E3 Notebook: Xbox 360

THQ's (THQI) two next-generation titles were both new franchises, but that doesn't mean they were exactly original. The Outfit, for instance, is yet another World War II genre game. And Saint's Row looked like a poor man's version of Grand Theft Auto.

That's not to say that there's nothing new under the sun. Activision, for instance, showed its upcoming The Movies title. The game is like a combination of The Sims and Adobe Systems' (ADBE) Premiere video-editing program set at a movie studio. The object of the game is to become the top-ranked studio by developing successful money-earning strategies and reputation for enhancing movies. Along the way, you have to manage moody stars, temperamental directors and marketing budgets. And, you get to develop your own movies, using thousands of preset scenes, costumes and characters. At the end of the process, you can export a final clip that you can send out to friends.

The game, which will launch this fall on the PC, is pretty amazing in its complexity. It remains to be seen, though, how many aspiring fantasy movie moguls are out there.

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My final executive meeting of the day was with Atari (ATAR) CEO James Caparro, whose chief job is to reverse the fortunes of the struggling publisher. Among the highlights of our conversation:

Atari believes its greatest growth opportunity lies outside traditional game revenue. Caparro, a former music industry executive, thinks Atari can learn from the music industry, which garners substantial revenue from areas other than CD sales. So, the company is exploring the idea of licensing the intellectual property from its games to movie studios, as well as the idea of "lifestyle" games that revolve around known musicians, Caparro said. Within five years, Atari expects to have 50% of its revenue coming from such nontraditional sources, he said.

Other publishers have been gobbling up game studios in an effort to bring more IP in house and lower licensing and royalty costs. Don't expect Atari to follow a similar path in its turnaround effort, Caparro said. Atari instead is focused on trying to get the best titles it can whether they're from in-house studios or outside developers, he said.

In terms of game genres, Caparro said there are at least two that Atari has pretty much ruled out: sports and children's titles based on licensed content. Entering either one of those areas, each of which has entrenched leaders in EA and THQ, respectively, would be a major mistake, he said.

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