Representatives from Japanese publisher and developer Square Enix have confirmed that the company has made a ¥67 billion ($610m) bid to buy arcade game stalwart and console publisher/developer Taito. The offer will formally be made tomorrow, when Taito’s largest shareholder, Kyocera Corp. will sell its 36 percent stake in the company.
Although the two companies initially seem an odd match, there is little overlap between their products, and Square Enix’s primary interest appears to be in diversifying its product range. Although Taito’s profile is now much reduced from previous years, when it was known for arcade hits such as Space Invaders, Bubble Bobble, Chase H.Q. and Operation Wolf, it still has a considerable presence in Japanese arcades and operates a number of sites. The company has also profited from diversification into mobile content and has a successful range of arcade and home karaoke machines.
“We need to expand our product and service line-up in order to respond to the changing environment of the industry,'' said an unnamed Square Enix spokesperson in a statement.
Square Enix itself is the product of a merger in 2003 between role-playing giants Square and Enix. Although this has ensured the company's dominance over the role-playing genre in Japan (which is by far the country’s most popular game style), it has not massively expanded the company’s portfolio or presence in the West.
Taito had revenue of ¥84.6 billion ($772.1m) on a parent basis for the year ended March 31st, this compares to ¥73.9 billion ($674.6m) for Square Enix. Combined sales for the last year would put the company at ¥158.5 billion ($1.45bn) – still well behind market leaders Sega Sammy at ¥515.7 billion ($4.71bn) and Nintendo at ¥515.3 billion ($4.70bn).
If successful, Square Enix’s acquisition of Taito will be just the latest in a long line of consolidations in Japan, which have seen prospective or completed mergers between Sega and Sammy, Bandai and Namco, and Takara and Tomy. Diversification has been claimed as the primary reason for all these mergers, with Square Enix also citing the increasing cost of next generation development as a factor in its latest move.