Sega, Japanese Game Giant, Scraps GameFi Plans and Labels P2E Games as Boring

Sega Corp., the renowned gaming studio known for iconic franchises like Sonic The Hedgehog and Yakuza, is reevaluating its stance on blockchain gaming following the collapse of the global crypto industry. The company’s co-Chief Operating Officer, Shuji Utsumi, told Bloomberg News that Sega will withhold its major franchises from third-party blockchain gaming projects to prevent the devaluation of its valuable content. Additionally, plans to develop its own blockchain games have been put on hold, at least for the time being.

This represents a notable shift for the 60-year-old gaming firm, which, along with competitors like Square Enix Holdings Co. and Bandai Namco Holdings Inc., previously championed the use of blockchain technology in gaming. The concept of blockchain-based games, where players can earn tokens through gameplay, gained momentum during the rise of platforms like Axie Infinity. However, the subsequent collapse of the digital currency market severely impacted the appeal of such games.

Although Sega is scaling back its involvement, the company does intend to allow external partners to utilize its lesser-known Three Kingdoms and Virtua Fighter characters for non-fungible tokens (NFTs). NFTs serve as certificates of ownership for digital assets. Sega’s announcement to join the NFT community in 2021 faced criticism from gamers concerned about the environmental impact of crypto technology.

Utsumi expressed dissatisfaction with play-to-earn games, stating, “The action in play-to-earn games is boring. What’s the point if games are no fun?” This sentiment underscores Sega’s decision to reevaluate its involvement in blockchain gaming.

Regarding the utilization of Web 3.0 technology in Sega’s upcoming “super game” initiative, Utsumi remained non-committal, stating, “We’re looking into whether this technology is really going to take off in this industry, after all.” Sega’s cautious approach reflects a broader cooling of interest in web3, the blockchain-based internet concept, which previously attracted substantial investments from companies like Andreessen Horowitz. Peers such as Ubisoft Entertainment SA have also scaled back their investments in NFT games due to low interest and criticism.

Despite the shift, Sega will still offer its lesser-known franchises to several blockchain games to be announced later this year. The company will also continue investing substantial amounts, in the hundreds of millions of yen, in related blockchain projects. Utsumi emphasized that the technology remains useful for enabling the transfer of characters and items between different games. Sega remains open to increased involvement as the technology matures.

Utsumi highlighted the importance of risk-takers and early adopters in the video game industry, comparing them to the “first penguin.” He acknowledged that while blockchain advocates may sound extreme to many in the industry, they should never be underestimated.

Sega’s decision to pull back from blockchain gaming signifies a cautious approach in the wake of the global crypto industry’s downturn. As the landscape evolves, the company will continue to monitor the technology’s development and may adapt its strategy accordingly.

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