GameStop has been rumored to be building an NFT marketplace since Q3 of 2021 and it has long since been confirmed. I reported on it in October last year and I have been following it closely. One aspect I have been watching with interest is the media’s reaction to this move, given their often confusing approach to the GameStop saga from last year.
It has become a theme in the last 24 months that mainstream media and many famous figures throw vitriol at the crypto industry at every opportunity. The most common form of attack last year was environmental concerns which were typically outdated. While I will fight that stereotype, the general dislike for crypto I tend not to, partly because I understand it.
One of the worst aspects of the crypto community is that many members have an insatiable appetite for combative behavior; shoving NFTs and blockchains down throats as often as possible and speaking about chains and organizations in the space using cult-like language. It has contributed to a divide that is well-established at this point. There are then of course the detractors who sit on the other side of the fence and are equally as outspoken.
So, it was no surprise when I started to see outrage and mockery directed at GameStop upon the NFT marketplace news making its way into the public domain. Even informative and well-written pieces such as “Of Course GameStop Is Doing NFTs” by Matt Levine on Bloomberg had a dark undercurrent. It’s a title that sets a tone that undermines the content it heads; the clickers of that article are likely going in for confirmation bias or to fuel their disagreement.
The message of this piece is more or less that using — or even mentioning — crypto is an easy corporate win, as reflected by GameStop’s stock price bump off the back of the news. That’s one take. I see it as a resurging company in dire need of modernizing that has decided to use a popular and emerging technology; seems an obviously good match to me.
There is one article, however, that stuck in my throat.
Why Would GameStop’s NFT Platform Be ‘Dead on Arrival?’
To begin, the article in question is by Yahoo! Finance, titled “GameStop’s reported NFT plan is ‘dead on arrival’: Analyst“. In it, said analyst makes some heavy-handed comments about GameStop’s plan with spurious support.
The comments come from Michael Pachter, an extremely experienced analyst and senior figure at Wedbush Securities, specializing in video games among a few other areas. I wouldn’t know his name if it hadn’t been for his comments about gamers several years back. When players were outwardly critical of Mass Effect 3’s ending, he said “That incident was a great example of what a whiny group gamers are in general.”
So, admittedly, I’ve gone into his comments about GameStop’s NFT platform with a sour taste in my mouth. He did offset that somewhat by making it clear he believes in NFTs and their role in several industries going forward. However, I’m don’t agree with where he goes next in this interview.
There are a number of criticisms raised by Pachter, but I’ll highlight the quotes that are getting attention. These are not taken out of context, but watch the interview in the article linked above for clarity:
“NFTs can only be resold if the publishers allow them to be … I know that a lot of the GameStop ‘Apes’ think that, ‘Well they have this unique relationship with their customer, and they have a great relationship with their publishers.’ That’s just wrong … The publishers are really going to be reluctant to let anybody trade NFTs unless they control the transaction and they capture the lion’s share of the profit … BFD they hired 20 people. Who cares. Unless they hire all 20 people from Coinbase, I don’t see how they’re going to be able to pull this off … Dead on arrival. This is a dumb idea.“
There are two key points I believe are incorrect. The first is the analogy he uses in the interview which is in essence that GameStop creating an NFT marketplace is like Walmart creating an on-demand video service as they were rising to fruition. NFT marketplaces, particularly pertaining to gaming specifically, are still in their infancy and many organizations are scrambling to build them. There isn’t a huge, established gaming NFT marketplace already dominating the space, so why not GameStop?
The second issue is regarding publishers not granting GameStop reselling rights for NFTs of various IPs. Unless I misunderstand Pachter, this doesn’t hold water. Firstly, unless each game publisher creates its own marketplace (please, no) then it will have to find its way onto at least one outside of their walls, if not more. Secondly, reselling NFTs is uniquely profitable for the creator of the NFT (as well as the marketplace) as they can bake in a percentage kickback for all future sales.
It seems to me that publishers would like that and if they could bypass having to build and maintain their own marketplace at the cost of a small share of each sale, it would be a desirable trade. Pachter goes on to compare the NFT resales to GameStop’s second-hand physical game sales and that the publishers don’t appreciate that as they do not get a share; that’s a point that is irrelevant for NFTs. If GameStop were to build a successful NFT platform for gaming, I find it unlikely that publishers wouldn’t use it out of spite.
We have seen the social power in crypto, with meme coins and celebrities cashing in left and right. GameStop, thanks primarily to /r/WallStreetBets, has seen singular growth in terms of support and relevancy, with a stock price to match. I couldn’t possibly say GameStop’s NFT marketplace — or any of the crypto projects they may be working on — will be a success; I haven’t seen what they are working on for one. But my feeling is this: why not GameStop?