Submitted by: kirkland on Tuesday November 07th, 2006 at 06:43 PM EST

Walt Disney Co., the world's second- largest media company, is creating a video-game studio to make titles exclusively for Nintendo Co., targeting audiences for its animated characters.

The studio, called Fall Line, will be based in Salt Lake City and run by Scott Novis, who led the team that created the game based on the Pixar film "Cars." Novis's designers will build games for the Nintendo "Wii" console to be released this month and the "DS" and "Game Boy" handheld players.

Chief Executive Officer Robert Iger said in September that Disney can earn more by developing its own games rather than licensing characters and content. Disney has spent $200 million in the past two years to buy or start game-development studios. The Burbank, California-based company will spend another $200 million in the next two years, said Graham Hopper, general manager of Disney's Buena Vista Games.

Shares of Disney rose 57 cents to $32.46 yesterday in New York Stock Exchange composite trading. They have gained 35 percent this year.

Buena Vista wants to produce 80 percent of its games internally, Hopper said. Of the games it makes, Buena Vista wants 80 percent based on Disney movies, TV shows or other content.

» Full story @ Bloomberg