Is 3-D the Next Step in Home Entertainment? : Technology: Silicon Valley’s 3DO Co. promises it is at the unveiling of its new system, and several big backers agree.

With a theatrical flourish befitting a firm that aims to marry Hollywood and Silicon Valley, a small start-up company with some very big backers Thursday demonstrated a living-room entertainment system that it predicts will eventually become as pervasive as the VCR.

The system developed by 3DO Co. resembles a souped-up video game machine, but it handles three-dimensional graphics and highly realistic, fast-moving animated images that look like real Hollywood special effects. Touting it as a quantum leap in technology--a judgment supported by many analysts--3DO aims to make the system the worldwide standard for “interactive multimedia.”

“This is not just kids’ stuff, it’s not just for nerds and hobbyists,” said Trip Hawkins, a video game entrepreneur who founded 3DO two years ago. “This is something that will appeal to the masses.”

Hawkins hopes to establish a worldwide consumer electronics standard, but that will be no simple feat. The initial 3DO systems--due out in the fall--will carry a hefty $700 price tag. But 3DO has powerful partners: Time Warner, Matsushita Electric Industrial Co. and American Telephone & Telegraph own minority shares in 3DO, and dozens of video game, computer software and entertainment companies have agreed to develop software for the system.

The first 3DO systems will be free-standing boxes that plug into a TV set and play programs stored on compact discs. Besides video games, the software will probably include education programs, interactive travel guides and instructional programs for everything from musical instruments to chess.

Eventually, the Silicon Valley company hopes to produce versions that will plug into a cable TV system, serving as a control box for interactive TV services such as home shopping, movies-on-demand and customized news programs.

At a packed news conference at the Consumer Electronics Show, Hawkins demonstrated a prototype machine. Three-dimensional objects twirled across the screen, bouncing off solid obstacles or passing through hollow ones. 3DO still faces some major challenges in establishing its system as a standard. A number of powerful companies have their own designs for compact-disc machines that plug into a TV set, including Philips, Tandy Corp., Sega, Sony and Nintendo.