"It all began last year when someone translated a research report from 2003 into Hebrew and mistakenly wrote that the [computer] game industry is bigger than the movie industry, which is wrong, of course," says Ilan Graicer, explaining the excitement that led to the convening of the first national computer games conference in Jerusalem last Thursday.

The conference was held in the Jerusalem Performing Arts Lab compound, home of the JVP Studio media incubator, established by the nonprofit Jerusalem Venture Partners (JVP) Community. The Lab, as it is known, is active in the area of investments in media and games, under the stewardship of Elie Wurtman.

The conference's goal: to bring all the local creative, technical and financing forces under one roof so that Israel - a high-tech power in every other field - can gain a significant foothold in the world computer games industry, which last year generated $33 billion.

"The movie industry is actually seven times larger than the movie spin-off industry," continues Graicer. "The translated report should have stated that the [computer] games industry, which is worth $11 billion in the United States alone - brings in more money than comes into U.S. box offices."

This explanation by Graicer - a gamer, designer of interfaces and games, a consultant and an entrepreneur - had no effect on the enthusiasm of the investors.

"Venture capital funds began reviewing their portfolios and noticed that they had many biotechnology and Internet infrastructure companies, but no game companies," says Graicer, adding that since VC funds are constantly looking for opportunities, fund managers began approaching him and his partner, Yaron Leifenberg, asking for investment advice.

As investor interest in computer games grew, Graicer decided the time had come to enlarge the discussion forum and organize a one-day seminar that would attempt to lay the foundations for the local computer game industry.

"We wanted to bring together a critical mass of people interested in the establishment of an Israeli game industry. Some of these people want to make money, some want to produce something creative and others want money for their startups. From my point of view and that of Leifenberg - this is our pleasure," concludes Graicer.

Last Thursday, in front of an audience of about 100, Graicer, Leifenberg, Vgames Web site editor Amir Lotan and its founder, Doron Nir, outlined their industry. They began with an overview of the hardware required for running games, explained the various computer game genres and the sums they generate and described the character of gamers. Conference participants heard about the opportunities available for beginning game developers and viewed demonstrations by six Israeli computer game companies. Then there was time for play, play and more play.

"The gaming world will change the way we consume content in the next 10 years," said JVP fund manager Erel Margalit, "and Israel must not be left behind. In the 1990s Israel lead the world in technology, but the creativity here is not gaining expression. Today, Israeli companies that only set up the technical platforms but do not provide content, will miss out."

Margalit relates that he realized the monetary potential in the computer game industry about four years ago, when his fund entered the Internet provider market and noticed that the biggest broadband consumers were gamers and game companies.

Local Internet guru Yossi Vardi says that Israel has not yet developed a computer game industry because for the past 30 years, the focus has been on information technology and communication technology for military purposes.

"In the meantime," explained Vardi, "the world's entertainment industry spawned the computer game industry. Now we need a few local successes in this field in order to motivate entrepreneurs, creative people and venture capital funds."

Both Margalit and Vardi realize that this will not happen overnight, but Vardi believes that if enough companies try out their luck, there are bound to be some successes.

"I think that we are now in a period when the funds are ready to take chances in this field," he says.

Two of the startups that gave presentations at the conference demonstrated products aimed at a new and fast-growing market within the computer game industry: interactive advertisements that are integrated into the game world. The decision to enter this particular field followed surveys that showed that even though American youngsters spend an average of one hour and nine minutes playing computer games daily, only a few million dollars are spent on advertising within the games. In contrast, $544 million is spent on advertising in the printed press, which young people peruse for an average of only 38 minutes daily.

Other presentations included a fashion game designed for girls aged 10-16, presented by Yanir Farber of Browzwear, and a military simulation game set in Hebron.