Blockchain-based gaming continues to garner interest among some of the largest global gaming companies, even in the face of an extended crypto winter that has chilled many sectors of the industry.

On Sunday, Square Enix, the multinational holding company behind the popular Final Fantasy video games, released a New Year's letter from its president and representative director, Yosuke Matsuda, affirming its push into blockchain gaming.

"In terms of new business domains, we named three focus investment fields under our medium-term business plan," Matsuda wrote. "Among those, we are most focused on blockchain entertainment, to which we have devoted aggressive investment and business development efforts."

As part of its strategy for 2023, the Tokyo-based video game giant said it has "multiple blockchain games based on original [intellectual property] under development," which it has been teasing since last year. It is also soliciting global investment to expand its stake in promising blockchain startups.

The company acknowledged that while it has been a year of "great volatility" for crypto, it remained confident in the future of Web3. "In the wake of the aforementioned turbulence in the cryptocurrency industry, there is now a trend to view blockchain technology as a mere means to an end and to discuss what needs to happen to achieve the end of delivering new experiences and excitement to customers. I see this as a very beneficial development for the future growth of the industry."

As Square Enix plans its further expansion into Web3, conditions for growth have been set in Japan, where the company is headquartered.

In June 2022, Japan's government approved a plan called “Priority Policy Program for Realizing a Digital Society," which outlined how the country would promote Web3 by learning more about decentralized autonomous organizations (DAO) and non-fungible tokens (NFT). In July 2022, the Ministry of Economy, Trade and Industry set up the Web3 Policy Promotion Office to field issues related to building a business on the blockchain.

Japan’s Prime Minister Fumio Kishida has been active in efforts to jump-start the country's economy, particularly through promoting investment in digital technology. In a policy speech in October 2022, Kishida said that Japan will continue to focus on “supporting the social implementation of digital technology” and will “promote efforts to expand the use of Web3 services that utilize the metaverse and NFTs.”

Japan's financial regulator has also proposed easing tax rules for corporate and individual crypto investors, and its digital ministry is exploring creating a DAO in order to better understand the technology.

Square Enix has been "aggressively investing" in blockchain gaming since 2018, though its core audience of hardcore gamers remains skeptical of continued crypto integration.

In October 2021, the company launched Shi-San-Sei Million Arthur, a collection of NFT digital stickers on the LINE blockchain, as its first foray into digital collectibles. In a financial results briefing in November, the company said it would be making "a robust entry into blockchain games" and touted the addition of token economics into its games.

But traditional gamers have expressed skepticism about the dive into blockchain gaming, pushing back against the company's release of Final Fantasy VII collectible figures that came with NFTs as well as the recent announcement of its first game built around Ethereum NFTs called Symbiogenesis. Some gamers were also confused by the company's sale of three of its studios in May 2022, including the maker of the Tomb Raider franchise, in order to fund its blockchain expansion.

Still, investment in Web3 gaming continues to grow, and other traditional gaming studios like Ubisoft have also started to embrace the technology.

With its latest announcement, Square Enix has demonstrated that it intends to be a leader in the space.

"Blockchain has been an object of exhilaration and a source of turmoil, but with that in the rearview mirror, we hope that blockchain games will transition to a new stage of growth in 2023," Matsuda wrote.