STUDIOS GEAR FOR INTERACTIVE BOOM

DAN ALAIMO

UNIVERSAL CITY, Calif. -- Movie studios expect to play a major role in the future of interactive entertainment products. Video games offer only a hint about the kind of products and technologies that will arrive in the future, and the studios are now getting as much experience in this business as they can, according to speakers at the Hollywood 2000 conference held here last month by Advanstar Associates, Carmel Valley, Calif. For retailers, these new products could mean more profit opportunities, an expansion of their video rental and sell-through businesses and a competitive edge against proposed in-home electronic delivery systems. "The new media is going to bring new opportunity, and the studios will have to evaluate how they want to enter," said Louis Feola, president of MCA Home Video, Universal City. The studios have to determine how to fit these new technologies into their structures, and then how to acquire, distribute, merchandise and synergize them with existing products, he said. "The one mistake Hollywood can make is to sit back and look at the way things have been done in the past and just assume that's the way they can do it on a moving-forward basis," said Feola. "We are seeing a whole new entertainment business forming," said Rand Bleimeister, senior vice president of Virgin Interactive Entertainment, Irvine, Calif. "We are seeing a whole new generation of people who grew up with Nintendo and Sega games. Our hope is they will continue to be interested in games and their children will be interested in games." While the business is still developing, it is having a definite effect on movie production right now, said Richard Cohen, president of MGM/UA Home Entertainment, Santa Monica, Calif.

"From the point of view of a company like MGM, the opportunities that are being presented by the new technologies are very, very real. They are changing the way that films are being made from the inception," he said. "Right now, we have some films in production where footage is being shot simultaneous with the theatrical film footage specifically for games that will be based on the title. This is a change in the way that films are being made and I think the same thing is going on all over the industry," he said. Two MGM movies now in production -- "Blown Away" and "Tank Girl" -- are the first shot this way, said Cohen. MGM and other studios will continue to shoot additional footage on any film that has "game-able characteristics," he said. "If there is a character or story that has a life beyond opening night, it will have a life in the new technologies as well," said Cohen.

Paramount has provided titles for Philips CD-I format and is very involved in the CD-ROM market, reported Alan Perper, vice president of marketing, Paramount Home Video, Hollywood, Calif. For example, he said, a CD-ROM based on the Mighty Morphin Power Rangers has sold more than 100,000 units. "Up to a few months ago, that marketplace didn't even exist for us. You are dealing with a business in its infancy," said Perper. The studios are not sure what direction the market will go in, he said. "We don't want to invent the technologies. We just want to be there when it happens," he said. "We are experimenting with all of these businesses. The studios will be players in this brave new world," said Perper. "Jurassic Park" has provided MCA with a big lesson in the interactive market, with a video game on the market in addition to the theatrical and video sell-through releases, said Feola. "We were able to roll the dice on a big bet and have it come home many different ways," he said. Licensed products are getting a boost from the video release and a sequel is scheduled for theatrical release in 1997, said Feola. "It's really a two-year-long process which will not culminate, but will continue to be marketed." Virgin worked closely with Disney on "The Lion King" game, which was set for release this month, shortly before the movie's second run in the theaters, said Bleimeister. "We are definitely partners with Disney in every aspect of this product," he said. Marketing strategies must be custom designed for every title, he noted. "They have to take into account what platform you are publishing on, as well as who the target audience is. In the case of "The Lion King," I think that we have constructed a marketing plan that will successfully reach our target audience many times over," said Bleimeister. But Bleimeister questioned whether the time was right for studios to get into the interactive business. " Currently, the studios are not at the top of the video-game or computer-game food chain as developers, publishers or distributors," he said. They might someday become major players, but, "There's a lot to it. Not only does it have a lot to do with content, but it also has a lot to do with the interactive experience -- the game play. It's not easy to make a good game," he said. This is a very uncertain time for the games business, he said. "It's no longer a hits-driven business. It's becoming a hits-only business. We are all fighting for the next great game experience. We are all fighting a technological war as well as a content war.""This is a transitory period -- it is a time for specialists. Companies that have a history in this business are more likely to succeed than companies that don't," said Bleimeister.