Montreal: Astral Communications is bringing its considerable assets in programming, financing and distribution to the world of interactive multimedia with the establishment of a new company, Astral Multimedia.

Based in Boca Raton, Florida, the company is headed by William ‘Bud’ Gillan, a senior developer/ producer who joins Astral after 11 years with ibm. Astral Multimedia is a unit of the Astral Entertainment Group, headed by president Sydney Greenberg.

Astral chairman and ceo Harold Greenberg says Astral brings a number of assets to the table as it enters the new fast-growth interactive sector, including experience in creating hundreds of millions of dollars worth of broadcast and home video programs in the past 15 years; a distribution network of 10,000 retail outlets following the establishment of A/B Interactive, a joint venture with Beamscope Canada; and, on the technical side, the ability to manufacture cd format and cd-rom discs in its new $20 million replication facility in Boca Raton.

Astral and Gillan are meeting with multimedia developers across North America to discuss joint ventures, and Greenberg says Astral is evaluating acquisition possibilities. The profile of these new multimedia development companies – in Canada six have 30 or more employees – is rising quickly, Greenberg says. ‘They are coming out of the woodwork’ looking for program sources, cash financing, distribution networks and manufacturing capability.

‘Through ibm, (Gillan) has been involved with hundreds of developers in the u.s., as well as in Canada, and has the ability to co-ordinate this work,’ says Greenberg.

Astral Multimedia’s game plan covers the entire range of multimedia activity, from concept and development, to production, manufacturing and international distribution.

All new Astral-backed programming will be evaluated for interactive suitability, with extra shooting requirements for multimedia exploitation factored into the budget. In animation terms, this could entail additional production costs of 25%, Greenberg says.

‘We are looking at our library and considering using our programming base and redoing it for interactive distribution,’ he adds.

In the next two or three weeks, Astral will complete production on a trilingual pilot cd-rom promo, says Greenberg. He adds Astral is now in the process of creating programs and games which will be distributed to both multimedia and traditional broadcast markets.

Astral reported revenues of $355 million for fiscal 1993/94. The broadcast division, headed by president and ceo Andre Bureau, accounted for $95 million in revenues, while the entertainment division, headed by president Sydney Greenberg, reported revenues of $210 million. The two groups accounted for nearly all of Astral’s profits for the period.

In the next 12 months, the game plan is to ensure Astral Multimedia heads in the right direction, through agreements with developers and the acquisition of suitable product licences, in preparation for new product launches.

‘After that, it’s hard to say how quickly (revenues) will grow. That will depend on how good we are,’ says Greenberg.

The minimum production level for a cd-rom title is in the ‘tens of thousands of copies,’ says Gillan. Retail prices for cd-rom titles tend to range from $30 to $50, with products like encyclopedias higher.

But the number of copies of a cd-rom is only part of the commercial distribution equation, says Gillan:

‘The idea being to pump as much water through the hose as possible, in other words to exploit all the available electronic delivery systems. The important thing is to create the content resources and libraries to put more water into the fire hose.’

The measure of product distribution – known as meterage – includes sales of cd-rom titles as well as volume sales to cable-tv, interactive tv, satellite delivery systems and distribution to local and wide-area computer-based networks.

Gillan says Astral’s preoccupations with subject matter aren’t very different from those of advocacy groups like the Alliance for Children and Television.

‘Astral will not be developing the hyper-violent, sleazier segments of the interactive market,’ he says.

As an example of a competitive cd-rom title in the market, Gillan points to Myst, ‘the current hot game of interest.’ It appeals to many age groups, is non-violent, is ideas-based and has the quality of ‘repeatability.’ Myst embodies the ‘evergreen effect,’ the multimedia equivalent of a long shelf-life, he says.

Another winning successful cd-rom title is The Way Things Work, first produced as a successful how-to book and then as a tv series by the Children’s Television Workshop in the u.s.

‘As the market matures, more interactive developers will have film (linear programming) ideas,’ says Gillan. ‘The general feeling is that the real art hasn’t arrived yet.’

According to Gillan, Canada is well positioned to assume a leading role in the multimedia market, which he stresses is an international market.

‘Canada has the resources and technical know-how to produce for the world market, supplying film and tv programs in both the u.s. and Europe, and Canada has world-class software developers and animators, and places high on the creative end of the spectrum with good ideas and concepts,’ he says.

‘One needs to have the right alchemy for interactive production. The only footnote that I might add is that the rest of the world is catching up. It’s time to act now.’

Growth in cd-rom drive production is exponential.

In 1994, some 18 million cd-rom drives were sold worldwide, up from 6.7 million in 1993. The market has grown more than tenfold in two years, with the projection for 1995 at 25 million drives. ‘By the end of 1996, estimates of cd-rom drive installations (worldwide) are for 60 million,’ says Gillan.

‘The key in multimedia production,’ he says, ‘is to know when to make things interactive.’

Through the Woods, a forest discovery/adventure product set in the Smokey Mountains and designed for children, is another example of a competitive title that is well suited for the interactive world.

Gillan says about 25% of Through the Woods is ‘backbone video,’ typical linear nature-style footage. The video footage sets the scene, but more importantly, it acts as a doorway – a zoom – to the title’s microcosmic elements. In one instance, we zoom towards a rotten log, a new and separate universe represented through the use of animation, stills photography, graphics, texts, etc.

Gillan says film and interactive industries are converging in terms of talent, themes and resources, but the design for the end product is different.

Subject-wise, he says Astral’s emphasis will be on the three es – education, edutainment and entertainment.

Gillan says the Astral product focus ‘will be on fun, meaningful and wholesome productÉfun and family, not sleaze and hyper-violence.’

And there is, he says, ‘a proclivity to tell stories with recognizable characters.’

Paul Butler, a director with Ottawa-based Artech, says the best measure of the growth of the industry is the fact that in North America last year, more pcs were sold than tv sets, with one in three homes in this country equipped now with a pc.

Artech, one of the half-dozen cd-rom development companies in Canada with 30 or more employees, has been involved in joint-venture talks with Astral.

Artech has been in the business for 12 years and has developed product for Sega, Viacom, Sony, and more recently, Corel, another Ottawa-based company best known for its work in desktop publishing and for its photo library.

‘Last year the games business surpassed the movie business in North America in terms of revenuesÉand the profits are higher,’ says Butler, explaining the motive of companies such as Sony, Turner Broadcasting, Viacom, and Astral as they expand their business to the multimedia sector.

Because cd-rom titles play on tv, they represent competition for existing networks. ‘You can’t do both (watch a tv show and play a cd-rom game) on the same tv,’ he points out.

And while film and tv producers hope the quickly emerging interactive market represents recycled life for existing film and tv libraries, Butler says most of the older libraries are not suitable for interactive production.

An example of the kind of broadcast-based product that is marketable is Director’s Lab, which Artech recently developed for Viacom.

This cd-rom product allows kids, and anyone else, to edit tv images, create graphics, add music titles and the user’s own voice to source material previously broadcast on Nickelodeon, the American children’s specialty channel owned by Viacom.

Rights issues are of growing importance in multimedia, says Butler. In the case of Director’s Lab, a fair portion, half, of the Nickelodeon footage used in the cd-rom title was eventually withdrawn by Viacom when it discovered its broadcast rights did not necessarily cover ‘character likeness rights for resale in the new medium.’

‘Contracts have changed 100% in the past two years, with licence holders anticipating redistribution on cable networks in the future,’ says Butler. ‘Rights have become a real issue, all content is precious.’ As a consequence, he says, there’s growing merger activity between licence holders and developers.

Butler says it’s cheaper to shoot digitally than on film, ‘which is so costly.’ Producers seeking to do business with a cd-rom developer can look at two potential scenarios:

The ‘cheap’ way might represent an investment of about $100,000 and lead to ‘poor productÉwith low sales.’

‘It’s the book publishers who are the sinners at this point,’ he says.

The higher end investment for a producer or rights holder is currently in the $250,000 to $1 million range. Butler says the developer is not likely to use much of the original library material anyway, and will be obliged to shoot new video footage.

He says in Canada, little development is currently taking place with the participation of the Canadian film and tv industry, ‘although, one large Toronto producer (of animation) recently contacted us (Artech); but they are the first, along with Astral.’

In addition to Artech, other key cd-rom developers in Canada include Electronic Arts, a Vancouver-based, u.s.-owned company with 125 employees, Radical Software, also of Vancouver, and Gray Matter, and ReadySoft, both of Toronto.

Butler says product interface potential is a key element in multimedia and in accessing ‘the suitability of their (a producer’s) crown jewels,’ developer talk for existing film and tv libraries. ‘A product has to be engaging. It’s not the same as watching a movie in theaters,’ he says.

One successful interactive cd-rom game titles on the market is Wing Commander. Created by Electronic Arts, the game features known Star Wars actors and had an original shooting budget (film footage shot exclusively for the game) of $2 million, according to Butler.