New Tune for Firm Formerly Known as Graphix Zone
Graphix Zone Inc. always seemed to have the ingredients for success. The Irvine company was there for the start of the multimedia boom, had the promising idea of making interactive CD-ROMs for music fans, and was able to ink deals with major stars including Bob Dylan and the artist formerly known as Prince.
So why was it such a bust that the company last week decided to lay off one-third of its work force, change the company name and abandon its core business?
Ron Posner, co-chairman of the company and a catalyst for the recent changes, said Graphix Zone was never able to bridge the gap between concept and customers. “It was an exciting” product, Posner said. “And once you reached consumers with it, they were excited too. But it was a problem of reaching enough people.”
Graphix Zone is best known for CD-ROMs that blend pictures, text and sound to tell stories about the histories and talents of famous performers. But Posner said that the company, now known as Ignite Inc., was pinched between the two markets of music and multimedia.
Most of the people who bought the company’s products were music fans. But most of the company’s sales were in computer stores. Trouble was, Posner said, both music stores and computer outlets “were totally confused about what to do with this kind of medium.”
Computer stores were reluctant to give the products shelf space because they didn’t fit into traditional multimedia categories, such as games or education. And music stores, Posner said, didn’t know how to differentiate the CD-ROMs from ordinary music CDs. Customers often thought the products, typically priced from $18 to $29, were just overpriced greatest hits albums.
Matters got worse in the past year, as a glut of multimedia titles led to fierce competition for computer store shelf space.
Graphix Zone had some successes. Posner said that CD-ROMs featuring Bob Marley, the artist formerly known as Prince and Bob Dylan were profitable and sold over 100,000 copies apiece. But more recent titles featuring Willie Nelson and others lost money. As a result, the company is leaving the market to focus on traditional games. And while Graphix Zone previously did much of its own development work--gathering facts, creating graphics and writing computer code--now the company will primarily publish and distribute others’ efforts.
Posner said the best-case scenario for the company “is that it remains independent and is able to get the stock price back up, and that some of the new titles do well in the marketplace. The worst-case scenario is we have to sell the company at a cut-rate price.”
Investors don’t seem too confident. The company’s stock, which traded above $8 per share last May, closed Friday at about 28 cents.
Greg Miller covers high technology for The Times. He can be reached at (714) 966-7830 and at greg.miller@latimes.com.
