Sega Steps Back from Blockchain Gaming Amid Ongoing Crypto Winter

Sega Corp., previously seen as a strong advocate of blockchain gaming, is scaling back its involvement in the industry due to the ongoing downturn in the global crypto market.

According to co-Chief Operating Officer Shuji Utsumi, the company behind Sonic The Hedgehog and Yakuza will refrain from allowing its major franchises to be used in third-party blockchain gaming projects in order to avoid devaluing its content. Additionally, plans to develop its own games in that genre are currently being put on hold.

Utsumi's statements highlight a shift in approach at the 60-year-old firm. Previously, Sega, along with competitors like Square Enix Holdings Co. and Bandai Namco Holdings Inc., had shown support for utilizing blockchain-based technology to enhance the appeal of their games. This was during a time when platforms like Axie Infinity, where players can earn tokens by playing, were gaining traction. However, the collapse of the digital currency market significantly impacted the attractiveness of such initiatives.

Nevertheless, Sega does plan to allow external partners to use its lesser-known Three Kingdoms and Virtua Fighter characters for non-fungible tokens (NFTs) that confirm ownership of digital assets. The company's earlier intention to join the NFT community, announced in 2021, faced criticism from gamers who viewed crypto technology as environmentally harmful. Utsumi, in an interview with Bloomberg News, stated, "The action in play-to-earn games is boring. What's the point if games are no fun?"

Utsumi also expressed uncertainty regarding the implementation of Web 3.0 technology in Sega's forthcoming "super game" initiative, a lineup of high-budget online multiplayer games set to be released from 2026. He commented, "We're looking into whether this technology is really going to take off in this industry, after all."

Sega's shift in strategy reflects a broader waning interest in the concept of web3, which refers to an internet built around blockchain technology, and had attracted substantial investments from firms like Andreessen Horowitz. Other companies, including Ubisoft Entertainment SA, have also scaled back their investments in NFT games following criticism and lackluster interest.

Despite the changes, Sega will still permit the use of its lesser franchises in several blockchain games to be announced later this year. Utsumi mentioned that the company will continue investing hundreds of millions of yen in related projects, as the technology remains useful for facilitating the transfer of characters and items between different games. Sega remains open to further involvement as the technology matures.

Utsumi stressed the importance of risk-takers, likening them to the first penguin, who are willing to take the plunge into new territories. He acknowledged the extreme views of blockchain advocates while recognizing the more cautious stance adopted by the majority of the video game industry.