UpOnly | Research #10: Gaming giant raises $300M from IP sales to pivot to blockchain gaming
The past few years have seen several traditional gaming corporations like Konami, Electronic Arts, and Ubisoft embrace blockchain technology. The scope of involvement typically ranges from issuing non-fungible tokens (NFTs) to funding blockchain gaming startups, or announcing blockchain-focused divisions. Amid the increased adoption, Japanese entertainment giant Square Enix is going all in.
In a recent development, the firm sold off some of its intellectual properties, including the established gaming title Tomb Raider. The $300 million netted from the sale would go into the company’s pivot to blockchain gaming.
This week’s edition of UpOnly | Research reviews the company’s recent involvement with blockchain gaming. We also consider why it is only a matter of time before most gaming companies adopt blockchain in one way or another to improve the experience for gamers.
Square Enix exits Tomb Raider to focus on blockchain
Square Enix is a Japanese entertainment conglomerate best known for creating famous gaming titles such as Final Fantasy, Tomb Raider, and Kingdom Hearts. In 2021, the company’s gaming titles generated a record-high 50 million unit sales.
Last week, Square Enix announced it had reached an agreement with Embracer Group to sell three of its gaming studios, including Crystal Dynamics, Eidos-Montréal, and Square Enix Montréal. The $300 million deal also included the transfer of over 50+ popular gaming intellectual properties notably including Tomb Raider and Deux Ex. Tomb Raider is one of the world’s most successful gaming titles, having generated over 88 million unit sales. Deus Ex also has an impressive record of over 12 million sales.
However, Square Enix is willing to part with these IPs partly to finance its push into blockchain gaming. In its official announcement, the company noted that the “transaction enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud.” Although certain reports have tried to undermine the relevance of the company’s blockchain pivot, recent developments suggest it was a largely influential factor in the latest deal.
In his New Year letter, Square Enix President Yosuke Matsuda reflected positively on the emergence of the Metaverse and increasingly sophisticated blockchain technologies that support the issuance of NFTs. He noted at the time that the company’s medium-term strategy included aggressive R&D and investment into the space.
Yosuke Matsuda also wrote favorably about play-to-earn games, albeit coining the term “play-to-contribute” to refer to gamers who seek to make the games they play more exciting. “It is blockchain-based tokens that will enable this [attracting play-to-earn contributors]. By designing viable token economies into our games, we will enable self-sustaining game growth,” Matsuda wrote.
Undoubtedly, access to fresh capital allows Square Enix to fully pursue its blockchain ambitions. The company already conducted a successful sale of Ethereum-based NFT trading cards back in November and also joined a funding round for blockchain Metaverse project Sandbox.
Blockchain potential in gaming means more dominoes will likely fall
Square Enix’s pivot to blockchain gaming, at a time when certain gaming studios are only partially invested or still skeptical of the technology, might seem speculative at best. However, the company’s successful track record in the traditional gaming space suggests the switch is likely backed by a firm belief in blockchain’s potential to disrupt gaming as we know it.
There are renowned benefits such as enabling players to truly own purchased in-game items and allowing them to make money doing what they love. The use of blockchain also incentivizes the creation of user-generated content (UGC), a field where most traditional games have tried to improve with little to no success.
Square Enix’s Yosuke Matsuda expressed confidence that blockchain-based incentives will lead to more UGC in games. They will also result in greater consistency and “lead to more people devoting themselves to such efforts and to greater possibilities of games growing in exciting ways.”
Admittedly, the blockchain gaming space is still in its infancy. In-game token design and user experience may still be far from top-notch. However, the underlying improvements that blockchain brings to gaming makes it increasingly likely that more traditional companies will follow Square Enix’s footsteps and eventually adopt the technology in the coming months and years.
UpOnly’s week in brief
- UpOnly Brings Trusted Data to Play-to-Earn Gaming Hub Revolve Games
- UpOnly Partners with Disruptive Move-to-Earn Project FitEvo
UpOnly is a first-of-its kind data directory dedicated to providing insightful and actionable data on the move-to-earn, play-to-earn and Metaverse gaming fields. Our solution addresses a market that is left largely uncovered by other data providers and we aim to become a one-stop-shop for gamers worldwide to identify the most lucrative play-to-earn and optimize their performance within these gamers. Alongside our data directory, we offer a decentralized predictions platform that allows anyone globally to bet on the outcome of play-to-earn and Metaverse gaming events.