paramount.jpgIt’s a little late from the point of view of its rivals, but Paramount Pictures has finally decided to take a plunge into video games.

The Hollywood studio is expanding its video game division with a slate of games that will start coming out later this year, according to Variety.

Most movie studios have seen why this makes financial sense. A movie might cost $90 million to make and gross $100 million. But a video game costs $30 million at the most and can still generate $100 million. For a few years now, video game console hardware and software sales have trumped movie box office receipts. (Yes, we know that games cost $50 or $60, and movies about $10).

Warner Bros. has expanded its presence in games under well-known developer Jason Hall and Disney is spending hundreds of millions of dollars on its own video game expansion. Sony, of course, has had both a motion picture and video game business for years.

Variety says that Paramount wants to invest in all types of games but is particularly interested in casual, handheld and mobile games. As we’ve reported, these are some of the hottest areas for start-ups these days. The rest of Viacom, which owns Paramount, is also active in video games. The MTV division owns Harmonix, creator of the hit game Rock Band. MTV also has a deal with famous Hollywood producer Jerry Bruckheimer to make a series of video games. Viacom chief Sumner Redstone has also had an investment in Midway Games, which recently named a new CEO, for some time.

What else could Paramount be working on? Well, this reminds me of Star Trek Online, a massively multiplayer online game that has been in the works for a while.

In the past, Warner Bros relied on big companies such as Electronic Arts to handle game versions of movies such as the Harry Potter series. EA still does such games but it has been turned off by gamer dissatisfaction with movie games such as Superman Returns and the James Bond franchise. That’s why EA is moving to original game properties.

et.jpgThe movie studios shied away from making games in the past because it took a completely different mindset. There has been a long history of failures between movie and game collaborations, including the famous E.T. game that brought down Atari in the 1980s. The game was so bad that extra copies were buried in landfills and the industry died until Nintendo revived it with a new home video game console.

But as game technology advances, it’s possible to combine the efforts. The Los Angeles area has been a major expansion region for video game companies such as EA, which is working with Steven Spielberg on games.

George Lucas’ LucasFilm, Industrial Light & Magic and his LucasArts game division, for instance, are starting to use some of the same tools for both movie special effects and video games.

And Brash Entertainment, a new video game start-up, is also focusing on a wide variety of games based on movie content. What does it all mean? The Hollywood-video game convergence moves in and out of favor on a regular cycle. Right now, it’s on the upswing.