Square Enix's recent annual report for 2022 shows a new record set with full-year net sales of ¥365.2 billion (up nearly 10 percent from 2021's ¥332.5 billion). While that's nice to see, the publisher's video game division (or "digital entertainment," as it's known in the report) had its issues, admitted president Yosuke Matsuda. 

"The High-Definition (HD) Games sub-segment struggled, in part due to the challenging year-on-year comparison created by the release of multiple major titles in the fiscal year ended March," said Matsuda. 

That HD sub-section for 2022's fiscal year (which wrapped on March 31, 2022) was said to have declining net sales compared to 2021's. Square Enix's 2022 games in that timeframe included Outriders and Marvel's Guardians of the Galaxy, whereas the 2021 fiscal year featured Marvel's Avengers and Final Fantasy VII Remake. 

Overall, though, net sales for digital entertainment for 2022 were at ¥279.68 million, up 6 percent from the previous year.

Much of that can be attributed to the MMOs Final Fantasy XIV and Dragon Quest X Online. It goes without saying that Final Fantasy XIV had a big year thanks to the release of Endwalker, during which Square Enix had to stop selling the game in its entirety because it was growing too popular. 

Of that particular title, Matsuda said it made a "massive contribution" to Square's business for the year. "We remain devoted to our engagement with these passionate fans and will continue to strive for even higher heights in our operation of the game."

For the overall Final Fantasy franchise, it's successfully sold over 173 million physical and digital units, as of March 2022's end. To date, the Final Fantasy VII sub-franchise has sold 13.9 million units, attributing for 8 percent of the overall franchise's sales.

Similar to HD games, Square mobile and PC browser titles failed to reach expectations. Several older titles, said Matsuda, have basically hit their peak, while newer titles just didn't perform as expected. Even so, some mobile games such as Dragon Quest Walk had "solid performances." 

But going forward, Matsuda said that Square Enix would revisit its mobile and browser lineup, and "start developing an organizational structure that helps enhance our development capabilities."

And what about Square Enix and NFTs?

Back in September, Square Enix announced a partnership with blockchain developer Oasys that would lead to the creation of blockchain and NFT titles. 

In the annual report, Matsuda touched on that in outlining the publisher's future. Having previously expressed open NFT interest in the past, he made it clear that blockchain is expected to be a "key part" in the publisher's growth strategy going forward.

"At present, we are positioning the blockchain domain as our most important focus," he explained. And though he acknowledged the technology may end up being a fad, Matsuda was resolute in his choice. 

"I believe that blockchain gaming holds the potential to create new forms of gaming content, and that it represents a new business domain worth our Group addressing alongside traditional games. [...] We will remain aggressive in taking on this new field."