Michael Milken-funded studio makes debut

Longtime rock ‘n’ roller Scott Page and computer software whiz George Grayson, along with veteran music producer Bob Ezrin, recently launched 7th Level, an interactive entertainment studio with a name that they say suggests the “eminence, achievement and transcendence” they are looking for in developing next-generation interactive education and entertainment titles.

And while the company’s name and the philosophy behind it borders on New Age, 7th Level itself is firmly grounded in the business of Hollywood-style entertainment and Wall Street finance.

THE MONEY BEHIND 7TH LEVEL

As with so many new media companies getting started today, it is the behind-the-scenes activity at 7th Level — and not the actual products — that is the most exciting aspect of the company. 7th Level is backed by Michael Milken, the one-time junk bond king, who since being released from a federal prison for federal securities law violations last March, has publicly championed interactive learning with gusto. In addition, Merv Adelson, the former chairman and co-founder of Lorimar, Inc., who is now chief executive of the merchant banking firm East-West Capital Group, has invested in 7th Level. Adelson is also a member of the Time Warner board of directors.

Three years in gestation. The Los Angeles-based interactive media studio is the brainchild of Grayson, a cofounder of the computer graphics company Micrografx, and Page, who is best known as a tenor saxophonist for music groups Supertramp and Pink Floyd. The two met three years ago at a Comdex computer trade show and discovered they shared a mutual belief that interactive software is the future of entertainment.

A multimedia spectacular. After the Comdex meeting, Grayson and Page decided to try to work together on a project that combined their talents in entertainment and computer technology. They developed the idea for the Grand Scientific Musical Theater, a multimedia musical extravaganza, which was held at Comdex in 1992. It drew more than 12,000 people, including Microsoft chairman Bill Gates, IBM computer exec James Cannivino and Borland International chairman Phillipe Kahn.

Ezrin, who had heard about the project from Page, helped it get off the ground, bringing in much of the talent. Ezrin has produced Pink Floyd, Peter Gabriel, Alice Cooper and Kiss during his 23-year career in the music industry. “It felt like rock ‘n’ roll in the ’60s,” he said of the show afterward, and told both Grayson and Page that he was interested in working with them on similar projects in the future.

The best laid plans. It was Grayson’s original plan to acquire Page’s entertainment production company, The Walt Tucker Group, and turn it into a consumer division within Micrografx. The board of directors at Micrografx objected to the acquisition, and Grayson resigned. The same day he called Page and said, “Let’s start the new company.”

Page and Grayson called in Ezrin, who became co-chairman and VP of music productions. Robert Tercek, formerly director of on-air promotions for MTV, then joined the team as the creative director. In addition, several of the key developers who worked with Grayson at Micrografx left the company and joined 7th Level. Grayson made the initial investment of $1 million to get 7th Level off the ground.

Today, 7th Level has about 25 people on staff and is divided between two offices, one in Los Angeles (at the old Walt Tucker studio) and one in Dallas, where Grayson and the programming team work. According to Page, the group is investing in high-speed phone links to connect the sites.

ROCK STARS AND … NURSERY RHYMES?

This past month 7th Level debuted its first title, Tuneland — a children’s interactive cartoon about a teddy bear named Little Howie, who romps around an animated farm while his barnyard friends sing “Bingo,” “Itsy Bitsy Spider,” “Pattycake” and “Ol’ MaCDonald.”

Comic Howie Mandel is the voice behind Little Howie, and members of the rock group Tower of Power, John Anderson of Yes and Jeff Baxter of the Doobie Brothers provided some of the vocals and the music. (All of the songs used in the title exist in the public domain.)

T-shirts and lunch pails. Tuneland will be released initially as a CD-ROM for the Windows platform this January, but, according to Grayson and Page, the multimedia personal computer is only one of many media where Little Howie will appear. The startup hopes its animated bear will turn into the next Barney or Mario through mass market entertainment and licensing agreements. To date, no PC-based character has been able to make the transition into mainstream media. Carmen Sandiego, star of Where in the World is Carmen Sandiego?, comes closest, but she does not begin to touch the success of characters such as the Nintendo’s Super Mario Brothers or Sega’s Sonic the Hedgehog.

At press time, none of the founders were willing to discuss where Little Howie might show up next. At this point, the team says it is not interested in developing for the Macintosh or the 3DO Multiplayer. They are looking at developing ITV applications for both Modular Windows and Silicon Graphics platforms, according to Grayson.

A chance to get their feet wet. Tuneland alone does not set 7th Level apart from the pack of multimedia developers scrambling today to deliver a hit title. The group chose to develop an animated cartoon because the children’s market is the fastest-growing market for new media, and because it did not require a high level of interactivity to be built into the product. Basically, the development team was getting its feet wet.

The company’s next title, although members of 7th Level will not discuss it in any detail, will be based on material from Monty Python, the offbeat British comedy troupe, which had a long-running TV series on the BBC and made several successful movies, including Monty Python and the Holy Grail, The Meaning of Life and Life of Brian.

EDUCATIONAL PROGRAMMING IS MILKEN’S FOCUS

According to Page, Milken reviewed 280 business plans on interactive media companies before investing in 7th Level. Milken selected 7th Level, he said in a prepared statement, because the company is “a company whose goals are in line with the criteria I have developed for children’s education and entertainment products.” As part of the investor agreement, 7th Level will develop interactive education titles to be distributed on the Education Entertainment Network, a non-profit cable TV network that Milken chairs.

It’s in the process. In addition to attracting high-profile investors outside of the traditional Silicon Valley investment crowd, the team at 7th Level says it has developed a “process” for developing interactive media, which it plans to license to other developers.

According to Grayson, who was reluctant to describe in detail what the process involves, it uses proprietary technology based on the Windows platform. Micrografx pioneered Windows-based software development; it developed and distributed the first Windows-based software application before Microsoft actually released Windows.

Janice Maloney