A LOS ANGELES TIMES - FINANCIAL TIMES SPECIAL REPORT : The Next California--The State’s Economy in the Year 2000 : The Next California / HOLLYWOOD AND TECHNOLOGY : Welcome to Siliwood : Will Convergence of the Creative and Technical Lead to a Jobs Revolution?
The first half of the 1990s brought us Siliwood, the concept. It was a big concept, the coming together of Silicon Valley and Hollywood, the merging of California’s most celebrated industries into a whole that would be greater than the sum of its parts.
But it is the remainder of the decade that will determine how Siliwood, the reality, will materialize and whether the cyber-age puree of technology and entertainment will make a difference to the state’s economy and the lives of its residents.
Will the Jetsons ever arrive? And will they locate here, as they so clearly were meant to?
There are some encouraging signs in the affirmative.
“Convergence at a technical level leads to divergence at a jobs level,” says Paul Saffo, director of the Institute for the Future in Menlo Park. “This is not the collapse of many industries into a single superindustry, but an explosion into many new industries. Without a doubt we’re creating more jobs.”
And because the creative and technical talent pools already exist here, many of those jobs are expected to be in California.
The new generation of graphic artists, set designers and architects will find work not only in the traditional motion picture business, but in creating virtual environments, from sites on the World Wide Web to eerily realistic video games.
Analysts estimate that nearly 600 companies creating digital media have sprung up in California over the last several years, about half of the total in the United States.
The computer-graphics sector alone is expected to grow at 40% annually for the rest of the decade, as more companies from all industries transfer work into the digital arena. A significant chunk of those jobs will be in the development of digital effects for movies and other forms of entertainment.
Companies such as GTE Corp., DreamWorks SKG and Walt Disney Co. have recently based their interactive entertainment units in Southern California.
Digital entrepreneurs with low overhead in search of low rent are revitalizing the area south of Market Street in San Francisco, which has become known as Multimedia Gulch. And hundreds of small Internet start-ups have sprung up in Silicon Valley and throughout California.
One of those is Netscape Communications Corp., the Mountain View-based Internet start-up who saw its market value climb to an astounding $2 billion in its first day of trading last month as Wall Street signaled its faith in the technological future.
The company makes a popular piece of Internet browser software and could theoretically be based anywhere--but founder Jim Clark imported the team of programmers who wrote the original code from Illinois and set up shop in the heart of Silicon Valley. That’s where the talent is, that’s where the deals are done, that’s where the furor over the future is at its height.
Similarly, DreamWorks, the new film studio and multimedia firm founded by entertainment moguls Steven Spielberg, Jeffrey Katzenberg and David Geffen earlier this year, will be based in Southern California.
According to a study by the UCLA Business Forecasting Project commissioned by DreamWorks, the company will directly support 14,300 high-paying jobs in California by 2004 and add over $10 billion annually to the state’s personal income.
“What I think is probably most distinctive about multimedia in terms of California is it looks like the kind of industry development that could be widely dispersed across the world, but there seems to be a very high premium to being connected at the right time, to adjusting quickly,” says Larry Kimbell, who conducted the study. “And we have an absolutely cutting-edge work force in that regard.”
In other words, while California loses out to Alabama for the low-cost choice to locate a new automobile plant, for instance, the critical mass of talent, accumulated knowledge and the historical identity that marks the state’s northern and southern regions appears to outweigh other business concerns for the moment.
Still, Kimbell notes that the total number of jobs in all industries related to entertainment, computing and communications is less than one-fifth the number in retail trade. And the number of jobs added in those sectors will be far less than the number added in state and local government over the next five years.
What is not calculated directly in jobs and revenue, however, is the strategic benefit of hosting a high-growth, high-profile emerging industry. That in turn generates other jobs, as well as simply boosting the state’s image.
“If you talk about what are the strategic, high-paying, export-oriented jobs, in an area where we can really compete and shine and be distinctive, it becomes a much stronger factor,” Kimbell says.
Also hard to calculate are the new jobs generated by the cross-fertilization of industries, the real driver of the new media. Representatives of Hollywood and Silicon Valley may never be entirely at ease in each other’s disparate cultures, but they are beginning to overcome the culture clash--or perhaps capitalize on it--to create entirely new forms of media.
Take Pixar, for instance, a computer animation company just north of Berkeley that collaborated with Disney on the first entirely computer-animated feature film, “Toy Story,” to be released this fall.
One of the film’s producers, Bonnie Arnold, had traditional Hollywood skills, having worked on “Dances With Wolves” and “The Addams Family.” Ralph Guggenheim, the other producer, is vice president of production of Pixar and had never worked on a feature film before.
“Between the two of us, it was like we had one working brain for this thing,” Guggenheim says. Pixar’s staff grew from 25 to 110 during production. And if audiences respond well to “Toy Story,” Guggenheim believes, a whole new type of filmmaking will have been launched.
Several other new technologies are likely to have profound effects on California by the turn of the century.
* Cable modems will allow computer users to connect to the Internet at up to 400 times the speed of a conventional modem, making it possible to view live video or retrieve massive amounts of information in seconds. More than 10 million Californians are expected to be connected to the Internet by 2000.
* Secure encryption schemes are likely to finally bring commerce to the global computer network. Sophisticated virtual communities are already starting to form on-line and are expected to continue to grow as compression technology and the ever-increasing speed of the microchip make virtual reality more realistic.
* Interactive television, including individualized video on demand, home shopping and on-line gaming will be available to millions of Californians. And the phone companies will offer an alternative to cable programming.
* The making of movies will increasingly involve computers from start to finish. Synthetic actors and virtual sets will become common tools for filmmakers.
* Wireless technology will plummet in price so that by 2000, nearly a third of Californians may carry some sort of “mobility set” that will enable them to be plugged in all the time. One result of the proliferation in phone numbers is that California could have as many as 22 area codes by 2000, up from 13 today.
How the coming of the Jetsons will affect our daily lives remains unclear. But screenwriter Michael Backes, who as a co-founder of San Francisco-based Rocket Science Games has a foot in both worlds, offers one vision of the coming of the millennium:
“I’ll be sitting in a horse show with my wife while I attend a board meeting. An intelligent agent will show up on the screen of my power communicator, telling me it’s found four books for me in London. I’ll go browse the bookstore, then meet some friends for a virtual game of pool,” Backes says. “The thing that I like is we’re looking at a future where I really don’t have to be at a desk.”
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ON HOLLYWOOD AND TECHNOLOGY “Hollywood is beginning to get it. When we come knocking, at least now they know who we are. It’s no longer like ‘Intel? Intel who?’ But I constantly feel when I come down here that this is a foreign place, they just happen to speak English. I’m sure they feel the same way about us. They wonder how we can get so emotional about bits moving down a wire. But it’s not a clash, it’s not a fight. We need each other, so we’re going to have to figure each other out.”
--Avram Miller, vice president for business development at Intel Corp.
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“If you look at various things happening in terms of distribution leading to things like interactive TV, I’ve got to believe that the acceptance of that will cause a lot of people to get into media authoring and the content creation side of things. Everyone is going to get into it. We’ll see the local pizza restaurant owner sit down in front of his workstation and do up his ad for the next day. And he’ll have an agreement with the local cable company to distribute it in the neighborhood.”
--Michael Ramsay, president Silicon Studios, the entertainment unit of Silicon Graphics Inc.
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“We are great believers in the convergence. I would love to see it stay in California and it is logical--the creative talent pool is here. But I think California should not be casual about it. My fear always is, just as the United States at times looked at Detroit as our birthright, California can’t afford to look at the entertainment industry as our birthright.”
--Elizabeth Daley, dean of USC’s School of Cinema-Television and executive director of the Annenberg Center for Communications
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“The good news is [the digital revolution] creates more jobs, it’s a bigger industry than ever. The bad news is the moment you put things into bits, bits don’t respect borders.”
--Paul Saffo, director of the Institute for the Future
Reality Check: The Biz
Opportunity: Movies earned an estimated $4.5-billion export surplus for the United States in 1994, and foreign markets accounted for about 46% of all film revenues last year.
Obstacle: But, This trend may not hold. The rapid growth of international motion picture revenue in the 1987-90 period has slowed markedly, plummeting from a high of 24% in 1987 to a projected growth of 7.4% for this year.
