Japanese gaming conglomerate Square Enix is forging ahead with its commitment to non-fungible tokens, or NFTs, a technology often derided by gamers.
In a Jan. 1 letter, Square Enix president Yosuke Matsuda shared the company’s vision for 2023, which includes “aggressive investment” into blockchain technology and NFTs. This continuation of the company’s contentious 2022 business strategy comes amid instability in cryptocurrency and the growing unpopularity of NFTs among gamers.
Matsuda wrote in the letter that Square Enix has “multiple blockchain games based on original IPs under development, some of which we announced last year, and we are undertaking preparations that will enable us to unveil even more titles this year.”
Square Enix devoted a considerable amount of resources to NFT projects in 2022. In May, the company announced that it sold a number of game studios and franchises to Swedish holding company Embracer Group for $300 million, noting in a press release that the “transaction enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud.” The sale coincided with the massive $500 billion crypto crash that same month.
In November, Square Enix revealed “Symbiogenesis,” an NFT game that was met with backlash from gamers who were expecting it to be a revival of the revered horror series Parasite Eve. (Square Enix was not alone: A slew of other major gaming companies announced plans to work NFTs into games, which were met with similarly tepid responses and controversies.)
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Despite the “crypto winter” that’s seen falling cryptocurrency prices and the collapse of large companies in the space, Matsuda expressed optimism about the future of blockchain games, referencing the Japanese government’s initiatives to promote Web3 services, NFTs and the metaverse.
“Following the excitement and exhilaration that surrounded NFTs and the metaverse in 2021, 2022 was a year of great volatility in the blockchain-related space,” he wrote. “However, if this proves to have been a step in a process that leads to the creation of rules and a more transparent business environment, it will definitely have been for the good of the growth of blockchain entertainment.”
Matsuda also mentioned that Square Enix would aim to fulfill the objectives laid out in the company’s March 2022 financial results briefing, including investing in blockchain company Animoca Brands, establishing publishing arms in countries where cryptocurrencies are popular and branded NFTs.
“The market was driven more by speculative investors than by gamers though 2021,” Matsuda wrote in his new year letter, referencing the crypto market. “In other words, the content that was at the forefront was created based on the premise that blockchain and NFTs should result in monetization. However, in the wake of the aforementioned turbulence in the cryptocurrency industry, there is now a trend to view blockchain technology as a mere means to an end and to discuss what needs to happen to achieve the end of delivering new experiences and excitement to customers. I see this as a very beneficial development for the future growth of the industry.”
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NFTs and cryptocurrency as a whole continue to be a hotly debated topic. The collapse of cryptocurrency exchange FTX and the subsequent arrest of its founder Sam Bankman-Fried brought intense scrutiny to the industry. Bankman-Fried, FTX co-founder Gary Wang and Caroline Ellison, the former CEO of Alamenda Research (a firm affiliated with FTX) were all charged with conspiracy to commit various forms of fraud. Wang and Ellison pleaded guilty; Bankman-Fried pleaded not guilty. In September, the White House said that crypto asset creation could hamstring the country’s commitment to the Paris Agreement, an international treaty to combat climate change. Mining, minting and trading cryptocurrency requires a staggering amount of energy, which leaves behind a significant carbon footprint.
Some video game developers have taken firm stances against implementing NFTs into their games. “Minecraft” developer Mojang Studios announced in July that NFTs and blockchain technology will be strictly forbidden from “Minecraft,” referring to both as exclusionary and against the spirit of the game. The game developer Sam Barlow responded to the news that Square Enix was still committed to NFTs with a wry tweet: “C’mon 2023, stop acting like it’s 2022.”