Thrills and Chills of Marketing a CD-ROM Adventure
By LAURIE FLYNN
Published: November 27, 1994
Published: November 27, 1994
LIKE most people in the new business of making and selling CD-ROM software, Howard Tullman was very recently doing something else for a living.
Today the former Chicago lawyer and venture capital investor is waiting for royalties from his first big title, a CD-ROM sequel to the film "Blown Away," which starred Jeff Bridges as an Irish revolutionary turned bomb squad hero and Tommy Lee Jones as a vengeful evil genius.
Industry executives expect the game to be a popular seller this Christmas, the first year there are enough home computers with CD-ROM players to make CD-ROM games the big gift in 1994.
Despite the growing excitement about games like "Blown Away," which reached stores in October and sells for $50 to $60, there is no question that CD-ROM game developers like Mr. Tullman can use help. In this fledgling business, there are no road maps or proven techniques.
"It's a bruising fight," said John W. P. Holt, director of new business at IVI Publishing Inc., a CD-ROM publisher in Minneapolis, which in June won the bidding war to publish the "Blown Away" game.
Much of the growth has been in entertainment and education software published on CD-ROM disks.
This year, American shoppers are expected to spend $587 million on consumer CD-ROM titles, a diverse category in which prices range from $20 to $200, and include reference works, self-help manuals, education programs and -- the biggest of all -- entertainment. That is up from $137 million in 1993 and is expected to grow to $1.2 billion in 1995, according to the Link Resources Corporation, a research company in New York.
Mr. Tullman, who is president and chief executive of a CD-ROM development company in Chicago called Imagination Pilots, hopes to get a fair share of sales.
The company's first release was a series of children's titles called "Professor Gooseberry & Associates," introduced for Christmas 1993. A CD-ROM based on the children's book "Where's Waldo?" is being developed and will be published by Warner Music Group in April 1995.
As one of his first orders of business in March, Mr. Tullman called on MGM/UA in the hope of gaining the rights to develop CD-ROM software based on some of the company's children's movies. Instead, MGM/UA offered him the rights to "Blown Away" and a co-marketing deal, on the condition that he release a game in time for Christmas.
The deal that Imagination Pilots struck with MGM/UA gave Mr. Tullman a scant seven months to complete the project, including filming the story with a cast of actors that came at much lower cost than the original stars. Mr. Tullman and MGM/UA agreed to split equally the cost of development -- $850,000 to $900,000, Mr. Tullman said.
IN the game, the player must maneuver through 12 environments, racing against time to free hostages and dismantle bombs through a series of puzzles that require both speed and logic.
As soon as he had something to show, Mr. Tullman set out to find a publisher, and soon "Blown Away" was the center of a bidding war.
For its part, IVI Publishing was looking to broaden its product line, and had just opened an office in Seattle dedicated to finding promising new CD-ROM titles.
Mr. Tullman liked IVI Publishing's desire to have a big presence in the game market and the enthusiasm of its new publishing executives, Geoffrey T. Barker and Mr. Holt. In the end, IVI Publishing outbid Electronic Arts, Spectrum Holobyte, GTE Interactive and even Compton's New Media, which was an early favorite of MGM/UA.
When IVI Publishing had something to show, it began courting distributors and retailers like Egghead Software of Seattle, the largest CD-ROM seller, and CompUSA, the Dallas-based superstore chain.
IVI Publishing's success last year with a product called "The Mayo Clinic Family Health Book" helped it gain a foot in the door at virtually all the important stores, and most big outlets have decided to carry "Blown Away" this Christmas. But such success did not come easily or without considerable expense.
Mr. Barker declined to reveal the exact amount that IVI Publishing and MGM/UA are spending to market "Blown Away." The packaging for such products costs from $30,000 to $50,000; testing for bugs and technical flaws can cost $40,000 or more.
Mr. Tullman guessed it required $800,000 to $1.5 million to have a successful CD-ROM product, often with nearly half of that going to marketing and promotion.
"The buyers don't have a rational plan for what goes on the shelf," said Peter Black, president of Xiphias Software, a small CD-ROM publisher in Santa Monica, Calif., that has struggled since the early days of the CD-ROM industry in the late 1980's.
At Egghead, the process is something of a beauty pageant, where publishers are each given a half-hour to strut their stuff in front of a sales person. At CompUSA, the decision is based more on early reviews and the volume of excitement surrounding the product, according to the company.
The fierce competition is turning the nascent CD-ROM business into something very like the book business, where industry consolidation has led to the decline of the small publishers and independent retailers. Already in the CD-ROM business, power is in the hands of a dozen or so publishers, including the Microsoft Corporation and Broderbund Software, which have the contacts, influence and products to win shelf space.
But the pace of the growth of CD-ROM titles is changing the way software is sold. Today, most CD-ROM programs are sold through traditional software and computer stores, including many independent shops that must work through distributors like Ingram Micro in Santa Ana, Calif., the software industry's largest. For a title to be successful, the publisher must court both distributors and large retail chains.
According to Mr. Holt, 80 to 85 percent of IVI Publishing's sales are through the 10 top retailers. But by this time next year more than half of CD-ROM sales will be made through mass merchants like Wal-Mart and Price-Costco, as well as through bookstores, toy stores and electronic networks.
Video stores, which account for only 4 percent of CD-ROM sales, will also pick up a bigger share, according to Nicholas Donatiello, president of Odyssey Inc., a market research company in San Francisco.
Mr. Tullman's strategy for "Blown Away" represents what many see as the trend in CD-ROM publishing: Rather than take an original idea and develop a program from scratch, licensing the rights to a story or character with a ready-made following is considered a more sensible approach. An example is "Mighty Morphin' Power Rangers," a new title from Xiphias.
"I've come to the realization that this is going to be a rights-driven business," Mr. Black said.
OTHER original works have fared better, but the increasingly competitive market is making it more difficult. "Myst," which came out last year and is today the best-selling CD-ROM game yet, remains the industry's proud example of a huge risk that paid off. The program, a fantasy and role-playing game published by Broderbund, was developed by two brothers, Rand and Robyn Miller, who spent heavily on the project and their company, Cyan.
The opportunities for self-publishing are minimal. "A single-title developer has absolutely no access to the channel," Mr. Holt said. Today, Mr. Barker and Mr. Holt are getting 50 to 60 calls a month from developers looking for publishers.
Even with the backing of MGM/ UA, success for "Blown Away" is by no means assured. In the past, CD-ROM software based on movies has not fared well, often because it has focused on the story rather than on the playing of the game.
Despite the ingenuity and marketing behind "Blown Away," there is no telling what will strike the fancy of the game player. "It's a little like trying to pick a hit movie," said Charles H. Finnie, an analyst at Volpe, Welty & Company in San Francisco. "You just never know."