Square Enix wants to start new game studios, despite selling three of them

Square Enix has released its earnings report for the past fiscal year and nestled amid the sea of ​​sales and numbers are a few interesting bits of information, including the fact that Square Enix is ​​looking to set up new game studios.

Normally, a publishing house looking to build or acquire more game studios would make perfect sense. But this news comes shortly after Square Enix announced it was selling three major studios – Crystal Dynamics, Eidos Montreal and Square Enix Montreal – to the Embracer Group for $300 million. Square Enix also wants to “cultivate robust IP” after it just sold major IPs like Tomb Raider and Deus Ex along with the aforementioned studios.

Analysts have theorized that the sale of some of its major Western studios and IP are part of an effort by Japan-based Square Enix to “refocus” on its Japanese studios. If so, Square Enix is ​​probably looking at acquiring or starting up new studios in Japan, rather than in other parts of the world.

One of the main reasons behind Square Enix’s divestiture of some of its overseas studios and IP is to use that money to “accelerate the launch and monetization of new businesses by advancing in focus areas,” including the blockchain, AI and the cloud.

In other words, Square Enix is ​​doubling down on NFTs and blockchain technology. Part of Square Enix’s “mid-term business strategy” is a renewed focus on “blockchain entertainment,” which includes the desire to issue exclusive NFTs and create a “new NFT brand and IP.”

As such, it is investing in a number of blockchain-focused companies, such as the Web 3.0-focused Animoca Brands and the “decentralized metaverse” The Sandbox. It also invests in Ubitus, a Japan-based cloud gaming company. Square Enix makes it clear that it is considering multiple other investments related to the blockchain and cloud services not mentioned in the report.

Square Enix’s renewed focus on NFTs and the blockchain comes just as the NFT and blockchain-based cryptocurrency market has taken a nosedive, with the Wall Street Journal recently reporting that the “NFT market is collapsing.” NFT sales have fallen 92% since September 2021, and the number of “active wallets” (also known as NFT owners or sellers) has fallen 88% since November, according to the WSJ.

That makes Square Enix’s current decision to devote so much resources to NFTs and the blockchain about as ill-timed as humanly possible, but Square Enix isn’t the only gaming company still trying to enter the NFT space. Companies like Ubisoft have also expressed interest (or have already implemented) some forms of blockchain technology in their games and experiences.

Regardless of the company’s NFT decisions, Square Enix fared well in the past fiscal year, with net sales and profits hitting new year-on-year records. Square Enix specifically cites the latest expansion for its MMORPG Final Fantasy XIV, Endwalker, as a “big contributor” when it comes to the company’s games business.

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