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This article in Amstrad User, August 1986, captures Mastertronic in highly confident mood. The distractions of full-price software, increasing competition in the budget market and the heavy costs of financing arcade machine development and Melbourne House were in the future. Martin Alper was on the verge of moving to Southern California to set up Mastertronic Inc. and the company was finding favour from many of the high street stores that had previously scorned to stock budget software.

The author made the common mistake of calling Alan Sharam "Alan Sharman".

‘We are the kings of Budget'

Mastertronic has conquered the software scene by creating low cost titles. Jerry Muir went to see what goes on at its London HG.

The Mastertronic team hard at work on their executive relaxation toy
(L to R Martin Alper, John Maxwell, Alison Beasley, Alan Sharam)

In just two years Mastertronic has come a long, long way. The company that created the £1 game and then went onto drag itself up from its bargain basement roots, now dominates the charts and boasts sales of well over five million tapes. Not bad in anybody’s books.
Tucked away to the east of the City of London, the company’s offices house the usual collection of micros. Commodores share desks with Spectrums and, of course, the all important Amstrads, while redundant machines retire under benches.
Not that much programming goes on here, but there’s a lot of program evaluation to be done. Mastertronic has no trouble tempting programmers to submit their latest offerings.
This is where the company’s day to day business is conducted and it’s here that I’m to interview Martin Alper, Alan Sharman and John Maxwell about the phenomenal rise of the company which dared challenge the spiralling price of software.
The room contains the usual office paraphernalia plus a Bally Space Invaders pinball table. This provides invaluable therapy when the going gets tough - the ultimate executive toy. It’s
surely a sign of Mastertronic’s success that a second table is to be ordered.
At the time of our conversation it was just two days before the Mastertronic team packed their bags for a week at the Chicago Consumer Electronics Show. Everyone was busy making last minute arrangements and news had just come through that they had won awards for three of their programs, to add to the two prizes from 1985.
In the midst of the phone calls and the rejoicing I asked Martin Alper, one of the original three directors, how the idea of pocket money software came about.
" We launched in April of 1984 and go back six months before that. The idea stemmed from a friend who had a duplication plant for data cassettes. We were in discussion with him about the cost of duplicating computer games an we started to do some research into the market and found that what was costing a low price was in fact ending up in the shops at a very high price". That friend now provides Mastertronic’s in-house duplication.
" We took a bold marketing decision that if we were to go strictly for volume we could bring the cost down to a budget level, although we had no intention of bringing the quality down".
None of the original triumvirate had been involved in computers. "As we were planning the launch we approached a software company, which John Maxwell was part of, to source a product. We’d tried to source it in the States and found it was very expensive at that time, and that the royalty rates being asked were too high, so we turned back to the UK.

A matter of marketing
At this stage Alan Sharman drags himself from his constantly ringing telephone to tell me about the search for those first releases.
" Initially we looked through the magazines and contacted almost every software house that was there to see if there was anyone who would be willing to let us publish their programs. We found some, had some samples sent up to us, and then selected from there.
As Martin recalls: "We were all three of us involved in successful businesses already and it was strictly a marketing exercise. We had no idea how successful it was going to be. And it effectively happened within eight weeks. We were more than just successful - we were incredibly successful.
" We had taken one or two very bold marketing moves. We contacted the main retailers well ahead of our launch warning them that the price of software was about to crash. Some major retailers listened and were very interested. And we realised, after discussion with them, that it was more likely to be a success than a failure.
" We then decided to put a lot of money and effort into it and we spent a lot of time developing the packaging, logos and point of sale material. This was all thought out well in advance"

Dealing with distribution
Less dramatic than the sudden drop in price, though equally important in the marketing strategy, was the use of alternative forms of distribution. Martin already had a team of salesmen for his video products and decided to call a sales conference. Everybody was enthusiastic about the idea and suggested other reps. A 62-strong sales team was created, freeing Mastertronic from the existing distribution channels.
" We approached the main retailers and all the independents direct and decided to pitch at unusual forms of distribution - unusual to the software
industry but not to others. We took a leaf out of the record industry’s book and went for newsagents, where budget records are distributed. And that was very successful". In the two years since then Mastertronic’s patterns of distribution have hardened and today most of its product goes through mainstream retailers.
Martin still sees the full price labels as separate from the budget ranges. "We’re an impulse buy and people who walk into a petrol station or a newsagent are there to spend £2 on a packet of cigarettes or a magazine. People who are going to spend £10 or £12 on a piece of software go into a computer shop and want specialist advice, maybe needing a lot of coaxing to buy it. It’s premeditated purchase".
The man who’s responsible for making sure the buyers remain impulsive is John Maxwell, who joined the company in July 1984 to oversee the development of products. When I describe some of the early programs as "less than inspiring" there is much laughter. "We haven’t had such flattery for a long time", John says.
However, more seriously he adds: "Assessing a program is a very subjective thing. All the programs we published had something going for them. Some lacked graphics but had playability. Overall we have made our mistakes but if you consider the number we’ve published, which is something in the region of 150 titles, and look through our sales records
you’ll find very few have sold badly".
The initial thrust was at the arcade gamers, though soon after the group moved into adventures. In the first year two million £1.99s passed across the counters of Britain. Martin says the graph of sales is a 45 degree upward slope! "This year I would expect us to sell well over six or seven million units which makes us one of the largest software producers in the world".
The speedy initial growth caused a few problems in itself but, as Martin says: "Although the industry viewed us like lepers, the public viewed us like Robin Hood. They forgave us some of our mistakes and we very, very quickly built up a substantial operation". The three directors left their previous companies and became full time board members.
" We had one advantage over most other software companies of the time. We had money behind us and we had researched the market. We didn’t do this as an ad hoc thing and knew what our contingency plans were. We had our own in-house duplication facility, our own distribution facility and our own warehouse within a few weeks. We weren’t beholden to anybody. And when Websters and the other major distributors came on stream, which they did after a few months, everything slotted into place".
When the time came to enter the Amstrad market, Mastertronic already had some strong titles. Finders Keepers was the first of David Jones’s Magic Knight adventures with their brilliantly simple pull down menu control system.
Chiller shot up the charts, helped by a little controversy and a speedy name change from Thriller when representatives of Michael Jackson made angry noises. John Maxwell is quite happy about this though. After all - no publicity is bad publicity!


Charting success
When it comes to the charts, Martin doesn’t think Mastertronic has always been fairly represented. "The problem is that we were always outselling most other games but the method of assessing the charts means we had to be in certain distribution points which we weren’t. So although we were outselling in terms of volume we weren’t appearing until we began to make an impact in Boots. We were probably always there, from eight weeks of launch".
The constant appearance of Mastertronic titles riding high is all the more amazing because sampling comes primarily from computer shops, which do not provide its main outlets. And further problems have occurred with MicroScope’s chart, often taken as the industry standard, which has tried to exclude budget priced games. This low price ghetto has created problems of its own - the only titles that appear are Mastertronic. MicroScope is now requesting that the £2.99 games are listed under Mastertronic’s Mad name to break the monotony.
Mad games were launched last October with a lavish Thames boat trip which obody who was present will forget - and which cost slightly more than £1.99. The thinking behind the range was that it should be an outlet for more ambitious programs, not that there are difficulties maintaining the £1.99 price.
" We wanted a marketing experiment to see if we could put extra effort into programming", Martin says, "and we truly believe that our £2.99 games are the equal of any full price software. Butto get that standard of programming takes an extra few months and extra capital investment and that can’t be recouped at £1.99".


Programming success
Soon programmers were coming to Mastertronic, according to John Maxwell. "We had quite a lot of publicity because of the price breakthrough and quite a few programmers sent in work for assessment". There are distinct benefits for the person who comes to the company. "He joins a very successful and knowledgeable team, and generally is paid more profitably than some of the other software companies. The volume makes up for the amount of royalty and quite a few programmers have earned considerable sums from Mastertronic".
" One team of two programmers", adds Martin, "in one year earned more than £200,000. The correlation between volume and royalties is something that some programmers don’t understand. We give them a vast volume for perhaps a lower royalty. We also give them far greater exposure. But more important, we back our programmers. We help them. We pay our royalties extremely promptly - often before we’ve been paid for the goods we’ve shipped".
Such loyalty is demonstrated by David Jones, who has remained with Mastertronic for his two subsequent Magic Knight adventures. "It’s a very small industry. Programmers talk to each other and we guard our good name jealously.
" I don’t think we’ve ever lost a programmer - maybe just one. They’re happy with what we offer them - providing they’re top class. We’re looking all the time for better and better programmers. We still have an incredible appetite for gameswriters - we don’t get enough.


Best sellers
Currently Finders. Keepers and Nonterraqueous are selling well, but probably the best seller of all time for the company is Formula One Simulator, a program which has gained a new lease of life from its budget re-release after very lukewarm reactions to its initial full-price launch.
" Ridiculed or not, the fact is that we’ve sold more than 400,000 copies", says Martin.
This isn’t the only Mastertronic title to receive a less than favourable critical reaction - Action Biker gathered some bad reviews too. But Mastertronic has ridden such criticism. Perhaps this can be explained by people taking a chance with a £1.99 game, which they wouldn’t with a full priced product.
" And we have a very loyal following", Martin tells me. "We get sacks full of letters. They collect every game we publish. They can buy five games of ours for the price of a mainstream product, If one of those is bad or they don’t like it they’re still streets ahead".
There’s still a problem of prejudice though. "Critics can be very unkind to us. There is still a little bit of snob in the software industry. We constantly ask to be judged not on our price or value for money but the quality of our software. It has to be good. That’s John’s criteria for publishing software, and that’s how we’re trying to be judged in the States too".


Across the pond
The move into the notoriously difficult US market was planned from the start. As early as 12 weeks after its launch, Mastertronic was exhibiting at the Chicago CES. "We’d made a dedicated decision to go for the American market as well. Now that takes a lot of bottle and a lot of capital investment. We’re the only British company to sit it out.
" It’s taken a lot longer in the States. They weren’t just sitting there waiting for an English company to come and take the market apart. But I think that in just two years we’ve achieved the most remarkable results. And we’re now being besieged by a flood of imitators. Everyone is trying to jump on the Mastertronic bandwagon out there. Again we’ve established a very big lead. We are the kings of budget".
Alan again breaks away from his last minute Chicago planning. "It’s a very different operation from doing full price software, which people don’t realise. The average price of games in the States is $35 -£24 for the same games they can buy here. We’re selling there for $9".
" American taste is totally different from ours. Our success is in the strict arcade format. They don’t tend to go in for animated arcade adventures or anything too complex. They do like very cleverly programmed, skilful arcade games
Martin’s trip to the States will be a one way affair -he’s going to take over the American side of the operation. "It’s already being run effectively by remote control by the three of us here, but it does need one of us full-time over there to make the day to day decisions."
One problem he’s preparing to face is scale. "Almost every phone call you make is long distance. If you say, ‘I’ll pop over to see you, even in a State the distances may be two or three hundred miles. That’s considered near. Distribution is a severe headache and they won’t take anything second rate".
The American operation provides a two-way trade and one reason for Martin’s Californian base is to be nearer the centre of programming activity. "There is an enormous pool of very skilful programming talent in the States, but it’s difficult to tap because of the distances and it’s difficult for a UK software house to use it because talking about programs on the telephone, even using modems, isn’t very effective. You need to discuss your ideas face to face".
While Americans might be slow to accept British software the same isn’t true the other way around. "All software will sell over here. The British have an incredible appetite for software whereas the American market is very blinkered".
When it comes to British competitors for the budget crown Martin says, "It’s a game strictly for professionals. Most of the other people who’ve tried it are restrained by the fact that they’re trying to run a full price software label as well. That’s their big headache. There s always a conflict between which way you’re going to go.
" Mastertronic won’t be going in for more expensive software because it’s not an idea we believe in. We consider full price software to be our price".
This also stops Amstrad disc-based software appearing, at least in the near future, because of the cost of the discs themselves. It’s a pity because the Ski Writer word processor is one of this year’s Chicago triumphs.


Into the future
Looking ahead, the end of 1987 will see another major step forward for Mastertronic when it goes public, selling shares in the company. A few days earlier the third director, Frank Herman, had told me over the phone that they would be looking for capitalisation to develop new projects, which could include the use of laser discs as a storage medium.
Martin tells me that the company watches all technological developments but only gets interested when it can produce them cheaper than anybody else. As John says, laser discs are the subject of much research, especially in Japan. "You can see the altimate computer game of the future being like taking an active role in a film".
Another area the company will be prepared for is the 16-bit revolution. According to Martin all the best American programmers are working for these machines now and he adds: "We’re already doing ST software. Whether it’s going to be released in the UK remains to be seen". John reckons that "It’s bound to happen eventually over here, probably in about 18 months. Somebody will develop a computer with the right marketing and the right quality at the right price" - I’d bet that Alan Sugar is a prime contender for this role and Martin’s question to me about the IBM-compatible would suggest that his mind is working along similar lines.
The Chicago CES products include Digital Integration’s Speed King, English Software’s Electra Glide and even Ocean’s World Series Baseball, going by the name of Slugger and selling at $9 compared with the $30 prices of competing baseball games. Not surprisingly it has been a great success. Other companies are clearly finding it profitable to take advantage of Mastertronic’s positioning in the US.
As the interview nears its end I’m treated to a preview of two new releases for the Amstrad by PR person, Alison Beasley. First up is Radzone, a very attractive collecting game in which you have to gather radioactive isotopes from a planet before they eat through your radiation suit. It’s a strangely relevant topic, but Alison denies that the company masterminded Chernobyl as a publicity stunt!
The other program was in a very early state, but even this preview was enough to thrill. Storm is a version of the arcade cult, Gauntlet. What really sets it apart is that as well as providing a one player hunt through the mystical castle, there’s also a two player mode, allowing for a more accurate recreation of the full size machine’s cooperative gameplay. Amazingly it will sell for only £1.99.
Looking ahead Mastertronic aims, according to Martin, "to consolidate our position in the market and grow steadily upwards. We’re not greedy. We just want to establish a principle that £1.99 and £2.99 are the definitive prices and any software of any standard can be produced within those points".