Mar. 26, 2003 - By Paul Bond, The Hollywood Reporter

Video games, once seen as mere toys, evolved into "entertainment" last year, in no small part because of Hollywood's influence. Still, there are no more than about five movie licenses at any given time that the booming gaming industry should be chasing.

Steve Allison, vp marketing and business development at Infogrames, delivered that message at a Tuesday panel discussion hosted by the Digital Coast Roundtable at the Peninsula Hotel in Beverly Hills.

"Enter the Matrix," the upcoming video game companion to Warner Bros. Pictures' May release "The Matrix Reloaded," should serve as an example of how Hollywood and the game industry can work together for their mutual benefit, Allison said.

"Enter the Matrix" was a $21 million project, and that's after Infogrames had to shell out $47 million for Shiny Entertainment, the company that had already been developing the game. Most of the better games carry a budget of only $5 million-$10 million. Andy and Larry Wachowski, who wrote and directed the "Matrix" film trilogy, also wrote a 250-page script for the "Enter the Matrix" game. About 65 minutes of original footage that uses 25 of the film's actors was shot for the game.

"That was in their contract," Allison said.

Allison showed to the 125 obviously enthused attendees a nearly three-minute trailer for the game that will be posted on the Internet on Friday and will play on 500 flat screens at Regal Cinema outlets. A 30-second version will run as an ad on movie screens.

Game companies, though, are selective about movie properties. A film should have the clear potential of breaking $200 million at the domestic boxoffice and skew to males in their teens and 20s, Allison said. And an "Enter the Matrix," which analysts already predict will be a blockbuster game, doesn't come around often.

"If you don't have Joel Silver and the Wachowski brothers telling Warner Bros. what to do every step of the way, there's no way this ever happens," Allison said. Silver is producer on the "Matrix" film franchise.

The video game industry raked in $25 billion worldwide last year and $11.6 billion in the United States, said panel moderator John Gaudiosi, video games reporter at The Hollywood Reporter.

Mark Lasoff, a senior art director for Electronic Arts who won an Oscar for his visual effects work on the movie "Titanic," said the convergence of Hollywood and gaming has created jobs. Hollywood talent, in fact, often ask him about career opportunities in gaming. "And usually we have a lot, for lighting, animation and VFX talent," he said.

Actors also are gravitating to gaming, Gaudiosi said, if for no other reason than to impress their children. "You win Oscars, who cares? You're in a video game, that's cool," he said.

THQ vp business development Dan Kelly showed off scenes from the "Finding Nemo" game, the result of a three-picture licensing deal that THQ struck with Pixar/Walt Disney Co. "The slight twist is the game will be released before the movie," Kelly said.

He also showed scenes from "Tak and the Power of JuJu," unique because the game was developed before the upcoming Nickelodeon TV show. It's the first such "video games first" project stemming from a THQ/Nickelodeon partnership, Kelly said.

John Heinecke, director of global brand management at Activision, showed scenes from "X2: Wolverine's Revenge" and last year's best-selling "Spider-Man." There's nothing new about video games being based on movies, he said, but just a few years ago such games were "rushed to market." Today, great care is taken to make sure movie-licensed games are of the utmost quality.

Sometimes license negotiations begin three years in advance of a movie's release, and every effort is made to release the game day-and-date with the movie, or even a few weeks earlier, in order to piggyback on the movie's marketing effort, Heinecke said.

But when it comes down to sales, said Gaudiosi: "Gamers are very fickle. Game play has to be good."

The Digital Coast Roundtable is a nonprofit group that promotes economic opportunity for technology companies in the California region stretching from Santa Barbara to San Diego.

Copyright 2003 The Hollywood Reporter