Sega alters strategy, embraces blockchain technology
Sega, a major player in the gaming industry, has recently announced a strategic shift towards integrating blockchain technology into its operations. This decision comes as the Tokyo-based company faces a decline in its financial outlook due to disappointing game sales during the 2023 holiday season.
Sega, renowned for its iconic franchises such as Sonic the Hedgehog, has encountered a challenging period. Games like “Sonic Superstars,” “Endless Dungeon,” and “Total War: Pharaoh” did not meet expectations. As a result, Sega has revised its sales and profit forecasts downward, attributing the decline primarily to the underperformance of its new releases in the third quarter (Q3) of the financial year.
The backdrop to Sega’s financial difficulties includes a broader trend in the video game industry, where market expansion in key regions like Europe and the U.S. has plateaued. This situation has been exacerbated by an economic environment worsened by inflation. Additionally, rising game development costs have put Sega at a crossroads, necessitating adaptation to these evolving business landscapes. Nonetheless, the company remains optimistic about the long-term growth of the gaming market, driven by the diversification of service provision and the ability to deliver content globally, regardless of device or platform.
In response to these challenges, Sega has ventured into the world of blockchain gaming. The company, which was first established in 1960, has announced a partnership with the Japanese blockchain firm Double Jump Tokyo to develop its first blockchain-based video game. This initiative will utilize Sega’s intellectual property in a SEGA-licensed digital collectible card game, set to be released on the Oasys HOME verse L2 network. Drawing inspiration from the mythology of the Romance of the Three Kingdoms and utilizing the Sangokushi Taisen series IP, this game represents Sega’s entry into the growing field of blockchain and NFTs in the gaming industry.
Sega’s strategic pivot towards blockchain gaming is not without context. The gaming industry as a whole has been exploring the potential of blockchain and non-fungible tokens (NFTs), despite facing criticism over concerns such as environmental impact and ethical considerations. Giants like Konami and Atari have already started selling digital items as NFTs, indicating a shift towards digital ownership and the monetization of in-game assets. In February, the PC strategy game Blocklords distributed 300,000 LRDS tokens among its players and NFT holders through an airdrop. The Blocklords GameDrop plans to hold a total of five airdrop events, with the second one already underway.
Sega’s foray into blockchain gaming, facilitated by its partnership with Double Jump Tokyo, aligns with a broader industry trend of embracing new technologies. This endeavor has the potential to redefine the future landscape of gaming. By exploring blockchain technology, Sega may alleviate some of the financial pressures it faces by creating new revenue streams and attracting a different segment of gamers interested in the digital collectible space. While the company has encountered setbacks with its traditional gaming portfolio, the integration of blockchain technology and NFTs into its strategy could pave the way for a new era of gaming, driven by digital ownership and the global accessibility of games.
As Sega navigates through its current financial challenges, its move towards blockchain gaming highlights its strategic adaptation to changing market dynamics and consumer preferences. The company’s ability to innovate and embrace new technologies will be crucial in its efforts to remain competitive in the evolving gaming industry.
