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Presentation by Tay Vaughan, President
Smart Media Conference
Sheraton Towers, New York, NY
October 26, 1993
IBM and Clone PCs
PCs are the most common computer attached multimedia platforms. A conservative estimate in 1992 shows 2.1 million CD-ROMs are attached to PCs. Of these 2.1 million, only 800,000 CD-ROMs have the multimedia capabilities (386 and above). This represent 38 percent of installed CD-ROMs used for multimedia. This low number of CD-Rom's used for multimedia is expected to increase rapidly since all new PCs are at least 386 or above.
The 1992 figure of 38 percent is distributed between household and business with the majority of CD-ROMs towards business. Because of this unequal distribution, the primary market for developers lie in the business sector. Titles that might be suitable for this market may therefore include the following:
• Accounting and Finance Applications
• Employee Training Programs
• Business Organization and Strategic Planning
• Business Presentation Tools
The MPC market is expected to grow rapidly in the near future. It is estimated that shipments of multimedia ready PC will reach 3 million units in 1993 and continue to grow close to 5 million in 1996 as shown in chart on below (source: The New York Times, Dataquest).
The connecting rate for between CD-ROMs and MPC has been estimated to 2.5 percent. The household market is expected to absorb a greater amount of the installed CD-ROM distribution and therefore create a market for edutainment, infotainment, reference, and game titles.
The Macintosh computers are more suitable for multimedia delivery and therefore has a larger number of multimedia titles available to its format. About 68 percent of all multimedia titles available represent Macintosh format and the rest 32 percent represent PC format as shown in the picture (Dataquest -93, p.18).
The number of attached CD-ROMs in 1992 is 600,000 which of 400,000 has multimedia capabilities (all systems except Plus and SE). This represent 67 percent of Macintosh attached CD-ROMs compared to only 38 percent of MPC attached CD-ROMs. In addition, the connecting rate between Macintosh computers and CD-ROMs is estimated to 6 percent compared to 2.5 percent for MPCs as shown below (Source; Apple's Mkt research report, p 13).
Computer Attached Multimedia CD Drives Summary
Computer attached multimedia CD drives (MMCD drives) are referred to Macintosh and MPC machines that are capable of delivering multimedia titles. That is, in 1992, 800,000+400,000=1,200,000 units as explained in the pervious section. It is estimated that only 1/3 of 96 million U.S. households are computer literate and the about half of these household use their computers in business. Because of the lack of computer knowledge, the Consumer Appliance Players businesses are targeting the rest (2/3) of the U.S. household market.
Consumer Appliance Players
Consumer appliance players are referred to all multimedia players that are not attached to computers. This market is larger and is expected to grow more rapidly then the MMCD market because of the lower cost and the limited computer knowledge that is required. The installed base of consumer appliance players is expected to 28,600,000 units in 1997 as shown below. Some common players that should be considered include Nintendo, Sega, 3DO, CD-I, CDTV, Data Discman, Photo CD, and VIS. The 1993 sales of some of the consumer appliance players has been estimated by Optical Publishing Association as following.
Nintendo & Sega
Nintendo & Sega are the main players in the consumer appliance market and therefore major competitors. In 1992, many believe that Sega and Nintendo share the market 50/50. Their estimated sales for 1992 was 5 million units each. It is believed that this competition foster a rapid advancement in technology trends. Their 8-bit market is expected to be completely dead well before 1998 and replaced by the 16-bit systems.
The 16-bit systems is expected to be profitable until 1995 when this system is expected to be replaced by either a 32-bit system, optical disc, and/or a specialized chip.
In 1994, the Nintendo CD and the enhanced Sega CD, both on 32-bit bases, will be introduced. This step is expected to cause the CD-ROM to be an important component in the interactive entertainment market by 1998 (source; Home Video Gaming and Electronic Entertainment Through 1998, p. 3-8).
• Projected year end sales of 200,000 for the $299 units.
• CD-ROM add-on for the Sega 16-bit Genesis gaming system sold out all $35,000 units of its first shipment within 48 hrs last fall.
3DO's interactive multimedia player will be available in the U.S at the end of December 1993. It will be able to play audio compact discs and display Photo CDs in addition to it's own titles developed by third party software developers. The multiplayer is based on a 32-bit processor that is believed to outclass the present 16-bit Sega CD.
According to Infotainment World, Inc., 3DO is expected to become a general excepted format by 1998 and compete for a market share together with Sega and Nintendo (source; Home Video Gaming and Electronic Entertainment Through 1998, p. 8).
• The machine delivers real time, 32-bit processing of complex animation, video, and sound • Expected to ship October 1, 1993 for about $750 • There are 75-100 ???? titles in production and only about 25% of them are games • 3DO will have to compete with Sega and Nintendo which are going to have its own CD-ROM capabiblity by January 1994
All the above infomation comes form "New Media" May 1993 issue p.40
• The company plans to put its core technology onto plug-in boards for the MPC and other computing platforms
• Disadvantages: 3DO needs good software titles to sell the device and the developers are loathe to write titles for a device that is not in millions of homes
• 3DO's platform includes a standard double-spin CD-ROM drive, a multi purpose port for musoc and computer keyboard, joy-stick or mice.
The above infomation comes for "MultiMedia World", a special saction of PC World, Feb 1993. p.39-41
CDI & CDTV
• Selling in tens of thousands of units a year • Only about 25,000 are shipped within United States • Some believe, especially Optical Publishing Association's Rich Bowers, that CDI, CDTV and VIS has flopped either because costumers do not buy it or the manufactures do not sell it.
Estimated CD-ROM sales in Units
|MS Dos PC||650,000||2,650,000|
Source: New Media: Optical Publishing Association
Estimated Title Development Costs by Platform
The cost to develop a similar title for Sega, CD-I, CD-ROM, and 3DO platforms has yet to be determined. However, the average costs for developing a title on the different platforms are estimated below (source; The Green Sheet, Feb, Issue 1, Vol. 5, 1993, p.4)
|Sega:||As high as 1.3 million|
|CD-I:||300,000 to 800,000|
|CD-ROM:||60,000 to 250,000|
|3DO:||300,000 to 500,000|