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."
