Encyclopedia Britannica is betting big bucks that multimedia computer software will soon graduate from just-above-novelty status to develop a bona fide consumer market.
The firm recently relocated the headquarters of its Compton's NewMedia electronic publishing operation from San Francisco to Solana Beach, and this summer will move it again to quarters twice as large: a 45,000-square-foot facility in Carlsbad near Palomar Airport.
The number of employees will double from the current 85 over the next year, general manager Norman Bastin said Monday.
The Encyclopedia Britannica subsidiary publishes the Compton's Multimedia Encyclopedia, one of only three electronic encyclopedias available (list price: $895). Grolier's and World Book also sell encyclopedias on CD-ROM discs, but only Grolier's and Compton's products are multimedia, meaning they feature not just text but also video, animation and sound.
So far, products such as Compton's have found only a limited market, mainly in libraries, because the broad consumer base found the software and souped-up PC computers necessary to run the programs prohibitively expensive.
Bastin insists that the multimedia boom is finally about to happen after years of high hopes. Among the reasons for his optimism is that an industry standard has finally been accepted by a group of key software and hardware publishers, including Microsoft, IBM and Apple. Also, there is now a larger base of multimedia personal computers in use and a growing inventory--and lower prices--of multimedia software.
The number of personal computers capable of running multimedia software, such as the Compton's Multimedia Encyclopedia, grew to about 125,000 in 1991 from 70,000 the previous year. This year, industry research shows, the number of multimedia personal computers may top 1.2 million.
A multimedia PC typically includes a CD-ROM disc drive, a color monitor and added special electronics to handle video and sound data.
Because of the high cost, the principal market for CD-ROM software including multimedia products has been the federal government and academic institutions. Thousands of CD-ROM players were shipped to Desert Storm soldiers last year for training in tasks ranging from tank repair to Patriot missile launching.
The discs, capable of storing 1,000 times the data of a typical floppy disk, are also ideal for storing government documents.
But companies such as Compton's NewMedia are hopeful that a consumer market for the products will develop. And the signs are encouraging, Bastin said. When Grolier's introduced the first multimedia encyclopedia in 1985, a computer system including software cost more than $10,000. Now, a multimedia computer, the CD-ROM disc drive and the electronic encyclopedia itself can be purchased for as low as $1,700.
With prices that low, encyclopedia manufacturers think that the market for their electronic reference texts can finally develop a broader consumer base.
Compton's NewMedia says it is positioning itself for just such a growth burst and clearly expects the market to expand far beyond encyclopedias. The company recently signed strategic deals with R. R. Donnelly, one of the nation's biggest printers, and Sony.
Sales of CD-ROM software in general, the medium on which multimedia data is stored, are exploding, according to Margaret T. Fischer, vice president at Link Resources Corp., a New York-based market research and consulting firm owned by International Data Corp. Fischer said 1990 sales of CD-ROM software in North America reached a value of $482.2 million, and that that will grow to $2.65 billion by the 1995.
Fischer credits the increasing affordability of the CD-ROM drives and computers needed to run the software with the proliferation of software titles.
But she is skeptical that multimedia software will generate broad appeal because of the high cost and what she sees as undemonstrated advantages over written texts.
"The market is still very small for the encyclopedia product," Fischer said. "Libraries and academics have the PCs, so they can pay to have a certain number of CD-ROMs. The consumer market is very small at this point because consumers don't have drives."
But Nancy Herther, editor of CD-ROM Professional industry trade magazine, disagrees, saying the market is growing rapidly as consumers awaken to CD-ROM's potential.