GTE Forms Video Game Software Unit : Entertainment: With its Interactive Media unit, the company will enter a $7-billion market.

GTE Corp., the world’s fourth-largest publicly traded telecommunications company, said Sunday that it has formed GTE Interactive Media, a wholly owned unit to develop entertainment software for the $7-billion video game market.

The company, which has its headquarters in Stamford, Conn., said a formal announcement will be made today. GTE, which provides local phone service to parts of Southern California, is the first telecommunications company to make such a commitment to the video game industry, although it is one of many phone companies scrambling to cope with change in its industry.

GTE executives said the unit, based in Carlsbad, Calif., will introduce 20 new entertainment titles at the Consumer Electronics Show in Chicago, which starts Thursday. The first games will be cartridge-based and will begin shipping in August.

Tom Casey, vice president of marketing for GTE Interactive, said the company will consider developing software for game systems other than Sega and Nintendo. These include 3DO Co.’s Interactive Multiplayer and Sony Corp.’s PlayStation, which is not expected to come out in the United States until 1995.

Company executives called GTE Interactive, which has been in the works for about four or five years, a “digital media studio” incorporating the talents of game developers, artists and systems makers. Its products will have cinematic effects, video and sound.

GTE Interactive games will be intended for boys 6 to 18 years old, who make up the majority of video game players.

The company said it will also offer more entertainment for people of all ages and that it is developing “interactive toys” or games for children ages 3 through 6.

GTE Interactive executives declined to give estimates as to how much parent GTE Corp. had invested in the unit, and they declined to give any revenue projections.