Sega shifts its focus away from making blockchain games

Sega, the renowned gaming company renowned for iconic titles like Sonic the Hedgehog and its classic consoles from the 80s and 90s, is reportedly scaling back its involvement in blockchain games. According to a recent report from Bloomberg, Sega Co-Chief Operating Officer Shuji Utsumi revealed that the studio will refrain from licensing its major franchises for third-party blockchain games and will not develop its in-house blockchain games. The decision stems from concerns that integrating blockchain technology may devalue Sega’s content, as well as a perception that the gameplay in many crypto-driven “play-to-earn” games is lacking excitement and enjoyment.

Sega to slow down its push for blockchain games

This marks a significant shift in Sega’s stance on cryptocurrencies and blockchain technology. In 2021, the company announced plans to release its non-fungible tokens (NFTs). Additionally, Sega producer Masayoshi Kikuchi had previously mentioned NFTs as part of the studio’s “Super Game” initiative, a creator-centric franchise with multiple interconnected titles. While the Super Game program remains mostly undisclosed, Sega has set a tentative release date for 2026.

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However, Utsumi’s reservations cast doubt on the widespread adoption of NFTs and blockchain technology in the gaming industry. He questions whether this technology will truly gain traction within the sector, stating, “We’re looking into whether this technology is going to take off in this industry, after all.”

Despite Sega’s decision to abstain from blockchain games involving its flagship Sonic IP, Utsumi suggests that the company may still consider licensing its smaller titles to be used in blockchain games. Sega has already licensed its Sangokushi Taisen IP to Double Jump Tokyo, a developer creating the game Battle of Three Kingdoms on the Oasys blockchain.

The company has cited issues over values and gameplay

The landscape of blockchain game development has diverged into two distinct approaches following the success of Axie Infinity, which generated over $4.2 billion in total NFT trading volume, primarily in 2021, before experiencing a decline in player numbers and a significant $622 million hack in early 2022.

While some game developers continue to emphasize the financial and play-to-earn elements of their titles, many others are adopting a gameplay-first approach. These developers often provide NFTs as optional features for players. Utsumi acknowledges that the bold claims made by blockchain advocates may seem extreme to the majority of people in the video game industry, likening them to risk-takers or “first penguins” in an analogy about early adopters.

While certain major game publishers like Square Enix, Nexon, and Ubisoft are actively developing original blockchain games, others, particularly those in the Western market, are adopting a more cautious stance. Despite Sega’s decision to retreat from blockchain gaming on a broader scale, Utsumi still recognizes the significance of the space, stating, “We should never underestimate them,” referring to blockchain proponents and other “first mover” types in the tech industry.

Sega’s cautious approach reflects the industry’s ongoing exploration of the potential benefits and challenges associated with blockchain technology. As the gaming sector continues to evolve, it remains to be seen whether blockchain games will achieve widespread adoption or if the technology will undergo further refinement to address concerns related to value and gameplay.

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