Even as crypto markets remain down and many video game enthusiasts vocally oppose the potential for NFTs in gaming, one major game publisher remains focused on Web3 gaming: Square Enix, the creator of major franchises like Final Fantasy and Dragon Quest.
The Japanese firm has gradually increased its investment and presence in the Web3 space over the last few years, and in President Yosuke Matsuda’s annual new year’s letter for 2023, he explained that Square Enix is “most focused” on blockchain-powered gaming amid its new business development efforts.
Square Enix is developing “multiple blockchain games” based on original IP, rather than its existing franchises, Matsuda wrote, and the firm plans to announce further games this year. The firm is also still considering investment opportunities around blockchain. “[We] will continue to take stakes in promising businesses whether we find them in Japan or abroad,” he wrote.
Matsuda’s letter highlights the growing use of the term Web3, which he writes has become “a firmly established buzzword among businesspeople.” However, he also notes the market challenges that emerged in 2022, including the collapse of cryptocurrency exchange FTX in November and the subsequent industry contagion.
“Blockchain has been an object of exhilaration and a source of turmoil,” Matsuda explained, “but with that in the rearview mirror, we hope that blockchain games will transition to a new stage of growth in 2023.”
Rising interest in blockchain technology has been a mainstay of Matsuda’s annual letter in recent years, and Square Enix has ramped up its moves in the space along the way.
In November, Square Enix announced its first original game built around Ethereum NFTs, called Symbiogenesis. Set to launch this spring, it’s a “digital collectible art experience” with storytelling elements. The firm recently tweeted that the “gameplay revolves around choosing whether to monopolize or [share]” information with other players.
Square Enix also recently announced that it will be a strategic advisor to Cross the Ages, a digital trading card game built on Polygon, and invested in Bitcoin gaming startup ZEBEDEE. It also invested in metaverse game The Sandbox in 2020, and last year revealed plans to revive its dormant Dungeon Siege property as an in-game experience in The Sandbox.
Also last year, Square Enix announced plans to release Final Fantasy NFTs via Enjin’s Polkadot-based Efinity platform. The NFTs are based on the popular game Final Fantasy VII, and are tied to physical trading cards and toys that will be released this year.
Last May, Square Enix sold off three of its internal studios along with major franchises—including Tomb Raider and Deus Ex—to Embracer Group for $300 million. The publisher said that the sale would benefit its growing push into blockchain games.
Square Enix is one of a handful of major traditional game publishers that have committed to growing the blockchain space. Ubisoft, the maker of Assassin’s Creed and Just Dance, has invested in and partnered with a number of crypto game studios, and released the first in-game NFT items for a major franchise game in late 2021 with Ghost Recon: Breakpoint.
Meanwhile, Take-Two Interactive—the publisher behind Rockstar Games and 2K Games, makers of Grand Theft Auto and NBA 2K respectively—has pushed into the NFT space through its casual games studio, Zynga. Take-Two also invested in Horizon Game Studios alongside Ubisoft, but Rockstar Games has since banned the use of NFTs on Grand Theft Auto V servers.
Web3 advocates believe that NFTs—or tokens that represent ownership of unique items—can fuel decentralized, player-owned game economies, and benefit players via the ability to resell items and potentially use them across multiple games.
However, many gamers have pushed back against the rise of Web3 gaming and NFT collectibles, pointing to scams in the crypto industry, simplistic gameplay for many early Web3 gaming examples, and speculative demand that has driven up the prices of some assets.
In his letter, Matsuda highlighted the past speculative frenzy around NFTs but wrote that he believes that the focus on monetization will give way to a growing view of the prospective functional benefits of NFTs for gamers.
“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,” he wrote. “I see this as a very beneficial development for the future growth of the industry.”