Hollywood's New Game

The creative team was allowed total freedom to ... play. "We started thinking up ideas and drawing pictures," says Snoddy. "We filled a conference room with sketches, we took trips, we looked at things." Word started to get around about Soundstage 35. Walter Parkes, head of DreamWorks's movie division, found time to drop by, as did America Online president and COO Bob Pittman, and high-powered movie executives Tom Pollock and Casey Silver. And the team "met with Steven" -- which really meant letting Spielberg play, think, and effuse about games. Remembers Snoddy: "Skip, Steve, Jeffrey, and I were on a bus once in Japan, and Steve was talking about which games he was playing during the making of which of his movies. He would have a game console of Missile Command or Tank shipped to his movie set, and between takes he would sit there playing these things. He's amazing at Asteroids." Adds Paul: "Steven loves games, and he knows them intimately -- why they succeed and why they don't -- better than anyone I know in Hollywood knows games. Walk into a games place, and most Hollywood execs stand there with their arms folded. Steven plays them online when he gets home at night."

Meanwhile, Paul brought in Michael Montgomery as president and COO. Montgomery had turned Euro Disney around before going to work for Katzenberg to raise equity for DreamWorks. He went to a presentation that Paul was giving and was hooked. Montgomery would go on to raise $76 million. Paul and Spielberg also put in a huge sum. Edgar Bronfman Jr. put in Universal's money to buy 25% of the company, and, of course, Sega chipped in as well. In total, the investment amount was so large that today the company still has zero debt and a huge war chest of cash.

Go to the next level.

Level Four: Strategy

In video games, "strategy" is a fancy word for the quick, intuitive decisions that you make as unexpected events unfold in front of you on-screen. That's also GameWorks's definition of strategy. Take the issue of pace. "Originally," says Snoddy, "we were going to do 100 GameWorks in two years. But the limiting factor was real estate. You just can't get that many really good locations." Adds Paul: "We would have had a cash flow of around $50 million a year, as opposed to $15 or $20 million, and more than 30 GameWorks locations, but we erred on the side of slower expansion to make sure that we would correctly implement the concept and the brand."

Then there was Paul's concept that each GameWorks site be designed differently, by sequential evolution: As each site opens, the design team immediately begins mentally tearing it apart and rethinking the whole thing. After each GameWorks opens, "we start from zero," says Paul. "Seattle was our genius creation -- until the second we built it. Then it was just a prototype. You need to trust your initial vision. But you also need to learn from it."

And then there was the product itself. And this was where GameWorks got really weird.

It is not immediately apparent what GameWorks sells. Sure, it sells the opportunity to play games. There are games from Namco and Sega at each GameWorks, and each game costs around $11,000 (some go for as much as $30,000). Every GameWorks facility holds at least 150 games and 3 or 4 "attractions," such as "Vertical Reality" (a Spielberg creation), "Indy Player," "Max Flight," and "The Lost World: Jurassic Park." Each attraction costs around $200,000 -- a total of between $3 and 4 million in games per site.

But these are not -- and everyone at GameWorks repeats this emphatically as the company's mantra -- just video games. Or more precisely, GameWorks isn't "about" games. Snoddy puts it this way: "GameWorks is not about the game that you are playing. It's about linking experiences, linking my experience to everyone else's experiences. Playing a video game at home, you play by yourself. Nobody knows, nobody cares. You play, and then you turn it off."

Now compare that limited experience to the options that are available in GameWorks's go-cart ride. A simple video game would be about you and the go-carts. At GameWorks, Snoddy explains, the go-carts "are about you and the people around you. You're onstage. You're being watched, evaluated. Other people are wondering if they can drive as well as you can. The best score of all time is up there, and you judge your performance based on it. When a race ends and a record time goes up, you hear cheering and shouting, and the winner is seen and known. Steven talked a lot in the early days about his conception of how this could work. He felt that a kid sitting alone staring at a screen is not a great thing. People interacting with one another and having fun is."