Hollywood's New Game

Skip Paul pulls his golf cart up to the classic Hollywood vaulted roof and palm trees of Soundstage 35. He usually tools through the back lot of Universal Studios with utter nonchalance, skirting Styrofoam dinosaur eggs and buzzing past, say, Jerry Seinfeld. But it's June 1993, and Soundstage 35 now houses Paul's new company -- so his superhuman cool is warming to excitement.

He says hello to a guy coming out of the building and asks, "Steve around?" The answer comes back: Steve's not there; he came by earlier. "Okay, fine," says Paul, 51. That's Steve as in Spielberg, Paul's friend and one of the other two cofounders of Paul's company. "And," the guy reminds Paul, "you need to call Snoddy." That's Snoddy as in Jon Snoddy, 46, in all likelihood the reigning entertainment-technology wizard this side of the San Fernando Valley and, as it happens, the third man in the company's original troika, with Paul and Spielberg, 52. Paul nods and then opens the door. "Now," he says, "you'll understand what this company is all about."

The atmosphere inside is fantastical. Everything comes at you: huge soaring arcs of metal, giant splashes of color, lights, cameras, overhead monitors, and, although it takes a moment to notice them, games. Everywhere there are games. They are video games -- racing games, skiing games, sports games -- but they seem different somehow. Looking around, you realize that the reason you don't see the games at first is that they are not just in the environment -- they are part of this amazing environment. The environment is the games. Everything looks different. And there's a . . . bar? The question almost forms itself: What is this company selling exactly?

Paul smiles.

The company is Sega GameWorks LLC, and in its shiny multilayered surfaces, you can see the vision of its three creators. Paul, Snoddy, and Spielberg have seen the future of movies and games. And guess what? The future is not exactly movies, and it's not exactly games. And there's more. The three men created this company on a production-studio lot, among movie sets. But strictly speaking, it's not a production studio or a movie set. These guys have taken the next sports bar and future rock show, and have created not a sports bar or a rock show but some kind of a fusion -- something different, something that starts with old and familiar elements and then makes something new and fresh and fundamentally other. And although they've created it in Hollywood, their model is pure Silicon Valley. It's all hybrid, fusion, transformation -- the morphing of the future of entertainment.

You have never heard of Paul, and he prefers it that way. With his cool, Californian air and athlete's haircut, Paul looks like a pro tennis player who wandered into a boardroom. He cannot be intimidated, and he is utterly independent. He has been openly gay for years and has managed to make a fortune, getting to know everyone in the top echelons of the movie business with barely any press exposure. He rarely gives interviews. He and his life partner, a doctor, live quietly in San Francisco.

One other thing about Paul: He is a video-game fanatic. He used to be, after all, a top executive at Atari Games Corp. It just might be the art of the video game that gave Paul his commercial edge. It turns out that in the constantly morphing technology economy, video games are the best corporate metaphor: They are all about negotiating fast-moving obstacles and surviving one level to get to the next. Get a good idea, survive all attempts to kill it, and you get to the next level.

The topology morphs suddenly into another time-space dimension? Go with it. Paul knows that you can't be either a bricks and mortar or a dotcom. Nor can you be either a startup or an established company. You have to be both. It's not either-or; it's both-and. GameWorks seeks to play in another dimension entirely. The company's corporate structure -- it is a joint venture among DreamWorks SKG, Sega Enterprises Ltd., and Universal Studios Inc. -- suggests the operating synthesis that its founders hope to achieve in their 13 domestic and 2 international locations. The company's DNA begs the question "Is there a model for creating a whole new industry?" Here's how these guys are doing it.