Hollywood Gets Back into the Games Game

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I'm Matt Holzman with The Business Brief, a guide to what's happening in and around the business.

In 1995, the then-new DreamWorks studio announced they were getting into the business of making video games. CEO Steven Spielberg insisted that they were committed to interactive projects. Four years later, realizing they were ill-suited for the inexplicable world of games and gamers, DreamWorks sold out their half of the business.

They were not alone. Back then, most of the studios dipped theirs toes into games and then got cold feet. But Hollywood's on-again, off-again romance with video games is back on in a big way. Once, again, every studio seems to be ramping up to be in the games business, and this time, they mean it. Quite frankly, they can't afford not to succeed.

While box office is booming, DVD sales are flattening and the business doesn't yet know when or where it will find its next cash cow. Meanwhile, video games were growing at a double-digit pace for years until the economy went south. In fact, according to the entertainment software association, US computer and video game software sales in 2007 grew to $9.5 billion – more than tripling since 1996. And while that's a fraction of what the entertainment business as a whole brings in, it's nothing to shake joystick at.

The good thing is that the studios seemed to have learned their lessons from their last ill-fated attempts at getting into the games game.

The common wisdom a decade ago was that "games are like movies and TV! It's telling a story! And we're storytellers!" While it's true that making games employs many of the same skills used in creating filmed entertainment, it was a little like saying that a home builder can also make spaceships because both use screwdrivers in the process.

Video games are not movies in a long list of practical and experiential ways. When games have a beginning and an end – and not all do – what happens in between, and how long it takes, is up to the individual. And more and more games are like ambient music…they have no characters at all and loosely defined goals, if any – the experience of playing is the point.

Gamers are indeed a different breed of entertainment consumer. And they're suspicious of the studios, and with good reason. In the past, games made based on studio movies were usually awful afterthoughts. Not to mention that these were the same evil people who desecrated gamers' beloved games by turning them into some of the most laughable movies in history – including the truly atrocious Super Mario Bros. Movie.

The studios past mistakes were due in large part to their hubris and their belief that they were the be all and end all of entertainment. Now that they web has given the entire industry a severe wrap on the knuckles, they seem to know better, and that humility will serve them well. Hollywood's now hiring people away from the game companies to run their new game divisions, and that will make all the difference in the world. Add the amazing skills of Hollywood's artisans and craftsman, and I think we are about to see the coolest games ever.

As games get better, and young gamers get older and introduce their kids to games, the number of gamers will only get bigger. And now that developers are incorporating social networking aspects into their titles, gamers are spending more time playing.

The whole scenario is a studio's integrated marketing dream. Say a blockbuster action movie becomes a game. With game consoles more and more hooked up to the internet, the game can incorporate billboards for real products or introduce players to new musical acts. Maybe you can buy those products or music right from within the game. You get the idea…the possibilities are endless – and a little terrifying. But not for the studios, who are getting that games are no longer child's play…they're a gold mine.

I'd love to know what you think. You can comment on today's commentary or subscribe to the podcast at KCRW.com/TheBusinessBrief. For KCRW, I'm Matt Holzman.



Matt Holzman