Sony Computer Entertainment has purchased an 18.6% stake in Square Co., a leading game maker in recovery after the box office disaster of its first film, Final Fantasy. The unit of Sony Corp. in charge of the bestselling PlayStation 2 console, SCE will become Square's second-largest shareholder. Square founder Masafumi Miyamoto will retain a leading 50.3% share.
SCE's 11.2 million shares in Square are a new issue, which add $124 million (Y14.9 billion) to the game maker's coffers and give SCE an 18.6% stake. The price, $11 (Y1,330), represents a 17.7% discount compared with the October 9 closing price of $13.40 (Y1,616). Square representatives said that the company would use the funds raised by the share issue for operations.
Following the US flop of its first feature Final Fantasy, game maker Square Co. announced its exit from the film business. It has also had less than stellar success with its online gaming business. The company expects to record a $83 million (Y10 billion) net loss for the current fiscal year, ending in March.
Expecting big box office from the CGI spectacular's US release, Square projected a profit of $5.8 million (Y700 million) for fiscal 2001. Now, however, it is scrambling to recover the $137 million (Y16.4 billion) in production costs, spent during the three years an international teams of 250 animators labored over the film in Square's Hawaii studio.
In fiscal 2000, Square posted a net loss of $26 million (Y3.16 billion) The company planned to recoup by releasing Final Fantasy at the height of the lucrative US summer season, but the film failed to impress the critics and tanked at the box office, recording only $32 million after its July 11 release on 2,649 screens.
Final Fantasy has also hit the wall in Japan -- distributor Gaga pulled the film from the theatres only three weeks after its September 15 release.