Sony to take $124M stake in game maker Square

Sony Computer Entertainment Inc. (SCEI), the company behind the PlayStation family of game consoles, plans to take a stake in one of Japan's largest computer game software producers as competition heats up between the major hardware players.

The company announced Tuesday that it will spend 14.9 billion yen (US$124.2 million) to acquire an 18.6 percent stake in Square, the company behind the hit Final Fantasy series of games, and become the second largest shareholder after the company's founder. The deal is expected to close on Oct. 26.

SCEI's investment will come a little less than three weeks before Microsoft Corp. is expected to provide the stiffest challenge yet to the PlayStation's dominance with the launch of its Xbox console. Despite delays in getting the console into the Japanese market, the software maker plans to launch it in the U.S. market on Nov. 15. Several weeks ago Nintendo Co. Ltd. launched its latest console, the Gamecube, in Japan and plans a U.S. launch in November.

The launch of the two consoles has renewed the battle for the wallets of computer game players and is expected to highlight the importance of software and especially key franchises like Square's Final Fantasy series or Nintendo's Mario character.

The money from SCEI will be used for operational purposes although it just about matches Square's losses from its recent foray into the movie business. Its Final Fantasy movie cost the company 13.9 billion yen and its failure to make a profit resulted in Square announcing last week that it would not continue movie production.

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Martyn Williams

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