Original Title: "What Big Publishers Think of Blockchain Gaming"

Original Author: Devin Becker

Original Translation: Yvonne, MarsBit

In the past 6 months, Web3 game development has been cooling down, but one area worth studying is the stance of AAA game publishers, who are optimistic about this technology at the end of 2021. When Axie Infinity ignited blockchain games, especially the play-to-earn model in the game, most major publishers adopted a wait-and-see attitude. When the market started to cool off in early 2022, most companies stopped any new development in this field and left it mainly to smaller, more focused developers.

Now some time has passed, and most AAA publishers seem to have changed course. However, some are still pushing forward steadfastly. These pioneering publishers are determined to solve problems, and we expect that despite remaining obstacles, they may have enough momentum in the next few years to encourage others to enter this field cautiously. While the continued momentum primarily comes from the East, a major Western publisher is also continuing to invest.

Ubisoft Still Lingers on the Edge

Ubisoft has always actively embraced new technologies and platforms. For example, it ventured into cloud gaming and made contributions to the short-lived Stadia platform; its subscription service Ubisoft+ also supports Stadia and Luna. It entered the virtual reality gaming field through games like "Star Trek Bridge Crew" and "Werewolves Within," as well as experimental toy interactive games through "Starlink." However, none of these adventures have sparked players' anger like Ubisoft's interest in blockchain games. Since 2018, the company has shown interest in blockchain technology when it helped establish the Blockchain Game Alliance.

Initially, Ubisoft explored blockchain technology through its "Strategic Innovation Lab". The lab developed Hashcraft, a game similar to "Minecraft" based on blockchain technology. Although it was very interesting, Hashcraft never went beyond the prototype stage. Later, the lab announced its latest development: a short-lived fantasy sports game called "One Shot League" based on interoperability collaboration and using Sorare's football cards. However, these initiatives did not attract public attention until Ubisoft launched its ill-fated Ubisoft Quartz project.

Quartz is Ubisoft's entry into the NFT field, with its product called "Digits". The company attempts to address criticisms of the technology by choosing the Tezos blockchain (for the so-called environmental reasons), using NFTs only for decoration to alleviate concerns about pay-to-win, and associating it with the popular game "Ghost Recon".

The company's marketing targets collectors and fans who are excited about limited edition and series decorations that can be traded outside of the game. However, public opinion towards NFTs at the time was mostly negative, associated with high prices, Ponzi schemes, and a lack of popularity among ordinary Ubisoft users. Furthermore, the latest "Ghost Recon" game at the time, "Breakpoint," faced poor sales and strong opposition from players. This unfavorable timing made NFTs even more unpopular.

After Quartz, Ubisoft's relationship with blockchain games deteriorated. There were reports of employees' dissatisfaction with the technology, ultimately leading to the cancellation of an unnamed web3 game called the "q project". Ubisoft even publicly stated that it would return its exploration in the blockchain field to "research mode" in order to move away from its overly aggressive position. Despite these setbacks, Ubisoft still invested in several web3 projects, including Cross the Ages, Nine Chronicles, Dogami, Rebel Bots, and Skyweaver.

The company also collaborated on NFTs with Reddit and The Sandbox using its Rabbids IP. Although these projects did not yield much return, and some projects were recently canceled and underwent strategic reevaluation, Ubisoft released its own web3 game last month: Champions Tactics: Grimoria Chronicles.

About "Champions Tactics", there isn't much information available at the moment, but it is known to be a "PC PvP tactical RPG experimental game." According to the game's website, players will "assemble a mythical champion team, engage in thrilling tactical battles with other players, and uncover the legends of the dark and mysterious Grimoire world."

The timing of this announcement is not coincidental - it is part of a special event for the Oasys blockchain, with Japan and Korea as the focal points during the Japanese blockchain cycle. Ubisoft is one of the 21 official validators of the Oasys blockchain and has joined forces with several major Asian companies including Square Enix, Com 2 us, NEOWIZ, Netmarble, Wemade, and NHN Corp. Oasys itself was created by renowned Japanese game developers Bandai Namco, Sega, Thirdverse, and Double Jump Tokyo. The event also serves as the launch of a new website showcasing all the games it offers and announcements from multiple publishers.

Sega Still on the "Battlefield"

Sega has been uncertain about developing blockchain games. In 2022, the company announced a collaboration with Double Jump Tokyo to develop a game based on its arcade IP "Sangokushi Taisen" on Oasys. The "Sangokushi Taisen" arcade series may be suitable for the Web3 model due to its unique approach of creating and controlling army units through the use of trading cards in real-time strategy scenarios.

Considering the success of card-based strategy games like "Clash Royale," this move seems logical. In 2022, Japan also saw the release of "Arsenal Base," a successful Gundam game based on physical trading cards that plays similarly to "Clash Royale." While the project was originally announced in 2022, Sega took the opportunity of the Japanese blockchain week to release the latest updates. They unveiled a teaser video and more information about the game, which will be a card-based, three-minute automated battle called "Battle of Three Kingdoms," planned for release at the end of 2023.

Web3 Although SEGA has released the latest information and plans for this game, the recent impression from Bloomberg's conversation with SEGA's COO Shuji Utsumi is that the company is keeping its distance from web3 games. Utsumi criticized the game for being boring, saying, "What's the point if the game has no fun?" and expressing doubt about the prospects of blockchain technology in the industry. However, he also emphasized the potential of the field, saying, "What blockchain advocates say may sound a bit extreme to most people in the gaming industry, but that's how it starts. We must not underestimate it." He added that while SEGA remains cautious about its biggest IP being used for blockchain games by third parties, it will continue to explore this field with external partners.

Contrary to these statements, SEGA has collaborated with Line Next to introduce one of its "major licensing rights" to Line Next's blockchain game platform Game Dosi. Line Next is the Korean subsidiary of Line Corporation, the driving force behind the popular eponymous instant messaging service in Japan. Game Dosi was launched in mid-May and released several third-party games and a first-party trading card game called Project GD. Unlike Oasys, Game Dosi uses its own cosmos-based blockchain Finschia, which aims to be user-friendly and features a simple wallet system, including social logins like Line and Google.

Although SEGA has not disclosed the licensing rights or any details about the game, it is evident that, despite some reservations, the company is still interested in the opportunities provided by blockchain technology. One of SEGA's successful IPs, "Virtua Fighter," released a limited edition NFT on Oasys in March this year, further confirming the company's interest.

Square Enix continues to move forward

Square Enix is another major publisher that has a strong belief in blockchain games. The company's president, Yosuke Matsuda, emphasized in the company's annual New Year's greetings for 2022 and 2023 his confidence in the potential of this technology and his commitment to exploring it. In March of this year, Matsuda was replaced by Takashi Kiryu, whose statement indicated his interest in blockchain technology as well.

"In a rapidly changing business environment closely related to the entertainment industry, the proposed changes aim to reshape the management team with the goal of adopting constantly evolving technological innovations to maximize the creative power of the company group in order to provide more entertainment services to customers worldwide," wrote Takashi Kiryu.

This is not surprising, as Takashi Ryu, who was the general manager of Dentsu, a forward-looking research and development group with a strong interest in blockchain technology. The organization even released a web3 preparation tool in May. The key question is how Square Enix will cautiously respond to the bear market environment of the current blockchain games, especially regarding its flagship IP, "Final Fantasy." Square Enix has made preliminary explorations in this field by releasing "Final Fantasy VII" NFTs, which was initially mentioned in 2022 and fully disclosed only in May of this year.

So far, the company's most important "adventure" has been the launch of "Symbiogenesis," a game that falls between an NFT art project and a mature game. The project focuses on art and storytelling, with gameplay similar to a hidden object puzzle game. Objects are completely hidden, and only clues guide the clicks. Despite taking an unconventional approach, it seems to have attracted a loyal following, with daily activities in its Discord community, which has 37,000 members, and game updates and clues shared on its Twitter account, which has 42,000 followers.

South Korea as the Pillar of Web3 Games

While Japan's confidence in blockchain games is evident, with even Japanese Prime Minister Fumio Kishida promoting NFTs, South Korea has been pioneering and improving blockchain games for years and has become a pillar of blockchain games in Asia. This development is noteworthy because blockchain games have been illegal in South Korea since 2019, leading developers to create web3 game projects for overseas markets.

Wemade has been at the forefront of this field, integrating tokens and NFTs into its successful "Mir 4" and "Mir M" game series on Steam and mobile platforms. The company has established its own blockchain called WeMix. So far, it has hosted 62 tournaments of varying quality. However, Wemade's approach has not been without controversy, as differences in the circulation of tokens have led to their delisting from exchanges.

Netmarble is another well-known South Korean developer embracing blockchain technology. The blockchain games it has released include classic IPs such as "King of Fighters" and newer games like "A 3: Still Alive," "Golden Bros," "Ni no Kuni: Cross Worlds," "Meta Football," and "Meta World." The company also plans to launch other games in the fourth quarter of 2023, including "GrandCross: MetaWorld."

Netmarble has been involved in developing games for major IP holders such as Marvel, and has also ported CCP Games' "EVE Online" to mobile platforms. However, it seems unlikely that we will see the company develop blockchain games for major IPs in the near future.

After establishing and renaming its blockchain XPLA (formerly C2X), Com 2uS continues to advance its web3 ambitions this year. It has already released multiple games on XPLA, such as the flagship game "Summoners War: Chronicles," as well as "Ace Fishing Crew" and "Summoners War: Lost Centuria." Com 2uS also announced at the Oasys conference that it will bring "Summoners War: Chronicles" to the platform. The company even talked about its experience in blockchain games at this year's GDC.

Another major Korean game publisher, Nexon, unveiled a new web3 game based on Polygon's "MapleStory" series at GDC, shocking everyone. Although this is still an experiment for the company, the demo showcased how the technology can enhance the main objectives of "MapleStory" and its ecosystem. I recommend checking out Naavik's recent interview with Nexon CEO Owen Mahoney.

Among all the existing IPs exploring blockchain potential, MapleStory is the most significant with its rich 20-year history. During this time, Nexon has been dealing with a series of secondary market issues and game design challenges, which are common for novice blockchain developers. These experiences provide valuable lessons that can help future companies.

In its introduction, Nexon explicitly expresses awareness of the risks associated with the brand, reflecting the enthusiasm and concerns many of these publishers experience when venturing into the Web3 finance and social realms with well-known brands.

If "MapleStory" succeeds in the blockchain, it could serve as a catalyst for many developers who are hesitant to enter this field. However, the project may still need some time before it can be publicly released.

Quiet Participants

While the most active support for blockchain games among major publishers comes from Japan and South Korea, several other publishers have chosen to remain low-key, quietly working on their own projects or observing from the sidelines. For example, Zynga hinted at its ambitions in this field after being acquired by Take-Two Interactive. Since then, the company has remained silent, except for recruiting senior game designers and executive producers in the blockchain gaming sector. EA has also been highly secretive about its activities, only recently announcing the integration of Nike NFTs into its sports games, which seems to be a cautious first step.

Activision Blizzard seems uninterested in this, but its parent company Microsoft has publicly expressed interest in the technical aspects of this field and has invested in multiple projects including blockchain games. It is worth noting that Microsoft has been very cautious in integrating blockchain technology into existing assets, as evidenced by Mojang's ban on NFTs in "Minecraft".

The Future

Just as with the hype cycle surrounding technological and commercial developments, the next major shift of game developers towards blockchain technology may be driven by only a few successful games. The 2021 frenzy was fueled by the success of "Axie Infinity," although this adventure ultimately failed, the next game that sparks similar excitement could ignite new passions and attract more developers.

For example, Ubisoft has been making efforts to correct mistakes in various areas, including canceling and delaying projects. Most of the previously mentioned technological bets didn't achieve the expected results, making it difficult for Ubisoft to change the game landscape and achieve victory through "Champions Tactics". Over the long term, if a blockchain project fails to generate profits, it will undoubtedly lead the company to reconsider the feasibility of the project.

Sega and Square Enix both seem reluctant to take too many risks on this technology, indicating that more traditional publishers have a lower risk appetite for blockchain games. Sega wisely chose to focus on card-based games, as it is a game genre that can sustain in this field, just like we have seen with "Sorare" and "Gods Unchained". On the other hand, Square Enix is leaning towards the advantages of Symbiogenesis, although Square's advantage in this regard is not directly realized through blockchain. The new president of Square is unlikely to talk too much about this technology in the annual letter of 2024 unless the publisher sees significant progress from the current projects.

From the perspective of the Japan Blockchain Week, despite being in a bear market, there are still a considerable number of people in the region who are keen to explore what blockchain can do for gaming. Korea has also been persistently developing games around a technology that cannot even be used locally. These two countries have shown some resilience and determination in their attempts to use Web3 and blockchain gaming technology to see if it has viable commercial potential. However, there are also certain market realities to consider, and problems at the underlying level may quickly make anxious company executives take a wait-and-see attitude.

The most likely outcome is that some of the publishers we discussed here will shift their focus to other areas without achieving substantial success in the early stages. We may not see a "Final Fantasy" or "Sonic the Hedgehog" game supported by blockchain anytime soon. It is equally important to consider that developing a AAA-level game takes years, making high-quality blockchain games more like a side project, as these publishers still need to invest most of their resources into their main projects.

On the contrary, SEGA relies on strategies such as developing smaller experimental IPs through third parties or Square Enix, which allows games to make progress without taking risks. We also don't expect to see Western publishers making a big push into blockchain gaming in the next one or two years, unless they achieve some success.