Microsoft Looking to Buy Sega?

[Bond]

Microsoft tends to look outside Redmond to beef up its Xbox game titles, and has snapped up some rising game developers over the past several years.

Now, Japanese game maker Sega is entertaining offers from corporate suitors, and Microsoft is thought to be one of the interested parties. Japan’s Yomiuri newspaper this week reported that Microsoft has approached Sega about buying a stake in the company.

Microsoft and Sega will not comment, but the speculation has boosted Sega’s flagging share price and given rise to much discussion about what such a partnership could mean.

Some observers have said it would benefit both sides. Microsoft could include Sonic the Hedgehog games in its catalog of so-called first-party titles, which are often more lucrative than relying on independent, third-party developers, while Sega would have the financial backing and stability it needs. Others have said the two companies are too diverse, and that Sega is too large to be successfully integrated.

Sega is already juggling merger offers, even after announcing in February that it planned to combine with Sammy, which makes machines for playing a Japanese form of pinball called pachinko. The share prices of both companies fell after the announcement. Last week, Sega announced it has received an offer from Japanese rival Namco.

Sega said Monday it is moving forward with the Sammy deal, but that its board of directors will discuss both proposals at its next meeting in June. Video-game maker Electronic Arts, a leading American game developer, is also thought to be interested in buying at least a significant stake in Sega.

Sega’s share price has plummeted over the past six months. Last November, the one-time game-console maker slashed its profit outlook by 72 percent to $41 million for its fiscal year ended March 31.

In January, Sega of America President Peter Moore resigned to join Xbox. Moore didn’t bring Sega along with him, but some analysts said a Microsoft-Sega deal makes sense, particularly because Microsoft is not known for developing its own original games.

"They don’t have enough original content for the Xbox as they could use," said Billy Pidgeon, a senior analyst for the Zelos Group.

Sega’s Sonic the Hedgehog series has great potential, said Arvind Bhatia, a Southwest Securities analyst who follows the video-game industry. Microsoft might want to offer Sonic games and other titles as Xbox exclusives, he said. The Mario franchise, for example, has been a bedrock for Nintendo.

"What Microsoft really needs right now is what we call a ’killer app’-type title," Bhatia said. "The only one they’ve been able to come out with is ’Halo.’ "

Developing big games is a difficult business, in part because game creation is expensive and labor-intensive and also because the whims of game players are unpredictable.

One of the best ways to produce games is to go out and acquire content, said video-game analyst David Cole, and Sony, Microsoft and Nintendo are all looking for acquisition candidates.

Microsoft has acquired a handful of game developers, including U.K.-based Rare and American companies Digital Anvil and Bungie Studios.

"It’s a constant battle," he said. "You’re trying to build up all that product line and trying to get the newest products."

A Microsoft-Sega deal might run into problems because an acquisition of that size would be very expensive and difficult for Microsoft to digest, Cole said. It also goes against the current trend of picking up product from smaller, more agile developers.

Source: XboxAddict

Well, it is an interesting rumor. But it's only a rumor. And I really don't think Microsoft is in the market for buying a large videogaming company right now...

[One Winged Angel]

hah... it will never happen.

[Stonecutter]

I hope it doesn't happen. While I agree that 100% sega support on xbox would be sweet I think that gamers would lose out on a lot of titles overall. They can't possibly release as many titles for xbox as they do accross all the platforms.

And what hapens to sega sports? It better not lose out to fever and the other ****ty ms sports games.

[TheGame]

No need for anymore buggy Sega titles

Originally posted by One Winged Angel
hah... it will never happen.

Sounds like hat Nintendo fans were saying when MS was about to buy out Rare.

[Neo]

They will assimilate us all.

[Stonecutter]

Well, one thing I will say.


I think we can say with 100% certanty, that either.

A) This won't happen

or

B) The Sega/Namco merge won't happen

I can't see MS buying both sega and ms.


EDIT Sega and Namco

[gekko]

Well it's a rumor, the only reason Microsoft got tied in is because an Xbox site wrote it up. If 85 companies were in competition for a buyout, it would look like Microsoft has it with the way they write things up.

[BlueFire]

Isn't this the 2nd time (or more than that) that this thing about Microsoft buying Sega has started

[GameMaster]

Sonic is just getting passed around like an STD these days...

[Bond]

Here is another article about a possible Sega merger with Sammy Corp or Namco:

Japan’s Sega Corp. said on Wednesday its board members had given it the go-ahead to "officially" consider merger deals proposed by pinball machine maker Sammy Corp and fellow game maker Namco Ltd.

The company, known for its "Sonic the Hedgehog" games, declined to provide details of the board’s discussion, but a spokesman said Sega was aiming to make a final decision on the proposals by the middle of May so that a deal could be approved by a shareholders meeting slated for late June.

Last week, Namco said it wanted to reopen merger talks with Sega, threatening to torpedo Sega’s planned October integration with Sammy.

Asked whether Sega’s board members had agreed to consider other reported options such as an operational alliance with Electronic Arts Inc, the spokesman said he could not comment.

The Nihon Keizai business daily said last week that Sega’s board was expected to agree on Wednesday to also consider a proposal from EA for a capital alliance and collaboration in development and sales with Sega.

Namco and Sammy both declined to comment on the current status of merger discussions with Sega.

Source: XboxAddict

[Tombor]

I read somewhere, either IGN or Gamerfeed, that Sega stock rose on the word of a buyout by MS...

Hasn't this gotten old yet? Weren't they supposed to buy them 2 years ago? Didn't they shovel enough money into them to basically own them already?

Capcom is also calling for a merger partner... it maybe in MS' best interest to go after them instead... their franchises are near guaranteed successes (unlike Sega's...) and Capcom has already supplied Xbox with its only real killer app in Japan (Tekki). It would also bring the Capcom 5, Biohazard, Devil May Cry, and Onimusha over. But that's getting off the subject. How about making it a 2-fer and get both of them? And Sammy and Namco. Brian's head would explode. Then he'd go buy Sonic.