For 2022, Square Enix (9684.T-JP: Tokyo) (OTC: SQNNY) stock was down 1%. This compares with a 30% decline for the DFC Intelligence Video Game Stock Index. However, among Japanese video game companies, Square Enix was one of the weaker performers. Overall Japanese video game companies had a strong stock price increase of 15%.
The big news from Square Enix has been the sale of Western assets and IP to the Embracer Group and the announcement of an increased focus on blockchain games. Of course, the end of 2022 saw some scandal in the blockchain community with the bankruptcy of FTX.
In a “New Year’s Letter from the President” Yosuke Matsuda clearly stated that the company plans to move forward with its blockchain strategy. The letter stated, “we are most focused on blockchain entertainment, to which we have devoted aggressive investment and business development efforts.”
Overall, investors are fairly bullish on Square Enix with consensus expectations of 25% stock price growth. DFC Intelligence has included Square Enix as an initial holding in the DFC Intelligence Video Game Stock Portfolio launched on January 3, 2023.
Square Enix is included even though DFC has concerns about the overall company strategy. However, these concerns are outweighed by the general strength of the company’s IP and catalog. If the company can pull off some success in blockchain they are likely to be rewarded. If blockchain efforts do not pan out, Square Enix still has a solid portfolio. The company could also be an acquisition candidate (unconfirmed rumors include Sony as a possible purchaser).