It raised a few eyebrows when Square Enix announced it was selling off a pair of Western developers and a list of its valuable IP addresses, and would use the money to invest in… blockchain, among other things. We now know more specifically what Square Enix’s plans are in this space, which they are putting in place amid a crypto market crash and the crater of NFT values and interest.
But here’s what they do:
- They have already created a Blockchain Entertainment business division in February this year.
- They’ve completed season 1 of a game you’ve probably never heard of Shi-San-Sei Million Arthur, a blockchain card game. They say they are “encouraged by the results and feedback from our NFT activity” and as such will be doing a second season.
- Beyond that, they more generally explore “revenue structures, breadth of play, and NFT ownership experiences” within the NFT sector.
- They plan to establish guidelines for blockchain games and support scalability with the NFT economy. They plan to issue fungible tokens and design payout structures based on them. They plan to launch a new brand NFT, an IP based on NFTs.
- They are investing in Animoca Brands, which focuses on blockchain gaming and web 3.0, as well as The Sandbox, the “decentralized metaverse” that has featured in numerous headlines for selling blockchain virtual real estate.
Why does this all seem… so bad to outsiders?
- So far, we’ve seen next to no mainstream success with NFTs in games. Existing companies that have tried this like Ubisoft have been ridiculed to the point that despite creating their own blockchain/NFT divisions, they don’t talk about it at all anymore.
- Popular blockchain games like Axie Infinity are constantly on the brink of collapse due to fundamental economic instability. Axie’s AXS is down 51% in the past month alone. The game’s Smooth Love Potion has lost 96% of its value, making its “play to win” mechanic no longer viable for many players.
- NFTs in general appear to have peaked and are now rapidly declining. The number of active NFT wallets has fallen 88% and the sale of NFTs has fallen 92% from its peak in September 2021. NFTs that sold for tens of thousands are now selling for tens or hundreds of dollars.
We’ll see what happens with Square Enix’s plans. They’ve convinced themselves it’s worth the investment, and while I understand the desire to find an alternative to AAA single-player games that cost hundreds of millions of dollars, it’s a lot like barking up the wrong tree in the current climate.
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