Square Enix President Yosuke Matsuda sent out his annual letter on January 1 in which he detailed the company’s ongoing commitment to blockchain technologies including investing in it and its use in games. He begins the letter by acknowledging the many factors that have affected the global economy resulting in inflation and continued supply chain issues.
“Countries around the world experienced soaring inflation in 2022. The US Fed accelerated the pace of its tapering effort at the outset of the year, and Russia’s subsequent invasion of Ukraine resulted in heightened geopolitical risk that drove up resource prices and caused supply chain disruptions. The Fed and other central banks then embarked on a round of rapid policy rate hikes that spurred a substantial rise in long-term interest rates. Stock prices plunged, especially in the tech sector, and IPOs stalled. This chain of events continues to cast a major shadow over global capital markets. The impact on our lives in Japan also mounts with each passing day as the dramatic depreciation of the yen has ballooned prices of imported raw materials, triggering further inflation.
Coming just as we were seeing promising signs of the world moving beyond the three years of the COVID-19 pandemic, these tremendous changes in the macroeconomic environment also pose a variety of risks to the digital entertainment industry. In particular, the semiconductor shortage has constricted hardware supplies, which has had more than a minor impact on the operation of our Group’s businesses.”
Restructuring
Mr. Matsuda also details the sale of Crystal Dynamics, Eidos-Montréal, and Square Enix Montréal, and their associated intellectual properties to Embracer group as part of a strategy to reduce costs and restructure during the aforementioned challenges as well as align the company into one core group. Before delving into an explanation of his blockchain plans he also expands on the goal to expand the remaining core’s internal talent pool in an effort to create games that can compete in a global market. Furthermore, he states how Square Enix is moving away from a geographically based publishing approach, with regional offices operated independently of each other, to a “One Square Enix” structure that utilizes an end-to-end global publishing model.
“By simultaneously strengthening our development and publishing organizations, we will further enhance our Group’s presence as a global publisher and achieve new growth for our core existing Digital Entertainment business.”
Yosuke Matsuda
Blockchain
The remaining half of the letter is almost entirely dedicated to covering Square Enix’s commitment to blockchain and the Web 3.0 concept. In last year’s letter, Square Enix President Yosuke Matsuda laid out plans for 5G cloud gaming but also that the company was investing in blockchain and developing games with it. He acknowledges that the volatility of the market following the FTX bankruptcy situation is of concern but also as various countries begin to enact legislation for Web 3.0, and digital currency, things will only get better. Mr. Matsuda expands on this by citing how “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,” and that the agency has launched a Web 3.0 study group.
“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.”
Yosuke Matsuda
Mr. Matsuda goes on to share that multiple blockchain gaming events have led to discussions about how they should be incorporated into entertainment and how they can make games exciting. Although he doesn’t specify which games, he does state there are multiple blockchain games in development based on original IPs. As part of its ongoing blockchain strategy, Square Enix will continue to invest in businesses its sees as promising whether they be in Japan or overseas throughout 2023. Similar goals were stated in May 2022 with the announcement it was looking into establishing and purchasing new studios following the Embracer Group deal.
Lastly, President Yosuke Matsuda commemorates that it is the 20th anniversary of the Enix and Square merger but not before one final mention of continued hope for the growth of blockchain games in 2023 despite the challenges blockchain saw in 2022.
“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.”
Yosuke Matsuda