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

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AMC Entertainment (NYSE:AMC), the movie theater chain that has seen a dramatic reversal in fortunes amid a mind-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. However, such a tie-up entails significant 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:

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Crucially, we do not know the nature of the partnership that is being mulled over. For instance, is AMC Entertainment willing to offer up its gigantic screens to gamers? Amid a pandemic-driven lull in blockbuster releases, such a strategy makes sense, at least prima facie. However, most 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 amid the prevailing pandemic-related realities.

What about Esports events? After all, AMC Entertainment theaters can serve as a perfect venue for holding these gaming events. True, such a tie-up does make sense. However, what impact would this partnership have on the two 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 work.

I believe that the key here is Non-Fungible Tokens (NFTs). We had noted in a previous post that GameStop has now 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 community. 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.

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

Nonetheless, as stated earlier, we do not know the precise configuration that a partnership between GameStop and AMC Entertainment would take. It might not even materialize. If the tie-up consists of conventional ideas described in the earlier part of this article, it might not catch on. On the other hand, ingenuity and out-of-the-box thinking might win the day.

It is for these reasons that I believe a potential partnership between AMC Entertainment and GameStop is as risky as a first date arranged by your friends – a small chance of success and an overwhelming potential for disaster.

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.
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