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NFT Market Collapses as Square Enix Positions for Heavy Investment

Tomb Raider is among the IPs Square Enix sold in its push to invest in NFTs.
Tomb Raider is among the IPs Square Enix sold in its push to invest in NFTs. / Courtesy of Crystal Dynamics/Square Enix

The market for non-fungible tokens (NFTs) is "flatlining" according to a report from The Wall Street Journal, having lost 92% of its value since September, and that crash is coinciding with Square Enix's plan to invest heavily in the blockchain generally, and NFTs more specifically.

Square Enix sold development studios Crystal Dynamics, Eidos Montreal and Square Enix Montreal to Embracer Group, packaging in the IPs for many of the games those studios made famous, such as Deux Ex, Tomb Raider, Thief and Legacy of Kain. The Japanese games company explained the sale "enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud."

Square Enix CEO and President Yosuke Matsuda has previously expressed interest in NFTs, in addition to the metaverse and blockchain-based games.

"By designing viable token economies into our games, we will enable self-sustaining game growth," he wrote in an open letter published in January. He said incorporating these elements would be a "major strategic theme for us starting in 2022."

Unfortunately for Matsuda's vision for Square Enix, he and the company have chosen a particularly low moment in the market's history. In addition to its 92% drop in sales, there's been an 88% decrease in "active wallets" since November. The Journal attributes some of this drop to rising interest rates pushing investors toward more stable investments.

Square Enix is hardly the only gaming company with NFT ambitions. Ubisoft Quartz began integrating the technology into Ghost Recon Breakpoint late last year (and killed development on the game a few months later). Konami sold Castlevania NFTs to celebrate the game's 35th anniversary. Team 17 and Atari have also produced NFTs of their games.

Square Enix, for its part, has not reacted publicly to the NFT market's downturn.