GYGO: You Knew This Would Be About GameStop

Buckle up y’all, this is going to be a long one. But first, hey, how are you doing? Been playing games, staying hydrated? I’ve been doing a lot of the first and probably less than I should of the latter—I recently finished Va-11 Hall-A and have been working through Murder By Numbers, a delightfully campy visual novel in which you investigate dramatic murders by solving nonograms. Now, as for the nonfiction dramatic events of this week… let’s get to it.

Retail Investors Gamed GameStop’s Stocks

I am but a simple writer with an utterly abysmal understanding of math and an even worse understanding of economics, so I’ll do my best to explain this in a way that doesn’t break anyone’s brain. 

The simplified story is that earlier this week, retail investors (Wall Street’s term for us regular folks) from the r/WallStreetBets subreddit sent GameStop stock prices soaring after realizing that hedge fund investors were capitalizing on the stock with a technique called short selling. Essentially, the hedge funds were “borrowing” stock from investors, selling it, and then buying back the stock at a lower price than what they sold it for. The investors get their shares back, and the hedge funds pocket the difference and net a profit. (The Polygon article linked above includes a Tweet with a great analogy in case you too learn better through metaphor.)

Theoretically, short selling can be infinitely profitable, but only if the stock price falls. What happened this week was the opposite: Retail investors bought up the shorted shares, driving up the price of the stock so much that hedge funds would lose a lot of money (like, billions) buying back their borrowed shares. This made many people (namely hedge fund investors) very unhappy, especially as retail investors continued to buy up other shorted stocks. 

Many retail investors are continuing to hold onto their stock, and it’s still difficult to say exactly how the situation will end. So far, the hedge fund that bet against GameStop, Melvin Capital, ended up losing 53 percent on its investments in January. Melvin is known for aggressive short selling and recently made $25 million shorting CD Projekt Red stock after Cyberpunk 2077‘s disastrous release. (Because, y’know. Everything comes back to Cyberpunk.) 

While many news outlets are framing this as a David and Goliath story in which the little guy retail investor has taken down a giant, wealthy hedge fund, the reality is a bit more complicated. Two other companies invested $2.75 billion in Melvin Capital to help stabilize the company, and Robinhood and other free trading platforms built on the idea of “democratizing the stock market” curbed users’ ability to purchase GameStop and other “volatile” stocks, angering users. When users review-bombed the app with one-star reviews on Google’s Play Store, Google deleted nearly 100,000 reviews, bringing the rating back up to about four stars.

The Robinhood controversy also prompted a response from lawmakers, who called for an SEC investigation into Robinhood’s decision to restrict trading. Robinhood users have also filed a class action lawsuit against the company. Unfortunately, though, history shows that the U.S. government is far more likely to side with Wall Street than it is with the average American consumer.

One other thing to note is that while investors battle it out in the stock market, GameStop’s stock prices have little bearing on its retail employees. As with most wealth, the profits investors make are only possible because hourly workers (often making around $10 an hour) are the ones keeping the stores running. 

Gamers File Class Action Lawsuit Against Valve Corporation

On Thursday, January 28, five people filed a lawsuit against Valve Corporation for its handling of developer contracts. Valve’s Steam platform is the preeminent digital storefront for PC games, responsible for 75 percent of all PC game sales. The complaint alleges that Valve “abuses the Steam platform’s market power” to maintain its dominance in the industry through a “Most Favored Nations” clause in developer contracts. Essentially, the complaint argues that Valve maintains its status by forcing developers to sign contracts with a clause stating that the price of a game will be consistent across all storefront platforms. 

Here’s why this is problematic enough to become a lawsuit. Say I open a new digital storefront called Noodle Games. To get the word out about Noodle Games, and to draw users to my platform, I strike a deal with a developer: I take a smaller cut of their sales, but sell the game at a slightly lower price than the developer is selling for on Steam. However, this isn’t allowed under Steam’s Most Favored Nations clause. Unable to compete against Steam’s much larger industry presence, Noodle Games closes its virtual doors and I go back to my regular job of thinking up goofy hypotheticals to explain other complex-ish concepts.

This PC Gamer article includes a lot of interesting context, as well as a more in-depth analysis of the lawsuit.

 

ICYMI

Current and former employees of Scavenger Studio have accused the company’s creative director of inappropriate and abusive behavior. Scavenger is the studio behind Darwin Project, a free-to-play online multiplayer battle royale game, and the upcoming Season.

Jeanette Maus, one of the voice actors featured in the upcoming Resident Evil Village, has died. She voiced several characters in the game, including one of the main witches. Resident Evil fans raised thousands of dollars for a GoFundMe that was set up to help pay for her colon cancer treatment.

Tabletop Simulator, which helps players enjoy board and card games digitally, used Google Translate for localization instead of hiring specific localization teams. It went about as well as you would expect.

Electronic Arts announced the company plans to open a new studio called Full Circle to work on the next Skate game.

A Super Mario-themed event and a Festivale event are likely arriving in Animal Crossing: New Horizons in February and March.

New details have emerged about IO Interactive’s plans for its upcoming Bond game, including the fact that it may grow into a trilogy.

An update on MAGFest: MAGFest’s executive director, Paul Birtel, has resigned after employees came forward with accusations of abusive behavior within the company.

Several comics creators have announced Campaigns & Companions: The Complete Role-Playing Guide for Pets, which allows tabletop players to bring their pets along on Dungeons & Dragons-style adventures. The book is written by Andi Ewington and Rhianna Pratchett and edited by Alex de Campi, with illustration by Calum Alexander Watt.

Did you make it this far? Here’s a puppy.