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A Jungle Out There: The Movie Was a Hit, The CD-ROM a Dud;
Software Bites Disney ---
`Lion King' Glitches Show Just How Far Hollywood Is From Silicon
Valley Crestfallen on Christmas Day ---- By Frederick
Parents don't like surprises when they are buying products for their
children. They pass over alien-looking goods for the comfortable, the
familiar, the trustworthy. This is Walt Disney Co.'s domain, and the
company's sacred pact with parents has built a $10 billion corporation.
So when three-year-old Cailin Flaherty dissolved into tears on Christmas
morning, it was the kind of event that shakes Disney to its foundations.
Like thousands of other children who found Disney's "The Lion King" CD-ROM
under the tree, she was disappointed when her dad couldn't get the program
to work on the family computer: Video would freeze midframe. Dad, a
software specialist with a relatively powerful computer, wasn't too
pleased, either, when Disney didn't respond to his repeated requests to
fix the problem.
"I expected much better from a company such as Disney," Terry Flaherty
wrote to its chairman and chief executive officer, Michael Eisner. "My
confidence, as well as many others', in your company has been damaged."
Mr. Flaherty finally got a response from Disney on Friday. The company
promised a technician would be in touch with him.
"We regret that customers have had incompatibility problems and we are
100% committed to customer satisfaction," says Steve McBeth, president of
Disney Interactive, the company's software arm. "We won't be satisfied
until all compatibility problems are removed."
How could Disney -- king of children's entertainment and moviedom's
reigning box-office leader -- fumble at what would seem to be its own
game? The answer is a study not only in Disney corporate culture but also
in Hollywood's awkward flirtations with computer technology. As Cailin
Flaherty's distress and similar problems in thousands of households make
painfully clear, multimedia is more lion's play than children's.
Like other major Hollywood "content providers," Disney had been surpassed
in the software universe by Silicon Valley upstarts with names like
Broderbund and Electronic Arts, which built a huge business designing
high-tech entertainment software for the home. Although Disney has the
most-recognized characters in the world, plus a reputation for
cutting-edge technology in its animated films and theme-park rides, the
company had been fitfully trying to master the software business since
1988.
Then, this past Christmas season, Disney decided it was time to pounce on
the CD-ROM market. With a huge $3 million advertising campaign timed to
the re-release of the highest grossing animated film of all time, Disney
pumped almost 300,000 units of the "Lion King" into Wal-Marts and Kmarts
everywhere, and overnight produced the fastest-selling children's title
ever. Consumers have bought more than 200,000 to date.
Disney executives, skeptical in the past when Hollywood seemed infatuated
with new technologies, now say the company will build its
computer-software division to a $1 billion business within five years -- a
fivefold increase from what it is currently estimated to draw. (Disney
won't disclose financial results for the software arm.)
Clearly, such new business would be welcome in a company that, despite a
decade of enormous growth, has lately seen its theme-park business
stagnate and its movie division endure a major overhaul of top management.
Disney wants to find profitable businesses in the interactive arena. But
in a world worried about wiring and 500-channel television, the company
remains focused on providing content for other people's systems.
Now, say company officials, one part of the puzzle is falling into place.
As more-powerful, cheaper computers enter homes by the millions, a
marketing and technical base is emerging that Disney officials believe
will support the level of programming that has worked for it in other
media. "Something fundamental has happened," Mr. McBeth contends.
For now, Disney and others are pinning much of their hope on CD-ROMs, the
silvery compact disks that can store huge, though still limited, amounts
of digital data. These disks hold enough information to produce acceptable
color motion pictures and sound on computers. Theoretically, the CD-ROM
market is big and mushrooming. Already 7.8 million home computers are
thought to have the equipment that can read these disks, three times the
number of just a year ago, according to industry consultant Dataquest
Inc.
But in practice, an unknown amount of this equipment already is obsolete.
And standards needed for software to mesh smoothly with home equipment are
foggy. Disney, which had such success selling the "Lion King" CD-ROM,
discovered painfully that it was another thing to make it work.
The venom set in on Dec. 26 and built as days and weeks went by and angry
consumer messages went unanswered. Mr. Flaherty's missive was just one of
thousands pouring into Disney by mail, phone and computer. "Is anybody out
there?" asked a plaintive user on one computer-service board operated by
Disney. Other messages complained of fundamental broken trust and
corporate arrogance. "My whole family has a tarnished image of Disney
right now," said an angry note. Still other writers threatened to cancel
plans to visit Walt Disney World.
Disney officials first went on the offensive. They complained to the
media that neophyte users didn't know what they were doing, that they had
failed to read a tiny technical message on the bottom of the box and that
many users' equipment was obsolete. More recently, Disney's public tone
has grown humbler, and the company has increased its product support staff
from eight employees when it introduced "Lion King" before Christmas to
about 50 today, an unexpected expense.
As company officials now concede, the program was marketed with known
errors, wrongly believed to affect only a minute percentage of computers.
Also, a misjudgment was made that allowed "Lion King" to run only on
computers with up-to-date sound equipment. (Other versions are now being
sent to disappointed buyers.) But pressed by the approach of Christmas and
the re-release of the film, Disney released the CD-ROM.
As with other home-computer programs published by Disney, technical work
on "Lion King" was done by an outside contractor. Closely held Media
Station Inc. of Ann Arbor, Mich., used an elaborate "software engine" of
its own design to stitch together sound and drawings by Disney artists.
Final quality assurance was Disney's job. Disney says it was told by both
Media Station and Microsoft Corp., which had produced sections of the
software code, of the program's bugs.
When "Lion King" works, users find the elegant coloring and slickly drawn
characters of the Disney movie. The tale of Simba the lion, whose father,
king of beasts, dies and who fights an evil uncle to regain his father's
throne, is told in the digested form of an electronic storybook.
Opinions of the 18 screens of narrative and three interactive games vary.
In informal testing at Home PC magazine, "it was clear that children love
`Lion King'; it was also clear that the love began before they sat down
with the program," reports Carol Ellison, editor. Some home users have a
different view. "I got the program to work after spending $300 to upgrade
our computer," says Charles Hammerslough, who bought the program for his
young daughter for Christmas. "After all of that, it was a bit of a
yawner."
Though glitches are widespread throughout the software industry, Disney's
approach with "Lion King" says much about its lingering unfamiliarity with
the business. Companies specializing in children's computer programs
generally go to considerable lengths to settle problems, having learned
the hard way about parental angst and anger.
While "Lion King" buyers waited days and even weeks for help, at least
one children's software company kept support lines open even Christmas
Day, anticipating an influx of calls. "People were thrilled that we were
there," says Larry Gross, vice president of consumer satisfaction and
co-founder of children's software maker Knowledge Adventure Inc. of La
Crescenta, Calif. Disney's support board opened the day after Christmas
with an expanded staff but was overloaded instantly, company officials
say. An 800 number, opened days later, was swamped as well.
"Somehow, it simply isn't easy for Hollywood to figure out what works in
software," says Sam Poole, president of software maker Maxis of Orinda,
Calif., and a former marketing head of Disney's past software effort. Mr.
Poole recalls that, during Christmas 1993, he had to delay until January a
key upgrade of Maxis' hot-selling SimCity software to make the program
more reliable. But, he notes, Maxis wasn't driven by a simultaneous
multimillion-dollar movie release, as Disney was.
Far from jeering at Disney's badly stubbed toe, competitors worry that an
angry public could reject all multimedia programming after the "Lion King"
experience. "Companies might snicker at Disney and their problems, but in
fact it's a problem for all of us," says Ron Gilbert, co-founder and
creative director of Humongous Entertainment Inc. of Woodinville, Wash., a
producer of multimedia programs for children.
Disney has had years to understand software. In the early 1980s, Disney,
like most studios, licensed the use of its characters for video-cartridge
games. It was a profitable business, but a limited one: Outside companies
put together and sold programs as Disney monitored them to make sure that
Goofy, Donald Duck and others stayed in character. The key was to take
little risk for maximum income.
That attitude began to change as other software makers prospered.
Consultants told Disney it could have a $100 million-plus annual business
in a few years if it entered the fray. In 1989, after the success of a
computer game based on the movie "Who Framed Roger Rabbit," the company
created the Disney Software division.
Though opened with fanfare and high hopes, Disney Software was a
half-hearted effort, say many who worked there. Despite its name,
programming was done by outsiders. And, though it held a creative mandate,
the unit remained lodged firmly in Disney's Consumer Products arm, where
the focus is lucrative licensing of everything from T-shirts to coffee
mugs. Some software products prompted flurries of excitement, but titles
for young children such as "Mickey's ABC's" and "Mickey's 123's," were
surpassed by programs from specialized software producers, though Disney
continues to market some of those programs. "Somehow, Disney never got it
right," says Robin Raskin, editor of PC Magazine and a writer about
children's software.
Meanwhile, there was a culture clash within. Game designers pursued wacky
concepts far from Disney's wholesome mandate. Company Vice Chairman Roy E.
Disney, nephew of the founder, cost the company millions when he angrily
demanded that a game based on Uncle Walt's classic movie "Fantasia" be
withdrawn even after it went to market, because he felt the images didn't
live up to the original. Yet Disney held to paltry budgets for most
programs, former employees say.
By late 1991, Disney Software was under stiff scrutiny from top
management as its financial results came in far below forecast. An
agonizing reappraisal began. For more than a year Disney Software limped
along, barred from designing new products. Selling the unit was
considered, and joint partnering was pitched to major software houses. Top
talent, meanwhile, bailed out quickly.
Only recently has Disney completed an ambitious new strategy for
designing its own software. In the meantime, however, the company has
focused its attention first on the video-cartridge game business where it
had for years profited handsomely -- if for the most part unimaginatively
-- through licensing.
Working closely with what was then the U.S. unit of closely held Virgin
Interactive Entertainment PLC, Disney devised a video game based on its
blockbuster "Aladdin" movie. The game, widely praised, was a major
commercial success. More recently, Disney has used the same careful
attention and skills at Virgin Interactive to produce a "Lion King"
cartridge game that also has drawn praise. Disney plans to produce with
other contractors games based on "Pinocchio" and its coming animated film
"Pocahontas."
Disney Interactive, the name adopted last month by the rapidly expanding
software unit, has unveiled ambitious plans. By the end of this year, the
new operation expects to have 300 employees, up from about 125 currently
and a low of 40 when Disney Software was in disfavor. And in a key move,
Disney has shifted reporting patterns for Disney Interactive, moving
authority from the sole control of the consumer-products arm to shared
responsibility with the television and telecommunications division.
Unsaid publicly, however, are even more striking plans to build a
full-fledged software operation within the Disney organization. Bit by
bit, Disney insiders say, the actual writing of software -- long disdained
as a technical task best assigned to subcontractor and licensees -- will
be brought in-house.
Yet, can a full-scale, independent-minded software unit last in the very
different culture of a Hollywood enterprise? Mr. McBeth says yes -- that
Disney has come to understand that in order to make successful multimedia
software, it needs to treat the technical aspects of software programming
as an art.
For the moment, however, Disney remains closely tied to its outside
technical help in the CD-ROM business. Media Station, the contractor for
the "Lion King" program, currently is finishing work on the multimedia
"Pocahontas." Both CD-ROM and movie are to be released later this year.
Also near completion with Media Station is "Winnie the Pooh and the Honey
Tree." Disney says it is very pleased with both programs.
Another CD-ROM product, the Aladdin Activity Center, which didn't have
the marketing buildup, the record sales or the same degree of technical
problems of the "Lion King" program, was done with another outside
contractor.
Eventually, however, Disney will bring closely under its wing the
software work it now recognizes is so important. "We're at a critical
juncture in the CD-ROM business, when it ceases to be a fringe business
and becomes a core business," says Peter Black, founder of Xiphias, a
software developer in Los Angeles.
Time will tell whether the Lion King's creator has learned the lessons of
the multimedia jungle. From within, Disney executives somewhat wearily
contend that, whatever Disney does, its work will be carefully
scrutinized. "We're very visible," says Richard H. Frank, chairman of Walt
Disney Television and Telecommunications, one of the corporate arms
overseeing Disney Interactive. "That's why people are happy to point to
our problems."
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