Square Enix plans to establish new studios, invest in the blockchain

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At the beginning of the month, Square Enix announced the sale of three of their major Western studios (Crystal Dynamics, Eidos Montreal and Square Enix Montreal) and several significant IP (Tomb Raider, Deus Ex and Thief) to the Embracer Group, "a massive, decentralized collection of entrepreneurs," as Square Enix described the group. Now, a new financial report has shed some light on their reasonings behind the sale and plans for the future.

There were three main reasons given for the sale. The first simply says they wish to optimize resource allocation in order to "develop appealing titles better aligned to customer needs while simultaneously bolstering our profitability." The second is that Square Enix wants to restructure its publishing function to better align with their headquarters in Tokyo. Finally, the last reason is to help them "accelerate [the] launch and monetization of new businesses by moving forward with investments in focus fields (blockchain, AI, and the cloud)." This echoes controversial statements by Square Enix's president, Yosuke Matsuda, last month committing to making blockchain games, saying that traditional games would be "not enough" for the company and expressing an interest in "autonomous game content." (These comments come from an interview with Yahoo Japan and the translation comes courtesy of VGC.)

The report later goes into greater detail on their interest in the blockchain, calling back to the establishment of the Blockchain Entertainment Business Division in February 2022 and the first season of NFTs sold based off of their Million Arthur franchise in March 2022. "Encouraged by the results and feedback from [their] NFT business," they will be producing a second season of NFTs and plan to incorporate game content into the blockchain as well. Other blockchain initiatives include an effort to "establish regulatory clarity and guidelines for blockchain games" and getting "world‐building, story‐focused creatives" to assist in launching new NFT brands and IP.

Finally, Square Enix is looking to "strengthen [their] IP ecosystem" on both the development and publishing side. They're looking to "cultivate robust IP (including creation of new IP)" and to bolster their game development capabilities by creating or acquiring new studios; on the publishing side, they will appoint a Chief Publishing Officer to "enhance global publishing function" and will integrate group management to "speed up decision-making."

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These changes could indicate Square Enix's intent to extricate itself from AAA Western development. Any mention of overseas restructuring in the financial report only referred to bolstering publishing ability, not development. Despite still owning several Western IP, it is possible they don't fully own any Western developers anymore (with the exception of Square Enix London Mobile, founded last October) as no other Western studios are listed on their Group Companies page. (Square Enix America and Square Enix Europe, the branches responsible for localizing and publishing Square Enix-developed games, are also listed as "development" teams, but no games seem to be attributable to them, possibly meaning they only act as support developers.) The press release that accompanied the sale to Embracer Group said that the company's "development function" now consisted of its Japanese studios, Square Enix External Studios and Square Enix Collective. Curiously, Square Enix Collective is a subsidiary of Square Enix Europe focused on publishing and marketing indie games, with no mention of game development found on its website. Square Enix External Studios also appears to be a publishing subsidiary of Square Enix Europe, focusing on publishing Square Enix-owned IPs, as well as other titles like Batman: Arkham Asylum (back when they were known as Eidos Interactive), according to a press release from People Can Fly announcing Outriders.

This move has arguably been forecasted by Square Enix's history of publicly expressing disappointment in their Western-developed games' sales and by comments made by its president last month, telling Japanese developers not to go out of their way to appeal to Western audiences, believing good Japanese games have a worldwide appeal. "The designs of the monsters, and the visual and audio effects, are all still somewhat Japanese," said Matsuda. "And players around the world know that this is what makes Japanese games good." (Once again, thanks to VGC for translating Matsuda's interview with Yahoo Japan.) Of course, we don't know for sure if this is case and can only speculate until we know more about what studios Square Enix creates or acquires.

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As for what's happening with the former Square Enix studios now, we largely don't know what they're working on. Eidos Montreal released Marvel's Guardians of the Galaxy last summer, but since there were no plans for DLC, they've likely been mostly done with the game for the better part of a year now with no announcement on their next project. Square Enix Montreal had been working on a Space Invaders AR mobile game but, as that IP is still owned by Square Enix, the state of that game is unknown.

Crystal Dynamics is the exception, as they announced a new Tomb Raider game and will still be working on the reportedly-troubled Perfect Dark reboot (according to a Tweet from the developer). They also recently cancelled the 2022 roadmap for their Avengers game at the same time they announced a new character would be coming, possibly indicating this will be the last release and Crystal Dynamics hopes to finish the game before the sale to Embracer Group finalizes.
 

Kraken_X

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Square-Enix had some of the best games of 2021: Guardians of the Galaxy, the Pixel Remasters, Actraiser, FF7 Remake for PC, Nier, Bravely Default 2, and Neo: The World Ends With You. They seem to be refocusing on their core RPG franchises, which sounds good to me. Hopefully they take other dormant IPs like Terranigma and Robotrek and make new titles or remakes with worthy new content. I'd love to see an new FF on the Pixel Remaster engine too.

The NFT stuff is worrying, but Square-Enix knows what they are doing in the predatory mobile game space. Their mobile games probably bring in more money than their AAA titles.
 

sombrerosonic

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They turned cloud into a bored ape, what a time to be alive in this corprate hellscape

Oh well. Fuck them, They will most likely not even put them on steam due to Valve's dislike of NFT. Not to mention the MASSIVE backlash they will get from it. Fallout 76 all over again.
 
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WG481

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What's interesting to think about is how Enix could profit off of the blockchain.
Since it's like super big or whatever now, investing in it and then selling all of whatever they acquired would turn a large profit.

But crypto/NFTs are kinda cringe.
Y'all investing thousands into something-coin or an ugly procedural picture of an ape and once it crashes, you are impoverished.
 

sarkwalvein

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You know, I still kind of want to get FFXVI, I hope they can delay the cryptoshit a little while, so at least I get the chance to get that game without blockchain bullshit inside, and then I say my farewells to Squenix forever. Only one more game. That's all I ask for...

But sure it will be shit anyway, so I don't know why I even care.
 

codezer0

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They turned cloud into a bored ape, what a time to be alive in this corprate hellscape
When I watched and read a thing explaining what nft's are, at first blush I fully expected Tumblr to embrace the notion, given it seems to cater to eccentricities. The fact that they are hard rejecting it, should speak to how even that mentally deranged user base sees it for the scam it is.
 

ChiefReginod

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Unfortunately, I don't think this whole NFT thing is as simple as crypto for the sake of crypto. They see it as the DRM of the future. Selling NFT items in-game is only the start of it.

The end result, if people actually buy games with this crap in it, will be a world where games can't be cracked and we have zero ownership of anything except for the stuff we buy in-game with real world money.
 

krakenx

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Outside of currency and pyramid schemes, crypto is a solution in search of a problem. All it really does is give you publically verifiable proof of ownership. Basically a receipt.

Crypto isn't really any stronger of a DRM then server-side methods that already exist. If you can modify the games code, you can give yourself all the NFTs just as easily as traditional DLC. It can give you the ability to resale, but that's already possible without Blockchain, publishers just don't bother allowing it because they make more money from a new sale. Same with transferring items between games. The hard part of that is making assets compatible with multiple games and adjusting gameplay for foreign items, none of which the Blockchain helps with. The verification part is easy.
 

Dr_Faustus

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Given that they sold off anything else they had of value its only a matter of time this crashes and burns into being a cheap enough company to be pocketed by Sony.

Alternatively, in the future installments of FF7 Remake Purchase and Unlock the secret ending where you save Aerith for only 5 ETH!
 

codezer0

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Given that they sold off anything else they had of value its only a matter of time this crashes and burns into being a cheap enough company to be pocketed by Sony.

Alternatively, in the future installments of FF7 Remake Purchase and Unlock the secret ending where you save Aerith for only 5 ETH!
And when Sony buys them, they'll just put the kibosh on the property being available anywhere else, and ban updates to games on non Sony platforms.

Yeah, no. I don't want that, either.
 

64bitmodels

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they'll just put the kibosh on the property being available anywhere else,
I mean... does anyone REALLY play final fantasy on Non Playstation Consoles? like at all? Not even defending exclusivity here, i hate it as much as the other guy but at the same time you're basically asking square cater to an audience that largely doesn't even play their games. Even on switch FF isn't that popular of a brand.
 

codezer0

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I mean... does anyone REALLY play final fantasy on Non Playstation Consoles? like at all? Not even defending exclusivity here, i hate it as much as the other guy but at the same time you're basically asking square cater to an audience that largely doesn't even play their games. Even on switch FF isn't that popular of a brand.
Of course. I still play ff 15 on steam, the wife and my sister in law play 14 online together, and of course I still have the classic entries on GBA carts.

But Sony already sets a precedent for shady behavior. Sunset overdrive still had some game breaking glitches that can more or less soft brick your progress on PC, before Sony bought the property. Surprise, surprise; no plans to fix it on either PC or Xbox since the buy
 
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