Sony Corp's purchase of a stake in Square Co, a video-game software maker for the world's No. 1 game maker, will split the Japanese video-game industry into two, with the other group led by No. 2 maker Nintendo Co, analysts and investors said.
The 19 percent stake purchase is a bailout for Square, which said ticket sales of its US$115 million science-fiction film, Final Fantasy: The Spirits Within, have fallen short of its expectations. For Sony, it's a move to lock up game developers to supply titles exclusively for its PlayStation 2 game console.
In the US$20 billion industry, the Sony player competes with Nintendo's GameCube console, and Microsoft Corp's Xbox machine starting next month. Capcom Co, which formerly supplied its best-selling "Biohazard" game series only to Sony, switched allegiance to Nintendo last month. Video-game makers like Sony and Nintendo rely on hit software to boost earnings and create more demand for their players.
"The industry has formed two camps: Nintendo and Capcom versus Sony and Square," said Tomoya Kurihara, an analyst with Mizuho Investors Securities Co "From now on, game developers will probably have to choose sides."
Sony shares rose ?110, or 2.6 percent, to ?4,320, while Square shares surged ?154, or 9.5 percent, to ?1,770.
Sony and Square yesterday said Sony's game unit, Sony Computer Entertainment Inc, will pay Square ?14.9 billion (US$124 million) for a 19 percent stake. Square has sold about 35 million copies worldwide of its best-selling "Final Fantasy" role-playing game series.
"Sony's stake purchase ensured an exclusive supply of `Final Fantasy' games," said Soichiro Fukuda, an analyst with Nikko Salomon Smith Barney Ltd.
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