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Square Enix CEO's New Year's Letter Discusses NFTs, Metaverse, Blockchain, And More

Square Enix sees a bright future of NFTs and blockchain games.


Square Enix president Yosuke Matsuda has published a new letter to celebrate the new year and let fans and investors know what to expect from the company going forward.

Matsuda touched on subjects like the metaverse, NFTs, blockchain, and more. Starting with the metaverse, Matsuda said Facebook's decision to change its name to Meta demonstrates that the metaverse as a concept "is not a mere buzzword but here to stay."

Matsuda said the metaverse will become more of a commercial product in 2022, and it might end up having some applicability to Square Enix in the future.

"The metaverse will likely see a meaningful transition to a business phase in 2022, with a wide range of services appearing on the scene. As this abstract concept begins to take concrete shape in the form of product and service offerings, I am hoping that it will bring about changes that have a more substantial impact on our business as well," Matsuda said.

As for NFTs, Matsuda said this could become another significant business opportunity. Like others, Matsuda observed "speculative overtones" in some parts of the NFT landscape, but overall, the executive believes NFTs will become immensely popular over time.

"We do observe examples here and there of overheated trading in NFT-based digital goods with somewhat speculative overtones, regardless of the observed value of the content provided," Matsuda said. "This, obviously, is not an ideal situation, but I expect to see an eventual right-sizing in digital goods deals as they become more commonplace among the general public, with the value of each available content corrected to their true estimated worth, and I look for them to become as familiar as dealings in physical goods."

Matsuda reiterated that Square Enix's previously stated plan to invest in AI, the cloud, and blockchain games remains unchanged. Square Enix has been "aggressive" in its R&D programs and investment in fields of AI, the cloud, and blockchain games, Matsuda said.

As for the cloud, Matsuda cloud gaming could help its content become more accessible. "Leveraging cloud technologies is extremely effective as a means of making our content and services uniformly available and as a catalyst for creating new forms of excitement that expand upon the content development capabilities for which we are known," Matsuda said. "As such, we will be making ample investments in the cloud space."

For blockchain games, Matsuda said Square Enix is so excited because of how those types of games can offer "self-sustaining game growth" as opposed to the type of games that exist today.

"Blockchain games, which have emerged from their infancy and are at this very moment entering a growth phase, are built upon the premise of a token economy and therefore hold the potential to enable self-sustaining game growth," Matsuda said "The driver that most enables such self-sustaining game growth is diversity, both in how people engage with interactive content like games, and in their motivations for doing so. Advances in token economies will likely add further momentum to this trend of diversification. I see the 'play to earn' concept that has people so excited as a prime example of this."

Finally, Matsuda acknowledged that criticisms of the "new trends" in games today. But Square Enix is pushing ahead because blockchain games, in particular, can make games "more exciting" and appeal to wider audiences.

"I realize that some people who 'play to have fun' and who currently form the majority of players have voiced their reservations toward these new trends, and understandably so. However, I believe that there will be a certain number of people whose motivation is to 'play to contribute,' by which I mean to help make the game more exciting," Matsuda said. "Traditional gaming has offered no explicit incentive to this latter group of people, who were motivated strictly by such inconsistent personal feelings as goodwill and volunteer spirit. This fact is not unrelated to the limitations of existing UGC (user-generated content). UGC has been brought into being solely because of individuals' desire for self-expression and not because any explicit incentive existed to reward them for their creative efforts. I see this as one reason that there haven't been as many major game-changing content that were user generated as one would expect."

"However, with advances in token economies, users will be provided with explicit incentives, thereby resulting not only in greater consistency in their motivation, but also creating a tangible upside to their creative efforts. I believe that this will lead to more people devoting themselves to such efforts and to greater possibilities of games growing in exciting ways. From having fun to earning to contributing, a wide variety of motivations will inspire people to engage with games and connect with one another. It is blockchain-based tokens that will enable this. By designing viable token economies into our games, we will enable self-sustaining game growth."

Matsuda said Square Enix will keep a close on "societal shifts" as it relates to decentralized gaming opportunities like blockchain. One item that Square Enix is considering is creating and issuing their own tokens sometime down the road.

Check out Matsuda's full letter here.

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