DreamWorks attracts two new big names.

Microsoft's Gates and Allen add their names to team

DreamWorks SKG, the new movie studio with a professed high-tech bent, has attracted the interest of some high-tech investors, among them Microsoft. Corp. co- founder-turned-independent-entrepreneur Paul G. Allen and Redmond, Wash.-based Microsoft itself.

First came Allen, who recently committed some $500 million to DreamWorks, the entertainment venture launched last year by Steven Spielberg, Jeffrey Katzenberg and David Geffen.

Three days later, Microsoft stepped up to the plate, taking a small equity investment in the DreamWorks studio, and starting a co-venture called DreamWorks Interactive. The new venture is to be headquartered in Los Angeles with additional offices in Redmond. A search for a company chief executive has begun.

The joint venture was announced by Microsoft CEO Bill Gates and the three DreamWorks principals at a Redmond press conference last week. DreamWorks Interactive will combine the Spielberg/Katzenberg/Geffen entertainment know-how - and more importantly, the entertainment products they will produce - with Microsoft's software expertise to create adventure games, interactive stories and other multimedia family fare for play on computers and gaming systems.

DreamWorks Interactive will be launched with about $30 million, with DreamWorks and Microsoft each pitching in half.

The amount that Microsoft has invested in DreamWorks itself was not stated, but published reports put it at about $9 million, giving Microsoft about a 1 percent stake in DreamWorks.

Software giant

Microsoft was founded by Allen and Gates in 1975. The company has since grown to the world's leading software creator and manufacturer, with Microsoft operating systems running about 80 percent of all personal computers sold.

Microsoft has also been involved with its own interactive game and product development, and will continue those efforts. But the partnership with DreamWorks will give it access to what the company is betting will be bankable characters, plots and themes for future interactive ventures to be drawn from hit DreamWorks movies and television shows.

"The potential for combining the incredible stories created by Jeffrey, Steven and David with the innovative technology and amazing interactivity that are possible today and in the future is just awesome to me," Gates said. "Our partnership with DreamWorks will pave the way for extraordinary new consumer products."

Allen, meanwhile, left Microsoft in 1983 when he was diagnosed with Hodgkin's disease. His disease has gone into remission, and he still serves on Microsoft's board of directors and remains a major stockholder.

Now worth a reported $3.9 billion, Allen since has entered into numerous entertainment- and technology-related businesses, including an 80-percent stake in Los Angeles-based Ticketmaster and ownership of the Portland Trailblazers basketball team.

Allen also owns Asymetrix, a multimedia company in Bellevue, Wash., and the Los Angeles-based Storyopolis, a children-oriented bookstore/multimedia program developer.

Getting into multimedia

Allen's $500 million investment in DreamWorks gives him a reported 18 percent stake in the company and a seat on DreamWorks' board of directors. And while he will take a hands-off approach toward entertainment product development, he will provide input and experience to the company's multimedia projects, according to the DreamWorks trio.

"The extraordinary reputations and achievements of the DreamWorks partners made this a very compelling and exciting investment," Allen said. "I was impressed with their vision and ambition for the future and recognize this as a unique business opportunity."

DreamWorks was unveiled last October as a new entertainment studio poised to capitalize on the growing field of multimedia. The company became an instant player on the Hollywood scene due to the pedigree of its three principals, "Jurassic Park" and "Schindler's List" director Spielberg, former Walt Disney Studios chairman Katzenberg and record-mogul Geffen, credited with discovering such top-selling acts as "Nirvana" and "Counting Crows."

The DreamWorks trio has said they want to raise $2 billion from outside investors, with the three investing $100 million each of their own money. Among those also reportedly talking to the studio are IBM and CALPERS, the California employee pension fund. Chemical Bank is also said to be developing a line of credit for DreamWorks in the neighborhood of $1 billion.

"Paul Allen was one of the first people in the world to realize technology would bring about a fundamental and positive change in the way people live and work," the trio said in the statement. "He's the perfect partner for a company that is committed to building the digital studio of the 21st century."