Is video game maker Sega in play? From bowing out of the platform business two years ago to last week's announcement of layoffs, the last couple of years have held perpetual retrenchment for the Japanese gaming specialist. Now, two stateside suitors are rumored to be interested in a buyout.

Microsoft (Nasdaq: MSFT) and Electronic Arts(Nasdaq: ERTS) have been linked to most of the recent buyouts in the video game sector. The reasons are simple. Microsoft would love to lock in hot titles and leave Nintendo as a distant and fading third-place finisher in the hardware wars, and Electronic Arts is the industry leader with an acquisitive past. They are big names, and they fan the rumors, in large part, because they're the only two well-funded players with a vested interested in getting bigger.

Sega denied the rumors this morning. The company is working on its own growth plan, which involves merging with a pachinko company. However, Sega better not take too long to gauge any potential interest. Vivendi(NYSE: V) still needs to unload some assets, and other game specialists, such as THQ(Nasdaq: THQI), Take-Two Interactive(Nasdaq: TTWO), and Activision(Nasdaq: ATVI), are trading at levels accretive to earnings for both of the two tagged titans.

It's a shame that so few companies appear to be in a buyout state of mind. Industry consolidation at a time when the hardware makers are ready to chop another $50 off their consoles should help grow the installed base of gamers. While Sony's(NYSE: SNE) PlayStation2 is doing well, software companies' reluctance to support Xbox and GameCube will dry up the demand for either system if fresh titles don't continue.

So, why shouldn't the hardware makers gobble up the software houses? The rivals are cheap, and in some cases, cash rich. The industry shakeout may not be pretty, but at least the public will know which platforms are worth buying.