Among major video-game hardware manufacturers, Sony has been the most reliant on third-party developers for its PlayStation and PlayStation 2 game consoles. Sony has released just a handful of games under its own name. And only one of the titles--puzzle game "Fantavision"--available when the PlayStation 2 launched last year came from Sony.
Competition is heating up, however. Microsoft is expected to offer a strong lineup of in-house and third-party titles for the launch of its Xbox game console later this year.
Red Zone, based in San Diego, is best known for sports titles such as "NFL Game Day" and "NBA Shoot Out." The company has 65 employees.
Naughty Dog helped establish the PlayStation with its "Crash Bandicoot" racing games. The Santa Monica, Calif.-based company has 30 employees. However, Sony is unlikely to win exclusive rights to "Crash Bandicoot" because the game's publisher, Japan's Konami, has already committed to sell one game for the Xbox.
Both Naughty Dog and Red Zone will become subsidiaries of Sony Computer Entertainment, the Sony arm responsible for PlayStation. They will report to Shuhei Yoshida, vice president for product development. Financial terms of the deals were not disclosed.
"Throughout the course of the year, we have expanded our internal development efforts considerably," Yoshida said in statement.
Besides being plagued by persistent hardware shortages, the PlayStation 2 was criticized when it launched because initial software titles failed to take full advantage of the console's capabilities.
Schelley Olhava, gaming analyst for market researcher IDC, said the PS2 launch may have helped convince Sony executives that they need to be more involved in software development.
"I'm sure they're looking at the bottom line, but it also gives them a little more control over the content they have to drive PS2 sales," she said.