Warner Bros. Studios in Burbank, Calif., is the latest entertainment group to jump on the interactive bandwagon -- and executives there are wondering how bumpy the ride will be.
Recently, Warner created a division to develop CD-ROMs and video games based on Looney Tunes cartoons and the studio's films. By doing so, the studio added yet another multimedia developer to parent company Time Warner Inc.'s list of five interactive divisions.
The other divisions have been largely successful because they produce mostly data and nonfiction titles that are well-established in the market, said Steven Koltai, the senior vice president overseeing the operation. But it's unclear how well the public will respond to the entertainment-oriented titles Warner will offer, Mr. Koltai said.
"That's the $64,000 question," he said. "I think there's a tremendous amount of hype and smoke [over] what everyone says exists in this media."
Yet Warner is just one of many studios taking the same big plunge into the multimedia market. In the past year, most of the major film studios announced plans to create divisions that would develop interactive games in response to skyrocketing multimedia computer sales -- an estimated 13 million units sold in 1994 alone.
Walt Disney Co., MGM/UA, MCA Inc., Warner Bros., 20th Century Fox and Paramount Studios parent Viacom Inc. all created interactive divisions within the past 12 months. Sony Pictures Entertainment has had operations for three years.
"There's a concern that you're going to get left behind," said Vince Broady, executive editor for Multimedia World in San Francisco, a trade magazine. "It'll be interesting to see who's making money at it."
There also is a question of whether the film studios should be in the interactive business, analysts said.
A studio's product often is licensed to be manufactured by other companies that are more expert in a particular field, such as stuffed animals or T-shirts. In this case, however, the studios are keeping product development closer to home. Some are contracting out with computer companies to help develop a product, but oversight of the creative content is being done by the studio along with distribution and sales.
Studios have made several miscalculations in the past about which product lines they should sell on their own, said Dave Davis, a Los Angeles-based analyst for Paul Kagan Associates. In the 1980s, film studios could have gotten involved in video rTC rental stores but were reluctant, he said.
"From that apprehension grew Blockbuster Entertainment," Mr. Davis said of the video retail giant. "They're the largest purchaser of film products."
Ted Hoff, vice president and general manager for Fox Interactive, said his company not only wanted to reap the potential financial rewards but also wanted to maintain control over content. Fox created its interactive division in May and plans to sell games based on "The Simpsons" animated television series and "Die Hard" movies.
The main challenge to studios is what approach they should take in developing products. Many executives agree it is essential that an engaging game or other interactive experience -- such as instruction for children -- is essential for success.
But other studios believe that it doesn't hurt to have a familiar character or product that naturally lends itself to computer games. Having a long-term stake in the business also helps.
Lucas Arts Entertainment Co. is finding itself consistently in Top 10 lists for game sales, much of it due to the strength of sales based on its "Star Wars" line. The firm is owned by George Lucas, director of the hit sci-fi movie.
"Star Wars [games] have distinguished themselves as huge sellers," said Randy Komisar, Lucas Arts president. "If you've got something as precious as the Star Wars properties or the Disney properties, you've got a leg up."