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Sega Eyes Growth Outside Japan
Sega Corp. plans to purchase European and U.S. videogame developers to expand their studios outside Japan, the company said this week. Sega has declined to name any potential targets. But there is speculation it is set to purchase French company Infogrames Entertainment, owner of the rights to the Atari name.
Chief Operating Officer Tetsu Kayama said Sega was set to announce a deal with an unnamed software publisher at the annual E3 video game show in May. Those talks fell through. But Sega's expansion plans are still moving ahead.
"If a studio has something that Sega doesn't have, then we'll do an acquisition," Kayama told the Wall Street Journal this week. Sega's spokesman said its expansion strategy is long-term, with little happening in the immediate future.
One industry watcher isn't so sure. "I'm sure we'll get some surprises in the coming months," said John Davison, editorial director of ZD Media's Game Group. "Sega would be very smart to start acquiring studios to expand its business," Davison added.
Charles Bellfield, vice president of marketing at Sega of America, said Wednesday that the most "interesting opportunities" for takeovers lie among smaller, publicly traded publishers. They could give Sega access to development teams and popular game franchises, he told Reuters.
He refused to comment on specific targets. Besides Infogrames in Europe, small U.S. game publishers include notable names like Acclaim Entertainment Inc., Midway Games Inc., Interplay Entertainment Corp. and 3DO Co.
As of the close of trading on Tuesday, Acclaim had a market capitalization of $270.8 million, Midway had a capitalization of $196.7 million, Interplay had a market value of $29.8 million and 3DO's capitalization was $24.1 million.
Bellfield said the only company Sega definitely won't acquire is the world's biggest publisher, Electronic Arts, which has a market capitalization of $8 billion.
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 on Tuesday about Sega's plans, shares in Infogrames Entertainment rocketed 23 percent on speculation the company could be a take-over target.
SOURCES: CNN, REUTERS.
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