Originally created 05/17/99

Video games as big as movies

SAN RAFAEL, Calif. -- Jack Sorensen's phone rings. It's another call for help.

A movie studio executive is trying to persuade Sorensen's software developers at LucasArts Entertainment Co. to create a computer game based on his upcoming film. Another pitch. Another "sure hit." And like scores of calls before, the LucasArts president will reject it.

"Studios are begging everyone I know to do projects. And we won't because we don't have to," Sorensen said. "I remember these same executives, just a few years ago, laughing at the idea of games being as big as movies. Today, no one's laughing."

Indeed, the video game industry has transformed itself from a niche business into a global powerhouse that market researchers say hauled in about $6.3 billion last year, just shy of the $6.9 billion taken in at the box office.

So big has the game industry become that Sony Corp.'s game division last year contributed the biggest chunk to the parent company's overall operating profits -- more than its film, music or consumer electronics businesses.

More important, video game sales are rising faster than those of movie tickets -- even though the actual number of tickets sold is higher. Revenues in the video game market -- which includes software and the console machines used to play them -- have jumped about 12 percent annually since 1994, compared to an average 7.5 percent bump in theater ticket sales. As games continue to skyrocket, analysts predict that people will spend more on electronic entertainment in 1999 than at movie theaters for the first time ever.

"This is not a toy business any more," said Stewart Halpern, a senior entertainment analyst at the New York investment company ING Baring Furman Selz. "This is a complex industry generating enormous revenues and showing no sign of slowing down."

Hollywood studios have grabbed the film and TV rights to numerous software titles, launched their own development teams and started production on numerous films based on computer games.

But software developers say that most of Hollywood's old guard still sees games as a fringe market and is missing the bigger picture. These artists understand that there's more to the medium than just marketing, in which a game helps promote a movie.

Sure, game developers are inspired by -- and emulate the storytelling techniques of -- film and television. Yet computer games possess their own distinct appeal and, in turn, have intensified a generation gap.

Just as rock music drew cultural lines between parents and their children in the '50s and '60s, electronic games have created a rift between many baby boomers and their offspring.

As the technology matures, so does the generation of players. Today's average game fan is male and in his late teens and early 20s, according to industry research.

These young men, who watch more movies and buy more games than girls their age, wield a surprising amount of power in Hollywood. They see films early, usually in the first 10 days after opening day, and can help create a public buzz soon after the feature's debut. Likewise, they buy software soon after the title is released, which is crucial to the life span of the game in the highly competitive battle for retail shelf space.

"This is Hollywood's prime audience -- young people looking for a cinematic, interactive experience," said Christian Svensson, editor in chief of MCV, a weekly computer and video game trade magazine.

The movie and computer worlds tried to marry in the early '90s, with a slew of partnerships and joint ventures creating a much-hyped merger between Silicon Valley's technology and Hollywood's marketing savvy. But the union was disastrous: The corporate cultures of the industries -- both used to full creative control of their products -- failed to mesh.

Still, both sides rushed to cash in on the untapped market. As a result, scores of titles were released and ultimately flopped.

Failure sent many film studios sprinting away from interactive software. At the same time, it forced the game industry, so focused on improving technology, to re-evaluate stories it was telling.

Adapting techniques from film, game makers began to draw on the visual and aural tricks perfected by their movie brethren.

Filmmakers, conversely, are again paying attention to games.

"Die Hard" producers Lawrence Gordon and Lloyd Levin are developing a movie based on the best-selling title "Tomb Raider" for Paramount Pictures. New Line Cinema is set to release "Mortal Kombat III," drawn from the martial arts game, by year's end.

Hollywood has snatched up the film rights to dozens of games, including the violent "Duke Nukem" from GT Interactive Software Corp., the gruesome "Resident Evil" by Capcom Ltd., and several action-packed titles from Activision Inc.

Refusing to succumb to the fate many authors face when books are turned into films, game publishers are retaining tight control over their intellectual properties. Eidos Interactive, maker of the "Tomb Raider" series, has final approval over Paramount's film script and the casting of Lara Croft, the pistol-wielding buxom heroine, say executives.

Eidos also dictates what Croft can -- and can't -- do on screen: no nudity, no smoking, no profanity and no sex scenes.

"The reality is `Tomb Raider,' as a game, does $150 million to $200 million a year for us," said Paul Baldwin, vice president of marketing for Eidos. "Lara Croft is our cash cow, and we can't afford to have her dragged through the mud with a bad film experience."

Most aggressive among Hollywood game players is Sony Corp. Long the world's leading consumer electronics maker, Sony's core business is being transformed by digital electronics -- particularly games.

"Software is king," said Kazuo "Kaz" Hirai, president of Sony Computer Entertainment of America. "You can have the best technology, the most advanced box in the world. But without the applications, that box will only collect dust on the retail shelves."

Sony hopes to tap the game market with its Playstation 2, which will be released in the United States next year. It's the first game machine able to deliver graphics that until now could be produced only by high-end computers.

The brains of the box allow the graphics of a game to be as detailed as those seen in the movie "Toy Story." Further blurring the lines between game and movie makers, the as-yet-unpriced Playstation promises to let software developers take the graphics and digital models used in a film's visual effects and drop them directly into a game.

"Philosophically, we're seeing a convergence between the two industries," said Chris Lee, the Sony executive charged with turning games into films. "In practice, though, what's happening is the game companies are starting to assert their power."


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