Leading the charge to interactive entertainment is co-chairman Michael Bay (pictured left), director of films including Bad Boys, The Rock, Bad Boys II and the upcoming Transformers. Bay is currently at work on one of the company's first titles, a first person shooter budgeted at $25 million.

Beyond Bay's game, the studio also hopes to develop movie-based titles helmed by the filmmakers themselves, a procedure mostly unheard of in the video game industry. Instead, licensed games are often made with the directors largely removed from the process, often acting as little more than consultants. Shiny Entertainment's Enter the Matrix--written and directed by Matrix creators Andy and Larry Wachowski--serves as a notable exception to this norm.

"I make world-class images," Bay explained to the Los Angeles Times. "Why not put those images into a game?"

"It's going to be very difficult," countered industry analyst Michael Pachter. "The skill set of a game maker is very different from the skill set of a graphic artist."

In addition to games, the studio plans to focus more on commercials, such as its work on last fall's "Mad World" Gears of War commercial, as well as feature-length computer animated films aimed at teenagers and young adults.