Ireland's emerging multi-media industry can create 12,000 jobs within five years if it is properly developed, according to a new report.

The sector is growing at a rate of 20 per cent a year and, according to Mr Dan Flinter, chief executive of Forbairt - the agency charged with developing indigenous industry - its position is similar to that of software in the early 1990s.

He called on the financial community to look seriously at investing in Irish multimedia companies and said the rewards for the winners should be substantial.

The report prepared by Farrell Grant Sparks and commissioned by Forbairt, IDA Ireland and Senior College Ballyfermot, says

more than half of Ireland's multimedia companies are less than four years old, with 10 to 12 companies starting up each year. Investment in product development typically accounts for 20 per cent of turnover, driven by the pace of technology development.

But the report identifies the industry's lack of experienced marketing and managerial personnel as a serious barrier to development, with more than half of the founders of indigenous companies having no formal training in business.

Moreover, many start-up companies are not realising their potential due to under capitalisation.

Mr Flinter pointed to the Government's role in nurturing the current level of growth. "There is a particular need to seek out opportunities for partnerships between indigenous and overseas multimedia companies located in Ireland," he said.

The report based its conclusions on a survey of 105 firms and has been submitted to the Information Society Commission for consideration.

It says that the European market for interactive entertainment software is worth almost $3.5 billion more than the video rental business, and is nearly 80 per cent of the size of the European cinema box office.

Multimedia is the combination of different media forms text, video, audio, graphics held together via computer programmes which complement each type of communication.