When "Mortal Kombat: Annihilation" hit theaters in 1997, it did something that parents groups and senators had failed to do: Brought the franchise to its knees.

The film was so horrendously bad that it made 1995's "Mortal Kombat," which only the most die-hard fans of the series truly embraced, look downright artistic. Production on a third sequel, sub-named "Devastation," was shelved and New Line Cinema never looked back.

But a funny thing happened as the Internet exploded. Last year, director Kevin Tancharoen ("Fame"), a big fan of the video game fighting series, had an idea to lobby Warner Bros. for a new installment in the series. Calling in favors from friends and tapping friends of friends, he began working on a live action short, which he never planned to release publicly – well, certainly not as soon as the short actually did make it online.

“I am not the most technically savvy YouTube person,” says Tancharoen. “What came out wasn’t the final product in my mind. I wasn’t done yet. It was still in its rough phase, but I couldn’t send a 2GB file over email, so my friend said I could cerate a private page on YouTube and sent it to him to review. It turns out it wasn’t that private.”

Fans and gaming outlets quickly found the video – which has since racked up over 5 million views. As it went viral, though, Tancharoen had no idea.

“I looked on Twitter and saw MK was trending and thought ‘Oh god, did someone beat me to the punch?’,” he says.

When he realized it was his film, his fears doubled: certain rights hadn’t been secured – including with his cast.

“The actors could have quickly rebelled against me,” he says. “Thank God people liked it, because it could have gone really bad.”

The buzz surrounding that YouTube short led Warner to tap Tancharoen to direct nine live-action shorts to lead up to this year's new installment of the game, which ultimately proved to be one of the most successful in the series.

Now Tancharoen is taking the franchise to cinemas – which is just what he had hoped to do when making that YouTube video.

“The bigger thing for me, of course, is I want to translate this to a feature,” he noted in a conversation earlier this year. “I would love to tell the stories that lead the character up to a certain point, then have them merge together in a big 3D movie.”

It was, in fact, Tancharoen's short films that got Hollywood thinking about rebooting the franchise.

"The new game and the online shorts prompted us to consider a reboot of a brand we hadn’t been actively thinking about," said New Line president Toby Emmerich.

The film will be written by Tancharoen's partner on the shorts and will likely come out in conjunction with the next Mortal Kombat game. Still undetermined is whether the stars of the Web series – which include Michael Jai White and Jeri Ryan - will reprise their roles in the big budget version.

The remake has one thing going for it, though: Fan buzz. Tancharoen has proven himself to the "Mortal Kombat" core audience – a critical first step in reviving the franchise.

The first video game adaptation of James Cameron's Avatar wasn't exactly a hit with players, but the director/3D visionary isn't ready to give up on the idea.

Cameron noted recently that he believes the franchise is ideally suited for a massively multiplayer online game, much like "World of Warcraft" or the upcoming "Star Wars: The Old Republic".

"I think Avatar is a perfect IP for an MMO," Cameron told IGN. "It's a very, very big world and based on the first film, you might not sense that, but we're talking about an entire planet, an entire alter world, and in fact a universe that has other planetary bodies, as well, and other cultures, other life forms.

"Eventually people will see enough scope to be able to see how the MMO will work, but that's going to have to be launched... the timing of that is going to have to be carefully orchestrated with the release of the second and third film because we don't want to be giving away elements before the fact."

The Avatar game, published by Ubisoft, failed to take off as expected – and was a drag on the publisher's 4Q 2009 earnings. It wasn't a flop by any means, though. While critics lambasted it, the game sold more than 2.7 million copies.

Cambio isn't a household name amongst most adults, but your tween may be familiar with it. Now AOL's interactive entertainment site is hoping to boost its Q factor with some high profile partnerships and a warchest earmarked for original programming.

The site re-launched today, announcing partnerships with several industry heavyweights including Mark Burnett, Warner Bros. Digital Distribution and Dolphin Digital Media. And while the Burnett relationship might turn the most heads, it's the Dolphin Digital one that could have the biggest impact.

The company and Cambio have launched an exclusive content deal, which will result in 4-6 scripted Webisodic content programs per year, with an annual budget of $10-$12 million.

In the meantime, Burnett (best known as the creator of reality fare like Survivor and The Apprentice) will switch gears to develop a series of comedic video shorts based on CliffsNotes Literature Guides. "Charlie's Angels" director McG will exec. produce the first Dolphin Digital contribution, entitled "Aim High," a six-episode series about a high school student who's a spy on the side.

Cambio's traffic has been falling precipitously over the past year- losing more than half of its monthly visitors - but execs hope the infusion of talent and cash will help right the ship.

"With Dolphin Digital Media, Warner Bros. Digital Distribution and Mark Burnett's stellar reputations in providing quality entertainment content, we believe they'll help catapult us to become the eminent destination for teens and young adults," said Nathan Coyle, General Manager of Cambio and former digital media agent at Creative Artists Agency.

After being the subject of whispers, rumors and speculation for months, it appears the iPhone 5 is finally ready to make its debut. (Edit: Or, you know... maybe not.)

Apple has confirmed plans for a press event at its Cupertino, Calif. Headquarters on Oct. 4, where it's expected to unveil the next iteration of its popular smartphone.

There are plenty of rumors about what that phone will offer. Among the most prevalent are longer battery life, an 8 MP camera and a faster processor. While the iPhone 4 has been on the market for some 15 months, demand for the phone has remained strong, giving Apple leeway to announce the new version a bit later than it usually does. (New iPhone announcements typically come in June.)

Of interest at the conference, beyond the iPhone 5 itself, will be what media partners Apple chooses to bring onstage to sell the device's benefits. The chance of an updated iPod also being among the announcements is worth keeping an eye on as well, especially given the recent launch of Spotify and that service's close integration with Facebook, a partnership that could make it a serious competitor to Apple's cloud plans.

Want to play what's likely to be this year's biggest PlayStation 3 game on a big screen? I mean a really big screen? Get thee to the local Cineplex!

AMC and Sony have teamed up to let gamers play "Uncharted 3: Drake's Deception" in 3D and in the theater in select cities nationwide.

San Francisco, Dallas, New York, Los Angeles and Washington DC players will have the opportunity on Oct. 18, 19 and 20. $25 will get them a general admission ticket, but $60 buys a 'premium pass' that will allow them to get a copy of the game before it hits store shelves on Nov. 11.

Rather than sending people home with games, Sony will ship their copy via FedEx on Oct. 25. Members from the Naughty Dog development team will also be on hand to speak with fans.

"Uncharted" is one of the most natural fits in the gaming world for a big screen play session. Previous entries in the series have been lauded for their cinematic qualities and strong focus on story telling alongside the action.

A big screen adaptation of the series is currently underway. Director Neil Burger, best known for Bradley Cooper's "Limitless" and the Edward Norton-starring "The Illusionist," took over the directorial reins in July after David O. Russell walked away from the project due to "creative differences". So far no casting announcements have been made by Burger, though Mark Wahlberg was attached to Russell's version. 

Additionally, Spike TV and Sony are teaming up to create a reality show centering on the game. Dubbed Uncharted 3: Race to the Ring, the show will be filmed this October and air before the end of the year on Spike.

The Nintendo 3DS' biggest selling point may be its biggest weakness.

A study unveiled earlier this week at the Variety-sponsored 3D Gaming Summit earlier this week finds that 28 percent of the system's owners feel the use of 3D actually hurts gameplay.

In contrast, just 22 percent feel it helps games, while 13 percent of the owners opting to leave 3D effects turned off all the time. The main pitch point of the 3DS, of course, is the ability to play 3D games in stereoscopic 3D without the need for special glasses.

Users, the study found, simply aren't satisfied with the effects, though awareness about the device is on the rise, passing 60 percent. Most who showed an interest in 3D gaming said they preferred a 3D gaming console, rather than a portable device.

The study, from research firm Interpret LLC, isn't likely to be warmly received at Nintendo headquarters. The company, stung by weak early sales numbers for the system has already reduced its price by $70 and is counting on strong holiday sales to salvage its annual earnings.

Interpret conducted the study in mid-May, talking to over 1,600 adults.

You don't have to be a stock market wonk to know that Apple is a staggeringly rich company. Heck, you barely need to have a pulse.

Even the departure of the iconic Steve Jobs from the CEO role hasn't dampened consumer optimism, with shares gaining 8 percent since his Aug. resignation. The company's market cap now stands at more than $378 billion – and a new tumbler site is helping people comprehend exactly how much that really is.

We mentioned a month ago that the company was worth as much as Europe's 32 largest banks – combined.  (It's now worth more, by the way.) But that's still a business centric view. Here are a few more real-world valuations, courtesy of Things Apple is Worth More Than, that underscore the company's bottom line. Apple is worth more than:

* The Star Wars, Star Trek, Harry Potter and Twilight franchises combined – as well as everything Steven King has been associated with. (approximately $49 billion)

* Every single home in Atlanta, Ga. ($274.8 billion)

* All of the gold at the New York Federal Reserve ($350 billion)

* All of the illegal drugs in the world ($321 billion)

CBS' hit procedural drama NCIS is making the leap to the video game world.

Ubisoft and CBS Consumer Products today announced plans to create a title based on the show for the Xbox 360, PlayStation 3 and Nintendo Wii due this fall. The game will feature four cases that were written and developed with the show's writers.

Players will get the chance to play as all of the show's major characters, from Mark Harmon's Gibbs to popular forensic analysist Abby in locales ranging from Atlantic City to Dubai. There's no initial word on whether the actors will provide voice acting in the game.

It's pretty common for hit shows to be made into games, but NCIS is something of a fish out of water. The program, currently in its 9^th season and syndicated to more than 120 markets, skews a bit older than the standard video game player.

Then again, so does CSI – and Ubi has successfully marketed eight games based on that franchise, part of an extended partnership with CBS.

The continuing customer backlash at Netflix is taking on staggering proportions. The company (whose stock, by the way, is down another 7 percent in trading this morning) has lost a quarter of its value in the past month.

Things don't look to be slowing down, either – and competitors are viewing that as a golden opportunity to swoop in and steal some of those disgruntled customers.

Leading that pack is Blockbuster, which has called a press conference for Friday where it says it will unveil "the most comprehensive home entertainment package ever." That's corporate hyperbole at its best, of course, but the upshot appears to be the Blockbuster streaming service is about to become official.

The Dish Network property has been expected to jump into the streaming market for a while now – but has played its cards close to its vest. There have been rumors, though, that it might be offered free to Dish Network subscribers. Other whispers indicate it will include content from Starz, whose current relationship with Netflix is set to end on Feb. 28.

And just to ensure it reaches as many people as possible with its news, Blockbuster plans to stream its announcement online via Ustream.

Netflix saw its problems begin in July, when it announced plans to separate subscription fees for its streaming and DVD rental service, effectively raising the rates for people who subscribed to both by 60 percent. That resulted in the company being forced to lower third-quarter subscription estimates by 1 million.

Late Sunday, it angered people again by announcing plans to separate its streaming and rental-by-mail businesses into separate divisions, eliminating much of the convenience the site has been famous for. Starting in a few weeks, the DVD delivery service will be called Qwikster.