Hollywood Romance Has Promise

Hollywood is now so enthusiastic about multimedia--buzzing over Strauss Zelnick’s move from 20th Century Fox to a video game start-up firm, and jamming Digital World’s multimedia conference in Beverly Hills this week--that it’s only natural to suspect a bad case of hype, a technofad that will fade without producing real business.

But for once there may be reality behind the buzz. Hollywood wasn’t the first to get the bug about the merging of computers and television. The craze took hold years ago here in Silicon Valley, and multimedia has already proven to be good business. Firms such as Media Vision and Creative Laboratories are growing rapidly, selling sound and video capabilities for personal computers. Media Vision, which will grow 160% to more than $180 million in sales this year, sells kits in Wal-Mart that allow computers to run interactive children’s stories and video games.

Multimedia is only part of a general rush of technological development that has spurred new growth in Silicon Valley. Computer networking companies such as SynOptics Communications, Cabletron Systems and Cisco Systems are deluged with business. The area’s venture capitalists are backing start-ups such as C-Cubed Microsystems, which makes chips to compress video signals, and Crystal Dynamics, the Palo Alto video game company that Zelnick is joining.

Multimedia is suddenly real, says Paul Jain, founder and president of Media Vision, because of two factors: power and boredom. The newest microprocessors and networking devices give computers enough power to carry moving pictures and good quality sound. At the same time, customers are demanding something more because they’re bored with personal computers that can do only spreadsheet accounting and word processing.

Media Vision, which Jain founded in 1990, sells chip boards to IBM, Compaq, NEC and other manufacturers so they can give better sound and video qualities to their personal computers.

And the company sells retail because the home computer market has finally arrived. “Eight months ago, Wal-Mart didn’t carry any computer equipment; now there’s a vast aisle, selling IBMs and Apples,” says Jain, 48, a native of India who earned computer degrees from UC Berkeley in the 1960s and worked for several small computer companies before starting his own.

The Wal-Marts sell more than $4 million a month in Media Vision upgrade kits--a sound board, compact disc, disc drive and speakers costing about $400. The kit equips a computer to use an interactive encyclopedia or to show an interactive story in which a child can move a cursor to manipulate the characters or answer questions.

Physically, Media Vision’s product is akin to Sesame Street with lumpy characters and jerky movements. But those qualities will improve with time. Meanwhile, the principle of interaction is the important point.

Computers can do more than television sets. Because they have memory, computers can store information. And now users will be able to interact with that information, contribute to a program or change it, control it.

“It’s a new medium,” says Jain, one in which the biggest market initially may not be in entertainment but in business. Think of a chemist for a pharmaceutical company working with molecular structures in a three-dimensional, full-motion video computer program, or an engineer working with a building or a Boeing jetliner or the intricate circuitry of a microprocessor for the next generation of computers.

Regis McKenna, head of a Palo Alto consulting firm who has just started a multimedia software company, believes that with advances in interaction, multimedia and communications, each industry will have a computer system specific to its needs that will be updated constantly with the latest technical, legal, political and financial information. It’s a vision that includes a bright future for information-gathering organizations, such as newspapers.

That’s a significant point. A new industry, fittingly called “multimedia,” is emerging at the intersection of computing, communications and consumer electronics (TV, videos and radio). Its emergence has been only partly foreseen. Predictions a few years ago were that consumer electronics would lead this new industry, but now it’s clear that computers will be its driving force.

Just so. Media Vision has hired key executives from Time Warner and Microsoft to turn out interactive computer movies. The “titles,” as Jain calls them, will be experimental, with video games helping to move the action forward. Other firms here and abroad are making similar attempts at interactive movies and stories. “We’ll make five titles for half a million dollars each and, just like Hollywood, if three or two out of five are great, we’ll make a lot of money,” Jain says.

It’s a beginning. Hollywood historians may remember the dawn of another medium on New York’s Lower East Side around 1900. Entrepreneurs sold tickets to storefront nickelodeon theaters that showed moving pictures. Within a decade, those nickelodeons became the motion picture industry. Maybe that’s why Hollywood is so fascinated with multimedia today.