Despite the different experiences of their companies, executives in the interactive entertainment industry agree that licensed characters from the toy, book, TV and movie businesses are more frequently popping up in interactive titles. At the same time, characters invented fresh for video games or CD-ROMs are making their way onto T-shirts and into videos and cartoon series. And the outlook for both of these types of licensing is that they will only continue to grow.

‘I think that we are seeing a trend moving more and more toward (acquiring licensed properties for interactive software),’ says Sarina Simon, president of Los Angeles-based Philips Media Home & Family Entertainment, which has brought out Felix the Cat, Peanuts and Lamb Chop titles.

With so many products on the shelves today, it’s going to be ‘increasingly more difficult’ and more expensive for publishers and developers to promote titles with new characters and to raise enough consumer awareness to make them hits.

For future products, Philips Media plans to use more licensed properties or to partner with companies like Children’s Television Workshop a recent alliance that own franchises and are looking for a publisher.

The downside to developing a product based on a licensed character, Simon points out, is that the money spent buying the property is money that is not put toward producing or marketing the software.

Robert Lewis, president of San Francisco-based Modern Media Ventures, says licensed characters are appearing more often in interactive titles because studios ‘want to do a full integrated launch of properties’ across several media, and a CD-ROM and Web site are now considered important components of the mix.

And it’s not just the studios, but also the toy companies, that are ushering their properties into the interactive world.

‘If a brand, character or some sort of intellectual property has been successful in one play-related market segment, it has a good likelihood of being successful in other play-related market segments,’ says Doug Glen, president of Mattel Media of El Segundo, California, which will be launching its first batch of titles around such well-known toy brands as Barbie, Polly Pocket and Hot Wheels this fall.

While some original characters in interactive titles have made the transition to other media Broderbund Software’s Carmen Sandiego is the most widely hailed success story Glen says it’s more likely that characters will cross over from segments such as television and movies that have ‘broader marketing exposure and broader consumer bases into interactive.’

Virgin Sound and Vision, located in Los Angeles, has marked its two years in business with all but a few titles based on licensed properties.

The children’s software publisher made that choice, says Tim Zuckert, vice president of marketing, because the interactive business is ‘a very competitive market,’ and parents have a tough time deciding which products out of the hundreds available to buy for their children.

Therefore, a product featuring a licensed character has a higher chance at success because ‘you’ve got a built-in audience of people who already know and love the character.’

Zuckert cautions that it would be ‘very difficult’ for a new company to break into the market with a product starring original characters.

Wanderlust Interactive, a two-year-old publisher headquartered in New York, concurs, and that’s why it purchased the Pink Panther property for its first CD-ROM, set to launch this fall.

‘You are taking less of a risk when you bring in a character that you know is popular and that there is a demand for,’ says Brian Fisher, controller and director of administration. Using the Pink Panther allowed the start-up company to concentrate the bulk of its efforts on the animation and the quality of the game, as opposed to the marketing.

But Fisher is quick to add that incorporating a licensed property d’es not guarantee a hit. The E.T. video game released by Atari in the early 1980s criticized as a poor game is one of the earliest, but not the last, testimonies to this adage.

Wanderlust aspires to create and introduce its own characters in the future, and hopes that these might eventually generate licensing interest. Who d’esn’t? ‘Everybody wants to create a new character that no one has heard of before [and] that becomes a popular character, because then you own it and you can do all the merchandising and tie-ins.’

Modern Media Ventures is doing just that. It just signed a two-year deal with an undisclosed toy manufacturer to produce an activity pack surrounding one of the CD-ROMs in its Gus and the CyberBuds line. It is also in discussions with TV and home video producers, book and comic-book publishers and children’s consumer products companies, and is near to closing talks to have its characters host and brand a children’s on-line network.

Robert Lewis believes very few publishers and developers are licensing their characters simply because ‘the CD-ROM and interactive industry is so young.’

But Humongous Entertainment of Woodinville, Washington, is in the same situation. In its four years in operation, it has released only titles featuring its own characters, including Putt-Putt, Freddi Fish and Pajama Sam.

‘It’s started to heat up for us in regards to taking our characters to other media,’ says Ralph Giuffre, executive vice president of marketing and licensing. Interest has been growing over the last year, and although Humongous has yet to reach a deal, it has received proposals from production houses and licensing agencies.

Giuffre suggests that it may even be ‘easier to take a good-quality character and interactive storyline and turn it into a linear storyline in a medium like television or a theatrical release than it is to go the other way.’

He credits the attention Humongous and other publishers and developers have begun to receive to a shift in the perception of the interactive industry. ‘For the last 10 years, people kept thinking of us as being just in the computer business or the video game business. But we’re not; we’re in the entertainment business. And it just so happens that our medium for expression [is] either a video game console or a computer.

‘So what’s happening is that there’s just more attention being paid to the kinds of characters and creativity that’s been in this business for a long time.’ Studios, toy manufacturers and book publishers are therefore starting to look to the interactive market as much as they do the other sectors of the kids business.

‘It’s now a wide-open market for these kinds of properties to go in either direction.’