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updated 3/10/2009 8:16:22 PM ET 2009-03-11T00:16:22

Walt Disney Co. is taking the wraps off an advanced new car racing video game that the entertainment company hopes will bolster its success in the lucrative gaming sector.

As sales of video games prove relatively resilient in the economic downturn, Disney is betting that it can prosper broadly from new games that it makes on its own. Rather than licensing Disney content out to game publishers, Disney's in-house gaming team wants to generate video game characters and story lines that can be the basis of movies as well.

"That is the Holy Grail for video games, to see them successfully become franchises," Graham Hopper, head of Disney's game division, told The Associated Press.

To that end, the company is investing in projects like the latest from its Brighton, England-based Black Rock Studio, a car racing game called "Split/Second" for Xbox 360, PlayStation 3 and PCs, set within the world of a reality television show.

With a release date of early 2010, the studio behind last year's off-road racing game "Pure" has employed new graphics-rendering technologies to pit racers against both the track and explosions triggered by competitors. A sneak preview to the AP showed a race track on an airport stage set, complete with an air traffic control tower that can come crashing to the ground.

The title is part of Disney Interactive Studios' strategy of injecting around 20 percent of its investment dollars into new intellectual property. The company invested about $170 million in overall game development last year and plans to increase that by $40 million to $50 million this year.

The video game market continues to expand even as music and DVD sales slump.

San Diego-based consultancy DFC Intelligence predicts that the worldwide video game market — including consoles, portable machines, their software and PC games — will hit a record of $57 billion this year, up from $33 billion just three years ago.

Nintendo Co.'s success with the Wii, which helped to expand the market beyond "hard core" gamers over the past few years, could play nicely into Disney's reputation for family-focused material. In fact, Disney has had mixed success with a mature-rated game, "Turok," a violent shooter game that was distributed under the Touchstone label. Hopper declined to comment on reports that a sequel to "Turok" had been scrapped, but he said that building a big Touchstone game portfolio was not a priority "right now."

Disney is taking more production in-house, rather than licensing its own characters and content to other developers. It rejected a pitch from its longtime video game partner THQ Inc. — which made the games based on Disney's "Ratatouille" and "Cars" movies — to create the game for the upcoming "Toy Story 3" film.

The company has a goal of self-publishing 80 percent to 90 percent of games, acquiring five development studios in recent years, including Black Rock and Austin, Texas-based Junction Point Studios.

However, Disney has not been immune to the economic downturn. Its Vancouver, British Columbia-based Propaganda Games recently cut 30 positions. Disney also plans to combine its Fall Line and Avalanche studios, both based in Salt Lake City, resulting in the loss of around 20 employees.

One problem is the high cost of producing and marketing major games. Disney Interactive Media, the unit that includes Disney's online division as well as Disney Interactive Studios, reported a $45 million loss in the most recent quarter. Higher sales volumes were more than offset by an increase in production costs and more expensive marketing.

Credit Suisse analysts Spencer Wang and Shub Mukherjee have forecast the unit will steadily increase revenue to around $1.3 billion in 2014, from $719 million in 2008. But they also note that the division's pretax losses are likely to extend to more than $385 million in 2014, from $258 million last year.

One pillar of Disney's strategy involves new twists in the way the games look. "Split/Second," for example, feels more like a movie — with cars surging through dissipating smoke while light refracts through exploding buildings — thanks to developments in graphics-rendering technologies such as "deferred lighting."

Video games have traditionally have been able to appear as if the action has one or two sources of lighting. "Split/Second" uses a "deferred renderer" that can generate hundreds of virtual light sources, including ones on exploding particles of buildings.

That kind of realism is backed up by "fluid dynamics" — a movement technology that allows "Split/Second" to flow more smoothly.

For instance, smoke and dust generated by explosions in the game are realistically generated so that "cars can punch through the smoke," said Nick Baynes, game director at Black Rock.

And "if you are at the back of the pack," he said, "you'll get a clearer view of the world in front of you than the car who's had to drive through it first."

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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