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The Creative Industries1 are acknowledged as a significant actual and potential wealth generator (Delors, 1993). However, compared with industrial manufacturing, finance or services there has been relatively little research on them, especially from an organisational point of view (Scase and Davi,s 2000). This paper presents the findings of an empirical study of the impact of digital technologies on small firms in the audiovisual sub sector of the creative media industries in the Eastern Region of the UK. The study contributes to our knowledge of the sector through examining how digital technologies are changing the way skills are acquired in an industry where individuals mainly “learn by doing” (Gregulis, 2010). The findings demonstrate generally positive associations with digital technologies. Yet, the latter are also perceived by owner managers as a threat eradicating the market entry barriers of high cost equipment and highly developed occupational skills. Perhaps paradoxically, the study also identifies a very significant skills shortage in the SMEs operating in the Film and Digital Media industry. The study highlights the problems related to the acquisition of skills in small firms, during periods of rapid technological change and the contrasting processes of de-skilling and multi-skilling.