Xbox Founders Got Game CompanyTwo of the key figures behind Microsofts Xbox game console have launched an independent production company to find and fund undiscovered talent in the game industry. The newly formed Capital Entertainment Group hopes to identify promising but untested development teams with good ideas -- but no cash; and provide both funding and the technological expertise to guide the game through its development phase. Once the game nears completion, the company will seek publishers to market the games. Xbox founders Kevin Bachus and Seamus Blackley said they started Capital Entertainment for the same reason they lobbied Microsoft to create the Xbox: to spark a renaissance in game development. Bachus, a 20-year game industry veteran, said he used to think the reason games fell into predictable formulas was because the hard-to-develop hardware created obstacles to game innovation. That was the notion behind the Xbox: a console built upon Microsofts established, easy-to-use directX software development tools. But he changed his mind after Xbox was released. "We got the Xbox up and running, but we werent seeing the kind of innovation we thought wed be seeing," said Bachus. "Not surprisingly in hindsight, what I found is it had more to do with the way the games are funded and produced." As the $9.4 billion game industry matured into an entertainment business that rivals Hollywoods box-office, it has left behind its garage-shop roots. That makes it hard for new talent to get noticed by the handful of big publishers who dominate the industry. And it becomes equally risky for established, publicly traded companies, which invest an average of $12 million to $15 million on popular titles, to fund untested development teams. "As publishers, its time-consuming and difficult for us to find garage shops and bring them along," said John Sutyak, chief creative officer for Infogrames. "What publishers are looking for are seasoned groups with experience under their belts." Bachus and Blackley are convinced that the greatest successes in gaming -- like "Tomb Raider" or "The Sims" -- are risky ideas that fall outside predictable formulas. Drawing from the game industry contacts they made over the two-year development of Xbox, they feel they can both identify promising rookies -- and match them with the seasoned specialists they need to successfully complete a project. P.J. McNealy, a senior research analyst for research firm GartnerG2 in San Jose, called Capital Entertainment an interesting business proposition that should appeal to game publishers, because it would absorb the brunt of the financial risk. And it provides a new source of seed capital for the development community. "It will also be interesting to see how many novel and creative games they get," said McNealy. "In the short term, theyre going to need some cash-cow games that are likely to be sequels."