Multimedia group works to change its image

Sony Electronic Publishing (SEP) seemed to have it all when it began two years ago. The group had access to Sony’s vast content libraries, its worldwide name recognition, its technological expertise, its established distribution channels for both the consumer and computer markets, and its funding.

Between its four divisions — Imagesoft, which publishes and distributes game titles for Nintendo and Sega; Multimedia Productions, which licenses and publishes CD-ROM titles for personal computer platforms and Sony’s Data Discman and MMCD player; the Publishers Data and Services group, which develops authoring tools and provides production services for electronic publishing; and the CD-ROM and laser disc mastering and pressing plant — SEP was going to be the publishing company that set the standards for how interactive media titles should be produced, marketed and distributed.

But Sony lost sight of two elements necessary for SEP to thrive in a competitive marketplace: action and innovation. And as a result it has left many involved in the electronic publishing industry doubtful of Sony’s ability to lead the way. In particular, some multimedia publishers affiliated with SEP question the company’s level of commitment to the CD-ROM titles market. And many members of the multimedia publishing group have left the Sony organization.

Not an easy row to hoe. In fairness, Sony’s behavior certainly isn’t the only reason for slow consumer acceptance of CD-ROM titles. SEP simply chose to put its energy into the division that yields the lion’s share of its revenues — the software market for Sega and Nintendo game machines. But with typical Sony arrogance, it wanted to be perceived as a major player in the nascent electronic publishing business and sold itself to CD-ROM publishers as the answer to their prayers: a one-stop shop for manufacturing, marketing and distribution of their titles.

By nearly all accounts, Sony did not deliver what SEP president Olaf Olafsson had promised when he launched the affiliated label program at last summer’s Consumer Electronics Show; now the company must take responsibility for what its arrogance has wrought.

One clear indication of that attitude is that Sony put the multimedia publishing group and the tools and services company in Monterey, a small, exclusive resort town on the central California coast, and expected the Sony cachet to turn it into a publishing mecca — without providing the divisions with adequate marketing, staffing, funding or autonomy.

‘SEP is DOA.’ Several multimedia publishing affiliates, who bought into the promise of the Electronic Publishing group early on, say they feel cheated. One of them, who did not want to be identified for obvious reasons, said, “Sony is going to have to ask me to deliver the rest of the titles under my contract if they want them, but I think they are so buried in their own [garbage] they won’t ask. Sony’s Electronic Publishing group is DOA; there’s no doubt about it.”

Certainly, the Multimedia Productions division does not have much to show for its two years. To date the publishing group has produced 10 CD-ROM titles for the Mac, Windows and DOS, nine of which are published by affiliates, while Sony handles distribution and marketing for a handsome fee. The group also has delivered about 30 DataDiscman titles — 17 of which were published in-house — as well as three MMCD titles.

SEP management says the lack of in-house published titles has to do with the 12- to 18-month development cycles necessary to produce quality CD-ROMs. According to Randy Thier, vice president of SEP, the Multimedia Productions group is working on “six to eight” titles, with about “half of those” to be delivered this year.

WON’T TAKE THE RAP, BUT SAYS ‘IT’S CHANGING’

Although Sony won’t admit anything went wrong in Monterey in the past, members of SEP today will say they have made changes in Multimedia Productions and Publishers Data Service Corp. (PDSC). To start, these divisions are no longer managed by one person.

Thier, who joined SEP 10 months ago, now controls worldwide operations for multimedia publishing and the affiliated label program. (Interestingly enough, he also handles Imagesoft products distributed outside of North America and has been in Europe recently setting up headquarters there.) Bob Hurley, who has been with SEP since its start, now runs PDSC, the tools and support group.

Hamstrung from the start. When the group started, Bob Headrick, who is now the president of Nimbus Information Systems in West Virginia, had the unenviable position of running operations for both groups. Although members of the Monterey team, past and present, are unwilling to comment on the record, many say they believe Headrick had an impossible job. According to one, he had “forward-thinking ideas but was hamstrung by lack of staff and corporate backing.”

Headrick, who is now helping to develop a multimedia publishing group within Nimbus, says the U.S. launch of the DataDiscman consumed much of the Monterey-based team’s potential development time. It fell to the Multimedia Productions group and PDSC to crank out tools and titles as proof of concept for Sony’s new player.

It was extremely important to Sony that the consumer device had software to run on it when it debuted, and so in less than nine weeks the two Monterey divisions produced 16 titles in house for DataDiscman — which for many reasons, chronicled in this newsletter and elsewhere (see Vol. 1, No. 8, “DataDiscman: So Many Ways Wrong”), was not a successful platform in the U.S.

Separating church and state. Perhaps more important than the division of labor between Hurley and Thier is the separation of church and state between content and technology. Prior to Thier and Hurley taking their respective positions, there was a lot of cross-pollination between the two groups. As we have seen over and over again — including with the launch of the DataDiscman — experts in technology do not necessarily have the skills required to be expert content publishers, and vice versa.

This is not a criticism of the team in Monterey. They were understaffed then, and, according to members of SEP, they are understaffed today. Thier says they are working to solve that problem. Although he will not name names, he says Multimedia Productions will make hiring announcements in the near future — bringing on experts, he says, in interactive media.

Adding a liaison. According to SEP, the group will add a liaison for the affiliate label program, who will work with outside publishers from their first dealings with SEP all the way to the signing of the contracts.

Compton’s NewMedia, which is Sony’s largest competitor for affiliates, has several such liaisons. Today, it is usually only the Sony lawyers and accountants in the room when an affiliate signs on the bottom line. Even Thier admits this practice doesn’t inspire confidence or trust between Sony and prospective affiliate label publishers, but says it has been

“Sony’s way of doing business.”

WHERE HAVE ALL MY TITLES GONE?

One of the biggest complaints of affiliates, who wished not to be identified, was that Sony does not market their products well. While Compton’s NewMedia will place ads in computer magazines and use the more traditional advertising vehicles of this market — in-house store advertising and catalog mailers of titles to targeted audiences — Sony has resisted advertising in publications.

“It makes more sense today to invest in retailer advertising or catalog advertising,” says Thier. “In our particular category the cost of the ad page is too high in comparison with the cost of the return.”

Several Sony affiliates disagree, and have in the past signed distribution deals with Compton’s and Electronic Arts.

Home of the exclusive deal. While those affiliates did not have exclusive distribution deals with SEP and were able to choose additional options, future Sony affiliates will not have the same opportunity. “For all future deals we are only going to involve ourselves with publishers who agree to exclusive deals,” says Thier. “It is by nature a dedicated relationship between publisher and distributor, and non-exclusive deals promote confusion in the retail channel.”

Interestingly enough, Greg Smith and Francis Juliano, who helped start SEP divisions in Monterey, and who recently left Sony to start a multimedia publishing company called Roundbook, have just signed an exclusive distribution deal with Compton’s.

Software on the trade show floor. Several affiliates have also been disturbed by SEP’s lack of presence at computer and consumer trade shows. Traditionally, when the Electronic Publishing group participates in a trade show, it holds private demonstrations of its software titles in hotel suites off the main trade show floor. Obviously, from an affiliate’s standpoint, this is not the best strategy if you want to impress the masses with your product.

When titles are shown on the floor, they are usually in a booth that is run by Sony’s hardware division, which often uses titles from Multimedia Productions as generic software to demonstrate the capabilities of its drives.

To date, these Sony hardware booths have been absent of sales people qualified to discuss and/or sell the CD-ROM titles. In addition, there is no literature or promotional material about the titles for potential customers.

According to Thier, this situation is changing. SEP will debut its software titles booth at Summer CES this June in Chicago. The booth, a 50-by-60-foot SEP demo center, will feature titles from both Multimedia Productions and Imagesoft.

According to Peter Dille of SEP, about one-quarter of the booth for CES will be allocated to optical media titles from the Multimedia Productions group, but he says the size could expand for a different type of show that’s more oriented toward computer-based content.

PROMISES TO CHANGE WITHIN SIX MONTHS

Sony Electronic Publishing has had to learn the hard way that the “It’s a Sony” mentality doesn’t work when you are trying to establish yourself in an emerging marketplace. The lesson was obviously painful for everyone involved. SEP has lost several key people, and has managed to disenfranchise some of its long-time advocates in the CD-ROM publishing community. But the group appears to want to change its image, and it seems that SEP’s powers-that-be are now more willing to put some cash and some marketing muscle into their optical media-based publishing ventures. According to Thier, the next six months will tell.

By that time some of the proposed changes of the Multimedia Productions group will have become tangible — in the shape of in-house produced content titles, new staff and affiliated publisher policies. “My guess is anyone will have a different judgment about any company in the next six months,” says Thier. “I’m confident that we will be viewed with approval.”

Janice Maloney