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Electronic Arts, Spielberg in Game Sequel

The director will once again help develop video-game titles.

Updated from 12:01 a.m. EDT

Electronic Arts

(ERTS)

is teaming up with Steven Spielberg to develop original video games, the game-publishing giant plans to announce later Friday.

Spielberg will collaborate with EA on the development of three titles under the deal. Although EA will own the intellectual property underlying the games, Spielberg will have the exclusive right to develop movies or television shows based on the titles.

Shares of EA moved higher in early Friday trading, up $2.37, or 4.5%, to $54.77.

Company officials had no time line for when the games would appear on store shelves, but noted that the typical development time required for similar projects was 18 months to two years.

EA made the deal with Spielberg, director of hit movies ranging from

Jaws

to

Saving Private Ryan

, to help broaden the appeal of its games and to help develop game structure, said Neil Young, general manager of EA's Los Angeles studio, which is working directly with Spielberg.

"We haven't been able to deliver on the full promise of the medium," said Young. "What we're phenomenal at is building games, game design. What we're not great at is the narrative. ... We think

Spielberg will accelerate our knowledge and understanding of that."

But the move also represents an effort to address one of EA's perceived weaknesses. While EA has seen some success developing -- or buying the rights to -- original games such as

The Sims

, the company is far better known for its industry leading sports titles such as

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Madden NFL '06

.

"At the end of the day, it's obviously important to us to have in the pipeline new intellectual property," Young said.

The deal comes as EA has been struggling with its development efforts and overall performance. The company had a huge earnings miss in its fiscal year end in March, and in July

lowered its outlook for the current year thanks to the

delay of

The Godfather

, a key upcoming title.

EA's deal is with Spielberg, not Spielberg's

DreamWorks

(DWA)

studio, Young said. EA declined to give the financial details of the arrangement with the director, who will have an office in the Los Angeles studio. But Young said Spielberg will "participate in the success" of the games he helps develop, while EA also should see upside if the games are turned into movies or television shows.

The agreement is something of a return to roots for E.A.'s Los Angeles studio. The studio began its life as DreamWorks Interactive division. In collaboration with Spielberg, the studio developed the

Medal of Honor

series, which has become a hit. EA acquired DreamWorks Interactive from DreamWorks and

Microsoft

(MSFT) - Get Microsoft Corporation (MSFT) Report

in February 2000.