Videogame companies deserve enterprise zone.

WITH its movie sequences, intricate plot lines and lifelike graphics, "The Red Star," a videogame to be released this year by Glen Cove, N.Y.-based Acclaim Entertainment Inc. might have been made in Hollywood.

But it wasn't, and that's too bad. While L.A. has benefited from the evolution of the videogame industry toward more big-budget Hollywood-like productions, it hasn't fully capitalized on the convergence trend.

Acclaim, for instance, has increased its ties to Hollywood through a recent partnership with a talent agency to tap screenwriters, voice actors and other movie industry talent. But expenses have prevented it from opening a design studio here.

L.A. has a natural appeal for video game firms. Besides being home to a large talent pool, it also hosts the Electronic Entertainment Expo, the largest videogame trade show in the world. Two major game publishers, Activision Inc. and THQ Inc., call the Los Angeles area home, while Vivendi Universal, Sony Corp., Atari Inc. and Electronic Arts Inc. all have studios here.

But many other game design firms don't, including Acclaim, Nintendo of America Inc., Microsoft Corp., Sega of America Inc. and others.

How can more of these industry heavyweights be brought to L.A.?

Three measures are needed: financial incentives for videogame companies to open design studios here; establishment of a geographical district in Los Angeles; and the aggressive marketing of L.A. as the de facto center of videogame development.

L.A. might do well to model itself after San Diego, which has become home to 400 biotechnology companies that employ 32,000 workers. Its core biotech area grew up naturally around the University of California, San Diego, and other research institutions in La Jolla, and then expanded into satellite areas when land ran short. Venture capitalists fed off of the concentration of companies, giving rise to a self-supporting cycle of investment and entrepreneurship.

L.A. has no comparable geographic zone, but the Playa Vista development on the Westside is a possibility. That's where Electronic Arts plans to open its 250,000-square-foot development studio next year. With THQ, Santa Monica-based Activision and the major motion picture studios here, there are the beginnings of a similar core.

Local universities are already receiving support from videogame companies. Electronic Arts donated $8 million to USC's School of Cinema and Television to fund a three-year master's degree program in interactive media. And many of the area's software writers, scriptwriters, voice actors and graphic artists already have videogame experience.

But to truly make L.A. an attractive place for game design companies to set up shop, Los Angeles would need to offer a set of financial incentives.

Nielsen Entertainment's move to Hollywood last year is a potential model.

Nielsen had been looking to move its operations to Glendale or Burbank from the Mid-Wilshire area. In an effort to keep the firm in L.A., city officials offered a $250,000 rehabilitation loan and a $50,000 grant to improve the Hollywood property Nielsen moved into.

After deciding on a location for a video game district, the city could set up a program where the companies fall under a state- or federal-sponsored enterprise zone. Wage tax credits would be granted for businesses that hire people from within a certain geographical area.

So what benefits would a large video game presence in Los Angeles provide?

It would add to the 220,000 people currently employed in the motion picture and television industry here.

When Electronic Arts announced its Playa Vista studio last August, it said it would likely double its 300-person staff (in several existing studios) by the end of this year. When Video game developer Sammy Studios Inc. opened a Sherman Oaks shop, it said it wanted to employ as many as 110 people. When Konami Corp. opened its Century City offices, it brought a 30-person business development team with the prospect of hiring more.

Individually, the numbers are relatively small. But they form a nucleus on which an industry can take shape in the years to come--and there's little doubt that videogames will be an important business well into the future, perhaps just as important as Hollywood itself.

11 VIDEOGAME DISTRICT

Proposal: Create a business district focused on the videogame industry

Obstacles: Cost to companies, tax incentives

Cost: $12 million

Time Frame: Ongoing