Square Enix is one of the biggest and most important game publishing companies in the world. Responsible for massive franchises such as Final Fantasy, Dragon Quest and Kingdom Hearts, the Japanese entertainment conglomerate has recently made some quite divisive and puzzling decisions. These include, for instance, selling most of their western studios to Embracer Group along with the publishing rights of Tomb Raider, Deus Ex, and Legacy of Kain, among others. However, it is their next step that could see them make it or break it.
According to several reports, Square Enix has finalised these deals intending to raise money to invest in the NFT gaming market, namely the creation of blockchain-based games. After earning roughly $300 million with their latest sale, the company is expected to use part of those revenues to enter the crypto gaming industry. Industry insiders and the gaming community have met such news with dismay, particularly at a time in which NFT games are struggling to remain viable.
Crypto Games in the “Red”
It isn’t difficult to see why these games may seem appealing to both game developers and users. The play-to-earn model, on which most NFT games are based, seems innovative and players are attracted to the idea of investing real money to play. However, these markets are largely unregulated and still highly unreliable, often resulting in high volatility. In this sense, online gambling platforms, which are required to adhere to strict regulations, offer more security to players looking to put real money into a game. These platforms offer a large variety of traditional gambling games while also featuring more interactive options, such as live casino and live betting which allows punters to place bets in real-time. Live betting has become particularly popular with players being able to assess their options as games unfold.
Additionally, crypto-based games offer little room for players to change their minds regarding their purchases, leaving it to the player-to-player exchange market to help users profit after their initial investment. However, these markets have fluctuated abundantly in the past months, with most internal currencies having dropped significantly in the first months of 2022. Data indicates that out of all the native cryptocurrencies used by NFT games that saw their price rise last year, only two are still currently growing. Similarly, the Internet’s biggest NFT-based game, Axie Infinity, has been facing serious financial problems since late last year.
Game Developers and NFT Games
It is still early to say if Square Enix’s decision to enter the NFT game market will prove successful, however, all around the video game industry game developers are abandoning their plans to invest in this industry. For instance, Ubisoft halted its plans to further incorporate NFTs into Tom Clancy’s Ghost Recon: Breakpoint, while SEGA, Electronic Arts and Team17 have stopped investing in NFT games altogether.
As a result, it seems that Square Enix’s incursion into the NFT industry is somewhat counterintuitive, but it is also understandable that such a financial decision could see them increase their revenues, even if it’s only temporarily. NFT games don’t require much investment and they primarily rely on attracting new players rather than having them play all the time.
For now, while this could be just a cheap and easy way to make a profit, it is already clear that gamers and fans of the company’s work are becoming increasingly frustrated with the lack of consideration demonstrated by the Asian conglomerate. In addition, it is never a good idea to sell the development and publishing rights of fan-favourite titles to other publishing companies.