Reuters Summit - Square Enix may take stakes in rivals

TOKYO (Reuters) - Japanese videogame maker Square Enix Co Ltd said on Tuesday it is considering taking stakes in game developers to combat rising competition from established companies and firms entering the videogame market.

"Economies of scale and breadth of scope is getting important. It may be a business alliance or it may be us taking a stake in others, but we need to go beyond traditional Square Enix," Square Enix President Yoichi Wada told the Reuters Global Technology, Media and Telecoms Summit in Tokyo.

"We face competition not only from Japanese videogame companies but from game companies worldwide. We also see some new players from outside the videogame industry coming in," he said.

Game makers are rapidly consolidating to boost their competitiveness, with Electronic Arts planning to take over rival videogame maker Take-Two Interactive Software Inc, while Vivendi's game unit is merging with Activision Inc.

Square Enix, creator of blockbuster game series including "Dragon Quest", "Final Fantasy" and "Kingdom Hearts", was itself created in 2003 through a merger of two leading Japanese game makers.

Asked if Square Enix is currently in talks with others, Wada said: "That's part of a CEO's job. That's part of our routine work."

Square Enix said last month it would move to a holding company structure in October, saying it was necessary to move to the kind of organisation that could respond to business tie-ups and investment opportunities quickly and flexibly.

Wada also said he aims to boost the ratio of overseas videogame software sales among its total game software revenues to 80 percent in three years from about 50 percent now.

Shares in Square Enix, which will report its earnings results for the year ended March 31 on Friday, were up 0.9 percent at 3,300 yen in early afternoon, outperforming the Nikkei average, which fell 0.8 percent.