The romance between Hollywood and the video game industry is hitting the skids.
A few years ago, game publishers were regularly releasing video games adapted from movies and tied to their opening in theaters. The games were routinely knocked by players and critics alike for their poor quality, but since they were cheap to produce and rode the coattails of a film's marketing budget, the business was a no-brainer for video game companies.
"There was a business model for some time of low-cost, lower-quality games based on movies that sold enough to earn a return," said Graham Hopper, executive vice president of Disney Interactive Studios, Walt Disney Corp.'s video game division.
Now movie-based video games have become a head-scratcher.
As the game industry gathers in Los Angeles this week to show off its upcoming titles at the annual Electronic Entertainment Expo, movie-based games are few and far between. In 2008, 19 video games based on new movies were released. Last year, there were 15. This year, 11. So far only four games based on movies have been announced for 2011, though at least four more are expected.
Such 2010 summer popcorn movies as "Robin Hood," "The A-Team," "Knight & Day," "Inception," and "Salt" probably would have had video games in the past but are going without them this year.
The reason: Games are more expensive and taking longer to make, raising the sales bar necessary for profit at the same time that consumers are saving their money for the highest-quality titles. As a result, publishers have cut back on production and are focusing on properties they own.
"The movie-based games business the way we have known it is broken," said Martin Tremblay, president of Warner Bros. Interactive Entertainment. "Quality is king now and quality is expensive, so it makes more sense than ever to own your intellectual property instead of paying for a license."
Top-quality video games typically take two to three years to make, significantly longer than a movie. As a result, when games are put into production at the same time as a film, they usually have to be rushed to make the companion project's release date: The resulting game is often short on content, lacking in production value, or both.
The decline of movie games has hit the bottom lines of studios, which typically received licensing guarantees of several million dollars for such titles, and more if the games became blockbusters. Some long-term deals, such as one for games based on "James Bond" films, have generated tens of millions in revenues.
However, two major studios — Disney and Warner Bros. — now have their own divisions to produce and distribute games. That means they reap bigger rewards from successes, take bigger losses on flops and leave fewer titles available to license.
Several major game publishers have nearly abandoned Hollywood-inspired games. The only movie-based games currently on the schedule at Electronic Arts Inc. are based on " Harry Potter." Take-Two Interactive Software Inc. has none except kids' games based on Nickelodeon television shows.
"When you're asking consumers to shell out $60 for a game in a tough economy, they are going to be discerning with their dollars," Take-Two Chief Executive Ben Feder said. "That's why the strategy we're pursuing now is to publish a select number of quality games and create our own marketing events."
The one exception seems to be the children's market. As any parent can attest, few forces are more powerful in the universe than a young child's affinity for a character he or she loves on the big screen.
Nine of this year's 11 movie-based games are tied to family films, including "How to Train Your Dragon," "Toy Story 3" and "The Last Airbender."
"Younger audiences really like licensed properties they're familiar with, and they don't have to be built with the most cutting-edge technology," said Brian Farrell, chief executive of THQ Inc., whose company recently signed a multiyear deal with DreamWorks Animation SKG.
Some publishers are abandoning the idea that a licensed game has to be released concurrently with a movie in theaters.
Although there was no game to go with 2008's "The Dark Knight," last year's well-received Batman game Arkham Asylum by Eidos Interactive Ltd. sold a respectable 3.2 million units. That's more than Ubisoft Entertainment's poorly reviewed "Avatar" game, even though it came out simultaneously with the blockbuster film that grossed $2.7 billion.
This year, Activision Blizzard Inc. is releasing new games based on Transformers and Spider-Man, while Warner Bros. has a new "Lord of the Rings" title even though there are no new films based on those properties.
New market realities have made the jobs of studio executives who license movie properties to the video game world more challenging. Some are now thinking outside the box — metaphorically and literally — by taking advantage of the fast-growing market for games distributed and played online via personal computers or on mobile devices.
Universal Pictures recently signed deals for digital games based on " Battlestar Galactica," "Jurassic Park" and "Back to the Future" that don't fit in the narrow band of genres popular on PlayStation or Wii consoles.
"All of these new platforms are really exciting because we can work on our properties that lend themselves to other types of game play," said Bill Kispert, vice president of interactive for the film studio.
Like Hollywood, game companies are turning to 3-D as an added attraction to boost sales.
One of this year's biggest bets is November's Tron: Evolution, which will be among the first games produced in digital 3-D with its PlayStation 3 version.
Like the movie "Tron: Legacy" due out in December, "Evolution" is an updated version of the 1982 film in which characters were transported into the then-novel world of a computer game.
If ever there was a good test case for whether movies adapted into video games have a future, Tron may be it.
"There are fewer movie-based games coming along," Hopper said. "But the ones that do are deeper, better, higher quality and hopefully more successful than what came before."