Interplay Entertainment of Irvine California has won the bidding war to gain the license to create videogames based on Warner Brothers' groundbreaking science fiction techno-thriller, The Matrix.  According to Daily Variety, the licensing fees are in the $8-$10 million range, rivaling the sums Electronic Arts paid to acquire the rights to produce videogames for The Lord of the Rings and Harry Potter, two of this year's most highly anticipated fantasy films.


Two sequels are in the works for The Matrix, which remains the best-selling DVD of all time (see 'Early Bird Catches the Worm').  The high-tech thriller, which starred Keanu Reeves, was highly influenced by video games, making it a natural for that genre -- though the game had better be good to compete with the film's superb special effects.  Of course with an $8-$10 million dollar payout, we can expect that Interplay will create several different Matrix games.


Right on the heels of Interplay's acquisition of the Matrix license comes news that French videogame company Infogrames has paid a similar price for the rights to create Terminator-based videogames.  Infogrames acquired videogame maker Ocean in 1996 and has been working on a deal to extend Ocean's Terminator license to cover the Terminator 3 movie starring Arnold Schwarzenegger which is being directed by action vet John McTiernan (Die Hard) and is set for release in 2002.


Compare the robust market for video game licenses with the post-Episode I situation in toy licensing and you begin to see how much stronger the videogame trends are.  Hasbro had to guarantee $600 million in royalties to obtain its Star Wars toy license, but Mattel only had to put up a $20 million guarantee to become the master toy licensee for the Harry Potter film (see 'Wary of Harry').  Yes, that's 96% less.  Even with Dreamcast shutting down, Playstation 2 production lagging far behind original expectations and worries that Microsoft's new X-Box won't be ready for the coming holiday season, the market for videogame licenses remains strong.  This couples with news from Japan that one reason Japanese toymakers are shipping increasing amounts of toy product to the U.S. (see Bandai To Produce...,' for example) is that the traditional toy market in Japan is collapsing, done in by videogames, DoCoMo, and general lack of interest. 


This is not necessarily all bad news for specialty retailers, who have been taking an increasing share of the action figure market in recent years.  The trend has produced more products directed at that market both from the big toymakers and from new, more collector-oriented producers like McFarlane, and on a much smaller scale Toy Vault.  This is, however, not a trend that can continue indefinitely or the action figure market will end up looking like the comic market -- declining numbers of aging consumers buying fewer products for more money every year.