Why Gaming Giant Square Enix Will Make Aggressive Investment In Blockchain Entertainment

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The legendary gaming studio Square Enix will continue to double down on Blockchain technology and digital assets in 2023. In a letter published by the company’s president Yosuke Matsuda, the company committed to focusing 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 business saw positive feedback and good reception. Matsuda said:

(…) 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 (…).

Square Enix Maintains Faith In Blockchain Technology For Entertainment

As seen in the chart below, the interest in the sector could be based on the spike in sales from mobile games. The net sales revenue from smart devices and PCs has been trending to the upside since 2020, becoming a bigger part of the company’s contribution. 

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Source: Square Enix financial result end of 2022

In terms of the physical game versus digital game sales, the latter has become more critical for the company since Q3 2020. This metric continues to rise today and, combined with the net sales revenue, explains the interest in amplifying digital sales and entertainment. 

Square Enix NFT NFTs 2
Source: Square Enix financial result end of 2022:

As part of their expansion in 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 “wide cryptocurrency adoption.”

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

In that sense, the company included blockchain entertainment as a critical part of its medium-term business strategy. From 2021 to 2022, Square Enix launched “Shi‐San‐Sei Million Arthur” season one, a free-to-play mobile video game for Android and iOS.

The positive reception of this product is another factor that prompted the expansion of the company’s digital asset and blockchain business. In this series’ second season, Square Enix will implement a new strategy to explore features such as NFT ownership, “earning structures,” and much more. 

Working On Crypto And NFT Regulations

The company’s president believes the implosion of FTX and other prominent players in the sector will push stricter regulations on blockchain technology. Thus, Square Enix will approach the Japanese and other governments to work on these regulations.

The company will help to clarify regulations around the nascent sector based on the idea that “new technologies and frameworks lead to innovation.” Square Enix’s president wrote the following on the future of NFTs and their maturation 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 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.

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

As of this writing, Ethereum trades at $1,210 with sideways movement in the last 24 hours.

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