Culture

Sega's game to grab a U.S. company

The Japanese video game publisher is looking for companies to buy in either the United States or Europe. Is Electronic Arts on the list?

Aug. 16, 2002 2:36 a.m. PT

2 min read

Japanese video game publisher Sega, which abandoned the hardware market 18 months ago to focus exclusively on game software, is looking to acquire other publishers in the U.S. and Europe, the company said on Tuesday.

Charles Bellfield, a vice president with Sega of America, said the company is looking at deals and talking with a number of companies as it pursues its goal of being the No. 2 game publisher in the United States this year and the No. 1 globally next year.

Bellfield said the only independent game publisher that Sega would likely rule out at this point as an acquisition target was No. 1 publisher Electronic Arts, with a market capitalization of more than $8 billion and annual revenue of more than $1.7 billion.

Sega's move to focus exclusively on game software has paid off to date, returning the company to profitability on an operating basis in fiscal 2002 after two years of heavy losses.

Bellfield said Sega had been set to announce a deal with a game publisher at the industry's Electronic Entertainment Expo (E3) in May, but the agreement fell through. He declined to name the company.

The most "interesting opportunities" for potential acquisitons were among the smaller, listed publishers that might provide development teams and intellectual property, such as rights to game franchises, Bellfield said. But, he added: "(I) can't confirm or deny any particular talks with any particular company at this point."

Jeetil Patel, an analyst at Deutsche Bank Securities, said almost any company apart from EA was a possible acquisition target, including THQ, which publishes Sega games for Nintendo's Game Boy Advance handheld console.

Bellfield also said Sega plans to be more directly involved in the European market in 2003.

He said there were no announcements at this point about the company's relationship with Infogrames Entertainment, Europe's largest games publisher and distributor of Sega games in Europe. That distribution contract expires March 31, 2003.

After a report in the Wall Street Journal Europe Tuesday about Sega's plans, shares in Infogrames Entertainment rocketed 23 percent on speculation the company could be a take-over target.

An Infogrames spokeswoman declined to comment, citing company policy on market rumors.