A Boom From Hollywood to the Silicon Valley : * Economy: California’s multimedia industry needs to fend off growing competition from New York and abroad.

Despite the many segments of California that continue to go through restructuring and job loss, a new and highly competitive economy is emerging, built on an innovative mix of high technology, entertainment and design. New and innovative local development programs are essential to safeguard this encouraging trend.

One of the most remarkable success stories of the new California economy is the multimedia industry that has emerged in the Silicon Valley and Hollywood. Markets for this industry’s products--chiefly interactive software for personal computers, ranging from children’s games to business and commercial applications--continue to grow and diversify at an extraordinary rate.

In a study just completed at the UCLA School of Public Policy and Social Research, California was found to be the home of no fewer than 875 multimedia firms. These companies typically are new-- well over half were founded in the past five years-- and are small and flexible in their organization. There also is an elite group of successful larger firms, including Broderbund, Electronic Arts, Activision and Iworks Entertainment. Entertainment companies like Disney, MCA/Universal, MGM and Time-Warner are moving aggressively into multimedia.Total employment, while hard to estimate accurately, is almost certainly in excess of 50,000 and increasing. Just as important, jobs in the industry are skilled and highly paid, with the median annual salary being $50,000.

The multimedia industry is split more or less equally between the Bay Area--San Francisco, Marin and Santa Clara counties-- and Southern California-- Burbank, Hollywood and Santa Monica. Bay Area firms tend to specialize in programming and business-commercial services, while Southern California firms clearly lead in entertainment. Indeed, the multimedia industry is not only important in its own right in Southern California, but it also is helping transform the entertainment industry. Multimedia techniques have revitalized the animated film industry and have been a significant factor in the repatriation of jobs from Asia back to Los Angeles.

California is the world’s leading center of multimedia production today. But intense competition can be expected to mount as other states (especially New York) and other countries (Britain, France, Germany and Japan) move more aggressively into this field.

In New York City, an Information Technology Center is being established that will eventually house up to 350 multimedia companies. To meet the challenge, the Bay Area Multimedia Partnership, an alliance of public and private groups, has begun development programs focused on new technologies, worker training, the formation of collaborative networks and marketing.

Southern California has done little to develop any equivalent effort. Various trial balloons have been floated by local officials, but no concrete steps have yet been taken to promote the venture capital, research and labor training programs that are needed if the industry is to maintain its lead over the long run. A permanent forum in which representatives of the industry, employees’ associations, government and universities can come together to assess needs and develop appropriate programs would be particularly useful.

Regional efforts to promote the industry in California should not, however, turn into a wasteful race fueled by overambitious political miscalculations. A multimedia alliance between north and south is in the wider interests of all.