By Alfred Hermida BBC News Online technology staff

Black and White has sold almost two million copies

The title will allow gamers to assume the role of a Hollywood studio mogul and build an entertainment empire.

It is due to be released in 2004 and is the latest in a line of simulation games that have proved immensely popular.

Games that allow players to manage cities, theme parks or even people have been major successes.

'Wacky, crazy films'

The deal with Peter Molyneux and his Lionhead Studios gives Activision the exclusive worldwide rights to The Movies for the PC and all game console platforms.

In the game, players will have an opportunity to run their own Hollywood studio from the silent days of the 1920s through to the present day.

Gamers will be able to assume the role of a studio boss, building a business by choosing the scripts to shoot, the directors to make the films and the stars.

"A lot of people will try to make blockbusters, others will try to make wacky, crazy films," Mr Molyneux told BBC News Online, "so you need a system that allows you to do this and it is a real challenge."

Gamers will be able e-mail their films to friends, "so you are going to see hundreds of thousands of these movies going around," he said.

Gaming coup

Simulation games like The Sims are hugely popular

Mr Molyneux is a leading force in games development in Britain. He has been the brains behind numerous best-selling titles.

His most recent, the God-sim Black and White, has sold close to two million copies.

The deal is a coup for Activision, who had to fight off competition from other game publishers.

"This is a crucial, major strategic announcement," said Scott Dodkins, Activision's Senior Vice President, European Publishing.

"Activision has a unique set of facets that other competitors cannot bring and we have empathy for Peter's vision."