Steven Spielberg and Shigeru Miyamoto, legends of the film and video games industries respectively, have pooled their creative energies to spark the inspiration for a new game to be released on Nintendo's Wii console by Electronic Arts (EA), the world's largest developer.

The new title, early details of which were given at the E3 games conference in Santa Monica, is being billed as an "action puzzle" adventure. The concept, somewhat removed from EA's staple sports, driving and shooter fare, underscores the revolution being wrought in the $30 billion games market by Nintendo's new-found dominance.

The move comes as EA fights to tackle plunging profits – down 70 per cent last year – and as groups across the games industry look to emulate the broad appeal of the Wii and Nintendo's equally successful handheld DS machine.

Both consoles have won market-leading positions by eschewing expensive new technologies in favour of innovative forms of game play that have won over older and female users. According to Screen Digest, the analyst, the Wii continues to outsell Sony's more powerful PlayStation by about two to one.

While not a collaborative effort, the involvement of Mr Miyamoto in the title's early stages is likely to spark interest across the gaming community.

EA will bank on the new title being hotly awaited by gamers and movie buffs alike, not least because Mr Miyamoto - a key creative force behind the Wii's innovative "magic wand" motion-sensitive controller – holds the same vaulted position in the games word as Mr Spielberg does in Hollywood.

It is understood that the project, being developed under the prosaic codename "PQRS", emerged from a meeting between Mr Spielberg, whose directing credits include Indiana Jones and Saving Private Ryan, and Mr Miyamoto, whose creations for Nintendo include Zelda, Donkey Kong and Mario, the most successful games franchise in history.

Mr Spielberg, meanwhile, also has experience of the gaming industry through DreamWorks Interactive. The division was sold to EA in 2000 after turning a loss, but was responsible for the hit "Medal of Honor" series.

Flagging the sector's shifting sands, John Riccitiello, the chief executive of EA, this week conceded that his games were "boring people to death". Too many new titles pandered to "fast-thumbed teenagers", he said, alienating a potentially much broader audience.

He also suggested that the economics of selling $60 titles that take up to 40 hours to complete to an increasingly esoteric hardcore of users was no longer stacking up.

The Wii, which at $250 still costs half the price of the standard 60GB PS3 in the US despite a $100 price cut by Sony this week , is also far cheaper to make games for. Industry estimates suggest a Wii title can be finished for $5 million. A new title for the PS3 can cost four times that.

In its battle to build margins, EA has already been heartened by the success of early moves into the newly defined "casual gaming" sector that has largely been defined by Nintendo. An EA download service for basic games has won more than 1 million subscribers – more than half of them women over 30. Such efforts tie in with Nintendo's most recent marketing push – a TV campaign promoting the Wii featuring Nicole Kidman, the actress.

EA also used the E3 event to unveil other Wii titles including Boogie, a karaoke game that will allow players to make their own music videos and will be shipped with its own peripheral equipment.

Involvement from EA is a big boost for Nintendo, which has struggled in the past to build relationships with outside developers. However, EA is not forsaking its traditional market just yet. It is also developing a second title with Mr Spielberg, under the codename "LMNO", which will be rolled out for Xbox 360 and the PS3.

"The 'LMNO' product is probably more of what you might expect from a partnership between Steven Spielberg and Electronic Arts in that it focuses on a relationship between the player and a nonplaying character," Neil Young, general manager of Electronic Arts Los Angeles, said.

Both of EA's new Spielberg titles are expected to be released in the next nine months.

In another sign of the growing relationship between gaming and Hollywood, Microsoft said at E3 that Walt Disney will join the studios offering films to rent on its Xbox Live online service.

Warner Bros and Paramount studio already sell and rent films through Xbox Live, which has more than seven million members and expects to pass 10 million in the next year.

Microsoft executives at E3 have said they will cut the price of the Xbox 360 in response to Sony's move. However, they said a cut would not come as soon as this week.

Last year, Microsoft's Games division lost $1.26 billion on sales of $4.26 billion. It will be banking on boosting uptake for the Xbox 360 to boost higher-margin games software sales.

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