GameStop's Rise and Fall in the NFT Market: Shutting down in less than 3 years

Authors: Andrew Hayward & Kate Irwin, Decrypt

Translation: Felix, PANews

Less than three years after first hinting at an interest in NFTs, GameStop has abandoned the NFT market. On January 13, GameStop announced that starting from February 2, its NFT platform will no longer have the functionality to buy and sell assets, but NFTs can still be viewed online.

The game retailer, founded in the United States in 1984, has struggled to turn a profit in recent years. It finally achieved its first profit in many years at the end of 2022, but this was after widespread layoffs and the exit of businesses in some European countries.

GameStop has been undergoing transformations, and its most recent "victim" is its NFT market. Here's a timeline of GameStop's NFT plan.

April 2021: GameStop recruits blockchain analysts

As early as April 2021, GameStop posted a job listing for a blockchain security analyst, indicating that the retailer was planning to launch NFTs. A fintech recruiter at the time suggested that the focus of the job listing on security indicated that GameStop was likely planning to launch something "serious" in the crypto space.

May 2021: GameStop launches a mysterious website

In May 2021, GameStop teased its ongoing blockchain project through a minimalist landing page, indicating that it would continue to recruit staff for the initiative. It was unclear at the time whether the retailer would be launching NFT series, tokens, a marketplace, or something else.

However, the landing page contained some hints and Easter eggs, such as a link to GameStop's Ethereum smart contract, which sourced NFTs from Immutable's Gods Unchained trading card game. The site also hid an "Endless Runner" browser game.

January 2022: Establishment of a blockchain department

By January 2022, GameStop had established its own blockchain department and hired 20 employees to develop its upcoming crypto plans. Following this news, GameStop's stock price surged by 31%.

February 2022: Deal with Immutable + $100 million grant

In February 2022, GameStop announced a partnership with the crypto startup Immutable to provide a $100 million grant to developers looking to use the Immutable X blockchain and release NFTs in collaboration with GameStop.

This news also confirmed that GameStop would be using the Immutable X blockchain in its upcoming NFT market (GameStop's NFT market also utilized another Ethereum scaling solution, Loopring).

To date, GameStop has remained silent about its blockchain plans.

February 2022: GameStop sells $47 million worth of IMX

Embarrassingly, GameStop sold $47 million worth of IMX tokens, causing a 23% price drop within 24 hours. While the token sale was part of a pre-arranged transaction, outsiders might perceive that GameStop sought to cash out immediately and profit from its crypto partnerships before launching its crypto products.

May 2022: GameStop launches NFT Twitter account and releases a wallet

GameStop established a GameStop NFT Twitter account dedicated to promoting its NFT plans.

In May 2022, GameStop's NFT account tweeted, "What the internet did for communication, blockchain does for value." To promote the potential benefits of cryptocurrency, GameStop stated, "A public, permissionless, trust-neutral value layer [empowers] players."

However, NFT sales were already in a lull at this time.

July 2022: Market launch and layoffs

In July 2022, following a report of massive losses, GameStop dismissed its chief financial officer and all employees in the business department. A few days later, GameStop launched the anticipated beta version of its NFT market, which required NFT creators to submit applications for approval before their assets could be listed or minted.

Aside from providing statistics for the top 50 series by trading volume, GameStop's NFT market lacked transparency in data. Within the first two days of its launch, the market traded NFTs worth over 3,100 ETH, approximately $3.5 million at the time. While not a large amount compared to major NFT markets like OpenSea at the time, GameStop surpassed Coinbase's NFT market.

During this period, GameStop continued to encourage developers to apply for its $100 million funding program.

October 2022: GameStop finally adds gaming NFTs

Three months after launching its NFT market, GameStop finally added Immutable X gaming NFTs to its platform. This meant that NFT items or assets from games like "Gods Unchained," "Illuvium," and "Guild of Guardians" could be traded through GameStop's NFT market. Prior to this, GameStop's platform only offered avatar-style NFTs and art-style NFTs.

According to a document from the U.S. SEC, in November 2022, GameStop further advanced the development of cryptocurrency and NFT wallets by releasing a version for iOS mobile devices through Apple's App Store.

March 2023: SEC filing shows business falling short of expectations

In a risk assessment filing submitted to the U.S. SEC in March 2023, GameStop wrote, "Our new digital asset products and services may not achieve the expected results and may expose us to new risks."

"If we are unable to successfully implement and operate these digital asset plans, unexpected costs and losses may arise, and we may face other adverse consequences, such as negative reputational impact."

GameStop further stated that its blockchain products expose the company to "risks associated with any new product, including but not limited to risks of accurately predicting market demand and acceptance, creator and buyer acceptance, technical issues in product operation, and legal and regulatory risks."

June 2023: GameStop dismisses CEO

Within a year of launching its NFT market, GameStop dismissed the CEO leading the company's foray into blockchain and NFTs.

August 2023: GameStop discontinues crypto wallet

In August 2023, GameStop quietly revealed through a pop-up message on its NFT market website that it would cease operating its crypto wallet in November due to "regulatory uncertainty in the crypto space."

Meanwhile, legal proceedings between exchanges like Coinbase and Binance and the U.S. SEC were ongoing.

September 2023: NFT Twitter account goes silent

GameStop's Twitter account focused on NFTs (primarily used to promote artists and collections approved for its NFT market) ceased posting content. However, as of December 2023, the account sporadically responded to some users.

It remains unclear whether the employee responsible for the account was dismissed, reassigned, or simply instructed to stop posting "gm" content on the account.

November 2023: GameStop wallet service discontinued

Before shutting down in November, GameStop's crypto wallet gave users approximately three months to transfer their assets. The wallet was initially released for the Chrome browser and iOS systems.

December 2023: Minimal returns from NFTs

In December of the previous year, GameStop's quarterly earnings report revealed that the company made $2.8 million in profit from selling digital assets (referring to NFTs) from January to the end of October 2023. This was a far cry from the $77.4 million in digital asset sales during the same period in 2022.

The report indicated that GameStop incurred a net operating loss of $56.4 million during the same period.

February 2024: GameStop NFT market shuts down

By January of this year, GameStop had made its intentions clear: it would shut down its NFT market. However, the publicly traded company once again remained silent about its plans to close the NFT platform and instead conveyed the information through a small pop-up message on the NFT website.

On February 2, as planned, the NFT market disabled all trading functions, meaning that users could still view assets on the platform but could not engage in actual transactions. All NFTs previously purchased or sold through the platform remain on their respective blockchains and can be accessed and/or traded through other means.

As GameStop ventured into cryptocurrency, the company was striving to achieve profitability. If the company's earnings reports can indicate anything, it's that NFTs did not completely solve its profitability issues.

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