Elan Lee, chief design officer for Xbox Entertainment Studios, helped create the Alternate Reality Game (ARG) genre because he feared being fired from Microsoft after Steven Spielberg walked into his office.

“Spielberg looked at me and said ‘your boss just gave me money to make A.I. (A.I. Artificial Intelligence)‘” Lee told the Merging Media 5 conference in Vancouver during a keynote address. And so suddenly, just three months into his career after graduation, his job was to make four video games based on the A.I. property.

“I was left thinking, I don’t understand how the business world works, but here I am. I’m in the middle of insanity,” Lee said.

So he and his Microsoft colleagues read the script for Speilberg’s project, and got on with creating the games – all before seeing the film. The film’s premiere left them facing an unexpected reality of their own.

“A.I. is an epic story about a young boy, who is really a robot, and who wants more than anything the love of his mom and would do anything to be real,” Lee explained, recounting the A.I. storyline. “But that doesn’t work out well. Instead, he gets abandoned by his family, tossed into the middle of the wilderness, and he watches everyone he loves get murdered, and eventually he gets trapped at the bottom of the ocean where he witnesses all of humanity go extinct,” he continued.

Spielberg may have looked forward to another box office hit, but Lee and his designer team saw a different future unfold. “How many people do you think left that cinema thinking, ‘Oh, I can’t wait to play the Xbox game?” Lee said.

The video games idea a bust – and quite possibly their young careers – the team returned to Seattle to regroup. But not all was lost.

Lee and his designer team retained one gaming element that promised emotional resonance. Their focus became the A.I. movie poster, and more precisely tiny notches placed in a date on the poster, and a fictional credit inserted for a “Sentient Machine Therapist” named Jeanine Salla. “We created two very subtle and very obscure rabbit holes,” Lee recalled.

They also created The Beast, a game to accompany A.I.

Lee didn’t have casual moviegoers in mind; Spielberg’s giant marketing and promotion team back at the studio had that covered. He was focused on hardcore fans. He was creating a magnet, subtle as it was, to pull diehard fans towards the poster. And those that came closest, to read its smallest script, would be rewarded. They would become part of game itself, and let everyone else know they were.

At first a few A.I. fans scratched their heads, but eventually millions of people went down Lee’s digital rabbit holes, chasing recorded phone messages and fake web sites. Their goal was to help solve a well-crafted story world of a murder where Jeanine Salla was key to resolving the mystery before the wide release of A.I.

“Do you have any clues? Can you help us out?” Lee recounted as early calls to action, followed by fake funeral involving actors and other elaborate role-playing. “Round and round this went, and we inadvertently created what the world has come to know as the world’s first alternate reality game,” Lee said.

And it was all done because Lee and his fellow designers feared they were about to be fired and had to get something out the door.

As he assured himself a thriving career, Lee also learned three important rules that underpin his storytelling tools and techniques.

The first is, as you create a storytelling narrative, make your audience feel like an extraordinary version of themselves as they consume it.

“This is the notion that the titles that attract people the most are ones that make them feel very special for being themselves,” Lee explained.

An example is I Love Bees, a six-hour War of the Worlds-style radio drama Lee created whose plot led directly into promoting the Halo2 game.

Rather than broadcast the drama over the radio, Lee and his designer team chose pay phones, thousands of them, ringing around the world, waiting to be answered by fans.

“You’re walking down the street, you hear a pay phone ring, you walk over to pick it up, and someone at the other end yells out, ‘God, you answered the phone, don’t hang up, I need your help!” Lee recounted.

Role-playing by actors was used to reveal bits of the storyline as fans played the game. Answering the phones became huge events, fans wore costumes, they wanted to answer them because they wanted to know the next elements of the story.

“You become an extraordinary person just for answering a ringing phone,” Lee explained.

His second guiding storytelling principle is to use the vocabulary of your target audience.

“There’s this huge temptation to always build things that you the creator understand, and then to force the audience to also use that language,” Lee said. The magic comes when the creator and audience use the same language, he added.

An example here is Cathy’s Book, written by Lee and a designer team as a teenage girl’s journal, but really an trend-setting experiment in interactive publishing. The book included endless clues like birth certificates, news clippings, telephone numbers and websites.

“As you flip through the book, everything [Cathy] talks about becomes real,” Lee recounted.

Like The Beast, Cathy’s Book offered evidence for users to piece together to solve a mystery, with the added goal to use the same vocabulary as the readers. “Make it seamless so it feels like the character and the audience live in the same world. This the way the 21st century wants to tell stories,” Lee said.

His third creative principle is wowing the audience with magic.

“Magic is this sense of the players and the audience coming away form the experience saying I didn’t know life could do that. The world is now different from what I thought it was. It’s magical,” Lee said.

It’s not enough to be clever with your storytelling: “You have to grab for something a little unexpected.”