Marking the long-awaited coming of age for CD-ROMs, the Software Publisher's Assn. is expected to announce today that sales soared in the fourth quarter of 1993 as this fledgling personal computer medium became one of the "must haves" of the holiday season.
According to a survey of 62 publishers, CD-ROM sales totaled $102 million in the October-December period, equaling the combined sales for the prior three quarters of 1993. Total revenues for 1993 came to $202 million. Unit sales for the quarter came to just more than 4 million compact discs, while sales for the year totaled 8 million.
For investors and entrepreneurs who have held out hope the hype surrounding the multimedia discs would someday become reality, the numbers are proof the promise of CD-ROMs has finally arrived.
"Until Christmas of 1993 we were all sort of hedging our bets," said Ann Winblad, whose Silicon Valley venture capital firm has invested in several CD-ROM developers. But falling prices for computers and CD-ROM drives drove software sales well beyond expectations last Christmas season.
CD-ROMs, shiny discs that can hold up to 70 times as much data as a regular floppy disk, cost about $1 to press and $1 to package, vastly less than a game cartridge or the several floppy disks it takes to equal one CD-ROM. And, with approximately half of all personal computers now being sold with CD-ROM drives, many software manufacturers are considering abandoning the traditional--and easily pirated--diskette.
Indeed, several CD-ROM publishers said the numbers did not reflect the full extent of the growth in the business, since many of the smaller publishers are not members of the trade organization.
"We've seen much more support in the marketplace for our CD-ROM titles than our projections anticipated," said Justin Heber, executive vice president of Irvine-based Virgin Interactive Entertainment. "We have a very big commitment to CD-based entertainment software, and we're seeing signs that it's beginning to pay off."
Robert Kotick, chairman of Los Angeles-based Activision said in 1995 his firm expects 75% of its revenue to come from CD-ROM, up from 20% in 1993 and less than 10% in 1992.
This sales boom has also fueled a takeover and investment craze in CD-ROM developers. Virgin last week canceled a public offering because of what company officials said were investment propositions that needed to be considered.
The association said about half of the CD-ROMs sold in 1993 were "bundled" with the sale of a CD-ROM drive or computer. But for the third and fourth quarters, more discs were sold individually through retail outlets.
"The most important trend we noticed is that people are for the first time beginning to buy CDs rather than just getting them when they buy their computer," said Ken Wasch, executive director of the trade association.