Square Enix Wants To Establish New Game Studios, Despite Just Selling Three Of Them

Square Enix has released its earnings report for the last fiscal year, and nestled amidst the sea of sales figures and numbers are a few interesting pieces of information, including the fact that Square Enix wants to establish new game studios.

Normally a publisher wanting 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 to the tune of $300 million. Square Enix moving forward also wants to “cultivate robust IP” after it just sold off major IPs like Tomb Raider and Deus Ex along with its aforementioned studios.

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

One of the core reasons behind Square Enix’s divestiture of some of its overseas studios and IP is to use that money to “accelerate launch and monetization of new businesses by moving forward in focus fields” which include the blockchain, AI, and the cloud.

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

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

Square Enix’s newfound 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.” Sales of NFTs have fallen 92% since September 2021, and the number of “active wallets” (aka NFT owners or sellers) having fallen 88% since November, according to the WSJ.

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

Regardless of the company’s NFT decisions, Square Enix did well in the last financial year, with net sales and profits reaching new full-year records. Square Enix specifically cites the latest expansion for its MMORPG Final Fantasy XIV, Endwalker, as making a “major contribution” when it came to the company’s games business.