In the complex tango between movies and video games, Hollywood may be losing its lead.
Motion picture studios have had a penchant for adapting games into movies all the way back to 1993's "Super Mario Bros.," which starred Bob Hoskins as the mustachioed hero Mario and Dennis Hopper as the villainous King Koopa, with varying degrees of success.
But today at the giant Comic-Con International fan convention in San Diego, Microsoft Corp. and French game publisher Ubisoft Entertainment will unveil a series of short films based on their popular games Halo and Assassin's Creed that were made with no Hollywood involvement.
The projects represent the first time that game companies outside Japan have moved onto Hollywood's turf, even while several studios have been creeping on the territory of video games. Warner Bros. recently bought Midway Games Inc. for $49 million, for instance, and Walt Disney Co. has become a major publisher.
Until now, game publishers have always handed over their properties to Hollywood studios, usually considered the experts at converting even the barest of concepts into screen entertainment. Now that's changing.
"This is not something we could have outsourced because it is part of the experience," said Yannis Mallat, the head of Ubisoft's Montreal studio that is making the Assassin's Creed films and an upcoming game sequel. "We are moving to a place where we produce movies and games because all those boundaries are blurring."
The blurring of the lines between the two industries comes at a time when they're directly competing for consumers' entertainment time and dollars. Video game software sales last year totaled $11 billion in the U.S., surpassing all spending on movie tickets.
Despite a recession-fueled slowdown in the business this year, gamers are spending even more time transfixed in front of their consoles, according to a recent study by Nielsen Media Research, drawing them away from television and other forms of media.
Hollywood will not be giving up its grip on many of the biggest video game brands soon, as evidenced by a deal this week for "Spider-Man" director Sam Raimi to make an adaptation of Blizzard Entertainment's Warcraft games.
Nor do game companies appear quite ready to assume the huge financial risks behind making big-budget event films that can compete with "Transformers" or "Harry Potter."
But they're moving in that direction, motivated by a desire to maintain control of their most valuable assets -- and benefit in the event that they hit upon the next big movie franchise.
"If you look at how George Lucas held on to 'Star Wars,' not just to make money from action figures but to control the direction the universe went in, you can see why we think it's pretty vital," said Frank O'Connor, creative director for 343 Industries, the Microsoft division that oversees all Halo products. "Luckily, Microsoft has the resources to enable us to do that."
Hollywood, after all, doesn't have a great track record when it comes to turning video games into movies. "Super Mario Bros." was the first of many big-screen flops based on video games, including 1999's "Wing Commander," 2005's "Doom" and this year's "Street Fighter: The Legend of Chun-Li."
Microsoft and Ubisoft are not the only companies wary of giving a movie studio control of their intellectual property. Rockstar Games, publisher of the hugely popular Grand Theft Auto series, has rebuffed repeated entreaties by movie studios and producers.
"It seems obvious to us that maintaining the long-term integrity of any entertainment property has been dependent on not making substandard spin-off products or ceding control to people whose primary interest is making a quick buck," said Dan Houser, Rockstar Games' vice president of creative.
Until now, the only game company that has produced a movie on its own was Square Enix of Japan. In 2001, it spent a reported $135 million to make the computer-animated "Final Fantasy: The Spirits Within," a box-office dud that sold only $85 million worth of tickets worldwide. In 2005, the sequel was made for DVD, a true sign of scaled-down ambitions.
Microsoft is producing seven short films titled "Halo Legends" in the anime style. Five production houses in Japan are handling the physical animation, but Microsoft's creative staff is approving major visual and storytelling decisions, O'Connor said.
Ubisoft is producing its shorts through subsidiary Hybride Technologies Inc., a Montreal special-effects studio it acquired last spring that has created virtual backgrounds for films such as "300," "Spy Kids" and "Sin City."
It's now using the same technique for "Assassin's Creed II: Lineage," three live-action films, 10 to 15 minutes in length each, that serve as a prologue for the Assassin's Creed II game that will be released in November. Writers for both the films and the game worked together on the story, and many of the actors cast in the films also did voice-over and motion-capture work for their characters in the game, which tells the story of an assassin in Renaissance Italy.
"We have much better connection with the game team than we ever did with a [Hollywood] studio," said Pierre Raymond, chief executive of Hybride, who oversaw production along with director Yves Simoneau. "But that means we are constantly inserting each other's ideas and pushing our luck timing-wise."
The game companies, however, still need Hollywood's distribution clout to get their short films in front of the public. Microsoft has enlisted Warner Bros. to distribute "Halo Legends" on DVD and through digital platforms in early 2010.
Ubisoft hasn't finalized distribution plans for "Assassin's Creed" but expects to release each of the short films separately before the game's Nov. 17 launch.
It remains to be seen how quickly other game publishers may follow suit. But Ubisoft has made no secret of its intention to use Hybride for further film production. One obvious candidate: a series of military games created by thriller novelist Tom Clancy. Last year the company bought rights from the author to use the games in all media.
Several executives at Hollywood studios and production companies note that they have approached Ubisoft about acquiring movie rights to its game franchises, but have been uniformly shot down. Mallat said that was no mistake.
"There are many steps to go before Ubisoft is a producer of feature films or TV series," he said. "But who knows? It would make sense."