Cobalt Moon Laughs It Up Interactively

There always seems to be someone laughing at the offices of Cobalt Moon, a year-old interactive-entertainment production and development company in Santa Monica.

Maybe that’s because employees are working on “Second City Naked News”--the popular “Weekend Update”-style comedy show the company produces for Microsoft Network--for at least 15 hours a day. A good portion of the 11 other shows Cobalt Moon has under development rely on humor as well.

It’s also possible the laughter is a mechanism to keep the company’s 26 employees from dwelling on the profoundly uncertain nature of the world of Internet entertainment. Although the global computer network has already proven itself a powerful tool for communications and information retrieval and publishing, it remains far from clear that it’s anywhere near becoming a mainstream entertainment medium.

“There’s a lot of anxiety because we don’t know what’s happening with this industry,” said Matti Leshem, one of Cobalt Moon’s three partners and co-founders.

“It’s changing so fast that if you blink you might fall behind, and what you’re doing will be obsolete,” added partner and co-founder Joe Orr.

Even the fact that Cobalt Moon collected $1 million in revenue in its first year--a stunning showing by industry standards--doesn’t allow anyone to rest easy.

Just last month, for example, Microsoft Network abruptly announced it would cancel half its shows. Whereas Cobalt Moon was not among the casualties, the sudden cutbacks reinforced the unpredictable nature of the business.

Leshem, Orr and Will Hobbs set up shop in a spare room at Orr’s visual effects and post-production company in March 1996. By September, they were producing “Second City Naked News” for MSN.

Since then, the Cobalt Moon team has developed a show called “Angel House,” which allows viewers to maneuver cameras in rooms in a sorority house. Although the staff includes its share of Generation Xers, they are outnumbered by colleagues 30s and older. Many, such as Deborah Scarborough, 36, left successful careers in the traditional entertainment industry. “I was making five times as much working in television,” said Scarborough, who recently turned down an offer to work on the pilot for a series based on the “Dilbert” comic strip. She prefers the Internet business because “there are no limits here. I have friends who are doing multimillion-dollar deals, and they’re jealous of me.”