Reflecting changes in the entertainment industry, George Lucas is splitting his company into two.

The innovative filmmaker is creating LucasArts Digital Services, to include post-production units Industrial Light & Magic and Skywalker Sound, and LucasArts Entertainment Co., handling electronic games and educational programs.

Lucas also announced that Lindsley Parsons Jr. will come aboard as president and CEO of the services arms. Parsons was an executive producer at Universal, having finished “Sneakers” last fall.

Gordon Radley, chief operating officer of LucasArts, will become president of Lucasfilm Ltd., Lucas’ film and television production company. He will also oversee the digital sound system, THX, toys and licensing.

Lucasfilm is producing “The Young Indiana Jones Chronicles.” Radley noted that Lucas is working on a number of production tools from the TV show that may be commercialized.

Parsons, though, has his work cut out for him. “He brings a wealth of experience and knowledge and is well known in the industry,” said Lucas. “We’re a service organization, and knowing people has a lot to do with that type of industry. Lindsley is familiar with running things efficently. It was a perfect choice for us.”

Parsons expects to use his contacts to market Lucas’ post services as a package, selling Skywalker and ILM together to producers.

Before his stint at Universal, Parsons had a five-year tour as senior VP of production management at MGM Pictures. Prior to that, he was VP and executive production manager for CBS Theatrical Films and Paramount Pictures. He’ll keep his residence in L.A.

Said Phil Alden Robinson, director of “Sneakers”: “He is as knowledgeable about this business and people as anyone I’ve known. He’s unflappable with an enormous sense of calm.”

The new divisions, Lucas said, reflect a five-year business plan that took shape nearly two years ago. The company had grown dramatically in the 1980s, expanding to a dozen divisions.

“We had 12 different divisions, which was unwieldy, and had to take that down to two,” he said. “LucasArts was run by people with MBAs, now they need to be entrepreneurial. The people running them have to have a very intimate knowledge of the postproduction services.”

Parsons immediately faces challenges. First, the entire effects business is changing with stiffer competition, falling prices and evaporating margins.

Reportedly, after wrapping up Steven Spielberg’s “Jurassic Park,” ILM has nothing in the pipeline.

“ILM has been aggressively increasing its commercial activity,” Parsons said. “So, you’re not as dependent on features. Also, they’re doing ‘Chronicles.’ “

Another is proximity to the business in L.A. Parsons intends on keeping his residence here, which will help marketing efforts. Still, once aboard, directors and producers have to commute to Lucas’ Skywalker Ranch outside San Rafael to oversee projects.

In the meantime, Lucas knows there will be some pain along with the transition. In the wake of the moves, Tom Kobayashi, VP and general manager of SkywalkerSound since 1986, and Kelly Flock, head of Lucas Games, will be heading to the L.A. area to work in software.

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