In New Year’s letter to investors, Square Enix President Yosuke Matsuda addressed the company’s goals for 2019 and the core tenets of its objectives going forward. The announcement was separated into three main parts: new technology, next-generation platforms, and more aggressive expansion into overseas markets. In a rather straightforward delineation of the company’s primary directives heading into the new year, Matsuda talked about the importance of adapting to the ever-changing economic and technological spheres of the video game industry to capitalize on major opportunities.
In the first segment, Matsuda addressed the rise of VR and AR technology, noting its growing importance with the ubiquity of smartphones in modern day society. He also suggested opportunities to be made in the realm of blockchain technology given the subsiding influence of the cryptocurrency bubble. Matsuda goes on to propose “some interesting developments with games and game platform services using blockchain technology” that can be done, along with advancements in the digital content space.
The second portion of the letter is no surprise to anyone in the gaming industry. Companies, big and small, are all gearing up for the next era, as the “the next generation of consoles has become a topic of discussion in the digital entertainment industry.” On the other side of the hardware coin, as demonstrated by Microsoft’s aggressive foray into cloud gaming, the streaming market can no longer be ignored either. Matsuda acknowledges the need for content creators to adopt non-physical distribution means, with the presence of a “a growing number of avenues through which game publishers and developers can provide content.” Not only are subscription models going to play a significant part of monetization efforts going forward, in particular, Matsuda states that “game streaming services will be the ultimate driver of a rapid transition from the sale of games in boxes to digital consumption.”
Perhaps most noteworthy in the letter is Square Enix’s plan for aggressive expansion into overseas markets, especially in India and China. Despite the huge asterisk attached to the latter when it comes to the “unpredictability of future developments in the regulatory landscape for games”, the astronomical influence of Chinese gaming giants like Tencent in the global gaming market necessitates “building collaborative and cooperative relationships with them” despite the volatile nature of the Chinese gaming industry. Meanwhile, the developing potential of the Indian market has also caught Square Enix’s attention, with Matsuda saying they see it as “an extremely promising market for entertainment consumption in terms of both the size of its population and its economic power.”
Matsuda ends the letter summarizing the takeaway from his various points, stating that the fluxes and unpredictability of the “digital content industry” in 2019 will undoubtedly give way to openings for progress and gains.