rivalries have emerged among multimedia communities: Los Angeles argues pop culture is key, New York sees publishing and information as models, San Francisco is technically oriented, and Seattle follows Microsoft's lead (Shrage, 1994).


AT&T's Consumer Products Group dropped plans to market a modem (called "The Edge") designed to connect Sega game players' equipment via phone. Earlier, AT&T had dropped plans for 3DO-compatible gear. "AT&T executives said Consumer Products will aim its investments instead at 3 product areas: digital wireless phones, where it has been deficient against mounting competition; phones for foreign markets; and intelligent phones for the home that the company plans to begin marketing next year" (Keller, 1994).


Investors include Apple Computer, Motorola Inc., Sony Corp., AT&T, Matsushita Electric Industrial Co. (owner of MCA Inc. and its Universal Studios), and Philips Electronics NV. See Hill and Yamada (1993).


Video games are now about a $6.5 billion business. Lee isgur, of a San Francisco investment bank: "You can talk all you want about the electronic highway and video on demand, but the only place anyone has ever sold anything interactive is in games." Over the past seven years, Nintendo and Sega have sold [over] 64 million machines in the United States. Their tack is to sell hardware cheap and license the software (classic bundling). See Tetzeli (1993).


The saga of 3DO is chronicled in The Economist (1993b) and in Turner (1993b). See also Pitta (1993), Carlton (1994d), King (1994), and Markoff (1994).


The enormous risk of venturing into this unknown territory, particularly in collaboration with Hollywood executives, can be illustrated by a review of foreseeable changes in the entertainment business.

Established entertainment centers (i.e., Los Angeles, New York) are no longer secure in their hegemony. In the next few decades, they will find that the dominance associated with physical concentrations of specialists, facilities, and mystique will be subject to profound change in the developing digital convergence matrix. Location-independent communities, improving microprocessor-based production tools and methods, and the rapid dissemination of many skills in expanding world markets, all undermine centrality. Just as "Detroit" is a metaphor, so it will be with "Hollywood" also.

As fresh waves of creative people struggle for access to the ballooning field, they will be far less bound to past organizational structures and practices (e.g., major studios, unions, traditional communities of the like-minded). Although this industry has a century's experience with change and readjustment, digital convergence exacerbates the process by another order of magnitude. The increasing pressure of new recruits and the human resources conflicts they engender will increase the level of disorder just enough to suggest a new chapter on chaos theory.

Meanwhile, it is clear that the corporate culture interface has been a low-priority topic in planning for digital convergence. Sooner or later, computer and telephone companies will have to confront the implications of collaborating with entertainment moguls whose market studies have all the reliability of the average shaman's chicken bone readings, in spite of the Armani suits.

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