GT Interactive Software

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Logo of GT Interactive.

GT Interactive Software was founded in 1993 and served variously as distributor and publisher for id Software's games Doom and Quake, a relationship which lasted until 1998, when these roles were shifted by id Software to Activision.

History[edit]

The GT Interactive Software Corporation (GTI) was founded in February 1993 as a division of GoodTimes Home Video, 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.[1] In its first year, revenue reached $10.3 million.[2]

1994 – 880% revenue growth[edit]

GT Interactive revenue soared 880% and reached $101 million in its second year of existence, with profits reaching $18 million.[3] 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[edit]

In February GTI obtained the publishing rights to games based on Mercer Mayer property, which included Little Critter and Little Monster.[4] GT Interactive began to set up displays at retail stores for low cost software.[5]

GTI signed an exclusive software supplier agreement with Walmart, which, according to UBS Securities analyst Michael Wallace, meant that, "All software developers have to deal with GT if they want to sell in a Walmart."[2]

In December GT Interactive Software debuted on the NASDAQ stock exchange under the stock symbol GTIS.[6] Raising $140 million with its initial public offering, it was one of the biggest IPOs of the year, second only to that of Netscape.[7]

GT Interactive offered 10 million shares to the public at $14 each.[7] During this IPO, Joseph Cayre sold more than 1.4 million shares, 9.2% of his shares, for a $20 million return.[7]

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.[8]

1996 – Humongous Entertainment acquisition[edit]

In January GT Interactive obtained the publishing rights for the highly anticipated Quake from id Software.

In February GT Interactive and Target signed an agreement in which GTI became the primary consumer software supplier to all of the chain's 675 stores.[9]

In June 1996, GTI acquired WizardWorks, publisher of the Deer Hunter series, for 2.4 million shares, and former id Software distributor and Apogee Software publisher FormGen, which had the publishing rights to Duke Nukem, for 1 million shares,[6] or $17 million.[10]

Quake was also released in June by GT Interactive for PC, selling 1.8 million copies.[1]

In July, the game developer Humongous Entertainment was bought by GT Interactive for 3.5 million shares, or $76 million.[11] In 1995, Humongous Entertainment's revenue had risen to $10 million, an increase of 233% over 1994's revenue of $3 million.[11] The deal gave GT Interactive rights to successful children's software titles such as the Putt-Putt franchise as well as the Freddi Fish and Spy Fox 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.[6]

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.[8]

1997[edit]

In January GTI bought One Stop, a European value software publisher, for $800,000 in cash.[6]

In June GTI signed a deal with MTV, giving GTI the rights to publish games based on Beavis and Butt-head and Æon Flux.

In October GTI bought game developer SingleTrac for $14.7 million — $5.4 million in cash and $9.3 million in stock. SingleTrac owned and developed such games as Twisted Metal and Jet Moto.[12] In September game developer Cavedog Entertainment, a division of Humongous Entertainment, made its first release, Total Annihilation,[13] which sold more than 1 million copies.[8]

On October 5, 1997, GTI announced that it had signed a definitive agreement to acquire MicroProse 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.[14]

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.[15]

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 Electronic Arts had a debt/equity ratio of just 8%. During 1997 GT Interactive posted its first net loss, totaling $25 million.[8]

1998[edit]

In May Epic Games's Unreal was published by GT Interactive, selling over 800,000 copies in the first 10 months. Deer Hunter II, which was released in October also sold 800,000 copies.[8]

In November GTI bought OneZero Media for $17.2 million in stock, becoming the first game publisher to own an entertainment Internet website.[12]

Legend Entertainment was acquired for around $2 million,[12] while Reflections Interactive was acquired for 2.3 million shares or $13.5 million.[12] Both companies were bought in December of 1998.[16]

In the fourth quarter of 1998, GT Interactive posted a net income of $16.7 million on revenues of $246.3 million.[17] 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).[8][17]

1999 – Control by Infogrames[edit]

The year of 1999 brought bad news for GT Interactive's shareholders: GTI posted first quarter losses of $90 million due to restructuring costs.[8] 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 Los Angeles added to the losses. In June GTI announced it had hired Bear Stearns 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.[18]

In June Reflection's Driver was released, selling approximately 1 million copies.[8] In July GTI sold OneZero Media for $5.2 million in cash, just six months after it was purchased.[12]

On November 16 Infogrames Entertainment, SA (IESA) announced that it would buy 70% of GT Interactive for $135 million and assume $10.5 million in debt,[18] a deal completed by December 17.[19]

On May 10, 2000, IESA announced the rebranding of GT Interactive to Infogrames, Inc.[20] 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[edit]

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.[21]:131 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:[21]:132

  • 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."[21]:169

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 250,000 units for the holiday season. 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."[21]:181

id Software games[edit]

Title Date
Doom II 1994/09/30
The Ultimate Doom 1995/04/30
Hexen: Beyond Heretic 1995/10/30
Doom for Sony PlayStation 1995/11/16
Master Levels for Doom II 1995/12/26
Heretic: Shadow of the Serpent Riders 1996/03/31
Final Doom 1996/06/17
Quake 1996/06/22
Hexen: Deathkings of the Dark Citadel 1996/09/06
Final Doom for Sony PlayStation 1996/10/01
id Anthology 1996
Depths of Doom Trilogy 1997
Towers of Darkness: Heretic, Hexen and Beyond 1997
Doom for Sega Saturn 1997/03/26
Hexen for Sega Saturn 1997/04/30
Hexen for Nintendo 64 1997/06/24
Hexen for Sony PlayStation 1997
Doom 64 (European release) 1997/12/02
Quake and the Ultimate Doom Compilation 1998

Other licensed products[edit]

Sources[edit]

References[edit]

  1. 1.0 1.1 "Now What Was That GT and Hasbro Were Saying About American Game Purchasers Being a Group of 17–28 Year Olds Only Interested in Bloody Games?." Just Adventure (archived 🏛). Retrieved February 5, 2012.
  2. 2.0 2.1 Eng, Paul M. (2 September 1996). "Lots of 'Doom' but No Gloom." Business Week (archived 🗺). Retrieved 2015-06-05.
  3. SEC Info - Atari Inc - 10-K - For 3/31/99, On 6/29/99 - Table in Document 1 of 9 - 10-K - GT Interactive Software Corp.
  4. GT INTERACTIVE REPORTS RECORD SECOND QUARTER REVENUES; Publishing Business Increases Nearly 300 Percent. - Free Online Library
  5. SEC Info - Atari Inc - POS AM - On 5/1/97
  6. 6.0 6.1 6.2 6.3 SEC Info - Atari Inc - 10-Q - For 6/30/97
  7. 7.0 7.1 7.2 Rothman v. Gregor GT LLP
  8. 8.0 8.1 8.2 8.3 8.4 8.5 8.6 8.7 SEC Info - Atari Inc - 10-K - For 3/31/99
  9. GT Interactive and Target Stores enter distribution agreement; GT Interactive to Become Primary Software Vendor to More Than 600 Target Stores Nationwide. - Free Online Library
  10. Game Matters: Royal tease
  11. 11.0 11.1 Baker, M. Sharon (14 July 1996). "Humongous lives up to name with $76 million sale."
  12. 12.0 12.1 12.2 12.3 12.4 SEC Info - Atari Inc - 10-Q - For 12/31/99
  13. cavedog - GameSpot
  14.  (6 October 1997). "$250 Million Stock Deal for Microprose." The New York Times. Retrieved 4 May 2010.
  15.  (6 December 1997). "Company News; Microprose and GT Interactive End Merger Talks." The New York Times. Retrieved 4 May 2010.
  16. Amazon.com: Game Design, Second Edition: Books: Bob Bates
  17. 17.0 17.1 SEC Info - Atari Inc - 10-Q - For 12/31/99, As Of 2/14/00 - Table in Document 1 of 2 - 10-Q - GT Interactive Software Corp.
  18. 18.0 18.1  (16 November 1999). "Infogrames Gets Control of GT Interactive." The New York Times. Retrieved 4 May 2010.
  19. Staff writer(s) (17 December 1999). "Infogrames Entertainment Completes Acquisition of Controlling Stake in GT Interactive Software." (archived 🏛). Retrieved 2016-06-05.
  20. Staff writer(s) (10 May 2000). "GT Interactive to Adopt Infogrames Brand Across the Company and Its Products." Infogrames (archived 🏛). Retrieved 2016-06-05.
  21. 21.0 21.1 21.2 21.3 Kushner, David. Masters of Doom: How Two Guys Created an Empire and Transformed Pop Culture. Random House, LLC, 2004. pp. 131, 132, 169, 181.