• The Hollywood Reporter, Tuesday, May 9, 2006 11 AM

The union of video games and Hollywood is nigh, says Diane Mermigas of the Hollywood Reporter. A few months back, Steven Spielberg announced that he would be the executive producer of three original online video games for Electronic Arts, the largest video game publisher in the world. One thing the rev-share agreement does for EA is cut 40 percent off the estimated cost of digital effects. Mermigas says deals like this one should set a precedent that will help both sectors offset cyclical downturns. New video games are costing a lot more to make: between $5 and $50 million for some, so new ideas like rev/resource share agreements or added-advertising revenue should be top of mind for game publishers. Mermigas takes an enormous leap into the future, saying Hollywood and video games will merge as game developers and studios gain access to 10 times more memory and processing capacity down the road, offering what one EA chief creative officer says will be "new kinds of hybrid entertainment for films and video games." An integration of digital worlds, perhaps with the opportunity for consumers to customize and create their own games and game environments. This would make them a natural for social networking, instant messaging, and other online communities. "The question," Mermigas writes, "is whether Hollywood, or even Silicon Valley, are prepared to be dictated to by empowered consumers who are adopting new rules of play and assigning new value propositions to existing media." All this is still several years away(?), but imagine the video game ad networks of the future....

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