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GTE Hangs Up on Bid to Enter Multimedia

Back in 1990, when “interactive multimedia” was poised to be the next big thing and pundits declared that content would be king, telephone giant GTE Corp. hopped aboard the bandwagon, launching a division just north of San Diego to create video games on cartridges and CD-ROMs.

It seemed strange that a $20-billion phone company would think that it had much to bring to the crowded multimedia game field. And in the end, it didn’t: Earlier this month, the company announced it would shut down GTE Interactive Media in Carlsbad on March 14 and lay off most of the unit’s 85 employees.

“In the beginning, the idea was that we wanted to get into the content business,” offered Dick Nordman, finance director for GTE’s new ventures group in Irving, Texas. “Now, with everything else going on in the telecommunications industry, we felt our energies would be better spent in the telco arena.”

Certainly, telecommunications deregulation has opened up new opportunities for local phone companies like GTE and created new competitors. Since March 1996, GTE has added 800,000 long-distance customers to its base of 18.5 million local phone lines across the country.

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But little has happened that wasn’t at least partly foreseeable back in 1990. Or, to put it another way, the development and distribution of CD-ROM games may not fit into the company’s business plans today, as Nordman says, but that has more to do with the bad times afflicting the entire CD-ROM market than to any real change in GTE’s business.

Employees in Carlsbad declined to talk about their predicament, but Nordman said they were not surprised to learn of the shutdown. GTE had been cutting back its GTE Interactive Media staff from a high of about 120 over the last year.

GTE initially tried to find a buyer or a partner for GTE Interactive Media that would have allowed the unit to remain open, but to no avail. Some companies have expressed interest in acquiring some of the 10 to 15 game titles that GTE distributed, Nordman said.

Company executives refused to say how much was lost on the Carlsbad operation over the years.

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