Square Enix Yosuke Matsuda released the annual A New Year’s Letter from the President for 2023. These missives tend to give people an idea of what to expect from the company for the year ahead, as well as goals. In addition to mentioning the 20th anniversary of Square and Enix merging, the goal of making an end-to-end global publishing organization, and bringing up how it got rid of Crystal Dynamics, Eidos-Montréal, and Square Enix Montréal, it also noticed a continued commitment to an endeavor mentioned in 2022. That is, despite fluctuations and situations in the cryptocurrency sphere in 2022, Square Enix will continue to invest in and explore NFTs and blockchain games.
As a reminder, Square Enix President Matsuda brought up NFTs and blockchain games in the 2022 New Year’s Letter as well. At the time, he suggested there would be story-focused NFTs.
Here’s the portion of the Square Enix New Year’s Letter in which Matsuda discussed the company’s approach to NFTs and blockchain games going forward.
In terms of new business domains, we named three focus investment fields under our medium-term business plan. Among those, we are most focused on blockchain entertainment, to which we have devoted aggressive investment and business development efforts. Looking externally, I think it is fair to say that blockchain gained significant recognition as a field in 2022, as evidenced by “Web 3.0” becoming a firmly established buzzword among businesspeople. However, the year also saw volatility in the cryptocurrency and NFT (non-fungible token) markets that tracked the dramatic shifts in the macroeconomy described above. The latter half of the year in particular produced a somber string of news stories with blockchain connections, including the scandalous bankruptcy filing of FTX in November.
In the wake of these developments, we hear rumblings from some countries of early moves to regulate such businesses more strictly. In Japan, meanwhile, the drive to encourage such businesses has gained momentum, led by the government. In June 2022, the Japanese cabinet signed off on a plan called the “Priority Policy Program for Realizing a Digital Society,” which includes wording regarding the creation of an environment for promoting the Web 3.0 concept, including the use of NFTs based on blockchain technology. Japan’s Digital Agency also launched a Web 3.0 study group.
New technologies and frameworks lead to innovation, but they also create considerable confusion. Having ridden out such societal tides, some such technologies and frameworks gradually become part of people’s lives, eventually giving rise to new businesses and growth. 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. 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.
Keeping a steady eye on these environmental changes while considering from a higher-level perspective what Web 3.0 and blockchain entertainment are actually all about presents a different vista than if we focus on them solely in technological or speculative investment terms. As I said in last year’s New Year’s letter, if we consider traditional gaming to have been centralized, then blockchain gaming must operate based on a self-sustaining decentralized model. It is that concept, that philosophy that I see to be key.
That is to say that what sort of new experiences and new excitement our Digital Entertainment business can deliver to our customers through its game development efforts and other endeavors under the self-sustaining, decentralized concept is extremely important.
Multiple blockchain gaming events held overseas recently produced more active discussion than ever before about what makes the games exciting and what their user community looks like. The market was driven more by speculative investors than by gamers though 2021. 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.
Our Group 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. We are also engaged in global sourcing from an investment perspective and will continue to take stakes in promising businesses whether we find them in Japan or abroad. Blockchain has been an object of exhilaration and a source of turmoil, but with that in the rearview mirror, we hope that blockchain games will transition to a new stage of growth in 2023.
Square Enix already started dipping a toe into these sorts of endeavors. In November 2022, it announced Symbiogenesis. The announcement teasing the project noted it would be a “NFT collectible art project,” throughout which participants would “untangle the story.” That will launch in Spring 2023.
