(FORTUNE Magazine) – THE GAME DEVELOPERS' CONFERENCE, the annual March gathering of videogame makers, is typically a low-key geekfest. Game designers and producers in T-shirts and jeans shuffle between seminars like Dynamic Procedural Combat Tactics and Mod Tool Jam, and test one another's wares. Not the place you'd expect to see Hollywood heavyweights or hear screaming matches. But the gaming crowd got both this year, when a Warner Bros. executive and a videogame talent agent turned a seminar on cross-industry cooperation into a verbal brawl. They hurled dueling accusations of disrespect and invading each other's territory, and they generally behaved as if the entertainment business wasn't big enough for both of them.

The power structure used to be clear: Videogamers bowed before Hollywood, grateful for any chance to make movie-based games. But that's all changing. With global reach of their own and a taste of the big time, the gamemakers are learning the movie game well enough to play it themselves. "We're equals now. This is our time,'' says Neil Young, who runs the Los Angeles outpost of Electronic Arts. It's now common for videogame designers like Jordan Mechner, who created Prince of Persia, to have agents that scout out lucrative studio-development deals. And game publishers are hiring movie writers to make their games more cinematic, hoping to create properties the studios will beg to make into movies. Electronic Arts' payroll includes Apocalypse Now writer John Milius, the "screenwriting talent" for the latest installment of its Medal of Honor series. Die Hard director John McTiernan is developing a game for the publisher Ubisoft. Microsoft's Xbox division has made the most aggressive move into studio territory. It's commissioned a screenplay for its hit game Halo from novelist Alex Garland and tapped former Columbia Pictures president Peter Schlessel to try to ignite a bidding war for it. "We're all building properties, not just leasing or buying,'' says EA's Young.

Movie executives, for the most part, sneer at the idea that the tail will start to wag the dog. "I don't think Electronic Arts has a secret playbook that is going to revamp the way this business works," says one. "The game business is like a little kid that wants to sit at the grownup table." True, games don't yet come close to the mass appeal of movies. While consumers in the U.S. spent $7.3 billion on gaming software last year, they bought $9.5 billion of movie tickets and spent $15.7 billion renting and buying DVDs and videos. And the idea that videogames will translate into good movies is still unproven. While movies based on the Resident Evil and Lara Croft: Tomb Raider games were hits, the game-based Final Fantasy and Wing Commander movies were dismal flops.

But videogamers do have two enviable assets: a near lock on young males and loads of cash. Rumors have long been rampant that one of the big publishers is trying to buy a movie studio, though game executives publicly say the idea is laughable. They'd rather, they say, invest in a movie or TV production, gaining some control over the process along with gaming rights. The question is, Will Hollywood make room at the table? Facing the triple threats of slowing growth, piracy, and the mounting influence of DVD retailers, they certainly should. Gaming may be young, but it's growing up fast. -- Evelyn Nussenbaum