Sept. 26 (Bloomberg) -- Martin Ly steps out of a San Francisco arcade and sits down to catch his breath. He's just played two rounds of the video game Dance Dance Revolution, which requires players to speed-dance to on-screen instructions.

``It's a workout,'' says Ly, 18.

``Exergaming,'' or playing video games that involve exercise, is booming in the U.S., not just in arcades but in schools, gyms and homes. The trend is getting a boost from the success of Nintendo Co.'s Wii, whose motion-activated controller lets a player simulate everything from realistic swordplay to golf swings.

As game makers move to make exercise more appealing and less monotonous, investors are taking notice. More than a dozen companies have pitched products to venture capital firm Enterprise Partners, says Erik Nierenberg, a partner at the San Diego firm, which has $1.1 billion in assets.

``People recognize the convergence of physical exercise and information technology,'' says Nierenberg, whose firm invested about $10 million in Sunnyvale, California-based Expresso Fitness Corp.

Expresso's computer-equipped bicycles simulate outdoor courses. In the past two years, Expresso has sold 3,000 bikes, which go for $4,995 apiece, to gyms such as YMCAs and Gold's Gym International Inc.

Like Expresso, GameRunner Inc. is seeking to take a piece of conventional exercise gear and make it a lot more fun. The closely held company, based in Grass Valley, California, is developing a treadmill-based system that connects to a personal computer. It allows users to run while playing games such as Id Software Inc.'s ``Quake II'' and Electronic Arts Inc.'s ``Medal of Honor'' series, where the gamer fires a weapon from the perspective of a shooter.

GameRunner says it expects to ship its first $500 treadmills next year.

Giant Joystick

While GameRunner and Expresso try to make exercise more like gaming, some of their competitors are looking for ways to make gaming more like exercise.

Interaction Laboratories Inc., based in Beltsville, Maryland, sells an oversized joystick to replace traditional hand units that come with Sony Corp. PlayStation or Microsoft Corp. Xbox consoles. It translates full-body force applied by the user into game movements.

In much the same way, XKPad Inc.'s Bodypad, after it is hooked up to PlayStation or Xbox consoles, allows a user to play fighting games with body movements. Sony's EyeToy uses a video camera to capture a player's movements and place them in the game on a screen.

A growing number of U.S. school systems see exergaming as a way to help children get a workout. U.S. childhood obesity rates have more than doubled over the past 20 years, and schools are pushing back with games that involve dancing, fighting and racing.

West Virginia Schools

West Virginia turned to Konami Corp.'s Dance Dance Revolution, known as DDR, last year, announcing plans to get machines for all 765 public schools in the state. Others such as the Patrick Henry Middle School in Granada Hills, California, have been using DDR for about five years.

Ly, who didn't have any gym classes in high school, says he started playing DDR seven or eight years ago. DDR machines debuted in U.S. arcades in March 1999.

In some Philadelphia schools, children use SSD Corp.'s Xavix console to play Jackie Chan video games to take boxing lessons. The jumps and arm movements required to play the game are as good as a gym workout, says Glenn Devitt, who coordinates a Philadelphia school district program.

``The heart doesn't care if you're playing DDR or running on a treadmill,'' says Ernie Medina, a preventive care specialist who runs the XRtainment Zone gym in Redlands, California. ``It's a no-brainer that you're burning more calories.''

Wii Extends Lead

Nintendo's Wii has given exergaming a face. In August it extended its lead over Sony's PlayStation 3 and Microsoft's Xbox 360, with stores selling 404,000 consoles in the U.S. Retailers sold 277,000 Xbox 360s and 131,000 PlayStation 3 systems, according to researcher NPD Group Inc.

``The Wii phenomenon has definitely had a positive effect,'' Nierenberg says.

The popularity of Wii is forcing game publishers to develop titles that appeal to people who don't typically play video games, John Riccitiello, chief executive officer of Electronic Arts, the largest maker of video games, said in July.

On a larger scale, exergaming will expand the game publishers' audience by attracting older people and women, says Scott Smith, an analyst with research firm Social Technologies LLC. The typical gamer is a man between the ages of 18 and 49.

Exergaming is a good investment, says Tae He Nahm, 47, a general partner at Menlo Park, California-based Storm Ventures LLC, which has $500 million in assets.

He says he'd win points with his wife by making a personal commitment to the trend.

``I like games, but she feels like I don't get enough exercise,'' he says.

To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net.

Last Updated: September 26, 2007 00:13 EDT