Square Enix President Yosuke Matsuda kicked off 2022 with a New Year’s letter that focuses on companies’ growing focus on NFTs, blockchain games, and the Metaverse.
Matsuda started the Letter by wishing everyone a Happy New Year and saying that the Metaverse “was a hot topic in 2021 that sparked a lively global discussion first about what the Metaverse is and then about what kind of business opportunities it offers”.
He then noticed the name change from Facebook to Meta and that this was just proof that the concept is not just a buzzword, but will remain, and that this attention led to 2021 being called the “Metaverse Year”.
Thanks to the advances in “Extended Reality (XR) technology, the proliferation of cloud and 5G, more sophisticated blockchain technology, and other technological developments that have taken place in a variety of areas over the past few years,” Matsuda believes the metaverse will “probably experience a meaningful transition to a business phase with a wide range of services in 2022”.
“When this abstract concept takes on concrete form in the form of product and service offerings, I hope that it will bring about changes that will also have a greater impact on our business,” said Matsuda.
NFTs, or non-fungible tokens, were the next topic of discussion, and Matsuda began by saying, “2021 not only as ‘Metaverse: Year One’ but also as ‘NFTs: Year One’ as it was a year when NFTs were made by received with great enthusiasm by a rapidly growing user base. “
While Matsuda agrees that there are “here and there unfortunate examples of overheated trading in NFT-based digital goods with somewhat speculative undertones, regardless of the observed value of the content provided,” he believes the ship will straighten up in time will.
“This is obviously not an ideal situation, but I do expect that digital goods deals, as they become more common among the general public, will eventually see a rights adjustment, revising the value of any available content to its actual estimated value, and I want them to be as familiar as trading in physical goods, “Matsuda said.
Referring to Square Enix, Matsuda reiterated that the company behind the Final Fantasy series, upcoming Forspoken and more, in May 2020, “identified AI, the cloud and blockchain games as new domains on which to focus our investments. and we have consequently aggressively advanced our R&D efforts and investments in these areas. “
In the case of AI, the focus was “primarily on the processing of natural language, world models and simulation technology”.
“These efforts will help us develop the games we release and improve their overall quality, but that’s not all,” said Matsuda. “By incorporating the results of these R&D efforts in virtual avatars and elsewhere, we plan to apply those results to a wide variety of content and make the relevant technology available to other companies to use these R&D efforts across our digital entertainment business to use .”
On the cloud front, Square Enix is exploring this technology from “two primary perspectives: first, the use of cloud technologies to distribute content, and second, the development of content that offers customers new forms of excitement made possible by the attributes of the cloud will”.
Finally, blockchain games will be discussed, which are different from traditional games, which “have a one-way flow with creators like us offering a game to the consumers who play them”.
“In contrast to this, blockchain games that have emerged from their infancy and are currently entering a growth phase are based on the premise of a token economy and therefore have the potential to enable self-sustaining game growth,” said Matsuda. “The engine that most enables such self-sustaining game growth is diversity, both in terms of the way people interact with interactive content such as games, and in terms of their motivations for it. Advances in the token economy are likely to add further momentum to this trend of diversification. See the “play to earn” concept that people are so excited about as a prime example of this. “
While recognizing that players who “play to have fun” and “currently form the majority” have “reservations about these new trends,” he also notes that there is another side of the coin – players who “play to contribute” – this is worth exploring.
“However, I believe there will be a certain number of people who are motivated to contribute, so I want to help make the game more exciting,” said Matsuda. “Traditional gambling did not offer any explicit incentive to this latter group of people, who were motivated solely by such conflicting personal feelings as benevolence and volunteerism.
“This fact has nothing to do with the limitations of existing UGC (user-generated content). UGC was born out of an individual’s desire for self-expression, not because there was an explicit incentive to reward them for their creative endeavors. I see this as part of the reason why there wasn’t as much major breakthrough content user-created as one would expect. “
As the token economy advances, Matsuda says, “users are being offered explicit incentives, which not only increases the persistence of their motivation, but also creates a tangible benefit in their creative endeavors.”
“I believe this will lead to more people dedicating themselves to such endeavors, and games to grow in exciting ways,” says Matsuda. “From having fun to earning to contributing – a variety of motivations will inspire people to engage in games and connect with one another. There are blockchain-based tokens that make this possible. “
All of this and more has led Matsuda to say that this ecosystem “is at the heart of what I call” decentralized gaming “and he hopes it will become a major trend in gaming in the future.
“By developing viable token economies in our games, we will enable self-sustaining game growth. This kind of ecosystem is at the heart of what I call ‘decentralized gaming’ and I hope this becomes an important future trend in gaming, “said Matsuda.” When we look at the one-sided relationship between game players and game providers Linking games that are finished products together, calling them ‘centralized gaming’ to contrast it with decentralized gaming, then adding decentralized games to our portfolio in addition to centralized games will be a major strategic issue for us from 2022 onwards.
“The basic and elementary technologies to enable blockchain games already exist, and the social education and acceptance of crypto assets has increased in recent years. We will keep a close eye on social changes in this area as we address the many user groups that populate it and step up our efforts to develop a business accordingly, with the aim of potentially issuing our own tokens in the future. “
In summary, Matsuda believes that, given the changing lifestyles and learning from Square Enix, “the new technologies and concepts that I have discussed and the changes they are bringing to our business environment,” during the ongoing Living and functioning COVID-19 pandemic will provide us with numerous opportunities to enrich people’s lives through digital entertainment that is at the core of our business. “
“At the same time, we see the beginnings of further leaps in our business,” concluded Matsuda. “We continue to strive to create, develop and deliver world-class content, and we will contribute to the happiness of society and its people by providing new forms of excitement. I wish you all the best for 2022. “
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