Microsoft Corp., which has maintained a low profile in Los Angeles for years, is quickly coming into the spotlight.

Its route? Hollywood, what else?

The Redmond, Wash.-based company has been developing partnerships with a host of local Web content production houses and major Hollywood studios.

Those partnerships include two major studios Walt Disney Co. and Paramount Pictures as well as Jim Henson Productions Inc.

Microsoft also has launched a multimedia entertainment division that helps develop and distribute independently produced material for the Internet.

The stepped-up activities here are directed toward establishing a dominant position in "Siliwood," the new world emerging from the melding of Silicon Valley technology and Hollywood entertainment.

"This is part of (Microsoft Chairman) Bill Gates' strategy of getting a finger into everything," said Art Rockwell, director of research for Yeager Capital Markets. "These deals are all quite small and somewhat experimental. Whatever seems to catch on, I'm sure Microsoft will put a lot of money behind it."

For now, Microsoft's actual presence in Los Angeles remains mostly in sales and marketing. The district office at the Water Garden complex in Santa Monica has a staff of about 120, most of whom sell Microsoft's consumer and business software systems or provide technical support.

A few software companies that work closely with Microsoft are being attracted to the Santa Monica area. One such company is M1 Software, which develops custom applications for Microsoft products. M1 President David Oxstein said having the ability to take major clients down the street to meet at Microsoft's offices brings added prestige to his meetings.

But it's the fledgling multimedia operation and not the traditional consumer/business software that's creating the real buzz around town.

Microsoft's two-person multimedia development operation, headed by Jamie Fragen, was launched about a year ago.

Fragen says she spends most of her time driving back and forth between small Internet production houses, scouting out potential shows for the Microsoft Network.

So far, Fragen's multimedia development unit has shepherded two independently produced shows onto the Microsoft Network.

They are: "Great Stuff," a program produced by Liz & S Productions of Brentwood that invites online visitors to participate in the creation of novels and works of art; and "Naked News," a parody of nightly newscasts created by Santa Monica-based Cobalt Moon.

Fragen said she is working with small production houses to develop several more shows for the Microsoft Network. Like "Great Stuff," most of these shows are being designed to run for a 13-week "season" on MSN, half the length of the standard television season.

Microsoft still handles its partnerships with the major Hollywood studios out of its Redmond headquarters, sending point people on occasional trips down to the studios in Los Angeles.

The recent deals have been more focused on the distribution side. As part of the Microsoft-Disney partnership, for example, Disney Online, a division dedicated to Internet ventures, is producing three shows for distribution over the Microsoft Network: "Disney's Daily Blast," a children's show launched last March; "Family.com," a family-oriented show; and "Active Desk Top," a site on MSN's Internet Explorer 4.0 that is devoted to Disney themes.

"We give them (Microsoft) great kids' content and, in turn, we get a fabulous distribution vehicle," said Disney Online spokeswoman Rebecca Buxton.

Microsoft also carries three sites for Paramount over the Microsoft Network: a "Star Trek" site, an "Entertainment Tonight" site and a "Duckman" site.

And Microsoft announced last January the formation of a partnership with Jim Henson Productions to develop family programming featuring the Muppets characters to be carried over MSN. The first program is due out within the next three months, according to Microsoft Network group product manager Jessica Ostrow.

She added that Microsoft Network's ventures announced to date are likely a sign of bigger things to come.

"We are still in the beginning stages of this, trying to see how we can best provide value-added programming for our audience," she said. "Where it makes sense for us, you can expect there will be opportunities for greater Microsoft involvement in the entertainment area. L.A. especially has some really cool small Web houses that hold lots of promise."

Microsoft's initial venture into multimedia in L.A. came in May 1995 with the launching of DreamWorks Interactive, a joint venture of Microsoft and DreamWorks SKG.

That venture has produced several children- and adult-oriented interactive games, including the clay-animation game "The Neverhood" and a game based on a story from Art Stine's "Goosebumps" series. Several more releases are planned for the upcoming holiday season, including two offshoots from "Jurassic Park: The Lost World" and eight desktop games from the Dilbert series of cartoons.

Typically, the Dreamworks Interactive games are released on CD-ROM and are "first person," meaning the user essentially becomes a character in the game, very much like games in a video arcade. Decisions in the game are usually made with a point and click of the mouse.

The Microsoft Network online games typically involve several players who have logged on to the network at different sites. The players communicate with each other through on-screen messages.

All of the development work for these Dreamworks Interactive releases is being done in Los Angeles, according to Ruthann Lorentzen, director of marketing for DreamWorks Interactive. A handful of Microsoft consultants have joined DreamWorks Interactive, some on temporary basis and others on a permanent basis, she added.

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