Charting a Course in the New Media Markets
Industry Interviews. April 1995
Diane M. Heppting
Chairman, Aris Multimedia Entertainment
This document accompanied Diane Heppting's presentation, New Media Markets: Solid as a Sand Dune? at the EXPLORING THE NEW MEDIA conference in Washington, D.C., March 30, 31, and April 1, 1995.
Introduction
The purpose of this booklet is to give the reader an up to date snap-shot of the new media markets from a variety of perspectives; from attorneys and artists to consultants, developers and publishers.
For this edition, I have chosen only a few of the talented and insightful contributors to the industry to keep it short enough to absorb quickly. The same three questions were asked of each of the professionals interviewed. These questions were made intentionally broad so that each could address the issues which were foremost in their mind.
The participants were gracious enough to include their addresses and contact information, so that the reader will be able to clarify an insight or develop a valuable resource or referral.
Jessee Allread: Multimedia/Business Development Consultant
DX3
1430 Bidwell Avenue
Chico, CA 95926
(916) 891-0557
(916) 894-6949 FAX
What is the trend in new media markets for 1995?
Shakeout and consolidation. Channel segmentation and strong alternative channel growth with significantly less access to the traditional channels. A definite consumer push for the hype right now which is on-line and set-top. If you want to play in that arena you need to be there now, but nothing is really going to happen for 18 months.
In introducing a product, what is the one thing to watch out for in 1995?
All of the low quality stuff is just going away. Be sure your product is high quality, original, unique and technologically capable -- fast!
What is your advice for 1995?
Non-exclusive partnering and accessibility to content. There are three business components which content holders need to develop. The first principle is transactional. Content holders need to build a financial template that makes sense in today's market. Make content easily used and easily paid for. Make money on your content when there is money to be made using smart royalty schedules, rather than having someone pay you to see if their product is going to work. The second item is partnering based. Know what resources you are willing to invest with a partner, as well as what you'll expect to get out of the relationship. The third factor is developmental. Have a clear idea of your own development aspirations and put a concise plan in place for outreach programs.
Pamela A. Sansbury: Multimedia/Packaging Consultant
3521 Kilpatrick Lane
Lithonia, GA 30058
(404) 979-2141
(404) 979-3873 FAX
What is the trend in new media markets for 1995?
Still a lot of experimentation in both traditional distribution and on-line distribution. Distribution channels such as video stores will experiment with renting and selling. Music and bookstores will continue to do more experimentation in the sale of CD-ROM's. Even the second tier of distribution, such as grocery stores, drug stores and chain stores, will look at selling CD-ROM's in 1995.
In introducing a product, what is the one thing to watch out for in 1995?
Underestimating the cost of marketing and the sales dollars required to bring a new product to market. The minimum for 1995 will be an investment of at least $250,000. If this is too rich for your blood, then search out a good publisher who can do the job for you.
What is your advice for 1995?
New developers should concentrate on work for hire. Worry about self-publishing your products in 1996 and 1997. Keep your head down and dodge the bullets.
Robert Steinberg: Intellectual Property Attorney
Irell & Manella
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067
(310) 277-1010
(310) 203-7199 FAX
What is the trend in new media markets for 1995?
People are beginning to avoid the traditional distribution channels because the retailers are holding the floor space for ransom. The alternative distribution channels will be a big push in 1995. The model for making money on the Internet will be distributed networks and subscribers. Ratios and demographics for placing advertisements will be how the developer sells space on the net.
In introducing a product, what is the one thing to watch out for in 1995?
Be very careful in obtaining proper licenses for software and content to limit the possibility of liability. Companies are becoming more strict in policing their assets.
What is your advice for 1995?
Developers should stay away from the job-shop model of doing only works made for hire. It is a cycle that starts easily for quick cash infusions, but it is hard to break out of because the margins are so small and the creative capital used is so great. It virtually eliminates the possibility of developing products on your own and substantially limits your upside potential.
Becki Walker: Multimedia Consultant
2306 Pifani Place
Los Angeles, CA 90292
(310) 821-5898
(310) 821-8780 FAX
beckwalker@aol.com
What is the trend in new media markets for 1995?
The CD-ROM market will continue to grow and come close to doubling in size this year. There will be a tremendous change in who makes up this market; it will be the new consumer. The consumer who knows nothing about technology but buys a computer to improve either his or her children's future, or his or her own present occupation or job opportunity.
In introducing a product, what is the one thing to watch out for in 1995?
Quality will be of the utmost importance and of equal importance is ease of use (i.e., installation and user interface of the product). This new consumer doesn't have the emotional attachment to the technology and has no patience for the technological trauma.
What is your advice for 1995?
Tread carefully, do your homework, understand your market and your user/consumer very, very well before you spend a cent on development. Do the best quality work that you can do.
Chris Kitze: Publisher/Developer
SoftKey International Inc.
201 Broadway
Cambridge, MA 01293
(617) 494-5839
(617) 494-8773 FAX
What is the trend in new media markets for 1995?
The trend is to jewel case packaging and more of the record business pricing model. The longer term trend is on-line, but there won't be any money to be made in that area for at least another year to eighteen months.
In introducing a product, what is the one thing to watch out for in 1995?
If you are a developer searching for a publisher, make sure you partner with the right organization for your type of product. Your foreign distributor may be different from your domestic distribution partner. Do not sign exclusive deals without a track record, guarantees and advance money.
What is your advice for 1995?
Focus on higher quality products and try to develop category killers.
Joanna Tamer: Multimedia Distribution Consultant
S.O.S. Inc.
100 Driftwood, Suite 1
Marina del Rey, CA 90292
(310) 306-1814
(310) 306-4861 FAX
What is the trend in new media markets for 1995?
From a CD-ROM perspective the trends are lower prices, broader distribution channels and more "kinds" of outlets and more outlets per "kind." More global selling. More on-line usage in general that is connected to CD-ROM in terms of the marketing and selling of CD-ROM on-line. There will also be on-line components embedded in CD-ROM products. More synergy.
In introducing a product, what is the one thing to watch out for in 1995?
Adhere to a business plan that allows you to survive until 1997 and take a single position of strength. The real market actually begins in '97. By then we'll know the players, the deal structures, and the economics will be in place.
What is your advice for 1995?
Be disciplined. Know your role. Know if you are a distributor, a developer or a publisher. Keep disciplined to your plan and plan for your position in '97. You must be focused. To succeed you can't exceed your business model.
Diane A. Golden: Entertainment/Multimedia Attorney
Mitchell, Silverberg & Knupp
11377 West Olympic Blvd.
Los Angeles, CA 90064
(310) 312-2000
(310) 312-3100
What is the trend in new media markets for 1995?
I believe there will be more consolidation and strategic alliances at the big companies as Hollywood studios get deeper into the industry. You will see more co- publishing deals and risk-sharing arrangements as retail shelf space becomes more limited.
In introducing a product, what is the one thing to watch out for in 1995?
You have to make sure you are competitively priced more than ever. There is incredible pressure to reduce prices of CD-ROM, as the installed base grows larger and the number of titles increases to fill that demand.
What is your advice for 1995?
Start developing and publishing story-oriented, gender-neutral titles to compete with the influence we can expect Hollywood to bring to bear in 1995.
Larry Jordan: Marketing Consultant
Multimedia Marketing
6550 Joshua Street
Agoura, CA 91301
(818) 879-1151
(818) 879-0533 FAX
larryj6@aol.com
What is the trend in new media markets for 1995?
First, the trend is a major shift away from retail except for the largest companies. Second, an increasing focus on targeted and direct marketing. Third, an increase in awareness of the promotional opportunities afforded by on-line services. Fourth, a decreasing reliance on advertising as a way to introduce new products for small and medium sized companies. The successful publishers will give up the idea of having a mass market and focus on who their key target market is and what is the best way to reach them.
In introducing a product, what is the one thing to watch out for in 1995?
Concentrate on an aggressive PR campaign. Create a strong direct mail campaign to key influencers. Develop sales channels using catalog and other direct marketing means. Finally, only move into retail if you have a marketing launch budget of at least $300,000 and can realistically project selling at least 5,000 units per month of your title.
What is your advice for 1995?
Avoid retail if you are a start-up and have no brand equity and limited dollars. You can still build a successful CD-ROM business, but it will not be in retail. Don't ever underestimate how expensive it is to market your product.
Larry Boden: Multimedia Consultant
Spade & Archer
30 North Raymond Avenue, Suite 404
Pasadena, CA 91103
(818) 584-1150
(818) 584-1248 FAX
SA30@aol.com
What is the trend in new media markets for 1995?
The trend is more toward educational products in the CD-ROM market. Tie into other media like movies, TV and music.
In introducing a product, what is the one thing to watch out for in 1995?
You've got to have a targeted market, define the buyer and package it accordingly.
What is your advice for 1995?
To remember this: Everything takes twice as long and costs twice as much as you think!
Joe Gershen: Producer/Musician
Rush Hour Music
1819 Eleventh Street
Santa Monica, CA 90404
(310) 452-0607 Phone & FAX
joegershen@aol.com
What is the trend in new media markets for 1995?
To use the Internet as an electronic shopping mall for all markets, as well as content delivery. In 1995, CD- ROM developers will be creating more interesting, more complete and more in-depth entertainment titles or they will be put out of business. Games will still dominate the CD-ROM market, but you will see that begin to change by the end of '95. As the general consumer becomes more involved, the titles will broaden in scope.
In introducing a product, what is the one thing to watch out for in 1995?
Underestimating the consumer and giving them too little. Current products tend to be one-trick ponies and the product that will be successful in '95 will give the consumer the ability to enjoy and use them repeatedly.
What is your advice for 1995?
The successful developer will create products the consumer wants to buy. Educational, artistic, and entertainment titles other than games will be the type of titles that the new consumer will buy. Look at the best of other media and incorporate that in the new media.
Bill Davidge: Multimedia Sales Consultant
The Davidge Group
Two lndian Dawn
Wayland, MA 01778
(508) 358-5265
(508) 358-1629 FAX
What is the trend in new media markets for 1995?
Multimedia CD-ROM. The retail marketplace appears not to be working because the exposure level for all titles is extremely limited. At best only 400 titles can be shown in a retail store at any one sitting. That is a big problem for the rest of the titles available, close to 4,000.
In introducing a product, what is the one thing to watch out for in 1995?
Good project management is a must. The project must be properly financed. Price the product properly. Don't price it to your break-even curve but rather price your product to what its value is to the consumer. The best thing to do is to have the title presold from concept to consumer. Define and develop a product for a specific price point.
What is your advice for 1995?
My answer is from three perspectives: If I were an investor and didn't have a specific and well defined project I would wait until next year. If I had a title ready now, I would really look to the alternative distribution channels: Presold, OEM, On-line, and Catalog sales. If I were just starting up a project I would create a low price point title. Making an "A" title in today's market is too brutal now because the production values are so high and the price erosion so dramatic. It just costs too much to buy the shelf space for the title.
Carrie Kitze: Multimedia Package Designer
EMK Group
72 Dock Watch Hollow Road
Warren, NJ 07059
(908) 469-7544
(908) 469-7861
What is the trend in new media markets for 1995?
There is a great deal of information out there on CD- ROM. The products the industry is currently selling simply don't meet the needs of the consumer. The new consumer is going to pick up the less expensive titles and be very disappointed in their quality. These titles generally have old information, are cumbersome to use, and do not meet the consumer's expectations.
In introducing a product, what is the one thing to watch out for in 1995?
The challenge is to create content in an exciting and dynamic way to capture the attention of the mass market and mainstream consumer. The products need to be easy to install and easy to use. The new consumer will not be willing to invest hours into a title to gain a full appreciation of the work. Developers often have a great interface but no real content or they have great content and no interface.
What is your advice for 1995?
Put out a quality product and package it correctly. The best way to communicate that you have a quality product is that in every interaction the consumer has a consistent experience. By that, I mean the perceived quality is continuous throughout: the package, the jewel case art, the disc label art, the user interface, and the product itself.
Annie Van Beeber: Agent/Multimedia Consultant
1421 El Miradero Avenue
Glendale, CA 91201 (818)
548-5162 (818) 548-1979
anynerd@aol.com
What is the trend in new media markets for 1995?
The trend is definitely toward the Internet. It is a great marketing vehicle. It is ideal for building a database and marketing to your customer directly.
In introducing a product, what is the one thing to watch out for in 1995?
The net is already an interactive medium so don't be too intrusive and expect to be successful. The product should be flexible enough to let the user choose the level of interactivity desired.
What is your advice for 1995?
On-line is such a broad opportunity -- diverse enough to do just about anything. Take what you do best in the traditional sense and go create for this new medium!
The author can be reached at heppting@netcom.com
© 1995 Diane Heppting.
Web copy published with the author's permission by David Seaman, Electronic Text Center, University of Virginia. Commercial use prohibited without permission.