How Eidos plans to stay ahead of the video game market

Ian Livingstone's office has all the standard accoutrements of corporate success: golf clubs in the corner, framed photos of his three children and a desk large enough to accommodate a board meeting. But there are also two eight-foot models of the world's most recognisable cyberbabe, Lara Croft, and stacks of video games.

The creative director and former executive chairman of Eidos, Britain's biggest developer of video games, has said that when he first spotted the pneumatic character - who became the protagonist of the Tomb Raider franchise on-screen - "it was love at first sight". This was a commercially astute love affair - since 1996, more than 30 million Tomb Raider games have been sold. An anniversary edition of the first game is due to be released in the next three months.

Livingstone, 57, is fiercely proud of Britain's gaming history. It has, for years, been the creative leader. But Livingstone has concerns as to whether "we can hang on to that". As with so many other creative industries, Britain is in danger of losing its position in video games.

Though the British games industry is often overlooked at home, its potential is well recognised abroad. As a result, foreign investors have bought up the British studios that created some of the most successful games, thus gaining the rights to those games.

For Livingstone, it's a depressing list. DMA, the Scottish publisher that created Lemmings in 1991 and Grand Theft Auto (a 50 million seller) in 1997 has been bought up by the US games publisher Take Two. Lionhead Studios, creator of the role-play game Fable, has recently been sold to Microsoft - as has the Newcastle-based video games producer Reflections, which made Driver.

"The Government gives incentives for overseas industry to come over here, which is only a short-term solution," Livingstone says. "Companies buy development studios, but also acquire intellectual property [the rights to the games]. Then, in the long term, the intellectual property can migrate. It is not about creating intellectual property, but retaining ownership of it."

Eidos is now Britain's only major games publisher. Last month, Warner Bros invested in Eidos's parent, SCi Entertainment, buying 10 per cent of its shares. With the deal came 22 licences to develop games based on Looney Tunes characters, such as Bugs Bunny, and the Hanna-Barbera catalogue, including Tom and Jerry. The high-school drama The OC, axed from TV last week, is likely to be given a new lease of life as a video game.

Is the sale the thin end of the wedge? Livingstone thinks not, although perhaps he's trying to convince himself. "For Eidos to remain a British company, with a cash injection from Warner rather than being bought out, is a good thing for the company," he says. "Games companies need more and more working capital. Twenty years ago, two blokes in a garage could make a game for £10,000. Now, it takes 100 people, including programmers, specialists in physics and artificial-intelligence writers, artists and animators." A major game takes two years of work for a team of 100 on a £5m to £10m budget.

Warner Bros' involvement aside, Livingstone says he will continue to focus on making original games, though he admits: "I tend to put my finger into everybody else's pies, but I add creative input to make good games rather than making an average game based on an existing TV show. That will not drag a poor game through the marketplace."

Eidos is in talks with Paramount over a third Tomb Raider film. When the game was first turned into a movie, Livingstone had a veto over cast, a huge level of influence. "We wanted to maintain the integrity of Lara Croft and didn't want Hollywood turning her into someone we didn't want her to be. But when they suggested Angelina Jolie, we said, 'That's OK with us.'"

He has done more than any other Briton in commercialising games: two decades ago they were the domain of "geeks and anoraks", but now, he says, "gaming has become very much part of not only youth culture, but wider culture". Last year, he was appointed OBE for his services to gaming. "It was an extraordinary honour - I had to re-read the letter about eight times, checking it was true." He remains a defender of the video games industry which, he says, has been vilified in the press for so long. "A lot of people say games are addictive. Well, they're addictive in the sense that anything you like doing you repeat endlessly. But no one would say, 'Mr Kasparov, you have a chess problem,' or 'Tiger Woods, you have a golf addiction.'"

Livingstone's love of games started from his early childhood, when he would dream of Tolkien-esque fantasy worlds with his toy soldiers. Thirty years ago, he moved to Shepherd's Bush and founded Games Workshop with his flatmate Steve Jackson, selling fantasy and role-playing board games. In June 1977, a queue of 300 people - nearly all male - formed in Dalling Road in Hammersmith at 8am, waiting for the opening of their first shop.

Livingstone's next success was a series of Fighting Fantasy books, in which the reader battles beasts as they choose a path through the novel. After struggling to interest a publisher, The Warlock of Firetop Mountain came out in 1982. Twelve reprints were ordered in the first month, and the series gained publicity when "some woman phoned up a radio station and said her child had read the book and levitated. So children thought, 'For £1.50, I can levitate.'" The books quickly became part of the establishment as teachers noticed that children reluctant to read were happy to play a game book. More than 14 million of the series have now been sold worldwide.

By the 1990s, he had switched to video games - "a natural progression" - and invested in a struggling developer, Domark. When Domark merged with Eidos, Livingstone became chairman. He is no longer on the PLC board of the company, since Eidos was bought by SCi Entertainment in 2005.

Turning his hobby into a career has not diminished his love of playing. His home has one room containing more than 1,000 board games, and another room with pinball and table football.

His latest project is the How Big is Your Brain? gamebook, published tomorrow, where players time themselves as they do puzzles and are given a brain measurement: pea-sized or planetary. "It is a fun way of exercising your brain," he says.

Livingstone's next ambition is for everyone to embrace their inner gamer: "I am always trying to broaden the profile and demographic of games. We now have the Wii and interactive DVD quiz games. I want grandmothers to play bingo and bridge online. There is a game for everyone out there."

Starting this Saturday in The Independent, you can boost your brain power with our Train Your Brain programme. The free seven-day course starts with a mental fitness book by Ian Livingstone and Jamie Thomson, then an interactive CD-ROM on Sunday, and then five mind worksheets through next week

The bestelling games franchises

1. 'Mario': 193 million games sold worldwide (below left)

Podgy plumber created in Japan. Official mascot of the Nintendo corporation, appears in platform, racing and role-playing games.

2. 'Pokémon': 155 million

'Pocket-monsters', created in Japan, that have inspired cartoons and films.

3. 'Final Fantasy': 68 million

Role-playing games set in fantasy worlds, created in Japan.

4. 'Madden NFL': 56 million

American football game created in the US.

5. 'The Sims': 54 million

US-created simulation game of everyday life in a suburban house.

6. 'Grand Theft Auto': 50 million

Created in the UK but now owned by US publisher, players rise through the ranks of the criminal underworld.

7. 'Donkey Kong': 48 million (centre)

Gorilla character who appears in platform and racing games, created in Japan by Nintendo.

8. 'The Legend of Zelda': 47 million

Nintendo action-adventure game: the quest to rescue Princess Zelda.

9. 'Sonic the Hedgehog': 44 million

Mascot of Japanese company Sega appears in platform and pinball games, as well as a cartoon television series.

9. 'Gran Turismo': 44 million

Realistic racing-car game - now including Grand Prix and bike-racing - developed in Japan for Sony.

11. 'Lineage': 43 million

Medieval fantasy, online, multi-player, role-playing game created in South Korea.

12. 'Dragon Quest': 41 million

Role-playing game where heroes slay monsters, created in Japan.

13. 'Crash Bandicoot':

34 million

Platform game created in US, acquired by Sony six years ago.

14. 'Resident Evil': 31 million

Violent survival horror game, known for its gore, created in Japan

15. 'James Bond': 30 million

US-developed games starring 007.

16. 'Tomb Raider': 30 million

UK-created action adventure game starring cyberbabe Lara Croft.

17. 'Mega Man': 26 million

Cartoon character battles evil scientist; platform game, created in Japan

18. 'Command & Conquer': 25 million

Strategy and first-person shooters, created in the US.

19. 'Street Fighter':

25 million

Fighting game made in Japan. Is 20 years old next year.

20. 'Mortal Kombat':

20 million

US-created fighting games that feature graphic and bloody death scenes.