Content created with digital data becomes “things” that cannot be copied and become valuable personal property. Such a world is steadily becoming a reality with blockchain technology.
On March 17, Square Enix (President and CEO: Yosuke Matsuda), a major game company known for the “Final Fantasy” and “Dragon Quest” series, announced the launch of blockchain application development company doublejump.tokyo (Double Jump Tokyo, CEO: Ueno). Hiroshin) announced a collaboration. Announced that it will start developing NFT content using blockchain technology.
In recent years, NFT has been rapidly gaining momentum in the music, art, and entertainment industries, mainly in the United States, but in Japan, it may not be a familiar keyword yet.
We asked Mr. Ueno, representative of doublejump.tokyo, who has industry-leading knowledge, and Mr. Ryo Matsubara, who is in charge of business alliances, about the possibilities of NFT from Japan.
What is the origin of “NFT”?
NFT is an abbreviation for “Non Fungible Token”, and is a term used for “digital assets (tokens) that cannot be copied or duplicated” and “digital authentication and its technical methods” that clearly indicate who the owner of each digital asset is. It is a generic term.
Since digital data can be easily copied, it has been difficult to technically preserve its value as an asset. However, “non-fungibility” is given to NFTs that record purchaser or producer information on the blockchain, which is almost impossible to tamper with. In other words, it will be possible to realize a new mechanism in which the value of even digital data is preserved as if it were a physical object, and in some cases the value increases due to a premium.
NFTs are developing rapidly, especially in the game industry. By making digital items, characters, and intellectual property (IP) “unique” or limited in quantity, we will realize a cross-sectional mechanism that saves and exchanges value beyond the boundaries of each game. This is because it has great potential to expand the market.
In fact, at the end of 2017, in the blockchain game “Crypto Kitties,” where you can buy and raise virtual cats with virtual currency (Ethereum), NFTs (virtual cats) can be bought and sold for about 20 million yen (at the time of September 2018). became a hot topic. Dapper Labs, which operates Cryptokitties, is also developing other popular services using NFTs such as “NBA Top Shot”, and the company’s valuation has exceeded $2 billion.
So, how is the possibility of NFT from Japan expanding?
doublejump.tokyo, headed by Ueno, is a blockchain game development company established in April 2018. “My Crypto Heroes”, released by the company in November 2018, has been ranked number one in the world for transaction volume, transaction volume, and DAU as an Ethereum-based blockchain game.
“At the moment, the total sales of My Crypto Heroes is over 20,000 ETH (Ether), which is about 4 billion yen when converted to the current Japanese yen. It was the innovator class in Japan that made us realize that there are more innovators in the soil of Japan than we had imagined.” (Ueno)
Reasons why blockchain and games are compatible
In the announcement of this collaboration, we will develop and sell NFT digital seals that utilize the IP (intellectual property) of Square Enix’s “Million Arthur”. Million Arthur is a persistently popular IP. Although the details have not been revealed, it is easy to imagine that the exchange and exchange of character stickers, which is done in the real world, will be reproduced in the digital world. The aim is to build a new business model from the perspective of NFT.
“Until now, digital items were nothing more than mere data with ambiguous value even if they were at hand. On the other hand, NFTs have made it possible to make digital items open, and they are beginning to generate value all at once. NFTs in blockchain games There are two types of users who are enjoying the game: the one who thinks the value of the game will go up, and the one who doesn’t want his items in the game to be deleted for the convenience of the management. In any case, by incorporating blockchains and NFTs, it becomes possible to store and convert values that were not possible in existing games.” (Ueno)
In Japan, NFT using the IP “Brave Frontier” of mobile online game company gumi reportedly performed well from around January to April 2020. After that, a group of decentralized financial applications using virtual currency (Defi) became a temporary boom, and although the interest of the market as a blockchain application temporarily shifted, NFTs have regained popularity around the end of last year.
Currently, a type of genre that combines NFT and virtual currency is also appearing. Nonetheless, globally, “the number of famous blockchain applications is still less than 100,” says Ueno, so there is still plenty of room for Japanese companies and ventures to enter the market.
It should be noted that Ueno and Matsubara share the idea that the spread of NFTs, not limited to games, will lead to the “restoration of content.”
For example, the subscription business has long been common in video and music distribution services, but this is a situation where “content has lost its value” (Ueno). Users pay for the service, but no longer for the content itself. However, if NFT becomes commonplace, it will be possible to create a new state where the content itself has value. NFTs and blockchains are also adept at creating mechanisms for returning profits to creators.
“All the movement of content is recorded on the blockchain, so even in the secondary market, the amount of money transacted can be clearly grasped. In the past, the content industry and entertainment industry tended to prevent secondary distribution, but blockchain and NFT bring profits to creators in a more diversified way. It has the characteristic of being able to let go.” (Matsubara)
Matsubara believes that the characteristics of NFTs, which increase the value of such IP and digital content, will be Japan’s “ultimate weapon” in its fight against the world.
“Japan has a lot of IP and content that have been loved all over the world, such as games, manga, and animation. Currently, the digital world is dominated by platformers such as GAFA, but if Japan can seriously face NFT, I think we will have a chance to compete again.”
A way to increase trust in digital in the next decade
NFTs are not only a new business opportunity for Japan, but also a way to further increase the trust in digital that has deeply permeated our lives. Ultimately, it may break down the dichotomy of values between digital and real. Ueno continues.
“We rely on digital for much of our lives, but we still don’t fully trust the ability to store value in it. After all, the digital world is still essentially just a list of numbers. Blockchain and NFT are technologies that can convert digital data into “things” and protect their value.The next 10 years will bring about a major shift in the concept of things, values, and the digital real. I’ll go.”
This time, the news that Square Enix, which has many masterpieces, has embarked on NFT development is very exciting. The company has invested in a blockchain game called “Sandbox,” and has long had a strong interest in blockchain and game synergies such as NFTs.
If other game companies that own a large number of IPs, as well as content companies and creators, follow suit, it should have a significant ripple effect not only within the industry but also on the global market. And it overlaps with the thoughts of doublejump.tokyo, which is trying to spread NFTs from Japan to the world through cooperation with many companies.
How will Blockchain & NFT innovate the value of each industry in Japan? The unprecedented innovation of digging up Japan’s digital value is about to begin.