The blockchain is still a "focus" for Square Enix in 2024, along with "aggressive" use of AI in gamedev

Square Enix representative director and president Takashi Kiryu has written a new year's letter outlining the Final Fantasy publisher's plans for 2024, while offering a few reflections on the year that was. The topline: they want to do more with generative "AI" machine learning tools, and they're still dead keen on metaversy VR/AR stuff. The blockchain remains a "focus", too, though it gets much less of a billing than in 2023's new year letter from Square Enix’s previous president Yosuke Matsuda.

In the letter, Kiryu made passing allusion to last year's widespread mass layoffs and other corporate reductions, describing 2023 as "a year of tumult exemplified by an intensification in geopolitical risks and sharp inflation stemming partly from monetary policy moves made by central banks grappling with the pandemic". He added that "regions, countries, and even we as individuals found ourselves in a time of transition as the world struggled to establish what the "new normal" would look like following the pandemic." As ever with "post-pandemic" talk, it's important to interject here that Covid 19 is still an active threat - according to the World Health Organisation, there were over 850,000 new cases during the period 20th November to 17th December 2023.

Kiryu also characterised 2023 as distinguished by faster-than-anticipated uptake of new kinds of technology, including the latest VR or AR tech and generative machine learning or "AI" tools in game development. "We saw the release of eye-catching products and services in multiple domains where the commercialization and adoption of emerging technologies had seemed a more distant eventuality," he wrote. "The potential of these offerings also garnered greater attention than ever before."

Kiryu claimed that "extended reality" (a fuzzy, catch-all word for VR and AR functionality being built into daily life) is on the rise in several industries besides gaming. "A case in point is the way the architecture sector, which previously had limited integration of XR in its business, began increasingly adopting these technologies because they enable the conversion of real-world architectural structures into data, a process also facilitated by the widespread use of commercial drones," he argued.

"In the realm of digital entertainment", meanwhile, "the experiential value of digital content itself increased dramatically" alongside the introduction of the latest AR and VR gadgets, and "the next step will be applying these technologies to new forms of content that fuse the real and virtual worlds."

This sounds like the usual utopic metaverse rhetoric to me, but I will defer to Rick Lane's VR wisdom. In one of our own 2023 reflection pieces, he noted that "2023 has gone from being a pretty dry affair in VR land, to a bit of a bumper year right at the death" caveating that "the quality of your harvest depends heavily on which headset you've got, and the big question going forward is how much further the existing VR platforms are likely to drift apart."

Talk of new applications for AR and VR aside, Kiryu went large on generative AI tools in his letter, arguing that they have "the potential not only to reshape what we create, but also to fundamentally change the processes by which we create, including programming".

Square Enix intend "to be aggressive in applying AI and other cutting-edge technologies to both our content development and our publishing functions," he commented. "In the short term, our goal will be to enhance our development productivity and achieve greater sophistication in our marketing efforts. In the longer term, we hope to leverage those technologies to create new forms of content for consumers, as we believe that technological innovation represents business opportunities."

This echoes recent moves from Microsoft, who have launched a couple of generative tools for videogame quest and dialogue writing and aspects of NPC behaviour, and one question as ever is to what extent "generative tools" will be a pretext for reducing team sizes. Microsoft recently reached an agreement with ZeniMax Workers United that gave the union some say over how exactly "AI" is used in game development.

AI is one of Square Enix's "three focus investment fields" from 2023, the others being "blockchain entertainment/Web 3.0" and the cloud. "Last year we redefined our overarching mission and goals for these three fields," Kiryu wrote. "We are currently working to modify our organizational structure and optimize our resource allocations to support these efforts."

Developers and players remain pretty unconvinced as to what blockchain technology adds to games beyond banal, dead-end digital landlord mechanics and outright scams, though the Epic Games Store made waves in December by exempting certain blockchain games from Adults-Only ratings and thus allowing them back on the Store.

Square Enix are also looking into creating "mechanisms that enable us to diversify our earnings sources" with a view to being able "to adapt flexibly to a changing business environment", which suggests that Square Enix expect last year's rough wider economic conditions to continue. Kiryu says that they're working "to vet our existing pipeline of titles under development", which I interpret as an acknowledgement that cancellations are possible, and are "optimizing our resource allocation across our entire development chain in order to accelerate an effort that was already underway to strengthen our internal development capabilities." Kiryu hopes to "expand knowledge sharing with the goal of standardizing our processes and enhancing our efficiency."

In terms of selling and publishing games, Square Enix want to do more to "promote the shift to digital", and want teams in different regions to work together more effectively, "not only to maximize our sales of new titles, but also to deliver our rich back catalog to more customers and in turn to expand the fan base for our Group's intellectual properties". They also want devs and publishing teams to exchange advice and feedback more often, so as "to strike a balance between a product-oriented and a market-oriented approach". All very dry, but potentially more decisive than any individual swanky new technology.

Here are some things we're expecting from Square Enix in 2024: the first new Mana game in 15 years and who knows, perhaps a Final Fantasy 16 PC release.