Led by strong sales for its HARRY POTTER game franchise, Redwood City, California-based Electronic Arts (EA) reported a net profit of $132.3 million, or 92 cents per share, compared with net earnings of $88 million, or 63 cents per share, in the year-earlier period. Excluding goodwill and other charges, the company reported earnings of $147.1 million, or $1.03 per share. Revenue in the quarter was $832.9 million, up from $640.3 million a year earlier.

The innovative studio that brought the synthespians of FINAL FANTASY to life, is planning to close up shop. Pressure from parent company Square Co., Ltd. of Tokyo is forcing Honolulu-based Square USA into closure, if they cannot find investors between now and March 31, 2002. Square Co. ceased funding of the studio in September, and although Square USA attempted to find partners in major U.S. studios, they have not been able to procure outside funding. Although the studio hopes an investor will appear in the 11th hour, a March 31st shut down seems inevitable.

Animation producer Millimages is expanding into German territory with the acquisition of 51% of the Hamburg-based animation company, Toons ‘n’ Tales. This latest acquisition follows the company’s announcements in 2001 of the launch of Millimages USA, headed by Dorian Langdon, and the international distribution center, Millimages London. Toons ‘n’ Tales managing director and co-founder Sunita Struck, will continue to oversee the company in partnership with Millimages.

The Hewlett-Packard Company (HP) and DreamWorks SKG have entered into a three-year, multi-million dollar technology strategic alliance aimed at revolutionizing animation production. The alliance designates HP as DreamWorks' sole "preferred technology provider" for core technology purchases meaning HP will provide a broad range of products, services and integration expertise to create a new DreamWorks production facility at the Glendale campus.

U.K. independent Tiger Aspect Productions (TAP) has created a new animation division and upped Claudia Lloyd, former creative director of comedy and entertainment at Tiger Aspect, to head of animation. With the creation of an animation division, TAP is pursuing an active animation development slate. Currently, producer Chris Skala is developing EARTH KID, a series to be co-produced with Cartoon Pizza for the 6-12 year old age group. Lloyd would like TAP to produce only two or three mainstream or children’s and family specials or series per year.

In a move to promote long-term growth of his businesses, George Lucas announced that he is bringing Lucas Digital, LucasArts Entertainment, Lucas Licensing and Lucasfilm Ltd. into one organization, as Lucasfilm president Gordon Radley leaves the company. Lucasfilm CFO Micheline Chau has been promoted to the position of chief operating officer to oversee the new unified company and to guide all of the business units.

Corus Entertainment’s Nelvana and Japanese publisher Kodansha Ltd. have entered into a partnership to jointly develop new children’s properties. The agreement expands on their existing relationship that has produced BABAR’S ADVENTURES, and seen the acquisition of CARDCAPTORS and the Fox Kids program MEDABOTS. Under the terms of the three-year partnership agreement, Nelvana will be given first look on all Kodansha projects for possible co-production or acquisition of distribution rights for non-Asian countries.

Australian visual effects companies Photon VFX and GMD have formed a strategic alliance and will begin their collaboration as joint visual effects contractors for the Disney production of INSPECTOR GADGET 2. The film, which is currently shooting on location in Brisbane, Australia, is a direct-to-video project from Disney. The eight-week shoot is will utilize Photon's motion-control services during production. Post-production is slated for completion by mid-2002.

Following in the footsteps of NBC, which recently leased its Saturday morning block to Discovery Networks, Fox Broadcasting has turned over its Saturday morning programming to 4Kids Entertainment, Inc. Beginning September 2002, 4Kids will provide all programming content for FOX's Saturday morning broadcast block, which commences at 8 am ET/PT (7 am CT). Fox hopes that 4Kids’ shows will help the network maintain its competitive edge in the key young boys’ demo.

Activision, Inc. has exercised its option to acquire the remaining 60% equity interest in Gray Matter Interactive Studios. Under the terms of the agreement, Gray Matter Interactive Studios will become a wholly owned subsidiary of Activision. Activision issued 133,690 shares of common stock in connection with the acquisition. "Gray Matter has a very talented team of programmers, designers and artists and we are confident that the studio's development strengths will further establish Activision as a leader in the PC action genre," stated Ron Doornink, president and COO of Activision.