You know what no one could ever have predicted? That a market based on imaginary ownership of infinitely duplicable jpeg images might not be end-game, long-term sustainable. As The Wall Street Journal reported, the NFT market is “flatlining,” down 92 percent from last September. Now we’re seeing a far wider crypto-crash, with $200 billion recently wiped out. Which makes it just the most incredible time for Japanese publisher Square Enix, famed for properties like Final Fantasy, to sell off most of their Western-facing IP and studios to gamble on the batshit scheme.
Update (05/13/2022, 10:20 a.m. ET): This story was originally published on 05/04/22 at 12:55 PM ET. It has been updated to include more recent details regarding the crypto crash, and Square Enix’s continued intentions to invest in that market.
Recently we learned that Square Enix is intending to sell Crystal Dynamics, Eidos Montreal and Square Enix Montreal to the monolithic The Embracer Group, along with IPs for games like Deus Ex, Tomb Raider, Thief, and Legacy of Kain. Why? Because, to quote Squenix, “the Transaction enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud.” Which is to say, its previously announced desire to milk the NFT/blockchain market.
Now, in a new announcement, Square Enix has declared its intentions to open some new studios (presumably in or near Japan, but we’ve reached out to check), but at the same time have doubled down on their stated intention to invest in the so-called blockchain. In the statements, tweeted by Axios’s Stephen Totilo, they include,
Accelerate launch and monetization of new businesses by moving forward with investments in focus fields (blockchain, AI, and the cloud)
This comes despite even more bad news regarding plummeting values of cryptocurrencies in the last few weeks.
NFTs feel like the most extraordinarily precise emblem of the 2020s. It’s all a glaringly obvious pile of bullshit. Companies are literally selling a line of code on what they call a blockchain, to repackage the extremely old idea of digital asset ownership as the next big investment you should get in on now while the going is good. You’ve been able to own things like video game skins for a long time, of course, and even sell some on via stores like Steam. Somehow, though, many of these companies are putting a lot of effort into pretending that you can now own a picture or gif or what have you, and then pretending that in doing so the picture somehow becomes imbued with inherent worth—all given life by enough idiots clapping their hands and shouting how they believe in fairies.
Unfortunately, a lot of these clapping idiots wear expensive suits and talk loudly in boardrooms, and as with every other aspect of the scam-fest that is “web 3.0,” businesses have been desperately scrambling to profit before the whole illusion blows away on a breeze. And it seems that breeze might have shown up earlier than anyone was expecting.
The WSJ doesn’t mince words in its reporting. The opening line is simply, “The NFT market is collapsing.” Citing not only that 92 percent fall in sales, but also the extraordinary drop of “active wallets” by 88 percent since November.
This is partly due, it seems, to the rising interest rates that are strangling the poorest, but in turn is causing the richest to be far less risky in their speculation. And you can’t get much more speculative than betting on mass delusion of jpeg ownership.
That’s a delusion that’s been breaking for a lot of people of late, who have discovered the promises that NFTs would somehow gain value over time isn’t vaguely true. We recently reported on Sina Estavi’s attempt to sell the NFT of Jack Dorsey’s first tweet (linked so you can own your own copy for free), for which he’d paid $2.9 million, expecting to see bids of, cough, $50 million, and received nothing higher than $3,600. He’s since had a bid of just shy of $14,000, or less than 0.5 percent of what he paid for it a year ago.
Hilariously, as the WSJ reported last month, his reason for not parting with it for this over-payment of $14,000 is, “because I think the value of this NFT is far greater than you can imagine,” and “whoever wants to buy it, must be worthy.”
Unfortunately for us, many games publishers are betting on this one-legged horse, and the consequences could be bleak. From Square Enix to Ubisoft to Sega to Team 17 to Zombie Atari to Konami to GameStop, this industry is thigh-deep in this bullshit.
NFTs and crypto are QAnon if it were stock, if believing in a flat Earth could be bought and sold. They depend on the belief in their own existence to exist, requiring faith and religious notions of “worthiness” in order to flourish. As the planet hits the financial consequences of the last two years, it appears such faith is not so easily found.
NFTs were always going to be a bubble, and no doubt they’ll have little spikes, resurgences of interest with each new nonsensical twist, reaching nowhere near as high as 2021's but allowing the True Believers to keep duping themselves and others for a while to come. But let’s hope that this news of a market collapse is finally enough to scare the games industry away from this ludicrous money pit. We’ve reached out to Square Enix to ask if the news has given them any pause.
If not, well, I’ve got these lovely jpegs of some bridges I could sell them.