Most of the early attention devoted to multimedia has emphasized American opportunities. However, the focus is now shifting to Europe, probably the next frontier in the industry’s evolution. How will Europe’s experience resemble that of the United States, and how will it differ? Who will be the principal competitors, and in which battlegrounds will they fight? And how will the nature and intensity of competition affect the eventual shape of the European multimedia landscape?

European companies face a real danger: that opportunities will be grasped by others as the competition for multimedia supremacy hots up. The most menacing entrants into Europe are Americans, either exploiting the experience and scale they have gained at home or using Europe as a dress rehearsal for future domestic battles.

Rapidly intensifying competition

Under assault from the United States, many of the established European players—public service broadcasters, public telephony operators (PTOs), and equipment vendors—are looking increasingly vulnerable. European PTOs generally have much lower labor and capital productivity than their US counterparts. The European personal computer market is dominated by Compaq, IBM, Apple, and Hewlett-Packard—and, of course, by Microsoft operating system software. US companies lead the...