Square Enix Will Make Aggressive Investment In Blockchain

Square Enix Will Make Aggressive Investment In Blockchain

Legendary game studio Square Enix will continue to double down on Blockchain technology and digital assets in 2023. In a letter published by company president Yosuke Matsuda, the company pledged to focus on “blockchain entertainment” and Web3.

In 2022, Square Enix explored non-fungible token (NFT) initiatives. According to the company’s latest financial results, the digital asset and blockchain-based businesses have had positive feedback and good reception. Matsuda said:

(…) we are more focused on blockchain entertainment, which we have dedicated aggressive investments and business development efforts to. Looking externally, I think it’s fair to say that blockchain has gained significant recognition as a field in 2022 (…).

Square Enix Keeps Faith in Blockchain Technology for Entertainment

As can be seen in the chart below, interest in the sector may be based on increased sales of mobile games. Net sales revenue for smart devices and PCs has been trending upwards since 2020, becoming a larger part of the company’s contribution.

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Source: Square Enix year-end 2022 financial results

In terms of sales of physical games versus digital games, the latter has become more critical for the company since the third quarter of 2020. This metric continues to rise today and, combined with net sales revenue, explains the interest in expanding digital sales and entertainment.

Square Enix NFT NFTs 2
Source: Square Enix final 2022 financial results:

As part of its expansion into the blockchain space, Square Enix will launch an overseas entity dedicated to “issuing, managing and investing our own tokens” and publishing games in countries with “widespread adoption of cryptocurrencies”.

In addition, the company is exploring launching a Corporate Venture Capital unit, issuing unique products such as NFTs and launching an NFT brand and new IP based on this technology.

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In that regard, the company has included blockchain entertainment as a critical part of its mid-term business strategy. From 2021 to 2022, Square Enix released the first season of “Shi-San-Sei Million Arthur”, a free mobile video game for Android and iOS.

The positive reception of this product is another factor that has spurred the expansion of the company’s digital assets and blockchain business. In Season 2 of this series, Square Enix will be implementing a new strategy to explore features like NFT ownership, “earnings structures” and more.

Working on Crypto and NFT Regulations

The company chairman believes that the implosion of FTX and other prominent players in the industry will lead to tighter regulations on blockchain technology. Accordingly, Square Enix will approach Japanese and other governments to work on these regulations.

The company will help clarify regulations around the nascent sector based on the idea that “new technologies and structures lead to innovation”. The President of Square Enix wrote the following about the future of NFTs and their coming of age in the coming months; he invited people to think about these assets beyond their speculative capacity:

NFTs and the Metaverse in 2021, 2022 was a year of great volatility in the blockchain-related space. However, if this turns out to be one step in a process that leads to the creation of rules and a more transparent business environment, it will certainly have been for the good of the growth of blockchain entertainment.

Ethereum ETH ETHUSDT Square Enix NFT NFTs
ETH price moving sideways on the daily chart. Source: ETHUSDT Tradingview

At the time of writing, Ethereum is trading at $1,210 with sideways movement in the last 24 hours.

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