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Can Hollywood Master the Game Biz?

21 Feb, 2004 By: David Ward

While it generated only a few short paragraphs in most business and trade publications, Warner Bros.' announcement that it is setting up its own interactive division didn't go unnoticed in the game industry or in Hollywood.

For all of the success the major studios have had creating entertainment for the masses, video games have remained the one format Hollywood has yet to master.

Fox, Disney, MGM, Vivendi Universal and DreamWorks have all stepped into the space at one point or another -- often with grand ambitions and ample financial resources -- only to eventually retrench amid a flurry of red ink.

Keith Boesky, a game agent with ICM, bluntly summed up the studios' efforts in video gaming to date: “It hasn't even been mixed results. It's been a failure.”

But in hiring former Monolith Productions CEO Jason Hall to run Warner Bros. Interactive Entertainment, the company signaled that it understands it needed to take a different approach.

“When they decided to bring me in as an SVP, that makes them relevant in the game industry,” Hall said. “I'm not your standard guy that a film studio would bring in to do this. I've been at the forefront of game development and technology for the past 10 years. They really reached into the hardcore game industry and pulled me out.”

Game publishers, for the most part, view the hiring of Hall as a sign that Hollywood is beginning to get it. “The fact that they are bringing in high-level, more sophisticated people from our business is a good thing,” said Germaine Gioia, head of licensing for publisher THQ. “I really do think the studios have shown a great deal more respect for the video game industry by virtue of the revenue games bring in. So it makes perfect sense that they are now looking at developing a better understanding of the business.”

But there is the lingering worry among some publishers that the more Hollywood learns about the game space, the more they'll want to do games on their own. While movie licenses aren't essential for the game business, there's no denying that titles like Enter the Matrix have been huge console hits. Boesky, for one, thinks it's only natural for the studios to start keeping these licenses in-house and using their own developers.

“It's the next logical place for it to go,” he said, suggesting the studios may begin to treat video games as they do home video.

As movie-licensed games proliferate, there are already some signs of frustration developing between Hollywood and the game world. Take, for example, the issue of how best to exploit the major studios' vast libraries. Emboldened by the success they've had selling DVDs of their back catalog, many in Hollywood are trying to get game publishers to turn some of these old movies into games.

“The movie studios are trying to sell us a lot of their back classic stuff,” said one game publishing executive, who requested anonymity. “The big problem we have with that is that our marketing and sales staff go out to retail, and all retail wants is the hits.”

Good games now take at least two years to make, which means many game publishers often commit to a license well before the film has even been cast, let alone started production. “We're looking for enough time to make a game that comes out day-and-date,” said Lori Plager, senior director of licensing at Activision, which is bringing out the Spider-Man 2 game for multiple platforms at the same time the movie launches this July. “So you have to have a little bit of that crystal ball mentality.”

Adding to the complexity of these decisions is the increased presence of game agents in Hollywood. “We now get every agent, writer and human being coming out of the woodwork and telling us that absolutely this movie is going to be tent-polled, it's going to be greenlit by this major studio and you're getting in on the ground floor,” said the game publishing executive. “But the sales staff can't go out and sell that, because retailers want to know that it's going to have a $120 million budget, [that] Mattel or Hasbro has been brought in [for the toy rights] and that there's a $40 million marketing budget. And those are the things that happen much later in the cycle.”

Hall admits that the gap between the development time for a game and movie production will likely remain an issue with movie-licensed games for some time. “Publishers are going to have to realize that the number of opportunities to have a 24-month development cycle and a greenlit movie are very rare,” he said. “They're either going to have to buck up and take the bet that a movie is going to be made or wait and have a compressed development schedule.”

Hall suggests the advantage of being in-house at Warner Bros. is the early look he'll get at many properties. “We will be able to start developing a game even before the movie has been greenlit, and it may help the movie get made or it may not,” he said. “But, either way, the game has to stand on its own.”

At least for the time being, Warner Bros. Interactive Entertainment won't have a lot of characteristics of a traditional game publisher. For one thing, Hall said he'll be looking to hire developers outside of the studio.

Nor will the interactive division have its own sales and distribution infrastructure. “Generally speaking, I don't have a desire to put boxes on shelves,” Hall said. “I see Warner Bros. as a content and intellectual property creator, and I want to maximize its ability to do that in the video game space.”

Can the studios pull it off? The consensus is ... maybe.

“I think they'll still go to publishers to license some of their bigger properties, and they'll keep some of the smaller properties for themselves,” said Activision's Plager.

“I don't think they bring a license like ‘Harry Potter' in-house because it's too valuable a property and too much of a challenge getting good games to launch day-and-date with a film,” said the game publishing executive. “They may fool around with some of the riskier properties that the big publishers won't take, but the big publishers don't take them for a very good reason -- they don't always translate to video games.”

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