GT Interactive Software

GT Interactive Software was founded in and served variously as distributor and publisher for id Software's games Doom and Quake, a relationship which lasted until, when these roles were shifted by id Software to.

History
The GT Interactive Software Corporation (GTI) was founded in February 1993 as a division of, a video-tape distributor owned by the Cayre family, with Ron Chaimowitz as co-founder and president. That same year the publisher saw the release of their first shareware title, the hugely popular Doom. In its first year, revenue reached $10.3 million.

1994 – 880% revenue growth
GT Interactive revenue soared 880% and reached $101 million in its second year of existence, with profits reaching $18 million. GT Interactive's partnership with id Software scored another hit with Doom II, which was released in October and sold over 2 million copies.

1995 – Initial public offering
In February GTI obtained the publishing rights to games based on property, which included ' and '. GT Interactive began to set up displays at retail stores for low cost software.

GTI signed an exclusive software supplier agreement with, which, according to Securities analyst Michael Wallace, meant that, "All software developers have to deal with GT if they want to sell in a Walmart."

In December GT Interactive Software debuted on the stock exchange under the stock symbol GTIS. Raising $140 million with its, it was one of the biggest IPOs of the year, second only to that of.

GT Interactive offered 10 million shares to the public at $14 each. During this IPO, Joseph Cayre sold more than 1.4 million shares, 9.2% of his shares, for a $20 million return.

GTI reported a strong revenue growth of 134% in the year to $234.4 million but, in the first sign of trouble ahead, profits increased a meager 23% to $22.6 million.

1996 – Humongous Entertainment acquisition
In January GT Interactive obtained the publishing rights for the highly anticipated Quake from id Software.

In February GT Interactive and signed an agreement in which GTI became the primary consumer software supplier to all of the chain's 675 stores.

In June 1996, GTI acquired WizardWorks, publisher of the ' series, for 2.4 million shares, and former id Software distributor and publisher, which had the publishing rights to ', for 1 million shares, or $17 million.

Quake was also released in June by GT Interactive for PC, selling 1.8 million copies.

In July, the game developer was bought by GT Interactive for 3.5 million shares, or $76 million. In 1995, Humongous Entertainment's revenue had risen to $10 million, an increase of 233% over 1994's revenue of $3 million. The deal gave GT Interactive rights to successful children's software titles such as the ' franchise as well as the ' and  series.

In November GTI acquired Warner Interactive Europe for $6.3 million in cash; with this acquisition, GTI gained access to software markets in Western Europe.

In a further sign of uncertainty for its future, GTI, for the year, reported a net income increase of only 11% over the previous year to $25.1 million. Revenue growth also decelerated to 56%, revenue for the year was $365 million. Making matters worse, net income in the fourth quarter reduced 16.8% to $8.5 million when compared to 1995's fourth quarter.

1997
In January GTI bought, a European value software publisher, for $800,000 in cash.

In June GTI signed a deal with, giving GTI the rights to publish games based on ' and '.

In October GTI bought game developer for $14.7 million — $5.4 million in cash and $9.3 million in stock. SingleTrac owned and developed such games as ' and '. In September game developer, a division of Humongous Entertainment, made its first release, , which sold more than 1 million copies.

On October 5, 1997, GTI announced that it had signed a definitive agreement to acquire for $250 million in stock; the deal had even been unanimously approved by the Board of Directors of both companies and was expected to be completed by the end of that year.

But on December 5, the acquisition was cancelled. According to both CEOs, "the time [was] simply not right" for the deal. MicroProse's stock plummeted after the announcement of the deal's cancellation.

In March, GTI stopped being the exclusive computer software distributor to Walmart, who decided to buy its software directly from the publishers.

In 1997, GT Interactive's share of the entertainment software market reached a historical low of 6.4% down from the record highs of 9% and 10% earlier. GT Interactive was a leader only in the arcade/action category, with a 20.3% market share. Making matters worse, GT Interactive also had a high debt/equity ratio of 41%, whereas had a debt/equity ratio of just 8%. During 1997 GT Interactive posted its first net loss, totaling $25 million.

1998
In May 's  was published by GT Interactive, selling over 800,000 copies in the first 10 months. , which was released in October also sold 800,000 copies.

In November GTI bought OneZero Media for $17.2 million in stock, becoming the first game publisher to own an entertainment Internet website.

was acquired for around $2 million, while was acquired for 2.3 million shares or $13.5 million. Both companies were bought in December of 1998.

In the fourth quarter of 1998, GT Interactive posted a net income of $16.7 million on revenues of $246.3 million. For the year, GT Interactive reported revenues were almost flat rising 10% to $584 million, but GT Interactive swung into black by posting a $20.3 million net income (results from the fiscal year ending on December 31, 1998).

1999 – Control by Infogrames
The year of 1999 brought bad news for GT Interactive's shareholders: GTI posted first quarter losses of $90 million due to restructuring costs. In February, in light of the bad results, CEO Ron Chaimowitz was replaced.

Game sales in 1999 fell in comparison to 1998, which had dire consequences on GTI's finances. In April GTI predicted for 2000 a first quarter loss of $55 million on revenues of around just $95 million. A failure to release five major games and a planned relocation to added to the losses. In June GTI announced it had hired to look into the possibility of either a merger or a sale of the company and in October, GT Interactive fired 35% of its workforce, or 650 employees, mostly from its distribution section.

In June Reflection's  was released, selling approximately 1 million copies. In July GTI sold OneZero Media for $5.2 million in cash, just six months after it was purchased.

On November 16 (IESA) announced that it would buy 70% of GT Interactive for $135 million and assume $10.5 million in debt, a deal completed by December 17.

On May 10, 2000, IESA announced the rebranding of GT Interactive to Infogrames, Inc. Almost three years later, on May 8, 2003, the company would again change its name, this time to Atari, Inc., becoming ATAR on the NASDAQ stock market.

Relationship with id Software
GT Interactive's relationship with id Software began during the development of Doom. Ron Chaimowitz was looking to expand his already successful business by bringing low-budget shareware developers into the retail market, and had taken note of id's massive success with Wolfenstein 3D. Meeting initial dismissal from id, he flew to Dallas three separate times before finally reaching an agreement that would see id Software develop Doom II with a $2 million promotional budget provided by GTI. id's demands in order to participate in the arrangement included:
 * retention of complete creative control,
 * retention of all intellectual property rights, and
 * prominent branding on all products.

Doom II was a commercial success, and was followed up by a retail re-release of Doom itself as The Ultimate Doom, and two Doom II expansions, Final Doom and the Master Levels for Doom II, in 1995 and 1996.

GT Interactive would offer to buy id Software for $100 million, but this offer was rejected. According to Masters of Doom, id Software was no longer impressed with the company and had come to consider it "shitty." Their concerns included GTI claiming too much credit for the success of Doom II, and GTI's increasing involvement with and acquisitions of a broad range of companies that they considered "unworthy."

id Software's new business director Mike Wilson would eventually plot an attack against GT Interactive which saw id Software develop Quake as a shareware game long after GTI had considered shareware a dead marketing approach. Reserving retail sales until after id Software had maximized their profits from shareware registrations, the retail version of Quake only moved 200,000 units. id Software would terminate their agreements and contracts with GTI entirely thereafter. According to Masters of Doom, Ron Chaimowitz's reaction by that point was one of "good riddance."