Japan's Gaga Communications is in talks to co-produce a live-action feature version of Namco's hit game Tekken with Namco and the US production Crystal Sky Entertainment.

Currently in pre-production, Tekken is scheduled to go before the cameras in April 2003 and be released worldwide in 2005 at a reported overall budget of $60m.

"Given the success of Tomb Raider which generated, $130m on a production budget of $100m, we and our partners feel comfortable putting $30m-$40m into the Tekken project," said the Gaga spokesman Hidehiro Yoshioka. "We want the film to be a Matrix- and Tomb Raider-like action entertainment."

The project is part of Gaga's plans to expand into film production targeting the US and the European market. The company distributed Crystal Sky's Eternity in 1990 and has had a close business relationship with the company ever since. Crystal Sky is currently negotiating for name Hollywood directing and acting talent.

Although Gaga intends to secure Tekken distribution rights for Japan, the company has not yet decided whether to invest into the project. Given Gaga's flop with Final Fantasy, which generated $8m (Y1 billion) at the Japanese box office after its September 15 2001 release on 259 screens, the company is carefully reconsidering its film investment strategy.

Now in its fourth edition, the battle game Tekken has sold 14 million units worldwide.

Meanwhile, Gaga will also distribute the 3-D animated feature Axis, co-produced by Le Studio Canal Plus and Chaman Productions, which is schedule for completion later this year. Currently in production, $35m project will be released together with a game from Namco in the summer of 2003 in the US and Europe and in the autumn of 2003 in Japan, the earliest.