Square<9620.T>, US partner to end 5-year alliance
Reuters, 02.19.03, 4:54 AM ET
TOKYO, Feb 19 (Reuters) - Japanese videogame software maker Square Co Ltd said on Wednesday it agreed with Electronic Arts Inc (EA) (nasdaq: ERTS - news - people) to terminate their joint ventures at the end of March, ending an alliance that helped each penetrate the other's market.
The Japanese maker of the popular Final Fantasy series and the largest game software publisher in the U.S. teamed up five years ago with joint ventures to market and distribute their products in North America and Japan.
"Five years ago, EA was not well known in Japan and Square was little known in the United States and our goal was to improve our presence in each country," a spokesman at Square said.
"Now we believe our target has been accomplished, thus we decided not to renew our contract," he said.
Under the existing pact, their U.S. joint venture, Square Electronic Arts, sells Square's games in North America and their Japanese venture, Electronic Arts Square, develops and localises EA's games for Japanese consumers.
After the dissolution of the partnership, each firm will market and localise its products on its own.
The cancellation comes ahead of Square's merger in April with rival Enix Corp <9684.T>, the Japanese creator of the blockbuster "Dragon Quest" series. The new entity was agreed to combat intense competition in the gaming industry.
Enix has already unveiled a plan to close its U.S. marketing unit at the end of April and transfer the operation to Square's U.S. subsidiary, to be renamed Square Enix U.S.A. Inc.
EA distribution of Square products in North America will end this summer, and the new Japanese company, Square Enix Co Ltd, may seek a new partnership, Square said in a separate news release issued in Los Angeles.
"As Square and Enix begin the worldwide implementation of the merger, our goals for the North American market will shift to include not only increasing our market share for our franchises, but also expanding the role-playing game market in North America," Square's president Yoichi Wada said in the statement.
"We are currently exploring opportunities for a new relationship," Wada said.
Shares in Square closed down 1.31 percent at 1,660 yen while Enix's stock ended up 0.05 percent at 1,966 yen. The Nikkei average <.N225> closed lower by 0.17 percent.
Copyright 2003, Reuters News Service
