First I would make a Princess Maker clone for a western audience, with over 200 possible endings for your daughter. It will be for DS and PC with a free Flash demo at my web site. This will be very very cheap to make and generate some internet buzz about my new company.
Then I would use a big chunk of the money to buy the rights to Choose Your Own Adventure books, and release them as a set of DVDs (with versions for Wii, DS, and PSP, since they can't play DVDs), since all you have to do is point and select your choice at each page. But I'd add animations for each choice and illustrations for each page for while you're reading, and optional voicework by quasi-celebrity actors. I would only have to buy the rights and pay the voice actors and animators, and then I'd release a DVD with the first 50 books on it. I would advertise it as edutainment to teach kids how to read and get them to think reading is fun, and the older nostalgic crowd would want it for their kids.
Then to get myself popular with the Wii crowd, I would make a downloadable game for use with the Balance Board and Wii Remote with Motion Plus, called Hoverboard Jousting. The whole concept is in the name. You try to deflect their lance and knock them off. The design will look somewhat similar to the Space Olympics, but you can redesign the colosseum Mario Paint style to make it look like your house, backyard, favorite monument, underwater, or a giant bathroom.
Then the rest of the money would go into my big project, Wii Drive By. One player sits on a couch with their feet on a Balance Board (gas and brakes), and drives with the Wii Wheel. Then 1-3 players can play with Wii Remotes (with or without the Wii Zapper) and shoot at everything they drive by. Each "level" will be so vastly different it will basically be a different game. You can rob a bank and try to get away, or you can chase bankrobbers. You can have a chase in a horse carriage with bows and arrows. You can fly a spacecraft with 3 gunmen on it. You can use the boring characters you start with, or Miis, or unlock famous historical figures (public domain booyah, like the cheat codes in NBA Jam) like Napoleon, Socrates, and Jaon of Arc, to give it a Bill & Ted's bankrobbing through time kind of feel.
EDIT: Man I'll never run out of $500 million. Well after those I'd try to sell my idea for "Super Luigi Bros." to Nintendo, but that's a story for another thread. All the money I had leftover would go into making a Flash "Wiki-Platformer" that anybody could contribute to (level designs, new items, new weapons, new enemies, new bosses), and levels would get voted up and down and re-organized, so the game would grow forever, and then I'd open an arcade museum and just buy every arcade machine ever and put them in soundproof booths and let people pay $10 to come in and have everything on free play with tons of information about each machine next to the machine.
