Hawai'i movie studio up for sale
By Hiroshi Suzuki
Bloomberg News
TOKYO — Square Co., a Japanese video-game maker, expects to conclude an agreement with a U.S. company to sell its Honolulu movie-making unit in the next three months after its "Final Fantasy" movie recouped about a third of its costs so far.
The Tokyo-based company, which makes video-game software for Sony Corp.'s PlayStation 2 console, is in talks to find a buyer for part or all of its stake in Square USA, its movie production unit in Hawai'i, by the end of March, Square President Yoichi Wada said in an interview.
Square said in October it would withdraw from the movie business after its first feature-length film flopped.
But Jun Aida, president of Square USA, said last night that the company ideally would keep a minority stake in the studio and continue doing some film work, if only as a secondary partner or contractor.
"The primary intent is for Square to not be in the film production business — but at the same time, the company did realize what a tremendous technological asset this studio brings to Square," Aida said. "If we have our wish come true, we'd find a very strong partner, such as a major studio, who could bring us the benefit of a very creative thought process. What Square lacks is everyday experience with film production."
The maker of the "Final Fantasy" series of games posted a $107 million group loss for the six months ended Sept. 30 after its $135 million "Final Fantasy: The Spirits Within" failed to meet revenue targets. Wada became president Dec. 1 after Hisashi Suzuki stepped aside to take responsibility for the company's abandoned entry into motion pictures.
"We can't maintain our commitment to the studio in terms of money and manpower," Wada said. "The best-case scenario is for us to maintain a minor stake and to continue using the business' computer graphics technology with a fresh input of funds."
The Hawai'i studio is 100 percent owned by Square. During peak production last year, the studio employed more than 220 programmers, artists and technicians, many of them highly paid experts recruited from off-island. The studio now has about 125 employees who are collaborating on a second project with a studio elsewhere, Aida said.
Aida said the company's long-term chance of staying in Hawai'i is unclear. Square came to Hawai'i in the late 1990s because of the state's multicultural environment and quality of life. Aida said prospective buyers haven't been concerned with the location.
"What is the likelihood of us staying here? It's title by title — that's the nature of the business," he said. "When you get another project, then you'll stay through that at least. But nothing is set in stone — that's the nature of the business."
Local government officials have hailed the company as one of the few high-tech firms to invest in Hawai'i.
Wada declined to say which U.S. companies Square is discussing the sale of its movie studio with or whether it is holding talks with one or several companies.
Square devoted a large portion of the $135 million allotted for "Final Fantasy: The Spirits Within" to build the Hawai'i studio and to buy equipment used to make computer graphics for the movie, which was released to North American theaters in July. The company did not disclose the exact amount spent on the studio's development.
The film is based on Square's Final Fantasy series of games, which have sold more than 35 million copies worldwide. Analysts say the company should stick to designing games.
"It's better for Square to sell (the studio) quickly," said Takashi Oka, an analyst with Tsubasa Securities Co. "After the company dropped its movie business, the studio is no use."
Advertiser staff writer John Duchemin contributed to this report.
