Japan’s Square Quits the Movie Business

The Japanese video-game company behind the animated movie “Final Fantasy: The Spirits Within” said Thursday that it is quitting the film business after its first and only effort proved to be a box-office flop.

Tokyo-based Square Co., which plowed about $115 million into making “Final Fantasy,” said it will post a loss of about $83 million this fiscal year as a result of the film, which grossed just over $33 million in North America. The company previously projected profit of about $6 million for the 12 months ending March 31. Square posted a loss of $18.7 million last year on sales of $259 million.

“Final Fantasy,” based on one of the best-selling video-game series in history, garnered much attention for its realistic computer-generated human characters. To the computer animation industry, the film represented a test of whether audiences would accept computer-generated human actors. The movie’s poor performance at the box office, despite moderate critical success, suggests the answer is no.

“It may take awhile before someone dives into this sort of thing again,” said Diana Walczak, co-founder and artistic director of computer graphics studio Kleiser-Walczak in North Adams, Mass.

The film’s disappointing results will not necessarily damp Hollywood’s enthusiasm for computer- animated films. The success of such movies as “Shrek” and “Toy Story” have shown that, when used to augment a good story, computer graphics does sell.

“The lesson here is that the purpose of the film should be explored before throwing a lot of money at it,” Walczak said.

Square said it will return its focus to producing games and cease funding its Honolulu-based subsidiary, Square Pictures. Officials at Square Pictures said they are attempting to get funding from investors and make a run at becoming an independent production company.

Square Pictures is working on a film produced by another studio to be released next year, said the unit’s president, Jun Aida. He declined to provide details. Square Pictures is paying its 125 employees with money it receives from its current project, Aida said. “We’re still very much alive and kicking.”

About 40% of the $115 million Square spent to create “Final Fantasy” was used to build Square Pictures’ state-of-the-art computer animation studio. Columbia Pictures spent more than $30 million to market and distribute the film.

Square may get a boost when “Final Fantasy” is released on DVD in two weeks; it has been on Amazon.com’s list of most-anticipated DVD titles. The film also will get a lift from foreign theaters, which so far have taken in more than $50 million, Aida said.

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Times staff writer Dave Wilson contributed to this report.