Gamestop To The Moon With NFT Rocket Fuel
Non-Fungible Tokens (NFTs) are blowing up. Everyone is making one; from William Shatner to Patrick Mahomes to the NBA. Given how hot the space is right now, I expect that more and more companies will look at selling them; including Gamestop.
Given that Ryan Cohen is refocusing Gamestop's sales efforts to e-commerce and digital, selling and facilitating the sale of NFTs only makes sense. Digital games are moving more into the NFT space while Funko has recently announced that they intend to move into the NFT space. NFTs allow a company to merge the physical (say a rare physical item) with digital (a rare NFT) in a packaged sale.
This posts starts by first outlining recent news in the NFT space, then moving to NFTs in video games, and then finally talking a bit about Funko.
NON-FUNGIBLE TOKENS: RECENT ANNOUNCEMENTS & HIGHLIGHTS
A non-fungible token (NFT) is a digital file whose unique identity and ownership are verified on a blockchain (a digital ledger). NFTs are not mutually interchangeable. NFTs are commonly created by uploading files, such as digital artwork, to an auction market. This creates copies of the files, which are recorded as NFTs on the digital ledger. The tokens can then be bought with cryptocurrency and resold. (From Wikipedia)
While NFT's have been around for several years, but have been more recently getting significantly more publicity as the NBA has created their own version of NFT trading cards and digital artists have been selling their works on the blockchain for large sums.
It is expected that many more companies and IP rights holders will move into the space (Here). The Compound had an interesting discussion on NFTs and the history of collectibles (Here).
Highlights of recent NFT milestones and news events:
· Beeple is the poster child of the trend right now as he recently sold his art NFT for $69 million (Here, Here)
· NBA launches NBA Top Shots where people can buy NFTs highlights of basketball plays. This guy turned $175k into $20 million in value. (Here, Here, & Here)
· Goldin Auctions getting into NFTs after dominating physical sports card auctions (Here)
· Elon Musk’s girlfriend Grimes (a singer) sold $5.8 million in NFT art in 20 minutes (Here)
· Jack Dorsey is auctioning off the very first tweet as an NFT (Here)
· Nyan cat sells for $600,000 (Here)
· Crypto Punks are sold for values from tens of thousands to millions of dollars (Here)
· CryptoKitties can sell for thousands or more (Here)
· Investment funds are being created to invest in NFTs (Here)
· DC Comics tells artists not to create NFTs based on their IP while it researches the space; suggesting that DC Comics may already have NFT deals pending announcement or in negotiations (Here). Including a recent Batman statue tied to the blockchain. (Here)
Some celebrities, famous people, and others talking about or playing in the NFT space:
Given the amount of publicity and momentum for NFTs recently, there is no doubt that they'll be a hot topic in the news in 2021 and probably beyond. Those that get in early may be rewarded handsomely.
NFTs IN THE VIDEO GAMES SPACE
Video games are an excellent fit with NFTs because the blockchain allows one to assign rights to digital items easily and quickly. Items like weapons, cars, real estate, clothes, whatever can be assigned an NFT and then monetized within a game. That NFT purchase could then allow a user to move their item from one place to another online. From e-sports to mobile games the impact could be massive.
Highlights of recent NFT news events in the games space:
· Sandbox, a UGC world like Roblox, recently sold more than $1 million worth of virtual land in apart of the game sponsored by Atari
· Polyient Games purchased a citadel in the Mirandus fantasy game for more than $800,000.
· Yield Guild Games purchased 88 plots of Savannah land in Axie Infinity and a 12-by-12 estate in Sandbox. The combined price was over $100,000.
· Illuvium has raised $5 million to create a fantasy-based video game with NFTs. The game rewards players with the opportunity to explore and capture NFT creates in combat. It incentivizes players with a stake in the project; as fees incurred within the game are paid out to staked token holders as ongoing rewards. (Here)
Some quotes about NFTs in video games:
“Gaming is going to be big. People spend a lot of money in games. When they quit a game, that money is gone. Your investment is gone. It doesn’t mean anything. So if people are willing to spend that kind of money in something where if they stopped logging in, it has no value. What happens when, if they stop logging in, they sell what they bought. It will change the whole nature of video games. It won’t be spending anymore. It will be investing. So it totally changes everything.” Gabe Leydon - Founder CEO of Machine Zone
"If you own a piece of property in a game, you no longer have to pay rent on it every month, and you can think of it as an investment. You could make money when you sell it." - Dean Takahasi
“If you can play for something that is valuable to you, then why would you choose to play in a game where there is no value. We are not saying traditional games will go away. But we do believe in this thesis that it’s better for the player to play in an environment when you have some ownership.” - Yat Siu - Founder of Animoca Brands
"In the past, players were more like serfs, working for the lord of the estate. These walled gardens generate money for the game company, and its shareholders, but nothing goes to the players. Those walled gardens could make the rules and kick out the players who broke the rules. And the players didn’t get to take the things they bought with them when they left. Now, if a game shuts down, the player can’t take their assets and move to another game." - Dean Takahasi
"In a game, I could buy an NFT that memorializes my completion of Red Dead Redemption 2, where it captures everything I did in the game and follows my unique path through it. I could show that to people, maybe, sometime in the future and recount it with pride. I would pay for that." - Yat Siu - Founder of Animoca Brands
“It’s more about the fact that the value of the assets are part of the experience. What makes it valuable as a collectible is that it’s an emotional and cultural moment. I can go deeper into the experience, and the more connected I become to it. I can express myself, and have a sword with 50 kills on it, or maybe it’s something my son used, and we had a great moment with it. We’ve just scratched the surface of that. - Yat Siu - Founder of Animoca Brands
“Within the generations or the family where that item is held, it is priceless. And this is a power of non-fungible tokens because every object has some scarcity. It’s like your wedding ring. It’s not that valuable to others, but yours is your dream, your story.” - Yat Siu - Founder of Animoca Brands
FUNKO MOVING INTO NFTs “FAIRLY SOON”
Last Friday Funko's CEO Brian Mariotti was interviewed by Yahoo Finance:
“We’re excited about it and we have a plan in place. We have some technology in place. We are going to be out in the market fairly soon. But we’re going to out in the market in a very different way. We have the ability to disrupt this space in a way that nobody else is doing right now. We can tie digital NFT’s to our fan base and link NFT’s with physical products. And that’s not happening right now. So, for example, if you had a pack of NFT’s. I won’t mention licenses. And there are a few rare ones. If you have those rare ones, we’re going to give you a free product that is tied to that rare NFT. Which means you have a super rare physical product that ties to your super rare NFT. That’s disruptive. That’s new. It’s different. It’s only what Funko can do. And we’re really excited about what the future of NFT’s are. We’re certainly all over this. And I think you’ll see fairly soon from Funko in the market.”
Funko seems to have the NFT market clearly in its sights and Gamestop could be a potential beneficiary. Imagine Gamestop selling Funko NFT's online and fulfilling in-store. Or having Gamestop exclusive Funko NFT's combined with rare Funko Pops!. Gamestop could even sell NFT's for Loungefly; Funko's fashion-related business that sells things like backpacks and wallets (Disney Bag 1, Disney Bag 2).
How Gamestop and Funko might capitalize on the NFT trend:
· Digital items have the ability to move globally in an instant; increasing the total addressable market. Both for Funko and for collectors. (Imagine how easy it would be for Gamestop to expand into other international markets they are not currently in through NFTs)
· All collectibles and art have concerns with fakes and counterfeits. By using blockchain technology and NFT’s, Funko and Gamestop can reduce the impact of counterfeiters on their businesses. When someone purchases a rare item, its NFT can serve as certification of its authenticity through the blockchain.
· NFT’s allow Funko and Gamestop to move to blockchain based payment systems and tap wealthy investors looking to diversify out of their crypto coin holdings into physical and digital items. Especially wealthy crypto investors who are looking to park their money in other investments to diversify their portfolio.
· NFT “artists” or “creators” can collect a piece of the revenue each time the specific digital asset turns over. For example, an NFT can be sold 20 times over the course of a year. Each time the NFT is sold the owner and seller can collect a fee (depending on how the system were structured).
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