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Warners plays its own game: interactive division gives studio pole position in lucrative vidgame arena.

The Matrix" has a new lease on life. Warners, which last year became the first studio with its own inhouse vidgame division, will this year become the first film studio to fund, develop and publish its own vidgame--"The Matrix Online."

The project is part of a new wave of investment in inhouse vidgame development at the big media congloms.

Disney is spending $40 million to grow its Buena Vista Games unit and is considering making its own acquisitions. Sony's PlayStation division continues to be an industry leader. And Viacom is considering acquiring Sumner Red-stone-owned Midway Games.

But it remains to be seen whether a studio adept at selling movie tickets and DVDs can execute on a product that costs $50 on the shelf and, if it misses in initial release, has no secondary window to save it.

Building upon a franchise that's generated $1.6 billion in worldwide B.O., the "Matrix" game has a budget neat" $20 million.

The game is a major test for the year-old Warner Bros. Interactive Entertainment unit. Thus fax; WBIE has only farmed out licensing rights to other publishers. But Warners hired industry vet Jason Hall to head up the division last year; and by the summer Hall had acquired his former company, Monolith Prods., which developed "The Matrix Online."

Warners is now the only studio that can publish its own games and the only one with the talent to produce them inhouse.

Hall reports to Warners consumer products prexy Dan Romanelli and Warners exec VP Kevin Tsujihara, who oversees new media

WBIE has its own production budget, giving Hall the authority to greenlight games in consulation with Romanelli and Tsujihara. He's working directly with the Wachowski brothers on "The Matrix Online," and will work with Warner Bros. Pictures production prexy Jeff Robinov on future film spinoffs.

WBIE has 35 staffers over-seeing production, marketing and other operations in an office building across the street from WB's Burbank studio, and another 165 employees at Monolith's Kirkland, Wash., office.

Most studios have come to see games as a legitimate way not only to earn ancillary revenue, but to continue the storylines of their films.

A game based on last summer's "The Chronicles of Riddick," which was a prequel to the pic, was a success for Vivendi Universal Games even though the U pic flopped; a sequel is expected to keep the franchise alive in the vidgame world even though it won't continue on the bigscreen.

Given vidgames' growing importance to the bottom line, it's little surprise that several media congloms are moving deeper into the industry.

But most studios keep their game operations separate from film, while Fox, Universal and others license all their properties for game adaptation to publishers like Activision and Electronic Arts.

The thinking, quite simply, is that vidgames and movies are fundamentally different businesses.

But Warner disagrees.

"In my opinion it's in a studio's best interest to have a stake in the videogame business beyond simply licensing because their properties need to be regarded as premium in one of the fastest-growing forms of entertainent," Hall says of his approach.

"Matrix Online" is a massively multiplayer online game where, similar to genre pioneer "Everquest," thousands of players interact simultaneously in an online world in which they combat, explore and socialize with one another.

So-called MMOs are considered one of the riskiest game genres, since they not only cost tens of millions to develop, but millions more to keep running. But they're potentially the most lucrative, since the hard-core fans they attract pay not only $50 to purchase the software but monthly fees (usually under $20).

"A game of this scope is literally the most complex you can try to build at the current time," observes Hall. "If we knock the ball out of the park, this can not only be an economic success but ensure that the first association people have with WB-driven videogame production is that we deliver on quality."

That's a prime goal for Hall, who has been critical of Hollywood's tendency to let game publishers put out rushed, poorly made licensed products.

Warner itself has suffered from this, licensing a "Catwoman" game that was as big a dud as the film and a console game based on the "Matrix" that, though it sold well, was critically panned.

But there have been a number of bumps along the road.

Originally scheduled for release this past fall, "The Matrix Online" has been delayed twice by what Hall describes as quality concerns.

In addition, WB, which still needs a co-publisher to handle distribution of the game to stores, lost its original partner; Ubisoft, last year due to an undisclosed dispute and had to switch to smaller competitor Sega.

Still, Hall's big promises, along with the prestige of "The Matrix" franchise, have got many in the gaming community excited.

"'The Matrix' lends itself well to an online game, and Jason Hall has been outspoken about the need to make higher; quality licensed products, so a lot of people are checking out this game," notes David White, an editor for gaming media company IGN/Gamespy.

In addition, research done by IGN in December found "The Matrix Online" was the No. 1 most-anticipated PC game and eighth-most-anticipated game overall for its previous January release date (though January is, as for movies, a slow month for game releases).

As it puts the finishing touches on "The Matrix Online," WBIE is in the midst of producing several more games, as well as overseeing numerous licenses. Hall says his division is intimately involved, financially as well as creatively, in a game based on next summer's "Batman Begins," which it is publishing with Electronic Arts.

Only time will tell if "The Matrix Online" is the wave of the future, or just a last-ditch effort to keep alive a franchise that's run its course on film.
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Author:Fritz, Ben
Publication:Variety
Geographic Code:1USA
Date:Jan 10, 2005
Words:976
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