Happy New Year, writes the president of Square Enix in a new letter (opens in new tab). But there are also big outliers like Ubisoft (which last year launched the ill-fated NFT experiment (opens in new tab)) and, above all, Square Enix.

The giant Japanese publishers stand out not because of their interest, but because of how bullish they are (open in new tab) about the future incorporation of these technologies. The necessary context for Western readers is that the company has several successful mobile titles in Japan that use such technologies.

The letter from Square Enix President Yosuke Matsuda wishes everyone a Happy New Year before outlining the problems facing the world in 2022, including "soaring inflation," Russia's invasion of Ukraine, plummeting stock prices (especially in the high-tech sector), and "dramatic depreciation (soaring) of the yen against imported raw material prices." It starts with this. In other words, the macroeconomic environment is not looking good, but Matsuda expects "things to improve in early spring.

Matsuda briefly mentions the sale of three studios (Crystal Dynamics, Eidos Montréal, and Square Enix Montréal) and various IP to the Embracer Group last August. The goal, he writes, is to "further focus resources" as development becomes more complex, and as part of that, the publisher is looking to hire in-house talent in a big way. This is placed in the broader context of Square Enix's current goal of becoming "one Square Enix," as opposed to the Western and Japanese divisions, which he believed were operating independently of each other.

Now for the bad news. Matsuda writes about the future opportunities Square Enix sees in the industry. The publisher seems to have "three key investment areas" and is "most focused on blockchain entertainment, in which it is investing aggressively." Matsuda acknowledges the "volatility" of the crypto market and a "somber series" of news about the blockchain business, "including FTX's scandalous bankruptcy filing in November."

The macro picture of many such crypto disasters is that regulators in various countries are waking up to the sector, and Matsuda says that "we are hearing early moves from some countries to regulate these businesses more strictly." However, this is not yet the case in Japan. In June 2022, the Japanese government signed a "Priority Policy Program for the Realization of a Digital Society," which includes guidelines on web3technology, NFT, and blockchain.

Matsuda said that Square Enix recognizes that there is something dubious here, and that while 2022 was a very bad year for web3 technology, he still believes it is part of the future. And unlike many crypto enthusiasts, he expects "rules and a more transparent business environment" regarding blockchain as part of that.

Then there's the slightly odd part, where it seems as if Matsuda has taken a sip of the Kool-Aid. If traditional gaming was centralized, blockchain gaming must operate on a self-sustaining decentralized model," he said. That concept, that philosophy, is the key, in my opinion."

Your guess is as good as mine. But all I want from Square Enix is another "Parasite Eve" (open in new tab).

Matsuda at least sees the conversation around blockchain moving from what it was in 2021, i.e., driven by speculative investments, where the assumption was first and foremost that these technologies were about monetization The first assumption was that these technologies were about monetization. However, thanks to the turbulence in the crypto market, "there is now a tendency to view blockchain technology as just a means to an end and to discuss what is needed to achieve the goal of providing new experiences and excitement to customers."

It is at least a more positive approach, given that Square Enix seems to be going all in on this. While it is arguable that these technologies could provide desirable features to games, such as tracking individual weapons in multiplayer games, for example, the only examples we are seeing at this point are those where the technology is front and center rather than doing something useful in the background.

Square Enix is currently "developing several blockchain games based on its original IP" and plans to release several more this year, and is also considering investing in companies that create interesting blockchains.

The year 2023 marks the 20th anniversary of the merger between Square and Enix. The partnership has undoubtedly been a great success, bringing together the two major JRPG studios. The company continues to make great games, most notably the continued success and vibrancy of Final Fantasy XIV, perhaps the current crown jewel.

Square Enix's attraction to blockchain makes one reflexively uneasy, but at least they recognize that if they are going to incorporate something like this into their games, the functionality for the player must come first. Players do not like these technologies as they exist today, and for good reason (opens in new tab). Square Enix seems to suggest that in the future players will enjoy games made with these technologies.