For months, venture capitalists have been hinting that an unheralded software company in L.A. was about to launch with something revolutionary. After more than two years of research and development, millions in funding from the venture capital arms of Global Crossing Ltd. and Donaldson Lufkin & Jenrette Securities Corp. and partnerships with two big local studios, Rotor Inc. is finally ready for prime time.

Rotor’s software allows producers to launch television-like netcasts that are truly interactive, meaning the audience can interact with characters in real time.

The company has developed a player allowing users to log on to designated events and influence the action by answering polls and asking questions. With that information, the Internet show can be quickly tailored to topics the audience is interested in.

“Unlike what’s currently being offered on the Net in terms of streaming video, Rotor actually allows viewers to participate as something is happening, influence the show and take part in the program so they are invested,” said Adam Tyler, Rotor’s senior vice president of entertainment, responsible for production and programming tasks.

Long development process

Instead of rushing to market as content companies popped up left and right, the company focused for more than two years on research before debuting its first event with Sony Pictures Family Entertainment and The WB network in late May.

The company makes no apologies for its conservative approach. “We’re doing something that’s never been done before, and we wanted to make sure that it worked,” Tyler said.

During the May sweeps, Sony and The WB teamed with Rotor to hold the first live, interactive animated event on the Internet. More than 4,000 cartoon-watching kids participated in the show, hosted by cartoon superhero Max Steel.

The TV program “Max Steel” debuted in February on The WB and has become one of the most popular Saturday-morning TV cartoons with boys. Executives with Sony, which produces “Max Steel,” decided the show was ideal for an interactive event because it could be hosted by the main character and it contains lots of gadgets and characters that are fertile ground for discussion.

“We did it to give kids a one-on-one interaction with Max, strengthening the brand overall,” said Tracey Tardiff, associate marketing director at Sony Pictures Family Entertainment. “(Rotor) really captured the essence of the show, and let us do things you didn’t have time to explore on screen.”

Starting work on the project in March with an air date of May 19, Rotor’s staff worked with the show’s producers to develop a story line and decide what interactive features would be used.

Part of the event was scripted, with an actor reading from a teleprompter while Max took the participating children on a tour of a top-secret lab featured on the show. This part of the event was drawn in advance by animators.

Polls let kids choose their favorite hero and villain. But the part that amazed the children the most was a feature that allowed them to ask questions, which Max promptly answered.

How do you make an animated character interactive? Rotor’s software allows animators to control Max’s lips in real time, to make it look as if he is speaking. By zooming in on a static drawing with moving lips, the character can talk (even if he couldn’t move anything but his lips).

“(The kids) kept asking, ‘Is this live? This is fake,'” Tardiff said. “So someone would ask, ‘Say hi to Howie,’ and Max would say, ‘Hi Howie.’ And there was a basketball game going on and we were feeding the sports scores. I think the kids were like, ‘Wow, this is real this is amazing.'”

That’s the kind of impact Rotor’s executives are striving for.

“If you’re a kid sitting at home, and Max Steel says, ‘Adam wants to know if it hurt when I go into turbo mode,’ that’s a big deal,” Tyler said.

How it works

Behind the scenes, as questions streamed in, Rotor’s staff searched the questions for key words designated by the show’s producers. A select group of questions were passed to the show’s executive producer and story editor, who sat in a nearby booth and chose the final questions that would be passed to the actor providing the voice for Max.

As the question popped up on the actor’s computer screen, the producer and editor fed the answers to him through a receiver in his ear, so the questions and answers flowed seamlessly. During a week of rehearsals, the actor prepared with sample questions, so he would be better able to improvise and understand what kinds of questions would be asked.

Throughout this process, an animator used a special software program to sync Max’s lip movements with the answers provided by the actor.

Since the Sony and WB netcast event, ZDTV, a San Francisco-based online and on-air network focused on technology, has been running an interactive, half-hour Web show powered by Rotor called “The Big Idea.” The show, on at 3:30 p.m., Monday through Friday, debuted May 29 and is slated to run through July 7. In the show, entrepreneurs present their business plans, and online participants vote for which ideas should get funded. At the end of the show’s six-week run, the winner will get $50,000 in seed money.

C-Net has also used Rotor’s technology for a 90-minute panel discussion show focused on Internet business issues, where panelists interacted with viewers.

Rotor is in talks with entertainment companies, awards show producers and film festival organizers, but could not provide names because contracts are still in negotiations. It’s likely that Sony and The WB will use Rotor for future events.

“Our experience was really wonderful,” Tardiff said. “We’re looking for ways to work with them again.”

Another “Max Steel” event is possible, because the model is already built, but Sony is weighing options for other brands and programs as well.

With 150 employees and growing, Rotor is trying to manage its growth. “We’re slowly rolling out,” Tyler said.

After raising initial funding of $20 million from upper management, employees, friends, family and select investment groups, including The Sprout Group and Global Crossing Ventures, the company is weighing going after another round of funding.