Major studios, indies vie for interactive games biz.

The race in Hollywood to cash in on the growing interactive video game market is wide open, pitting entertainment conglomerates against small independent film studios.

Sony Pictures Entertainment is aggressively making a video game based on its film "Dracula." Trimark Pictures is expected to create its own ghoul video game based on its film "Warlock."

Although major studios dominate the feature film business, interactive video games based on movies -- and using actual movie footage -- is a new arena. Smaller studios may have just as good a chance producing and distributing a blockbuster video game as the majors.

Based on that premise, Trimark Holdings Inc., a Santa Monica-based film company with $54 million in revenues last year, launched its own video game division, Trimark Interactive, earlier this month.

"Historically big companies have been slow to adapt to new businesses that are changing and growing fast," said Mark Amin, Trimark chairman. "Whenever there is a dynamic and fast-growing industry, there are tremendous opportunities for smaller companies that don't have layers of management who can move fast and take risks."

The video game industry is far less capital-intensive than the movie business. The cost of creating a video game is seldom more than $2 million. However, video game sales have zoomed since the mid-1980s when Nintendo started making more sophisticated games featuring high-quality video with vibrant animated images.

Video game retail sales were a mere $300 million in 1986. In 1992 the software portion of video games had sales of $4.5 billion. By comparison, box office revenues for feature films were just under $5 billion last year and have been relatively stagnant the last three years.

Sony has been among the most aggressive major studios to pursue the business. Michael Schulhof, Sony U.S.A. vice chairman, predicts his firm's video games will produce $100 million in revenues next year despite the video game division being only three years old.

Sony is not licensing its movies to outside video game companies Nintendo and Sega while other majors studios are. MCA Inc., owned by Japan's Matsushita Electric Industrial Co., is expected to have a summer blockbuster film in "Jurassic Park" and has licensed that film to Sega, 3DO and a Nintendo licensee so there will be video games in each of their formats.

Trimark will be making games from its own films, which include "Warlock" and "Leprechaun," and will be looking to acquire the rights to other films. Kelly Flock, executive vice president for Trimark Interactive, was formerly general manager for George Lucas' consumer software division.

He plans to have three video games for Sega Genesis and Super Nintendo consoles ready for this Christmas and at least one product available for the personal computer games market. By 1994 Flock hopes to have around 16 titles in production. Chairman Amin estimates video games will be contributing 25 percent of the company's revenues in five years.

Amin entered the entertainment business by starting 20/20 Video, a Southern California video store chain. In 1987 he sold that company and 20/20 Video has now taken a 20 percent stake in Trimark Interactive.

Trimark anticipates a synergy with the video store chain as it will be selling Trimark's video games, then supplying sales and marketing information back to Flock. That information can help him make future video games.

Competing with the majors doesn't scare Amin, who said, "When major studios try to have video game people on the set, the big-name talent and directors don't want to be interfered with. They see video games as a minor distraction. For us there will be full cooperation and we will be much more flexible."