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Square Enix's NFT and Cryptocurrency Controversy Explained


To kickstart the new year, Square Enix President Yosuke Matsuda wrote an open letter. In this letter, Matsuda described his larger plans for the company in the coming years. Matsuda's vision sees blockchain technology, cryptocurrency, and NFTs form the backbone of a new kind of gaming: decentralized gaming. Unsurprisingly, gamers aren't fans of the plan. In this article, we'll explain what's going on with Square Enix and why gamers are so upset with the announcement.

Square Enix's New Direction: Blockchain, Cryptocurrency, and NFTs

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Credit: Square Enix

In 2021, NFTs became the latest controversial new technology to start to make its way into video games. Blockchain technology and cryptocurrency continue to come to more and more games as the years go by, too. NFTs dovetail nicely with these technologies, relying on the blockchain to actually work and most easily sold for crypto.

Other technology, like machine learning or any kind of A.I., is the backbone of a lot of higher-level techs, driving game development behind the scenes. In many senses, these types of technology are quickly becoming a staple of the modern world. Whether that's good or bad aside, this kind of technology is here to stay.

Related: Ubisoft's Quartz NFT Program Failed Because of Ubisoft, Not NFTs

In this context, the letter written by Yosuke Matsuda is a pretty unsurprising read. The Square Enix President talks about the shifting market creating a space for NFTs, the company's continued investment in A.I., and an interest in bringing blockchain tech and cryptocurrency to more games.

Matsudo differentiated between gamers who "play to have fun" and a new kind of gamer that "plays to earn" who would be empowered by playing decentralized games with NFTs and cryptocurrency.

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Credit: Square Enix

Matsudo pitched the idea by talking about modders, a community filled with people who give up their time, energy, and money to develop free software that can regularly be almost essential to play a game. "Play to earn" gamers like modders, in the new NFT-world of Square Enix games, will have new ways to monetize their user-generated content.

Related: Why NFTs Are Not as Bad, Stupid, or Worthless as You Think

The Square Enix President went on to describe exactly how he envisioned bringing blockchain, cryptocurrency, and NFT technology to their games: by way of token-based economies. If this sounds like business-speak to you, all it refers to is the now-familiar concept of buying virtual currency in-game to spend on virtual items.

Under this new plan, the virtual currency is more likely to be a cryptocurrency, but the concept stays the same: Instead of traditional microtransactions, you'll buy cryptocurrency to use to spend on NFT digital items, instead. Or, at least, that's the eventual goal, it seems, for Square Enix.

Ultimately, Square Enix wants their future games to have "self-sustaining growth" in the sense that the games have their own self-sustainable economies where players can make, buy, sell, and trade items and content totally independent of Square Enix's development teams.

Related: NFTs in Video Games Explained

This announcement is in line with Ubisoft's reviled Ubiosft Quartz program where the publisher tried their hand at their own NFT/cryptocurrency combo in games. Just like the reaction to Square Enix's announcement, gamers universally hated the Ubisoft Quartz program for many of the same reasons.

What Square Enix Did Wrong

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Credit: Square Enix

First and foremost, the heart of the controversy surrounding the letter written by the President is extremely simple: Gamers don't want these features and didn't ask for them. Square Enix fans, who generally like story content and more single-player experiences, don't want new, fancy ways to have money taken from them.

Microtransactions themselves in games primarily built around storytelling are a hard sell, so hearing from the famed developer of Final Fantasy that new, innovative ways to sell you virtual stuff are coming to a beloved franchise near you is unsettling to many at best.

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This is a largely existential criticism where gamers in general aren't happy with the endless march towards more and more and more monetization, leaving games to perpetually beg you to spend money on them. It's less of a specific criticism of what Square Enix themselves are planning to do.

It's also important to remember that in extremely recent memory there have been high-profile NFT disasters in the gaming world. Ubisoft's Quartz program crashed and burned, as mentioned above, and the developers of S.T.A.L.K.E.R. 2 tried, and failed, to introduce NFTs into their game that caused an enormous and instantaneous public outcry.

Final Fantasy 7 Remake
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Credit: Square Enix

The Square Enix President referring to gamers who "play to have fun" as if they were some kind of small subset of players rather than, well, everyone is another huge issue to gamers. Many fans feel like modern Square Enix games aren't as good as they used to be, accusing the company of prioritizing profits over quality. Hearing the President speak about gamers as if they're profit-generating robots doesn't change that feeling.

Related: Microtransactions in Games Ruined Gaming: NFTs Could Be the Answer

Facebook's rebrand to Meta and their announcement of their 'Metaverse' also caused quite a stir in 2021. In most circles, this move from Facebook was seen as suspicious and at least slightly dystopian: another bid from the largest social media company on the planet to control more of the digital public square. In the letter, Square's President also talked about the Metaverse.

The President wanted to work towards developing Square's own Metaverse and building content for the Metaverse. The 'Metaverse' was just another in a long series of technological buzzwords that littered the letter. Altogether, this is what gamers pushed back against: the prevailing sentiment that games in general were going to change their business models to incorporate some of the least-liked, most-scary new technologies out there.

It's an anti-consumer move, for sure, but video games are very much a business, and while an open letter, this letter is more of a statement of fact than it is an open question. Square Enix is pushing in these directions as is likely every other major game publisher or developer out there today.

Related: Why Are Graphics Cards, PS5s, and Xboxes So Expensive?

Whether the technology is particularly well-liked or not on Twitter aside, if like microtransactions gamers continue to support even if they don't like them, these technologies will be here to stay. The good news is that even if they are here to stay, these kinds of transactions in general probably won't function too differently from how games already work.

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