Square Enix President Embraces NFTs, Pay-to-Earn Games

Square Enix president Yosuke Matsuda has expressed his support for non-fungible tokens (NFTs) and games in which players earn cryptocurrency by playing in an open letter published Saturday.

"The advent of NFTs using blockchain technology significantly increased the liquidity of digital goods, enabling the trading of a variety of such goods at high prices and sparking conversations the world over," Matsuda wrote. "I see 2021 not only as “Metaverse: Year One,” but also as “NFTs: Year One” given that it was a year in which NFTs were met with a great deal of enthusiasm by a rapidly expanding user base."

Both NFTs and cryptocurrency are controversial. NFTs are viewed by many as empty speculation at best and outright grift at worst, offering buyers unique licenses to digital goods that provide little in the way of tangible value. It's also tied to the blockchain of individual cryptocurrencies, nearly all of which require enormous energy expenditures to earn, causing environmental devastation.

Matsuda acknowledges the rampant speculation in NFT markets, but believes the market will ultimately correct for this inflated sense of value.

Matsuda hopes to capitalize on the rising value of cryptocurrency through so-called play-to-earn games, in which players earn cryptocurrency by performing certain in-game actions. He sees playing for fun as just one possible motivation for playing games, with play-to-earn games offering a new motivation to play: profit.

"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," he writes.

"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."

Matsuda goes on to say integrating these systems in Square Enix's games will "enable self-sustaining game growth." Incorporating them will be a "major strategic theme for us starting in 2022."

Online reaction to Matsuda's letter has been fairly negative.

"The people who made FF7, a game about eco terrorists fighting to save the planet from a corporation literally sucking life out of the planet... has now become that corporation," wrote one Twitter user. "When is S-E gonna rename itself to Shinra?"

"Wow I can't believe they skipped all the way to Final Fantasy L," wrote another.

Matsuda's letter also addresses his optimism around the metaverse, extended reality technology, the cloud and 5G, each of which will also be part of Square Enix's strategy in 2022.

"The metaverse will likely see a meaningful transition to a business phase in 2022, with a wide range of service appearing on the scene. As this abstract begins to take concrete shape in the form of product and service offerings, I am hoping that it will bring about changes that have a more substantial impact on our business as well," he wrote.