.

Diving into the crypto space and NFT puts GameStop on a rapidly growing list of companies trying to cash in on these fledgling and largely unproven technologies. A handful of NFT marketplaces already exist and some have game publisher tokens. Earlier this week, a market called OpenSea said it raised $ 300 million in venture capital and is now valued at $ 13.3 billion, more than GameStop's valuation of close to $ 10 billion.

The video game industry is likely to play a major role in the adoption of cryptocurrency, NFT and blockchain technology, analysts say. Players are expected to be among the first to adopt the technologies because they are already spend a lot on virtual goods. Virtual real estate in video games, as well as video game collectibles, is a rapidly growing segment of the NFT market.

In recent weeks, some of the industry's largest publicly traded video game companies have launched or announced plans to sell NFT, including

Ubisoft Entertainment,

Zynga INC.

Y

Square Enix holdings Co.

However, some executives and industry players have raised concerns about the value of NFTs and the developers' motives for creating them.

By entering the crypto and NFT space while still in its infancy, GameStop hopes to avoid missing out on opportunities to be part of a fledgling trend like it did with computer game downloads about a decade ago, people familiar with its plans said. GameStop attempted to enter streaming video games at the time, but abandoned the effort. Today, downloading and streaming games are fast growing trends.

Write to Sarah E. Needleman in sarah.needleman@wsj.com