Square Enix has released its earnings report for the last fiscal year, and amid the sea of figures and sales numbers are some interesting tidbits, including the fact that Square Enix wants to set up new game studios.
Normally, a publisher looking to build or acquire more game studios would make a lot of sense. But this news comes shortly after Square Enix announced that it would be selling three major studios – Crystal Dynamics, Eidos Montreal and Square Enix Montreal – to the Embracer Group for a reported $300 million. Square Enix in the future also wants to “grow robust IP” after it just sold major IPs like Tomb Raider and Deus Ex along with its aforementioned studios.
Analysts have theorized that the sale of some of its major Western studios and intellectual property is part of an effort by Japan-based Square Enix to “refocus” on its Japanese studios. If that’s the case, Square Enix is likely considering acquiring or opening new studios in Japan, rather than in other parts of the world.
One of the main reasons behind Square Enix divestment of some of its overseas studios and IPs is to use that money to “accelerate the launch and monetization of new businesses by advancing fields of focus” that include blockchain. , AI and the cloud.
In other words, Square Enix is doubling down on NFT and blockchain technology. Part of Square Enix’s “medium-term business strategy” is a new focus on “blockchain entertainment” that includes a desire to issue exclusive NFTs and create a “new NFT brand and IP.”
As such, it is investing in a number of blockchain-focused companies, such as Web 3.0-focused Animoca Brands and “decentralized metaverse” The Sandbox. He is also investing in Ubitus, a Japan-based cloud gaming company. Square Enix makes it clear that it is considering many other investments related to blockchain and cloud services that are not mentioned in the report.
Square Enix’s new focus on NFTs and blockchain comes just as the NFT and blockchain-based cryptocurrency market has taken a nosedive, with the Wall Street Journal recently reporting that the “NFT market is collapsing.” NFT sales are down 92% since September 2021, and the number of “active wallets” (also known as NFT owners or sellers) is down 88% since November, according to the WSJ.
That makes Square Enix’s current decision to commit as many resources to NFTs and the blockchain as ill-timed as humanly possible, but Square Enix isn’t the only game company still trying to get into the NFT space. Companies like Ubisoft have also expressed interest in (or already implemented) some forms of blockchain technology in their games and experiences.
Regardless of the company’s NFT decisions, Square Enix did well in the last financial year, with net sales and profit hitting new records for the full year. Square Enix specifically cites the latest expansion for its MMORPG Final Fantasy XIV, Endwalker, as a “great contribution” when it comes to the company’s gaming business.