The OFDC all-biz new media seminar answers the questions you gave up asking because no one had credible answers

On the seminar scale (with a zero rating indicating a high snooze quotient and a 10 at the ‘Can I write this all down fast enough?’ end of the scale), the packed New Media session hosted by Ontario Film Development Corporation in Toronto this month was definitely in the upper echelons of the congress continuum.

Sheridan College multimedia prof Gillian Chubb, who described multimedia at its best as a ‘near-life experience,’ imparted the basics of interface design.

Interface step-by-step, according to Chubb: develop a conceptual model (why, for whom and how are you doing this), outline content and purpose/intent, consider which media delivers it best, decide on style, instructional design, and plot a navigational model (tools, links).

Tips: hire the best talent you can afford across the board, get technical input at the design stage, always tell the user where they are in the program, provide a way out, and make the help section helpful rather than frustrating.

The successive prototype model Chubb drew calls for concept, design, production and testing in concentric cycles, culminating in the final product after several go-rounds.

If that doesn’t leave cd-prod wannabes dizzy, the world of distribution will certainly give them pause.

The sales and marketing overview provided by Silicon Valley-based Paul Giurata was a marvel of detailed market stats and distribution process elements. Giurata, who lives on the San Andreas fault – ‘Caulking is a major building material where I come from’ (which tells you a lot about the kind of people who do well in cd-rom launching) – does contract work for Sanctuary Woods, Discis and the ofdc.

Giurata’s market overview consisted of good news – most new pcs are multimedia-ready, 60% of new development is cd-based, and users bought 1,800 different cd titles in the first quarter of ’95 – and bad news – many titles didn’t even sell one copy, 71% of all the revenue came from the top 10% of the titles (190 titles/63% of the unit volume), and 30% of the revenue came from the top 1%.

Armed with a statistical study of the top 10% of the cd-rom market in the u.s. (using research from PC Data) for the first quarter of ’95, Giurata delineated a composite model of a successful title. The accepted price points are in the us$45 to us$55 range, with a unit sales range of 45,000 to one million (the average first-year unit volume is 125,000 to 200,000).

The top hit categories are:

– Games/entertainment: adventure/role-playing, action, simulation, sports and war games (in hit-q order). The revenue share is 48%, representing 44% of the titles. The estimated annual volume is 217,000 units, the average selling price is us$45.48, and the average shipping life is eight months.

– Education/edutainment: art and creativity, electronic books, math, reading, science. The revenue share is 24%, representing 31% of the lucky shelf-winning titles. The annual volume is 131,000 units, however the asp is slightly higher, us$52.26, and the average shipping expectancy is a venerable 11 months.

– Personal: home graphics, medical, travel/maps. This category takes 14% of the revenue market share, with 13% of the title share, and sells an estimated annual volume of 164,000 units at an asp of us$55.53. Nine months is the average shipping time.

– Business: desktop publishing, reference. With a 6% revenue market share, representing 8% of the titles, this category has an estimated annual volume of 118,000. It has a very healthy asp of us$178.33 and the longest shipping average, 12 months a year.

– Personal finance has 8% of the revenue market share with 4% of the titles. The asp is us$55.14 and the annual volume is 314,000, with a nine-month average shipping window.

The list of top publishers includes all the usual suspects – Broderbund, Disney – with Canadians Corel and Softkey also on the list.

Keys to success: be in a hit category, work with a hit developer. Contributing factors: source hit property, category analysis, proven demand generation, distribution and placement.

The winning financial model advocates pricing between us$45 and us$50, a channel margin of 11% to 35%, returns of 10%, cost of goods sold at us$3 to us$7, and a gross margin of 60% to 70%.

The cost of publisher commission varies greatly, but for an affiliate label deal it’s in the 23% to 30% range. Marketing rings in at the us$200,000 to us$1 million ballpark, and the break-even unit count is 50,000 (even if you can do it profitably for less, merchants won’t be interested). The contribution margin for the top 10% was 30% (revenue less cogs).

Interesting tidbits on the launch process include the fact that in the main distribution channels there are 30 accounts that represent 80% of the biz.

No wonder Giurata advocates self-publishing only if you have coffers the likes of the telephone companies.

Platform tips: pcs represent 80% of the installed base, however Mac’s numbers are higher in educational areas.

Conclusion: the market is real for the people in the top 10%; however, as the distribution channels grow (Internet, bookstores) and the multimedia pc base grows, that 10% will grow.

The afternoon concluded with a case study of the Discis-published puzzle game Jewels of the Oracle, developed and designed by Electra Media’s Paul Chato and Courtland Shakespeare. The cross-platform title, which has 50,000 units in distribution in 8,000 retail outlets, cost about $300,000 to develop and has a marketing budget of $2 million.

Chato, who spoke humorously of the technical problems mastered along the way (not to mention the perils of programmer-wrangling), had a particularly sobering cd-rom statistic: 99% of multimedia pc owners never buy another disc.

He also had some very good advice for cd-rom producers, given the importance of meeting the delivery date (premarketing for a launch begins six months prior, and shelf space waits for no cd-rom): ‘It’s done, not when it’s finished, but when someone tells you it’s done.’