Square Enix CEO: Blockchain to Enable Self-Sustaining Game Growth and More Game-Changing User Generated Content

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There's been no shortage of blockchain related stories in the last few weeks. We've covered Electronic Arts and Ubisoft executives excitedly discussing the potential implementations in the games industry. Then, a short while ago, Ubisoft itself and GSC Game World both announced the first blockchain/NFT (non-fungible token) implementations in triple-A games like Ghost Recon Breakpoint and STALKER 2; both were met with nearly universal disdain from gamers, to the point where GSC Game World had to quickly backtrack and forego any such plans.

That was just the tip of the iceberg. We've also had other prominent industry figures chiming in, including Microsoft's Head of Gaming, Phil Spencer, who called current blockchain gaming implementations too exploitative for his liking. Hazelight founder Josef Fares predictably said he'd rather get shot in the knee rather than add any NFT to one of his games, while CCP Games CEO Hilmar Veigar Pétursson expressed the idea that gamers should be able to earn real money while playing games, according to the play to earn model.

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Square Enix president Yosuke Matsuda had the opportunity to voice his view (and the company's, presumably) in a New Year's letter posted yesterday on the publisher's official site, where blockchain technology got the lion's share of the focus alongside other efforts such as cloud gaming and AI research. According to Matsuda, blockchain games can enable self-sustaining game growth. The Square Enix president also acknowledged the reservations that many hardcore gamers have on this topic but quickly added that there's another group of potential gamers that will be excited to have a more tangible incentive to play games through blockchain and NFTs.

According to Matsuda-san, this could even boost user-generated content (UGC) higher than ever before, as creators would finally be able to get proper rewards and incentives. This is, after all, what happens in The Sandbox, one of the most successful play to earn games to date.

The Square Enix president goes on to name this new trend 'decentralized gaming' as opposed to the currently 'centralized gaming', adding that it's one of the company's goals to incorporate decentralized games into its portfolio starting this year. Last but not least, Matsuda-san left the door open to Square Enix issuing its own NFTs in the future.

You can read the letter's portion dedicated to this subject below.

[...] 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. 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.

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. 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. It is precisely this sort of ecosystem that lies at the heart of what I refer to as “decentralized gaming,” and I hope that this becomes a major trend in gaming going forward.

If we refer to the one-way relationship where game players and game providers are linked by games that are finished products as “centralized gaming” to contrast it with decentralized gaming, then incorporating decentralized games into our portfolio in addition to centralized games will be a major strategic theme for us starting in 2022. The basic and elemental technologies to enable blockchain games already exist, and there has been an increase in the societal literacy and acceptance of crypto assets in the past few years. We will keep a close eye on societal shifts in this space while listening to the many groups of users that populate it, and ramp up our efforts to develop a business accordingly, with an eye to potentially issuing our own tokens in the future.

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