[In the 1980s, Atari founder Nolan Bushnell's startup Axlon was formed to create electronic toys and games -- and toy company Hasbro bankrolled the development of Project NEMO, a VHS video-based console. Former journalist Tom Zito became its head of marketing -- an outspoken proponent of the marriage of Hollywood and games. In this extract from Jamie Russell's new book Generation Xbox: How Video Games Invaded Hollywood, you'll find the story of one of the most infamous 1990s video games, Night Trap -- long before it landed on the Sega CD.]

The American Legion Post 43 stands at 2035 North Highland Avenue in Hol­lywood. It's not an easy place to miss. For a start it has a five-ton Howitzer artillery piece parked on the front steps. Then there's the building itself, a solid Art Deco bunker in the Egyptian Revival style adorned with the Stars and Stripes. If Cleopatra and General Patton had been an item, this would have made a decent love nest.

The celebrated building is no stranger to celebrity, either. Over the years, the distinctive bunker has played host to Hollywood talent like Bob Hope and Errol Flynn. But between 1983 and 1994 it was better known to theatregoers as Il Vittoriale -- the central location for Tamara, a unique play about politics and scandal in '20s Italy.

Unlike most conventional theatre, Tamara had a brilliant selling point. Staged in the American Legion building, the play asked its audience to follow the actors as they moved from room to room. You didn't simply sit and watch the drama that unfolds as Polish artist Tamara de Lempicka is seduced by Italian poet Gabriele d'Annunzio, you became part of it.

With as many as nine parallel stories running in 13 different rooms over three floors, the audience had to make choices: would you follow mysterious chauffeur Mario? Or were you intrigued by the arch seducer D'Annunzio? Did you want to know the story behind the house's pretty maid, or was the fascist policeman a more interesting character? Depending on what you chose and where you went, you might witness a suicide on the first floor but miss a lesbian tryst that was happening downstairs in the scullery.

Moses Znaimer, the Canadian TV producer who bankrolled the long-running $550,000 production, liked to describe it as "a living movie." Reviewers compared it to a cross between Dynasty and Disneyland. The New York Times suggested it was like watching "a movie in which each theatregoer does the editing without ever seeing the rushes".

For the NEMO team, Tamara was more than just a play. It was also the blueprint for the kind of movie-video game they were grappling with. Over the course of a weekend in 1985, Axlon employees Rob Fulop and Jim Riley watched three performances, hoping to piece together its multi-strand plot by repeat attendance.

At around $80 a ticket it wasn't cheap, yet the price was worth paying. "It was the first design model that made sense," recalls Fulop. "We decided you could let the user be the camera, just lock a camera down into a room and let people walk in and out of the scene." For Riley, who'd previously worked with laserdisc technology at MCA, the play mirrored the kind of interactive experiences he'd been experimenting with.

Tamara became the basis for a five-minute demo of NEMO's live-action video capabilities called Scene of the Crime, co-created by Fulop and Riley. Styled as an Agatha Christie-style whodunit, the demo was a radical re-imagining of what a video game could be.

Instead of moving 8-bit pixels around a screen, you were being asked to drive a narrative, each choice leading you to another piece of filmed footage featuring real-life actors. Just as Tamara had offered different perspectives on the story, so Scene of the Crime jumped between characters and points of view as the player tried to solve the mystery by watching and interacting with video clips.

As far as Hasbro's executives were concerned, they were witnessing the evolution of the industry Atari had started. The console, attached to a VCR that it used to load the data from VHS tapes, looked nothing like the Nintendo NES. And neither did the game it played.

"The immediate assumption was that this was a huge leap in video games," recalls Fulop. "They were like, 'Wow, just imagine video games with live footage.'" After watching Scene of the Crime's rather adult whodunit plot unfold, Hasbro's suits offered just one instruction: "This is great. Now go and make it for kids." Zito and his team were about to become filmmakers. It was a huge step.