Video Game Firm Invests in Start-Up : Technology: Irvine’s Interplay Productions has acquired a minority stake in Palo Alto-based Northstar Studios, which is developing futuristic ‘interactive entertainment’ software.

Interplay Productions Inc., the second-largest video game publisher in Orange County, said Monday that it had acquired a minority stake in a Northern California start-up headed by a veteran of the video game industry.

Interplay said it invested an undisclosed amount of money and technology in Northstar Studios in Palo Alto, which is developing futuristic “interactive entertainment” software for video games. The deal calls for Northstar to develop games for Interplay.

Northstar was started in December by Ronald Spitzer, 33, who has worked as an executive and manager at several computer game companies. Most recently, he was licensing director for Crystal Dynamics Inc. in Palo Alto.

“Ronald has a great ability to land key development talent,” said Brian Fargo, president of Irvine-based Interplay. “This is a strategic move for us. We expect he will deliver a series of games that we will market over a period of years.”

Interplay’s investment in Northstar Studios follows an industry trend for managing rising game development costs. Companies are teaming up with allies, subcontractors or investors, especially in preparation for the coming age of interactive games and TV.

Such alliances come in different forms. Two weeks ago, Blockbuster Video Entertainment invested $30 million in Virgin Interactive Entertainment Inc., which is Orange County’s largest video game company with 250 employees.

These deals are an acknowledgment of a coming convergence of digital industries, including Hollywood films, video game publishing, cable TV, consumer electronics and computer software.

Spitzer also has worked for Electronic Arts in San Mateo and in 1986 was a founder of New World Computing, which created the “Might & Magic” fantasy game series that sold more than 800,000 units.

For Northstar, Spitzer is rounding up a team of talented game developers from around North America, with offices in Texas, Northern California and on the East Coast. He envisions a company of about 100 people in 18 months.

“The key is to tap into the talent where they want to live,” he said. “I don’t want to be a publisher. Been there, done that. I want to develop great product.”

Publishers manufacture, market and distribute games; developers create them. He has already recruited game producer Nicholas Beliaeff, who produced “Tony LaRussa Baseball” and the “Eye of the Beholder” computer game series.

Northstar is specializing in developing software for game systems that process data in 32-bit chunks. Such systems, which can process data much faster than the original 8-bit Nintendo Entertainment System, are being developed by major industry players.

Today’s 32-bit systems, including the recently launched 3DO “multi-player” and the Atari Corp.’s Jaguar machine, can run software faster and feature better quality graphics than conventional 16-bit systems such as the Sega Genesis or the Nintendo Super Entertainment System. Sega and Nintendo are also planning to launch game systems that can process data in 32 bits or larger.

Interplay is a 10-year-old private company founded by Fargo with 1993 sales estimated at $60 million. Its current hits include compact disc games entitled “Star Trek: The 25th Anniversary” and “Lord of the Rings.”