Game software makers Enix Corp. and Square Co. said Tuesday they have agreed to merge on April 1 to bolster their earnings base and development capacity.

The move marks the first time in Japan for two major game software makers to join forces.

The merged firm, to be named Square Enix Co., hopes to become the world's leading digital content maker, the two firms said in a news release.

Industry experts said the move could serve as a catalyst for further reorganization within the game software industry, which is facing increased competition from up-and-coming overseas makers.

Enix is known for its "Dragon Quest" series of game software, while Square is famous for its "Final Fantasy" series.

Under the agreement, Enix will be the surviving company, with 0.81 Enix share to be allocated to each Square share.

The new firm is aiming for consolidated sales of 80 billion yen and net profit of 15 billion yen for the business year through March 2005.

Enix Chairman Yasuhiro Fukushima will be installed as the new company's chairman, while the presidency will be taken over by Square President Yoichi Wada, the companies said.

Many companies in the game industry see their earnings greatly affected by the timing of their software releases.

Industry analysts said merging is a viable option for software makers that want to expand their sales.

Square logged a group net loss of 16.5 billion yen in fiscal 2001 due to the flop of its movie project for "Final Fantasy." It received financial support from Sony Computer Entertainment Inc.

Enix has remained in the black, but has failed to release new products on schedule.