Square Enix to Reinforce Blockchain Bet, According to Latest Earnings Report

Square Enix has announced its new mid-term business plan, reinforcing its blockchain pivot according to the documents presented. The company will continue to invest in key companies in the blockchain arena, including Animoca Brands and The Sandbox, and will also consider other investments in the area. Square Enix recently sold its Western studios for $300 million, but will reportedly not use the funds to pursue these new Web3 investments.

Square Enix Structures Blockchain Strategy

Square Enix, the Japanese gaming company, seems determined to include blockchain and play-to-earn (P2E) as part of its business and monetization scheme for the future. In its recent earnings call, the company disclosed plans regarding blockchain and play-to-earn and the investments it will make in this area.

As part of its mid-term business strategy, the company reported taking on new domains, meaning that it will be putting funds behind new fields, including what it calls the “blockchain entertainment domain.”

Also, Square Enix is taking other, more concrete steps regarding its blockchain pivot. The company will seek to “establish regulatory clarity and guidelines for blockchain games,” including NFT zones and experiences. Square Enix also contemplates issuing exclusive fungible tokens and complementing these with games whose world-building will be designed to include them. This hints at the establishment of new IPs using blockchain, play-to-earn, and NFTs.

New Investments and Business Structure

The company also announced new investments in companies that are already established in the Web3 and metaverse space. The document mentions Animoca Brands, a company with a big portfolio of blockchain gaming investments, and The Sandbox, one of the first experiences launched using Web3 and metaverse.

Square Enix is one of the few companies that has strived to include these technologies in their business model in a structured way. Other, similar developers like Ubisoft and Konami have also started to dabble in the space, but arguably without such a defined approach.

Earlier this month, the company sold part of its Western studios and operations to the Embracer Group for $300 million, and declared this transaction important to enabling “the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud.” However, according to statements of the company in the earnings call, the $300 million will be directed to reinforce the core business of Square Enix. Analyst David Gibson reported that this new business will use different finances, separate from these funds.