Peter Molyneux got the idea for his latest game while in bed with his girlfriend.

The esteemed designer, whose hits over the last 15 years have included "Fable" for Xbox and the PC series "Black and White," said the idea struck him at 5 a.m. on January 19, 2003. His girlfriend was asleep.

"I woke up for some reason," he said. "I thought, 'My God, why has no one ever really done a game about the movie industry?' "

Molyneux is known for promoting — if not always following through with — ambitious game ideas, like letting players play God or putting them in a flexible world where acorns sprout into trees. But this was a surprisingly straightforward, almost fully formed concept that emerged at 5 a.m.: Players would oversee a studio. They'd hire and fire writers and directors. They'd steer the lives of actors, avoiding or courting headline-grabbing scandal. And they would make movies.

"I woke up my girlfriend," he said. "I told her the whole idea and she told me to go back to sleep."

Few games have re-created any aspect of Tinseltown. Most that have tried have focused on stunt work.

This week, nearly three years later, Molyneux's British gaming studio, Lionhead, and publisher Activision released "The Movies," a "Sims"-style computer game that virtually realizes those early morning scribbles. From a bird's-eye view, players oversee the workings of a movie studio, developing their enterprise as a century's worth of technological advances, newsmaking events and annual awards shows reel forth.

Molyneux is the sort of free spirit who prioritizes a flight of fun over the boring details of real life. A few years ago, for example, he stressed to the architects who worked on his house to design him some secret passages. So when it came to re-creating Hollywood as a video game, Molyneux wasn't afraid to do some streamlining.

"The way that Hollywood operates is very close to insanity," he said. "If you were to sit down and think as a logical human being, 'How am I going to structure a movie industry?' you definitely wouldn't come up with the system that they've got." So Molyneux and his team decided to keep things simple: Players hire writers who turn out scripts that are cast and shot. He left out the best boys, the gaffers and the key grips.

That's not to say Molyneux didn't find Hollywood lunacy inspiring. He met with Hollywood directors, agents and writers (he won't say which ones) while preparing to make "The Movies." The rampant name-dropping he encountered when meeting with real movie people inspired one of the game's key features. "If you have a one-hour meeting, you have to go through 56 minutes of that one-hour meeting going through a list of people that these people know and have lunch with and are best friends with."

As a result, gamers playing "The Movies" will find that their stars' success and happiness heavily depend on how well the stars know each other and are known by the public. On-set romance can help a movie — and having a paparazzo bear witness can help even more.

The team behind "The Movies" drew much inspiration from the tabloids. The game's actors can get addicted to drugs and food. They have egos and throw tantrums. But letting virtual actors indulge their wild side did present a programming challenge, according to Molyneux. "We had a lot of problems with stars getting totally over-addicted," he said.

One vexing issue involved the game's method for tracking fame and pride, which Molyneux called "the shyness bug." The biggest stars would be so worried about being seen in a bad light that they wouldn't leave their trailer for a decade. That bug was fixed. The developers also dropped the idea of irate actors being able to trash sets. The damage was getting too out of control. Still, directors storm off a set to hit the bar, and some actors have to be sent to detox.

Gamers won't just keep busy trying to keep their studio profitable and lively; they'll actually be able to zoom in and create movies. Borrowing from the Machinima concept of staging movies within games, "The Movies" lets players pick sets, costumes, angles and basically build their own films, which can then be shared online. Molyneux said he used the game to make a movie of his own — a 20-minute attempt at a science-fiction version of Shakespeare's "The Tempest" — but said it was "complete rubbish."

For all the game's flexibility, Molyneux admitted "The Movies" has limits. If they're playing through the history of cinema, players will be hard-pressed to create blockbuster five-star movies in the game's version of the '40s. So they can forget about making a "Citizen Kane."

Players' movies are graded by the game itself. How can a computer program calculate the quality of a movie? "The Movies" uses a formula with some 200 factors, according to Molyneux. A movie's rating can be improved with a high number of costume changes, how well the actors like each other or even — if it's a disaster movie — if it's released "at a discrete time after a worldwide disaster." Molyneux said he has rejected requests from real-life movie people to share the game's formula. "I had to reach across to them and say, 'This is not going to tell you anything, man.' "

Having given Hollywood the virtual treatment, Molyneux said he can think of another industry that would be fair game. "Imagine if you had the ability to create not films but the stuff you listen to and get inspired by — wouldn't that be fantastic? Who wants a game about boy bands, pop stars and rappers?"

While the PC version of "The Movies" came out this week, console versions are in development for release sometime next year.