Multimedia production is a small but potentially significant factor of structural change in the Austrian economy. A survey of enterprises conducted up until June 1997 furnishes the basis of an empirical assessment of this sector in Austria. 75 of the 450 questionnaires sent out by WIFO and Research Centre Seibersdorf in the spring of 1997 were returned. The article summarizes the current state of affairs and the perceived potential for development in the Austrian multimedia sector. Most enterprises in the multimedia sector have recently been founded and are small. Most firms entered the market in the 1990s. 80 percent of the enterprises surveyed employ less than 10 people and have a turnover of less than ATS 5 million. The sector is only now becoming professional, but those surveyed expect the sector to attract an increasing number of specially trained multimedia experts. Cooperation is highly valued, especially where exchange of information and product development are concerned. A quarter of the enterprises work in conjunction with universities and other research institutes. Currently, competition in the multimedia sector is still transparent for most enterprises. About half estimate that they have no more than 15 competitors, while a quarter believes that they are in direct competition with no more than 5. Respondents expect an increase in the number of competitors as well as in the intensity of competition. The most important clients of multimedia providers are deemed to be other enterprises (70 percent), households (19 percent) and public institutions (11 percent). Enterprises are optimistic about reaching more clients in the next five years. 41 percent anticipate a "rapidly growing" market and 55 percent anticipate a "growing" market. The geographical reach of the market is limited, for the time being, to Austria. However, 27 percent report, that the international market also plays a significant role in their business. The most important locational factors for achieving and maintaining a successful competitive position were the availability of a qualified workforce; an adequately large clientele, that demands high quality and is open to new products; and the caliber of digital network providers. Technological developments and the convergence of media and telecommunications require a legal and institutional reform that takes into account the international framework. Only in this way can innovative multimedia production continue. The challenges facing public policy are thus in the areas of standardization, copyrights, security of electronic transactions, as well as regulation of the audiovisual sector.