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Sega, a titan of the gaming industry, recently signaled a strategic shift toward integrating blockchain technology into its operations.
The move comes as the Tokyo-based company faces a slowdown in its financial outlook due to disappointing game sales during the 2023 holiday season.
Sega, known for its iconic franchises such as Sonic the Hedgehog, faced a challenging period. Titles like “Sonic Superstars”, “Endless Dungeon” and “Total War: Pharaoh” did not perform as expected.
As a result, Sega revised its sales and profit forecasts downward, attributing the adjustment primarily to the lackluster performance of its new releases in the third quarter (Q3) of the financial year.
The backdrop to Sega's financial woes includes a broader trend in the video game industry of stabilizing market expansion in key regions such as Europe and the United States, exacerbated by a worsening economic environment due to inflation.
Coupled with the rising costs of game development, Sega is at a crossroads and needs to adapt to these evolving business landscapes. However, the company remains optimistic about the long-term growth of the gaming market, driven by the diversification of service delivery and the ability to deliver content globally, regardless of device or platform.
Sega and Web3
In a move that could be seen as a response to these challenges, Sega has ventured into the realm of blockchain gaming.
The company, which was first launched in 1960, announced a partnership with Japanese blockchain company Double Jump Tokyo to develop its first blockchain-based video game. The initiative will leverage Sega's intellectual property into a SEGA-licensed digital collectible card game, which will launch on the Oasys HOME verse L2 network.
The game, which is based on the mythology of the Romance of the Three Kingdoms and uses intellectual property from the Sangokushi Taisen series, represents Sega's foray into the burgeoning field of blockchain and NFTs within the gaming industry.
The strategic axis 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, signaling a shift towards digital ownership and monetization of game assets.
And in February, PC strategy game Blocklords released 300,000 LRDS tokens to its players and nft holders. Blocklords GameDrop plans to hold a total of five airdrop events, with the second one now live.
Sega's exploration of blockchain technology, marked by its partnership with Double Jump Tokyo, is part of a broader industry trend toward the adoption of new technologies. The effort could redefine the future landscape of gaming.
Sega's foray into blockchain gaming could potentially offset some of the financial pressures it faces by opening up new revenue streams and engaging a different segment of players interested in the digital collectible space. While the company has faced setbacks with its traditional gaming portfolio, integrating blockchain and nft technology into its strategy could pave the way for a new era of gaming, driven by digital ownership and global accessibility of games.
As Sega navigates its current financial challenges, its move into blockchain gaming underscores a strategic adaptation to changing market dynamics and consumer preferences. The company's ability to innovate and adopt new technologies will be crucial in its efforts to remain competitive in the changing gaming industry.
