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The Multimedia Revolution

The Multimedia Revolution

Presentation of Tay Vaughan at:

• November 3, 1994, Guatemala, Asocicion de Gerentes
• November 4, 1994, San Jose, Costa Rica, Gran Hotel Costa Rica
• November 7, 1994, Mexico City, Hotel Sheraton
• November 8, 1994, Guadalajara, Hotel Fiesta Americana
• November 9, 1994, Monterrey, Hotel Ancira
• November 10, 1994, Leon, Hotel Real de Minas
• November 11, 1994, Merida, Hotel Hyatt Regency

<<< titlePage >>>

Introduction

Good evening! My name is Tay Vaughan.

<<< mm2eS >>>

I wrote the book "Todo el Poder de Multimedia," published by McGraw-Hill. I am President of Timestream®, a multimedia company based in Oakland, California.

<<< tsLogo >>>

At Timestream, we design and make CD-ROM multimedia products to sell to consumers as "titles," and we also provide multimedia services and solutions to corporations and businesses. We are a new company, but you will hear more about us as we grow!

<<< tayPaint >>>

Like most of you, I have not always been involved in multimedia. In fact, many of us in this room come to the multimedia industry from strange but often interesting careers and professions. In my case, it is pure chance that brings me and my book to you today.

<<< tayMontage >>>

I was asked to tell you about my background and how I got here, so I'll start at the beginning.

I grew up near Boston, where my father was a medical doctor. We were a comfortable but not wealthy family. In our family there was a music tradition, and at six, I began playing the cello. There was also a high value placed on good education and good academic performance in my family, so I attended excellent schools and studied hard my Latin, my Literature, and my Science lessons. I became a good photographer, both with a camera and in the darkroom. For a while, I considered becoming a doctor like my father, but by the time I was in my early twenties, I became lost and rebellious.

<<< Evanger >>>

I worked as a ordinary seaman on a Norwegian freighter and visited 36 port cities in Mexico, Central America, and South America. I have loaded cargo in Acapulco, seen icebergs along the coast of Tierra del Fuego, have spent Christmas in Montivideo, and have body-surfed on beautiful beaches in Brazil. It was my first passage through the Panama Canal.

<<< Dag >>>

I went to college, and discovered that I was still lost. I traveled to Germany and worked for a year as a cabinet maker and learned to speak German. I married a German girl, returned to North America, and completed a baccalaureate degree in Anthropology and Sociology at Oberlin College. There I learned to program computers using Fortran. I then went to graduate school at the University of California at San Francisco to study for a Ph.D. in medical sociology. I supplemented my meager scholarship funds by helping my professors program the IBM main-frame computer at the Medical Center there.

<<< tayCarpenter >>>

The academic clothes still did not fit me very well, and, to the surprise and disappointment of my family, I quit my studies to become a union carpenter. I built highway bridges, apartment houses, and fine custom homes. My tools were hammers, saws, and chisels.

<<< GreatBear >>>

During my spare time, I also built a ten-meter-long ocean-going sailing yacht in the small yard in front of my house. Instead of going to the movies or taking a vacation during that time, I would buy another piece of plywood, some glue, or a few expensive stainless steel screws, and shape them into a functional work of art.

<<< Sailing >>>

When I had saved a little money, I sailed this boat from San Francisco to Boston through the Panama Canal. I became a very good yacht builder, sailor, and navigator, and I studied then for a United States Coast Guard captain's license. Even now as I speak to you as a multimedia expert, I am also a licensed Merchant Marine Officer - a Master - licensed to risk other people's lives and cargoes upon the sea.

<<< BAMI >>>

When I sold my sailboat in New Orleans after logging 17,000 sea miles, I learned to fly airplanes -- little ones -- and I returned to San Francisco where I founded the Bay Area Marine Institute to teach boatbuilding, ship repair, welding, engine mechanics, maritime safety, and navigation.

<<< Sagres >>>

It is at the Marine Institute where my personal story begins to come full-circle to the multimedia present. Atari donated two computers to the Institute, hoping for some good publicity, which they received when I took a crew of Institute cadets on a voyage as guests aboard the Portuguese Navy's square-rigger training vessel, Sagres.

Because I already knew something about programming and about computers, I became very interested in them, and I wrote several commercial programs for shipyard management. Then, when my non-profit school ran out of money and energy and finally closed down, Atari hired me to work there as a Senior Technical Editor.

<<< Atari >>>

It was perfect: it was a job where I combined the writing skills of my good childhood education with my programming skills.

<<< AppleLogo >>>

In 1987, I went to work for Apple Computer, to write HyperCard programs. I told them that I not only hadn't used a Macintosh before, but I had barely heard of HyperCard. They said "No problem, we want you for your creativity; HyperCard shipped two weeks ago, and nobody else around here knows it, either, except the team that designed it." It was the right kind of job offer! It was also the bridge for me into multimedia.

<<< HyperCard >>>

HyperCard was a tool for mixing multimedia's basic elements: text, images, and sounds. And suddenly the creative skills that I had learned throughout my life -- the music, the photography, the carpentry, the naval design and architecture, the programming, even the adventure of new challenges -- all became focused in the world of high technology and computers.

<<< hcBook >>>

Que, a computer book publisher, asked me to write a 700 page text book about HyperCard. I said OK, and was excited. It was my first book. But writing it was like childbirth - a very painful and energy-consuming experience. And after it was done, just like childbirth, I soon forgot the pain, and a few years later I was easily seduced into writing another book, this time for McGraw-Hill!

<<< mm2e >>>

The child of that effort, the multimedia book, is the reason I am here.

<<< clientLogos >>>

After Apple, I then started a company to MAKE multimedia, and from 1987 to 1992 we produced large multimedia corporate information systems as well as custom demonstration software for trade shows and public distribution for many clients, including Apple, Microsoft, Novell, Sun, Tandy, Lotus, and many others. Timestream, my current company, is focused on producing CD-ROM and broadband multimedia titles where we "write once and sell many" instead of "write once and sell once" to blue-blood clients like the ones I have mentioned.

The Revolution

<<< Gutenberg >>>

There is an unstoppable revolution underway, made possible by technology: the way humans access and learn information, and the nature of the information itself, is evolving as a synthesis far more complex and powerful than the liberation of the printed word that occured 500 years ago in 15th Century middle Europe. That last revolution in the way humans access information, led by printers Gutenberg in Germany, Grolier in France, Aldus Manutius in Italy, and others, yielded powerful and long-lasting changes.

<<< Timeline >>>

Think about it! In the perspective of human history, we have only recently developed text and symbols for use in communication -- about 6000 years ago in the Mediterranean Fertile Crescent -- in Mesopotamia, Egypt, Sumeria, and Babylonia -- where meaningful marks were scraped onto mud tablets and left to harden in the sun.

Back then, only members of the ruling classes and the priesthood were allowed to read and write the pictographic signs and cuneiforms, and the messages were about people, politics, and taxes. In some lands it was a capital offense to read unless you belonged to the proper social class or religious order.

Thanks to Gutenberg and the other inventors who affordably brought to the masses WORDS and the thoughts behind them, today text and the ability to read it are doorways to power and knowledge. Now, for your literary skills, you may be awarded a doctorate instead of the death penalty.

Sitting at his workbench in the 15th Century sunlight while he carved the many individual letters of the Pater Noster from tiny uniform blocks of wood, Gutenberg could not have predicted the profound changes that would result from his actions.

A few years from now, we, too, will be amazed by the results of the fast-moving multimedia revolution. It's an international phenomenon. Indeed, someone among us, here in this room, may be multimedia's Gutenberg, a creative and engineering talent who will truly alter the human condition!

<<< cooker >>>

I wish to talk to you today about multimedia, and how you can make multimedia out of an idea. Then how you can apply this idea in the real world as a NEW ART FORM and a NEW LITERATURE. I will talk about the economics for successfully earning money by making multimedia, and I will talk about the equipment, the skills, and the talent required.

What is Multimedia?

<<< cat >>>

Multimedia is an eerie wail as two cat's eyes appear on a dark screen.

<<< redRose >>>

It's the red rose that dissolves into a little girl's face.

Multimedia is a catalog of fancy gift items, and a guide to help you buy one. Multimedia is a real-time video conference with three colleagues in Valpariso, London, and Hong Kong on your office computer. At home, multimedia is an algebra or geography lesson for a young student. At the arcade, it's goggle-faced kids flying fighter planes in sweaty virtual reality.

<<< Elements >>>

Multimedia is any combination of text, graphic art, sound, animation, and video delivered to you by computer or other electronic means. It is richly-presented sensation. When you weave together the sensual elements of multimedia - dazzling pictures and animations, engaging sounds, compelling video clips, and raw textual information searched and retrieved - you can electrify the thought and action centers of people's minds. When you give them interactive control of the process, they can be enchanted. Multimedia excites eyes, ears, fingertips, and, most importantly, your head.

<<< whatNeed >>>

You need hardware, software, and good ideas to make multimedia. To make GOOD multimedia, you need talent and skill.

Let's talk about hardware

Selecting the proper platform for developing your multimedia project may be based on your personal preference of computer, your budget constraints, project delivery requirements, and the type of material and content in the project. Most multimedia developers in the United States and in Europe agree, nonetheless, that multimedia development is smoother on the Macintosh than in Windows, even though projects destined to run in Windows must then be ported across platforms. Hardware and authoring software tools for Windows are improving, however, so it will not be long before you can produce the same multimedia project with equal ease in either the Windows or Macintosh environment.

Soon, also, there will be other multimedia production environments that achieve wide-spread notice. In 1991, Apple, IBM, and Motorola formed an alliance to design and build a new generation of computers that use reduced instruction-set computing (RISC) microprocessors. This PowerPC hardware family bridges both Macintosh and PC environments, and will become commonly available in 1995.

<<< keepUp >>>

No matter what platform you choose, you should follow "Vaughan's Rule for Keeping-up:" Upgrade to proven products that lie in the calm water slightly behind the leading edge of the wave.

<<< installed >>>

Platform 1993

Installed Base Est. 1994

Installed Base Est. 1995

Installed Base

MPC (or equiv.) 2,300,000 3,000,000 4,500,000

Macintosh 1,175,000 2,000,000 4,000,000

Total 3,475,000 5,000,000 8,500,000

MS DOS PC 2,650,000

Sega 800,000

Photo CD 95,000

Philips CD-I 80,000

Other 355,000

Total 7,455,000

Hardware and software vendors are understandably attracted to the PC world because there have been many more PCs sold than Macintoshes, as you can see in this table. For many multimedia vendors, each PC computer represents a potential upgrade sale. Until IBM redesigned the PC to use proprietary hardware (the PS/2 series), the functionality of the AT-bus PC could be copied or cloned by other hardware manufacturers. Many computers from other manufacturers with widely varying features became available, offering more or fewer special capabilities according to that manufacturer's market strategy and production costs. Even today, not all PCs provide the sound and graphics features necessary to make and display multimedia.

<<< MPC >>>

The Multimedia Personal Computer, or MPC, is an industry-wide effort begun in the late 1980s to provide a standardized and capable multimedia computing environment for PCs. However, an MPC computer is not required for you to create multimedia presentations on PCs. Though few multimedia authoring and delivery tools are designed strictly for the DOS environment, some of these are quite extensive. But more multimedia tools are becoming available for Windows--and many multimedia applications are being ported from the Macintosh to Windows.

When enhanced with Windows 3.1, a sound board, and SuperVGA graphics, the PC readily challenges the Macintosh in delivering excellent audio and visual presentations. An MPC computer, moreover, will always provide sound capability, a CD-ROM player, access to the Media Control Interface (MCI) for extensions to video overlay boards and other peripherals, and minimum CPU and memory configuration.

<<< bias >>>

The multimedia toolset is currently biased in one direction: from Macintosh to Windows. If you create a multimedia project using an authoring tool such as Director or Authorware on a Mac, you can convert it to run in Windows; if you make a QuickTime movie with Premiere or VideoShop on the Mac, you can convert it to play in Windows; you can convert a HyperCard stack using ConvertIt! to run it as a ToolBook book. Crossing platforms in either direction, however, can be a trauma of font, palette, and format inconsistency; crossing against the present Mac/Windows bias may put you into the intensive care ward of the hospital.

What skills are required to make multimedia?

<<< occupations >>>

A recent study in the United States reported that physicians, dentists, and computer scientists share highest honors for the most respected professions. Are multimedia developers computer scientists? Or are they programmers, graphic artists, musicians, animators, storyboard craftspeople, instructional designers, and/or Renaissance authors?

<<< glass >>>

Video producers become expert with computer-generated animations and MIDI controls for their edit suites. Architects become bored with two-dimensional drafting and create three-space animated walk-throughs. Classical painters learn the electronic elements of red, green, and blue and create fantastic computer-based artwork. A multimedia developer might be any or all of these and typically fits no traditional management information systems mold; many have never seen a line of COBOL code or booted up an IBM 3090 mainframe.

<<< trapeeze >>>

Leonardo DaVinci, the Renaissance man, was scientist, architect, builder, creative designer, craftsman, and poet folded into one. To produce good multimedia, you will need a similar diverse range of skills -- detailed knowledge of computers, text, graphic arts, sound, and video.

<<< skillChart >>>

These skills, the multimedia skillset, may be available in a single individual, but more likely from a composite of a few or many individuals working as a team. Complex multimedia projects are, indeed, often assembled by teams of artists and computer craftspeople. Many job titles and collaborative team roles for multimedia development are being adapted from a mix of motion picture industry and computer software industry experiences.

A multimedia team usually consists of:

• Project Managers

• Multimedia Information Designers, including

• Graphic designers

• Illustrators

• Animators

• Image processing specialists

• Instructional designers &

• Interface designers

• Writers

• Video Specialists

• Audio Specialists

• Multimedia Programmers

<<< learnCurve >>>

If you are new to multimedia and are facing a major investment in hardware and software, and the investment of time to learn each new tool, take a gradual approach. Begin by studying each element of multimedia and learning one or more tools for creating and editing that element. Get to know how to use text and fonts, how to make and edit colorful graphic images and animate them into movies, and how to record and edit digital sound. Read the books and computer trade periodicals that contain the most up-to-date information. Your skills will be most valuable if you develop a broad foundation of knowledge about each of the basic elements.

<<< orgChart >>>

Producing a multimedia project requires more than creative skill and high technology. You need organizing and business talent as well. Issues of ownership and copyright will be attached to some elements that you wish to use: text from books, scanned images from magazines, audio and video clips. These require permission and often payment of a fee to the owner - your team may also need professional legal advice. Indeed, the management and production infrastructure of a multimedia project may be as intense and complicated as the technology and creative skills you bring to bear in rendering it.

Before I talk about how you can actually MAKE multimedia, let's take a few minutes break!

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Welcome Back!

How do you Make Multimedia?

<<< stages >>>

The five basic stages in building a multimedia project are idea processing, planning, production, testing, and delivering. Some developers claim these stages should be called calm, chop, storm, chaos, and deliverance.

Let's talk about Idea Processing

<<< navMap >>>

A multimedia project always begins with an idea or a need that you refine by outlining your desired messages and objectives. Identify how you will make each message and objective work within your authoring system. Before you begin developing, plan what writing skills, graphic art, music, video, and other multimedia expertise will be required.

Develop a creative graphic look and feel, as well as a structure and navigation system that will let the viewer visit the messages and content.

The most precious asset you can bring to the multimedia workshop is your creativity. It's what separates run-of-the-mill and "underwhelming" multimedia from compelling, engaging, and award-winning products, whether for a short sales presentation viewed solely by colleagues within your firm or for a full-blown CD-ROM title.

<<< storyboard >>>

Choosing your subject matter, then determining how a user will interact with and navigate through the content requires great attention to the message, the scripting or storyboarding, the artwork, and the programming. You can break an entire project with a badly designed interface. You can also break a project with inadequate or inaccurate content.

In making multimedia today, there is a lot of room for creative risk-taking because the rules for what works and what doesn't work are still being empirically discovered; there are few known formulas for the success of multimedia. Indeed, companies that produce a terrific multimedia title are usually rewarded in the marketplace. Then competitors quickly reverse engineer the product, and six months later "knock-offs" using similar successful approaches and techniques appear on the market.

<<< cosmic >>>

Even the best-selling Just Grandma and Me from Brøderbund is an extension of techniques used in an earlier successful HyperCard children's game, Cosmic Osmo...

<<< grandma >>>

which in turn was based on experiments with interactive virtual desktops in HyperCard.

<<< peter >>>

An excellent multimedia title recently developed in France by Arboresence, Peter's Numbers Adventure, goes beyond Grandma and Me.

<<< olympics.qt >>>

While many developers are hoping to make the "VisiCalc of Multimedia," or software that is so good that consumers BUY computers just to use it, it may well be that no single multimedia project or trick will be the breakthrough INVENTION that VisiCalc's spreadsheets provided during the early days of the PC: users bought computer systems just so they could use that software! It is likely that multimedia will be gradually improved and made more powerful in incremental steps, by INNOVATION, where developers build upon existing technologies, ideas, and approaches. This is the basic nature of change.

To successfully reduce your ideas to practice, you must be familiar with what is possible and not possible in the realm of multimedia; familiar with what is limited and unlimited by both hardware and software. Indeed, you will find it is difficult to stay informed and keep up with the frothy leading edge of the multimedia wave.

Now Let's talk about Planning

<<< msProject >>>

Once you have your ideas formulated, you need to be sure you have enough money, time, and talent to pull it off.

Treat your multimedia idea as a business venture. As you visualize in your mind's eye what you want to accomplish, balance the project's profit potential against the investment of effort and resources required to make it happen.

Estimate the time needed to do all elements, and prepare a budget. Work up a short prototype or proof-of-concept to give you a reality-check.

Planning for multimedia projects is like cellular fission: the big picture of your idea is divided into production phases and then divided again into smaller and more manageable tasks and items spread over a given amount of time. These manageable tasks are the building blocks of project management.

<<< cooker >>>

One of the problems you face is that making multimedia is not a repetitive manufacturing process, like making cookies or auto parts, where you can stamp out piece after piece. Rather, multimedia is by its very nature a continuous research and development effort characterized by creative trial and error. Each new project is somewhat different from the last, and each may require application of many different tools and solutions. The first time you accomplish a multimedia task, it will demand great effort as you learn the software and hardware tools and the techniques required. The second time you do a similar task, you will already know where the tools are and how they work, and the task will require less effort. You should be profitable by the third time you perform a task.

Production

<<< hammer >>>

Once you have your idea fleshed out and have budgeted and planned how you will get it done, you can begin the production stage.

Production is the phase when your multimedia project is actually rendered. During this phase you will contend with important and continuing organizing tasks. There will be times in a complex project when graphics files seem to disappear from the server, when you forget to send or cannot produce milestone progress reports, when your voice talent gets lost on the way to the recording studio, or when your hard disk crashes.

<<< toolList >>>

Multimedia elements are typically sewn together into a project using authoring tools. These software tools are designed to manage individual multimedia elements and provide user interaction. Images, sounds and movies are usually created with editing tools dedicated to these media, and then the elements are imported into the authoring system for playback.

<<< interface >>>

The sum of what gets played back is the human interface, and this interface is just as much the rules for what happens to the user's input as it is the actual graphics on the screen. The hardware and software that govern the limits of what can happen here are the multimedia platform or environment.

For many multimedia developers, following the plan and actually doing the construction work--being down in the trenches of hands-on creation and production--is the fun part of any project.

<<< openCode >>>

HyperCard, SuperCard, Macromedia Director, ToolBook, and other commonly used authoring platforms may allow access to the software programming code or script that drives your particular project. In such an open-code environment, are you prepared to let others see your programming work? Is your code neat and commented? Perhaps your mother cautioned you to wear clean underwear in case you were suddenly among strangers in a hospital emergency room--well, apply this rule to your code. You can insert a copyright statement in your project that clearly (and legally) designates the code as your intellectual property, but the code, tricks, and programming techniques remain accessible for study, learning, and tweaking by others.

Testing

<<< crashMsg >>>

Always test your multimedia programs. If they lock up or glitch out, user's will condemn your project before it gets off the ground.

Test it, then test it again; that's the unavoidable rule. Do this before the work is finalized and released for public or client consumption. A bad reputation earned by premature product release can destroy an otherwise excellent piece of work representing thousands of hours of effort. If you need to, delay the release of the work to be sure that it is as good as possible. It's critical that you take the time to thoroughly exercise your project and fix both big and little problems; in the end, you will save yourself a great deal of agony!

<<< manyCPUs >>>

One of the major difficulties you face in testing the operation of your multimedia project is that its performance depends on specific hardware and system configurations. If you cannot control the end user's platform, or if the project is designed to be shown in many different environments, you must fully test your project on as many platforms as possible. Remember to budget for obtaining the hardware test platforms, as well as for the many hours of effort the testing will require!

Delivering

<<< birds >>>

As you move through the testing process toward a final release, you may want to use terms that indicate the current version status of your project: bronze when you are close to being finished, gold when you have determined there is nothing left to change or correct and are ready to reproduce copies from your golden master. Some software developers also use the term release candidate (with a version number) as they continue to refine the product and approach a golden master. Going gold, or announcing that the job is finished and then shipping, can be a scary thing. Indeed, if you examine the file creation time and date for many software programs, you will discover that many went gold at two o'clock in the morning!

<<< wave >>>

In the multimedia world today, delivering to the consumer channel is the least understood stage of the multimedia process. In fact, for PUBLISHING multimedia, a different team of people with different skillsets is usually employed.

Clearly, the marketplace will drive the success of high-visibility multimedia projects. Consumers will pay real money for good works, whether on CD-ROM, from a centrally-served 500-channel television system, or from an international data highway. With real money in hand, developers will then create even more and improved material... and the leading edge of the multimedia wave will move forward. This is the nature of the multimedia revolution.

The Multimedia Marketplace

<<< 2-Graph >>>

The largest market share of CD-ROM playback equipment is in the computer environment, not the television set-top environment, with the Windows-based MPC platform maintaining an advantage over Macintosh-based systems. The available installed base of multimedia-equipped computers in U.S. households at the end of 1993 was 3.8 million: 2.5 million MPCs and 1.3 million Macintoshes. The installed base of CD-ROM players grew 300% from the end of 1992 to the end of 1993. The installed base of CD-ROM players is expected to triple again in 1994. The available installed base is that fraction of the projected installed base into which consumer/mass market and business titles can be sold.

Other CD-ROM players can be connected directly to a television, such as the Compact Disc-Interactive ("CD-I") player from Philips, the Photo CD player from Kodak, and the 3DO player. Both the 3DO and CD-I systems display graphics and animation and play stereo-quality sound. The combined installed base for Photo CD, CD-I, and 3DO, however, is less than 250,000 units, and consumers seem to prefer purchasing computers with CD-ROM capability rather than these specialized and expensive set-top devices. The installed base of set-top CD-ROM players will not increase fast enough to justify producing titles specific to them at this time, and these devices soon will be supplanted in the marketplace by a new breed of set-top "boxes" (which may also include CD-ROM players) that are linked to the interactive data highway.

Only 1% of the multimedia market has been tapped, and there will be an 80% annual growth rate over the next three years. By 1997, the multimedia market will be worth $9 billion in computer sales and $15 billion in consumer sales.

While sales of interactive programs on computer disks still outstrip CD-ROM sales, several things happened in 1992 and 1993 to stimulate consumer acquisition of CD-ROM titles.

First... Multimedia products were bundled with up-grade hardware, introducing millions of consumers to the variety and versatility of interactive titles.

Second... Multimedia development tools became very powerful and capable: newer CD-ROM titles incorporate sophisticated video, 3-D graphics, and game-like structures.

Third... The retail price of individual titles declined over these two years: from an average of $129 per title to $59 per title. During 1993 the price reduction rate was 6% per month.

Finally... Products increasingly became available in channels other than software retail outlets: at video and audio outlets, through catalogs and direct mail, and (by the end of 1993) at video rental chains.

There is rapid growth in the consumer market for CD-ROM titles, triggered by the penetration of multimedia-equipped computers as well as downward pressures on title prices. Consumer sales are on the rise. With a market size of $3 billion in 1993, increasing to $15 billion in 1997, this is a clearly high-growth market - an exciting place to be. But you are there already!

<<< 3-05 >>>

The Nightmare

The multimedia marketplace is a nightmare of uncertainty where you must distribute your multimedia titles into a chaotic new-born marketplace where the rules for doing business, and the business itself, are unformed.

It's a strange place fraught with allies and enemies, mergers and acquisitions. Business and money people have heard the mewling of our infant industry, and they circle now, just outside the firelight, waiting to make their play.

<<< 3-06 >>>

Order

Good developers, however, will fashion order out of chaos; some will survive this infancy. They will be smart, strong, and enduring craftsmen who will challenge the equations of the marketplace, and shape the numbers to fit. Marketing gurus, sales experts, creative talents, programming geniuses, and strong leaders will not only team up to MAKE multimedia, they will aggressively SELL it in this emergent industry.

<<< 3-11 >>>

Who are the Customers?

Customers of today's multimedia titles are owners of computers with CD-ROM drives attached. DataQuest predicts that 17 million CD-ROM drives will ship in 1994, a 153 percent increase over the 6.74 million drive units shipped in 1993. In 1994, CD-ROM owners are expected to purchase about $450 million dollars worth of reference, entertainment, and educational titles costing between $25 and $100 each. Title sales will be up from $325 million in 1993. Approximately 3,000 titles are available today by mail order and from retail shelves, and another 1,500 new titles are expected by Christmas this year. The majority of this marketplace is currently located in North America, Japan, and Europe.

<<< 3-12 >>>

Retail Channels

In North America, five retail channels are emerging for CD-ROM multimedia: video rental stores, book stores, record stores (really Audio CD stores now -- the vinyl records are in special bins mixed in with the 8-inch floppy disks), warehouse stores such as Costco/Price Club, Wal-Mart, Sears, and K-mart, and the computer software chains such as Egghead and CompUSA. Traditional software chains will continue to provide the primary retail sales points for CD-ROMs during the next year or so, but will diminish in importance unless they evolve to meet new demands.

<<< 3-18 >>>

Alternate Routes

Direct marketing of multimedia through catalogs and direct mail will, however, remain an important method of selling titles for the next two years Today, approximately 20% of CD-ROM title sales are by direct mail. Over time, these catalog companies will evolve into niche market specialists because consumers will buy multimedia from mainstream store-fronts and discount warehouses in the same way they buy their music, groceries, and Levis. To put your product into a catalog today, be prepared to pay a buy-in fee as high as $10,000 just for the listing, and then more for advertisements.

<<< 3-19 >>>

The Superhighway

Of course, in the end, multimedia titles, unlike groceries and Levis, will be sold from automated server-driven warehouses along the data highway. Why do you think Oracle is involved? They want to supply the tracking and point-of-sale machinery to these warehouses, or become the warehouse itself. The World Wide Web, or "Information Superhighway," is growing at greater than 300% per year; if Microsoft has its way, every television in the world will ship with a Windows operating system on its mother board or in an external set-top box that connects it to the Web. Apple would like System 12 or 22 on the mother board. When this phase shift occurs, probably by the year 2010, today's CD-ROM superstores will adapt to something unpredictably new or go out of business.

<<< 3-22 >>>

Going to Market

You can publish yourself, or you can strike a deal with an established publisher or distributor and, for a fee, hitchhike your way to the market. Today, according to Compton's, the average CD-ROM title sells between 15,000 and 20,000 units before it dies. More than 40,000 units is a great success!

<<< 3-28 >>>

Beyond Production

I want to close with some tips aimed directly at small and start-up developers. First, finance and marketing are as critical as producing a cool product. If you don't like budgets, marketing, management, and distribution, find someone who does, and sign them up. Whether you are going it alone or dealing with a publisher, do your homework; don't get run over because you don't understand the business side.

<<< 3-29 >>>

Know your Market

The marketplace will seem different to each player, depending upon approach and position. Study all its aspects and viewpoints. Before you begin developing a product, know that it will sell and to whom. Try focus groups. Or send demo disks to a hundred people who fit your audience and measure their response. Be market-driven.

<<< 3-30 >>>

Marry a Publisher

Signing up for the wrong deal can take all the fun out of making multimedia. Always ask these questions?

Can the publisher sell to the right channels for your title?

How many stores does the publisher sell to in each channel?

Does the publisher's title line complement or compete with your product?

Does the publisher treat Affiliate Label titles such as yours as well as its own in-house titles?

Have you called references and checked Dun & Bradstreet?

What help will the publisher give you with marketing, PR, and package design?

Will the publisher assist you with direct marketing and catalog sales?

Have you signed away rights of first refusal on your future titles, or simply a right of first negotiation?

Will you be properly compensated for sub-licensing deals such as for foreign distribution?

Have you established a rate for ancillary or related products like dolls, t-shirts, and stickers?

And, of course, a myriad more questions...

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The Upside of Multimedia

Even as I describe to you a chaotic, rapidly-growing market without a track record or long-standing rules for behavior, the future of small independent multimedia developers is actually bright! SOMEONE has to make the vehicles and provide the cool ideas that will travel to the multimedia marketplace. That's you! You are at the right place at the right time!

Thank you very much.

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