Going on-line eliminates a lot of problems. A lot of people want multiplayer games, which certainly is a new trend. So, as bandwidth issues and latency problems go away, you're going to see very high quality content there.

As to animation, the current trend is to high-end 3D graphics. Two-D cel animation certainly has its place in the linear formats, but it's skewing very young in the interactive market. It's great for edutainment or educational titles, or for the stuff companies like Disney and Brøderbund do. But the games that are the big hits--7th Guest, Commander and Conquer, Warcraft--they use a lot of 3D graphics.

Green Eggs And Ham © Living Books.

Mark Schlichting, Vice President of Research & Design/Creative Director, Living Books, San Francisco: Some of the changes I see are in animation being streamed in over the Internet. In the early days, we had to design animation for the narrow bandwidth available with less powerful machines. Now, we are using pencil animation. But until the bandwidth gets better, current streaming technologies will put us back to the old place, where we will have to use more limited animation.

I foresee two basic models by which this new approach will be used. There is the advertising model, in which advertisers give you something for watching a demo. Then we will have interactive networks, modeled after cable TV, using high bandwidth lines, where you might pay $5.00 a month to play games on a network. Potential buyers of video games will also be able to sample new games on-line before buying it, much in the way that radio allows listeners to preview CDs.

Right now, you can play interactively, in a multiplayer environment, on the Internet, but each player has to have most of their assets on a local machine using a CD-ROM.

John Hughes, President, Rhythm & Hues Studios, Los Angeles: Rhythm & Hues has been in the business of creating images with computers for a decade. Our core markets have been commercials, theme park attractions and feature film animation and effects. A fourth division was created when Adam Spindell and Dan Quarnstrom approached the four company owners with a concept for an original game in l994. The owners immediately agreed to finance the development of their game and the Interactive Game Division was born.

In the feature film market we are best known for our work on Babe for which we won the Academy Award this year. Our most recognized commercial work would be the ever popular Coke Polar Bears spots. Our theme park work is showcased by Epcot, MCA Universal, Disney and several Las Vegas venues. And now, our first original game is entitled Eggs of Steel and is slated for a Christmas '97 release on Sony Playstation.

The 4 owners and 200 employees are committed to excellence in all of our businesses, on every job we undertake. But being a service-based company operating within tight margins is ever more challenging in the current climate of our businesses. Our goal from the beginning has been to grow beyond the service market and to become a content provider. Our interactive game group is our first attempt to be both the creator and the production company. It is our intention to grow this aspect of our business and to eventually produce a feature-length computer generated animated film, in addition to developing more of our original interactive games.