Computer gaming is a big business—and a growing force in the Boston economy. Cambridge’s Harmonix Music Systems makes the popular game Guitar Hero II, and 2K Games in Quincy built BioShock, one of the best-selling console games in the world. Even Red Sox pitcher Curt Schilling is in the act—he’s formed a company called 38 Studios, out in Maynard.

Then there’s Westwood’s Turbine, which has had not one but two hits in the market for massively multiplayer online role-playing games, where players pay for gaming software and then a subscription fee, and the company constantly adds elements to the game, set in a virtual world. Its The Lord of the Rings Online game, which came out this summer, is by some measures already the second largest such game, behind Blizzard Entertainment’s World of Warcraft and its 9 million or so players.

Jeff Anderson was Turbine’s CEO through the development and marketing of its first success, the PC game Asheron’s Call, and through The Lord of the Rings Online. He’s also overseen the shutdown of a second version of Asheron’s Call and a modest success in a Dungeons & Dragons online game. He quietly gave up the CEO title to former mobile media executive Jim Crowley in the first week of October, but remains on Turbine’s board of directors. He spoke with Xconomy freelance contributor Michael Fitzgerald before stepping down.

Xconomy: You credit some of the success of The Lord of the Rings Online to the game’s use of an unprecedented set of community tools for its players—things like an in-game wiki with the data from the largest online Tolkien encyclopedia embedded in it. The game also uses Google Maps to let players create in-world maps. Why did you decide to build in such community tools?

Anderson: When I first started working on games like Ultima Online, we were all foolish enough to think that the games were actually products. After we launched, we realized that no, it’s a 24/7 service, and people are playing when they want to, on their terms. Now we realize we’re actually running a 24/7 community. And communities are about what the community’s interested in. From a business side, we needed to give the players more ways to participate in building the Tolkien world and Tolkien community.

Xconomy: This looks like a model for entertainment companies, or other content creators. Why doesn’t, say Scholastic or Bloomsbury’s create the Harry Potter site that everyone goes to, instead of fan sites like MuggleNet?

Anderson: You’re starting to see it happen in a few places here and there around certain properties. Heroes has been one of the sites NBC has been trying to push. You’d probably be hard pressed to find any of the big media properties that don’t have some kind of MySpace page attached to a new record or band. That’s just the first step in a very long journey of integrating your community into your products.

Xconomy: Why did Lord of the Rings Online do so much better than Dungeons & Dragons?

Anderson: Compare the success of the Dungeons & Dragons films to the Lord of the Rings Films. It probably answers the same question.

Xconomy: As an industry, who do you compete with?

Anderson: Mostly television. There’s only so many hours of leisure time that you’ve got to spend; and in that way, I guess we compete with the sofa.

Xconomy: Are you winning the battle for cushion time?

Anderson: If you look at Nielsen ratings and you look at the viewership of television, I think we’re killing them right now. The amount of time and dollars being spent on old media is just decaying and diminishing.

Xconomy: So, is online gaming now where radio was in the 1920s, or TV in the 1950s?

Anderson: Absolutely. The Electronic Arts of the world shouldn’t be fooled into thinking they have it all figured out. I mean, Nintendo was written off the charts 18 months ago, and look at how wrong that was.

There’s a whole generation of kids who are looking at entertainment completely differently—they’ve grown up with computers and portable devices. Small screens will never stop being part of their lives. With both of my daughters [who are 7 and 10], them learning to mouse was more memorable for me than watching them walk for the first time. It was just this epiphany they had one day. They play games, all their friends play games. That’s a fundamentally different dynamic than anything we’ve seen in economics, in media, in entertainment to date.

Xconomy: What can you say about Turbine’s plans for an IPO?

Anderson: Clearly, we have investors. [Turbine has raised $50 million, including investments from Boston-area VCs Highland Capital Partners, Polaris Ventures, Tudor Ventures and Columbia Capital--eds.] The long-term goal is to find liquidity for them and give them an opportunity to exit. The revenue bar to achieve a really good IPO has gone up post-2001, so now you want to be at $100 million plus in revenue. What the final resolution is for us—I’ll let you know when we get there.

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It’s showtime at Virtual Ubiquity. In the conference room at the start-up’s Waltham, MA, office, a band of engineers gathers to see the latest tweaks to the way Buzzword, their new word processor, organizes documents.

“This is the alphabetical view,” says Dave Coletta, a programmer who’s one of the company’s 11 employees. Projected on one wall is an array of what looks like sheets of paper with whimsical names like ‘Junkyards of Romance’ and ‘Why Trust a Guy Named Dick?’ It couldn’t look less like the monotonous hierarchy of files and folders used by Windows.

“And here’s the group view.” Coletta clicks a button, and the documents scatter like birds to new places on the screen, reorganizing themselves by topic. After a moment, most of the people in the room break into delighted laughter. Paul Kleppner, the company’s software architect, looks mildly stunned. He had told Coletta not to pursue this kind of on-the-fly sorting, that it would be too hard to pull off in Buzzword’s first release, and might confuse users. But Coletta figured out how to use Adobe’s Flash technology to efficiently animate the transition. Kleppner bangs the conference table in mock anger; really, he’s tickled.

It’s one of those delicious moments when the magic of a technology surprises even the technologists. That moment took place back in March, before Virtual Ubiquity was open to beta testers. But the magic stayed with it, and on October 1, the day Virtual Ubiquity made its preview edition available to anyone on the Web, Adobe (previously the company’s sole investor) announced it was buying the company for an undisclosed price.

Adobe gets two things with Virtual Ubiquity. One is a proof point of the virtue of developing Web applications with its tools. The other is a document creation tool that could be integrated with other Adobe products like the Connect Web conferencing system, or could automatically export documents to Adobe’s PDF format.

Buzzword isn’t the first Web-based word processor—at least half-a-dozen others are out there, including Writely (now part of Google Docs). But it just might be the slickest. Instead of vertical drop-down menus, it arranges things horizontally, using “pleats” that unfold like an accordion when clicked. It features catchy little icons like “f” (for formatting text), or a paragraph symbol (for formatting paragraphs). Tables and pictures get resized by clicking on them with a mouse, rather than going up to a tool bar at the top of the screen.

Buzzword is also built with different tools than most of today’s Web 2.0 applications. It’s programmed in Flash, the nearly ubiquitous Web animation tool, which means it’s a simple thing to make a document look the same regardless of whether you log in from your home machine, at the library or at a friend’s house. Other browser-based technologies like AJAX (an abbreviation for Asynchronous Javascript and XML) can’t manage the same fidelity, says Melissa Webster, an analyst at technology watcher International Data Corp.

After hearing book publisher and tech savant Tim O’Reilly describe Web 2.0 as a new kind of computing platform, Virtual Ubiquity CEO Rick Treitman says, “I thought to myself, somebody’s going to build a new word processor for the Web, and if it isn’t me, I’m going to be really kicking myself.” Obviously, he wasn’t first. But he thinks Buzzword will be better than its rivals, with fewer compromises from desktop-based word processors.

If Buzzword does succeed, Treitman and his team will be improbable groundbreakers. Middle-aged men are supposed to blow money on cars and alimony, not rebuilding a relic application from the glory days of PC software. Treitman is 56. His CTO, Mike Kraley, is 57 and another Lotus alum. Kleppner, who was the architect of Improv, the first three-dimensional spreadsheet, is 45. Robbi Shaver, who designed the interface for Improv and Lotus Notes version 5, is 51.

But with age comes wisdom—and some measure of financial wherewithal. Treitman sold his business, Kraley had some money in the bank, and Kleppner and Coletta were fresh from stints at ERoom, a startup purchased in 2002 by Documentum, which was in turn bought by EMC in 2003. When it took almost a year to get funding, they could go without the pay, working in Kraley’s attic. There, Kraley, Kleppner, and Coletta built the foundation of Buzzword while Treitman barnstormed for funding, which he finally landed in November 2006 from Adobe’s venture fund to spur the creation of Flash apps.

For its official public beta, expected later this fall, Buzzword’s graying gang is actually targeting users 30 or more years their juniors—students. Why? Because students don’t stay in one place. The Pew Internet Project says people between the ages of 18 and 34 log in to their Web accounts from an average of four different places a day. Flash’s ubiquity means Buzzword users will have access to their documents in the same format no matter where they are—home, school, library. It’s also easy for students to work together on Buzzword documents, and to see comments from teachers on screen, even from different computers.

Treitman also thinks a free word processor like Buzzword, with the free online storage it will offer, will appeal to cash-strapped students and their schools.

Web-based word processors like Buzzword do face security and privacy issues: users’ documents will be hosted by Virtual Ubiquity on the Web, and even though they’ll be password protected, it’s still the Web. That said, we’re all getting used to living with those concerns; Jupiter Research found in 2006 that 11 percent of U.S. businesses were already using Web-based applications like Salesforce.com, which represent the fastest growing part of business software. And if businesses trust the Web, it’s likely that students (who seem to post pretty much anything on MySpace or Facebook) will, too.

Another big drawback is that you have to be online to use these applications, at least for now. But in the future Treitman expects to take advantage of the new Adobe AIR programming tool (for Adobe Integrated Runtime) to help it work offline as well as online.

Treitman says being subsumed by Adobe is a good thing for Virtual Ubiquity, which was “a stand-alone company with a funny name that people couldn’t remember how to spell.”

“We were asking users to trust their documents to a small startup, and we now have a trusted and well-respected brand name,” says Treitman. That may create a lot more buzz around Buzzword.

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