STATE OF THE ART

Question: What do Michael Milken, Monty Python, and (reportedly) Robert DeNiro have in common? Answer: They are all players in the hip, heavily hyped industry that is multimedia games. "It's a very hot area of investment, not only for venture capitalists but for big players like AT&T, Time Warner, and Paramount," notes Russell Snipes, principal of VentureOne, a San Francisco investment-research firm. But despite increasing sales of CD-ROM titles and PCs with multimedia capabilities, experts caution that the multimedia-games field is crowded and has yet to yield a standard platform. (PC? 3DO? Sega? Nintendo?) As multimedia-market researcher Nick Arnett observes, "It's a classic case of early adapters fascinated by a new technology. Just because you slap multimedia on a product doesn't mean it's an automatic sell."

Some start-ups that are betting on multimedia games:

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Rocket Science Games
Palo Alto, Calif.

"We call this the Nerds Meet Hollywood," says Steve Blank, president of Rocket Science Games, a nine-month-old start-up whose employee roster reads like a marriage of Silicon Valley and Tinseltown. Along with Blank and Peter Barrett, who come from SuperMac Technology, Rocket Science cofounders include screenwriter and technical adviser Mike Backes (whose film credits include Rising Sun and Jurassic Park) and creative designer Ron Cobb (who worked on Conan the Barbarian and Alien). Marketing director Dean Fox describes Rocket Science's products as futuristic, with superior graphics and sophistication that demands the users' attention. Venture capitalists have provided $4 million in seed capital, and the start-up expects each of its first three titles (due out in November 1994) to cost $600,000 to $1.2 million to produce.

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Interactics
Lexington, Mass.

"I had this idea that I wanted to see kids using computers in a new way, and fortunately, I had the electronic background to make it happen," recalls Elissa Edelstein, who wrote the business plan for her multimedia start-up, InterACTics, last July. An electrical engineer by training and a former hardware designer, Edelstein has patented a voice-controlled video game in which children, by speaking into a microphone, can assume the role of characters in an animated cartoon and influence the story line. InterACTics plans to license well-known characters in addition to creating its own titles and selling a tool kit to other software developers that would like to adapt Edelstein's patented technology. Edelstein started with $500,000 and is looking to raise an additional $1.5 million, and she expects to hit revenues of $8.5 million by 1996.

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Tsunami Media
Oakhurst, Calif.

Ed Heinbockel has spent the past eight years working in adventure video games and is the first to admit that "the field tends to be dominated by technophiles and gamers, males 20 to 45 who are college educated and have fairly high levels of disposable income." That's why Heinbockel's own company, Tsunami Media, launched in 1991, created its first five multimedia titles all in the classic adventure genre. Its latest, released last November, is a CD-ROM interactive dating-simulation game for men called Man Enough. The company is also developing a similar game for women that will be an interactive romance. "We take into account that women are more into feelings and men are more visual," Heinbockel says. The company is backed by investment-banking firm Unterberg Harris and projects that its 1994 revenues will reach $5 million.

-- Alessandra Bianchi