Square Enix President Yosuke Matsuda has posted a new New Year’s message on the company’s official website.
In it, just like last year, Matsuda talked about blockchain gaming, NFT (non-fungible tokens), and other company plans in general.
Read the full message below.
I would like to start by wishing everyone a Happy New Year.
Countries around the world saw inflation rise in 2022. The US Federal Reserve accelerated its easing efforts earlier in the year, and Russia’s subsequent invasion of Ukraine raised geopolitical risks that sent resource prices up and caused disruptions to supply chains. supply. The Fed and other central banks embarked on a round of rapid interest rate hikes that led to a significant increase in long-term interest rates. Stock prices have plummeted, especially in the technology sector, and IPOs have stalled. This chain of events continues to cast a shadow over the global capital markets. The impact on our lives in Japan is also increasing with each passing day, as the significant depreciation of the yen has led to higher prices for imported raw materials, which has led to more inflation.
These massive shifts in the macroeconomic environment come as we see promising signs that the world is moving past the three years since the COVID-19 pandemic, and also pose a variety of risks for the digital entertainment industry. In particular, the shortage of semiconductors has restricted the supply of devices, which has had very little impact on the operation of our group business. Driving our business amidst this uncertainty continues to be a challenge. However, we expect these conditions to improve in early spring, which we hope will act as a tailwind to the realization of our group’s medium-term business plan, which can be found here.
Based on this understanding of our environment, we set two goals for 2022. The first was to lay the foundation for the fiscal year from April 2023 to March 2024, which is the last year of the current medium-term business plan. The second was to implement structural reforms that seemed to go further. For these reasons, we have completely overhauled our development and publishing businesses, focusing on our existing core digital entertainment business.
on the development side, We sold three studios – Crystal Dynamics, Eidos-Montréal and Square Enix Montreal – as well as associated intellectual property to Embracer Group in August last year. The purpose of this divestiture was to further focus our resources, as the increasing sophistication and complexity of game development made these endeavors more expensive. This divestiture is part of the structural overhaul mentioned above and is designed to bring about fundamental changes to our portfolio of studios.
We will also begin to reshape our group bond portfolio over the medium and long term. To that end, we will accelerate our efforts to strengthen our internal development capabilities, further expand our internal talent pool, and more quickly focus our resources on developing world-class competitive titles. The remarkable growth in the volume of modern game development has made raising the skill sets and focusing the efforts of our development teams more important than ever.
Divesting studios and bolstering our internal development capabilities might seem, at first glance, like conflicting moves. However, we must flexibly and continually review our portfolio of medium/long-term titles and the development studios that create them in light of the environment in which we find ourselves. As such, both steps are essential for our group to continue to provide entertainment that caters to an evolving world. We will continue to review our development organization and use mergers and acquisitions and other approaches to improve our studio portfolio through both organic and inorganic means, thereby ensuring that we continue to enhance our internal development capabilities.
On the editorial side, we are moving away from the previous model based on geography and function, in which Japanese and Western publishing organizations operate independently of each other. Instead, we are creating a comprehensive global publishing organization based on the “One Square Enix” concept. We launched this new structure late last year with the close collaboration of our two Chief Publication Officers (CPOs), a newly created role. We’ve made particularly profound changes to the organizational structure of our Western operations, adopting an enhanced sales and marketing structure to match the pool of new studios created by divestment from our three overseas studios. We are expanding our roles so that we can reap as many benefits as possible from the digital transformation that has been gathering momentum since the beginning of the pandemic.
Simultaneously strengthening our development and publishing organizations, we will strengthen our group’s presence as a global publisher and generate new growth for our existing core digital entertainment business.
In terms of new business areas, we have named three investment areas that are focused in our medium-term business plan. between them, We are more focused on blockchain entertainment, to which we are devoting unremitting investment and business development. Looking outward, I think it’s fair to say that blockchain has gained significant recognition as a field in 2022, as evidenced by “Web 3.0” becoming an established buzzword among entrepreneurs. However, the year also saw volatility in the cryptocurrency and NFT (Non-Fungible Token) markets that accompanied the massive macroeconomic changes described above. The second half of the year, in particular, produced a string of dismal news with blockchain connections, including the scandalous FTX bankruptcy filing in November.
In the wake of these developments, we hear grumbling from some countries about the first steps to more strictly regulating these businesses. In Japan, on the other hand, the drive to encourage these actions has gained strength, led by the government. In June 2022, the Japanese Cabinet signed a plan called “Priority Policy Program for Achieving a Digital Society”, which includes wording on creating an environment to promote the concept of Web 3.0, including the use of web-based NFTs technology. The Japan Digital Agency has also launched a Web 3.0 study group.
New technologies and structures lead to innovation, but also create a great deal of confusion. After overcoming these social ebbs and flows, some of these technologies and structures have gradually become a part of people’s lives, leading to new business emergence and growth. After the excitement and joy surrounding NFTs and the metaverse in 2021, 2022 was a year of great volatility in the blockchain-related space. However, if this turns out to be one step in a process leading to the creation of more transparent rules and work environment, it would certainly be in favor of the growth of blockchain entertainment.
Watching these environmental changes closely while considering from a higher level perspective what Web 3.0 and blockchain represents for entertainment really offers a different perspective than if we focused solely on it in terms of technology investment or speculation. As I said in last year’s New Year’s speech, if we consider traditional games to be centralized, then blockchain games should operate on the basis of a self-sustaining decentralized model. It is this concept, this philosophy that I consider fundamental.
This means what kind of new experiences and new emotions the digital entertainment business can offer our customers through game development efforts and other endeavors under the concept of self-sustainability and decentralization is critical.
Several blockchain gaming events held abroad recently have generated more lively discussion than ever about what makes gaming exciting and what it’s like to have a community of users. The market was driven more by speculative investors than players until 2021. This means that the content that was at the forefront was created based on the premise that blockchain and NFTs should lead to monetization. However, after the aforementioned upheavals in the cryptocurrency industry, there is now a tendency to view blockchain technology as merely a means to an end and discuss what needs to happen to achieve the goal of offering new experiences and excitement to customers. I see this as a very beneficial development for the future growth of the industry.
Our group has many blockchain games based on original IPs in development, some of which we announced last year, and we are making preparations that will allow us to reveal even more titles this year. We are also involved in providing a global investment perspective and will continue to have stakes in promising businesses, whether we find them in Japan or abroad. Blockchain has been an object of delight and a source of disruption, but even so in the rearview mirror, we expect blockchain gaming to move into a new phase of growth in 2023.
Finally, I’d like to point out that 2023 marks a milestone for us because it marks the 20th anniversary of the Enix and Square merger. In the scenario of circular changes in our business environment, we have achieved significant growth driven by the countless opportunities that have arisen in the past two decades. Our group aims to achieve further growth by continuing our self-sustaining development and transformation while staying aware of the changes that will occur in the next decade and beyond. We will strengthen our business with the aim of making 2023 a year of great development and transformation.
I wish you all the best in the new year.
President and Managing Director,
Square Enix Holdings Co. , lt.