CD-ROM SHOWS MASS-MARKET APPEAL

DAN ALAIMO

LAS VEGAS -- Educational software programs are fast becoming mass-market products and CD-ROM is now the dominant platform for them, according to a panel at the Winter Consumer Electronics Show. "The growth in this category is clearly in CD-ROM [compact disk-read only memory] and it's at an unexpected level," said William P. Wilde, vice president of marketing and sales at MECC, Minneapolis.

Sales of software on floppy disk was flat last year for better titles and down for weaker ones, Wilde said. "That's no surprise, but it was more than offset by the unexpected growth of CDs." Strong promotional activity helped build success, even for borderline CD-ROM titles. "We are concluding that it is becoming a mass-market in the sense that if you have a good, sensible promotion that stimulates consumers, and it is executed well at retail, it will work," Wilde said. As CD-ROMs quickly obtain a strong mass-market presence, they will become viable products for supermarkets, especially lower-priced CD-ROMs offered for sell-through, said industry observers. Meanwhile, retailers with video departments will offer more of the better-known and higher-priced titles for rent, they said. This Christmas season saw significant CD-ROM sales at mass merchants like Wal-Mart, Kmart, Target and Sears, said Joseph E. Adney III, marketing manager at Walt Disney Computer Software, Burbank, Calif. About 30% of the 200,000 units of "Disney's Animated StoryBook: The Lion King" were sold through these stores, he noted. "We are starting to see software move in those outlets," said Adney. New to the software industry, but old hat to Disney, was the amount of promotion the company put behind the title. Components of the marketing push were advertising in computer magazines and on television, sweatshirt and plush toy giveaways at select retailers, a sweepstakes offering a trip to Walt Disney World and a free "Lion King" mouse pad in every package, said Adney. Retailers responded with large product displays. "In-store, we looked for ways to support the retailers, make things more fun and add more value to the experience for the consumer," he said. Coming up for Disney Software are CD-ROM projects based on "Winnie the Pooh" and "Pocahontas," he said. "The numbers we are talking about are pretty significant. This market is here,"Adney said. While CD-ROM is growing fast for all computer software categories, this is especially true for educational software aimed at children -- called "edutainment" by many. CD-ROM has now eclipsed floppy disks for this market, the panelists said. Most of Disney's software is offered on CD-ROM, said Adney. "But we still have some product categories that fit better on floppy," he said. "We are not making any titles anymore on floppy. Going forward, 100% of everything we are making is CD-ROM," said Hope Nieman, vice president of marketing at Knowledge Adventure, La Crescenta, Calif. In the 1994 holiday season, MECC's sales were 60% CD-ROM, said Wilde, who predicted that this will rise to 80% in 1995. Part of the reason for this growth is the penetration of CD-ROM into schools, he said. "We all know that it's gone from being a niche market to being a market segment," Wilde said.