Multimedia Battle Is a New L.A.-S.F. Grudge Match : Rivalry: Will the recently hatched industry nest in Northern or Southern California? Or worse yet, Seattle?

It’s been a while since Los Angeles and San Francisco had a hot new issue to feed their simmering rivalry. The water wars have receded, Southern California’s political dominance is firmly established, and Angelenos cheerfully acknowledge that San Francisco is a terrific place to visit--even though few northerners return the compliment.

But there’s a new tug of war going on now, a geographic struggle over the heart and the soul and the dollars of the emerging multimedia industry. Born of the marriage of computer technology to video and sound and storytelling, it’s an industry destined to shape the economy of California for decades to come.

Will it be centered in the north, with the computer programmers and venture capitalists and software patent lawyers? Or will it be in the south, home of the movie studios and entertainment writers and sound designers? At stake are thousands of jobs, as well as the evolving culture of two regions that have for years been defined by the two massive industries that are now giving birth to multimedia.

By most measures, the north is winning so far, and some headline-happy civic leaders in San Francisco are already declaring victory. “If you think about it,” says Tim Boyle of the San Francisco Multimedia Development Group, in the ultimate digital-era insult, “L.A. is really very analog.”

But where the industry ultimately settles--insofar as it settles in one geographical location at all--will be determined by a host of complicated economic and sociological factors that have only begun to play themselves out. And Los Angeles boosters--who do, after all, have a stellar historical track record--say they have just begun to fight.

“These nerds in the north are not going to be the ones to make this thing work,” says Joel Kotkin, an economist with the Ontario-based Center for the New West. “This region has not yet figured out what it’s next act is going to be--that’s one of the problems--but multimedia is clearly a big part of it.”

The industry is developing quickly, spreading across the state like a benevolent, self-replicating computer virus.

Boyle’s group, founded a year ago with financial help from the city, has nearly 800 members. The organization’s informal monthly get-togethers at the Press Club--beer and distilled water are sold at a makeshift refreshment stand, pretzels are free--are jammed with multimedia entrepreneurs and wanna-bes.

The Los Angeles New Media Round Table--whose monthly meetings at the posh Loew’s Santa Monica Beach hotel include a sit-down dinner and full-service bar--reports similar growth.

Orange County has become a minimultimedia capital itself. San Diego’s recently formed Digital Multimedia Assn. has signed up 65 members in a few months.

And all across the country--from New York to Atlanta, from Texas to Seattle--ambitious cities and states are making efforts to develop a local multimedia industry.

California is way out in front in the interstate struggle, and some argue that the north/south split should now be bridged: It is the respective talents of the two regions together that will bring the greatest prosperity in the long run. There have been efforts at building unity--Pacific Bell is even working on a high-speed phone network to enable multimedia developers to exchange data in a form of virtual reality sometimes referred to as “Siliwood.”

Still, “I think there’s reason for a little friendly rivalry,” says Paul Gormsen of the San Francisco Chamber of Commerce. “I’d put it as the No. 1 industry, in terms of the most desirable, most likely to succeed, most likely to add dollars to the cash register we call the city of San Francisco.”

Rohit Shukla, executive director of the Los Angeles Regional Technology Alliance, says: “We’re going to go after this industry in a major way because it’s part of our bread and butter.”

It’s hard to say exactly how much bread and butter multimedia will be worth. Many a forecast shows it becoming a multibillion-dollar industry very soon, but such predictions amount to little more than guesses about how quickly and enthusiastically consumers will respond to the CD-ROMs, interactive television programs and on-line services that the industry is just beginning to produce.

Similarly, it’s hard to discern the precise geographical outlines of an industry made up of companies ranging from start-ups with fewer than 10 employees--often working out of their homes--to large media and technology firms.

A report released last month and sponsored by the Bay Area Economic Forum found about 62,000 people in more than 2,200 firms engaged in multimedia-related activities in the Bay Area, more than twice the national average.

The Carronade Group, a Los Angeles research and consulting firm that tracks the fledgling industry, estimates that Northern California is home to about three times the number of multimedia developers as the state’s southern half. But with the addition of nearly 40 new media divisions at Hollywood studios and production companies in recent months, Carronade counts the two about even in terms of actual funded entities producing new media products.

In any case, the perception remains that Northern California is leading the multimedia charge. “The Revolution Starts Here,” proclaimed a recent Newsweek story on San Francisco’s so-called Multimedia Gulch, the onetime warehouse district near downtown where dozens of budding media firms have been drawn by the availability of cheap loft space--and, some argue, decent coffee. It now boasts a population of nearly 6,000 multimedia-oids.

“There’s no question that there’s more going on up there,” says Steve Glenn, vice president of Simgraphics, a Pasadena-based multimedia firm and one of several local executives working with the Los Angeles mayor’s office on what the city can do to foster the industry here.

The rap against Los Angeles is part topography, part ideology.

The geographic spread of the Southland, detractors say, works against the cohesion of a community such as Multimedia Gulch, where radios in neighboring work spaces are often tuned to the same station and graphic artists mingle at the same lunch spots.

“Going to L.A. is a nightmare,” says one multimedia programmer who flies down frequently from his northern abode. “You have to drive everywhere.”

Still, southern partisans note, pockets of multimedia communities have sprung up in different parts of the Los Angeles area. The American Film Institute in Hollywood has served as a gathering place for the city’s entertainment elite and 20-something computer jockeys. And Santa Monica’s Electronic Cafe fills a similar function across town.

The city of Los Angeles is considering helping to fund an “incubator”--a space that could be another center where multimedia folk could gather and play show and tell.

But a bigger problem may be the region’s lack of experience in nurturing a start-up industry. The Silicon Valley, with its storied entrepreneurial history, has a more robust infrastructure of venture capitalists, lawyers, public relations agencies and other service businesses geared to the needs of start-ups.

“The whole philosophy up north is different,” says Jonathan Seybold, a new-media consultant who has offices in Malibu and the Silicon Valley. “And it’s partly because the Silicon Valley geist is very much entrepreneurial and focused on fostering individual creativity, while the entertainment community down here has been more dominated by the established power structure.”

Indeed, which region gains the upper hand may depend in part on whether the multimedia business structure parallels that of the entertainment industry, in which independent producers, usually in private partnerships, work project-by-project for major studios, or the high-tech industry, in which small firms have traditionally made money by reinvesting in themselves and eventually selling shares to the public.

Hollywood studios, whose wealth and control of entertainment distribution channels provide Los Angeles with some major advantages, are experimenting in both forms. MCA/Universal, for example, recently signed what is probably the industry’s first on-the-lot production deal with a video game production company called Naughty Dog, consisting of Andy Gavin, Jason Rubin and their dog, Morgan.

Not surprisingly, 24-year-olds Gavin and Rubin--both Washington natives who were courted by Silicon Valley firms as well--say they like it better on the Universal lot.

“This is where all the talent is,” Gavin says. “You meet people here and get ideas. We’re pretty sure we saw Martin Short in a Lexus on the 101, but we can’t be sure.”

The two high school friends will develop games for Universal Interactive, MCA’s multimedia division. But the studio will not have an ownership position in the company. On the other hand, MCA has taken stakes in Redwood City-based 3DO, a video game console manufacturer, and Irvine-based Interplay, another video game firm.

MCA Executive Vice President Charles (Skip) Paul spends a lot of time up north, but he says his main focus is “a group of relationships” in the multimedia area, similar to traditional studio relationships.

“Proximity matters,” Paul says. “People share ideas and projects and get to know each other. That’s why I wanted Andy and Jason on the lot,” he says.

Still, if you’re not attached to a studio, it’s harder in Los Angeles for the average start-up.

Mayor Richard Riordan, who has a background in venture capital, is planning to meet with several of the city’s multimedia entrepreneurs to acknowledge the importance of the nascent industry. And in March, the city is planning to invite several of the Silicon Valley’s major venture firms to a conference where local entrepreneurs will make presentations.

Although many Hollywood creative types have gone north, there’s movement in the other direction too. Robert Kotick, chairman of Activision, moved the video game firm to Los Angeles from Menlo Park more than a year ago when he took control just so he could be near Hollywood’s creative community. He recently hired Peter Lenkov, who wrote the screenplay for the film “Demolition Man,” to write a script for a CD-ROM game. The firm has hired 120 people in the last year.

Kotick complains, though, that the city was less than welcoming. “When I decided to move here I put in a call to a bunch of city agencies but I never heard back from them,” he says. San Francisco, San Jose and even Seattle appear to have done a far better job than Los Angeles of marketing themselves to the multimedia crowd. In 1992 San Francisco’s City Council passed a resolution declaring the city the “de facto capital of multimedia.”

The new efforts by the city of Los Angeles, along with the growing reputation of centers such as the American Film Institute may raise Los Angeles’ multimedia profile. USC is also seeking funding from the National Science Foundation to become a national center for multimedia.

But meanwhile, efforts are under way by Northern and Southern California organizations to encourage the two powerful regions to work together to keep multimedia in California.

Even the San Francisco Chamber of Commerce’s Gormsen has concerns on a broader level: “I find myself falling victim to the idea that there is this great struggle going on between San Francisco and L.A., but what I am more bothered about is some swing to Seattle or New York or someplace else. If it’s in California, I think we’re not so far apart.”

Mark Dowling, Kotkin’s colleague at the Center for the New West, sums up the perpetual ambivalence: “Rivalry? We like to think of everything as harmonious in the state of California--a brotherly, loving . . . kind of relationship. You mean it’s not?”