Fox President Expected to Quit Studio : Entertainment: Sources say Strauss Zelnick is leaving to take the top job at Crystal Dynamics, a Silicon Valley video game maker.

Strauss Zelnick, president and chief operating officer of 20th Century Fox, plans to resign his position to join a new technology company, sources say.

Zelnick is expected to announce his decision today. The Fox executive will become president and chief executive officer of Crystal Dynamics, a Silicon Valley start-up company involved in electronic games technology.

Zelnick’s move comes as a surprise to many in Hollywood, since he signed a three-year contract extension with Fox only six months ago. But sources say Crystal Dynamics offered Zelnick a “significant” ownership stake.

Zelnick could not be reached for comment, but sources say his parting from Fox will be “amicable.” Zelnick enjoyed a successful run at the studio, which is owned by media magnate Rupert Murdoch, but reportedly saw little advancement opportunity under a new regime that includes Chairman Peter Chernin and Production President Tom Jacobson.

Zelnick was also said to be frustrated by his lack of creative input at the studio, even though his new contract gave him control of Fox’s acquisitions and music divisions. The 35-year-old executive made no secret of his desire to head a studio. At the same time, he was an early advocate of advanced technologies.

In a speech to fellow Hollywood executives earlier this year, Zelnick predicted that there would soon be a major market for interactive games.

Sources close to the studio said the decision to leave Fox was finalized as late as Saturday. The executive is expected to formally vacate his post at the end of June, with Chernin assuming his responsibilities on a temporary basis.

“This is about ambition,” said one person close to Zelnick. “He wants to be the principal in a company and to run his own show.”

A Harvard-trained lawyer and MBA, Zelnick once said he had dreamed of working in Hollywood since the age of 3. He was said to be frustrated when Chernin was chosen to succeed outgoing Fox Chairman Joe Roth last year.

During his four years at Fox, Zelnick helped implement cost cutbacks, including a reported 20% manpower reduction.

He also helped manage the studio’s international theatrical, worldwide home video, pay-per-view and pay TV divisions. In addition, he was instrumental in negotiating Fox’s long-term movie deal with HBO and establishing the Fox video division when it severed its ties to CBS.

Prior to joining Fox, Zelnick worked at now-defunct Vestron Inc. from 1986 to 1989. He was named president of the entertainment company in 1989. Before that, Zelnick worked in international television sales at Columbia Pictures.

Crystal Dynamics, where Zelnick is headed, has been called one of the most promising young video game companies in the country.

It has created software for 3DO Corp., maker of the interactive television device that has the backing of industry giants such as Matsushita Electric Industrial Corp., owner of MCA Inc., and Time Warner Inc., though it is not under an exclusive contract.

Executives at Crystal Dynamics could not be reached for comment on Sunday.