A Partnership Between AMC Entertainment (AMC) And GameStop (GME) Is as Risky as a First Date Arranged by Your Friends

AMC Entertainment (NYSE:AMC), the cinema chain that has seen a dramatic reversal in fortunes amid a listen-boggling retail-driven stock price rally, is entertaining notions of a partnership with GameStop (NYSE:GME), the only other pivotal bastion of fidelity among Reddit-based traders. Notwithstanding, such a necktie-up entails pregnant risks and pitfalls.

To wit, Liz Claman at Fox Biz has now tweeted that the CEO of AMC Entertainment, Adam Aron, has reached out to GameStop for a possible tie-up:

BREAKING: $AMC @CEOAdam Aron to @ClamanCountdown: We take made contact with $GME @GameStop on a partnership, nosotros're not prepare to say what it is." says AMC now playing offense to become folks back to the theatres westward/ballsy $25m ad spend

— Liz Claman (@LizClaman) September 8, 2021

Crucially, nosotros practice not know the nature of the partnership that is existence mulled over. For instance, is AMC Amusement willing to offer upwards its gigantic screens to gamers? Among a pandemic-driven lull in blockbuster releases, such a strategy makes sense, at least prima facie. However, near gamers prefer to engage in this activity from the comfort of their homes, often on custom-built gaming stations and rigs that are tailored to their individual taste and preferences. I don't think that a mass gaming avenue would garner much appeal even on AMC's gigantic screens, particularly amongst the prevailing pandemic-related realities.

What about Esports events? After all, AMC Entertainment theaters tin serve every bit a perfect venue for property these gaming events. Truthful, such a tie-upwardly does make sense. However, what impact would this partnership have on the ii companies' bottom-line given the relative rarity with which Esports events are held?

Bear in mind that both AMC Entertainment and GameStop have been presented with a once-in-a-lifetime opportunity to revive their failing business models, and run-of-the-mill ideas simply would not piece of work.

I believe that the key here is Not-Fungible Tokens (NFTs). We had noted in a previous post that GameStop has at present activated a dedicated website for NFTs. While the details are scarce at the moment, the website references players, creators, and collectors, thereby indicating an incoming ecosystem to cater to the gaming customs. For the uninitiated, NFTs are digital imprints of photos, videos, and other digital files that are stored on a blockchain. Additionally, NFTs are also being used to develop and monetize video games, hence GameStop's logical interest in this field.

A fantastic way for GameStop and AMC Entertainment to collaborate would exist for the theater chain to integrate with GameStop's upcoming NFT platform, allowing complete interoperability and transferability. For example, theatergoers should be allowed to redeem their tickets for NFTs on GameStop's platform and vice versa. This arroyo would not only create additional demand for GameStop's NFT platform only too allow AMC Entertainment to tap into this growing phenomenon – a win-win formula.

Still, every bit stated earlier, we do not know the precise configuration that a partnership betwixt GameStop and AMC Amusement would take. It might non fifty-fifty materialize. If the necktie-upwards consists of conventional ideas described in the earlier part of this article, it might not catch on. On the other mitt, ingenuity and out-of-the-box thinking might win the twenty-four hours.

It is for these reasons that I believe a potential partnership between AMC Entertainment and GameStop is as risky every bit a outset appointment bundled by your friends – a small chance of success and an overwhelming potential for disaster.