The rise and fall of the company behind ‘Reader Rabbit’ and other games (2018)
theoutline.com
theoutline.com
At first I thought they were just stupid (I was naive... “don’t they know their catalog will run dry if they aren’t refilling it with new titles?!?”).
Then with growing horror I realized they knew perfectly well, that their company sales numbers were shooting up while their costs were going down.
I thought the payoff would be to milk revenue from the back catalog for a few years until even that was no longer worth the effort.
But then there was the huge sale to Mattel. They’d found someone with billions of dollars to spend without the slightest idea how the business worked (or any business?). I still don’t know why it didn’t matter that the growth was due only to acquisitions and the cost cutting was due to halting new development (like losing weight by amputating your legs). I guess Mattel had a “Barbie” mindset where the popular properties keep producing steady revenue for decades? Still even something like Barbie gets constant updates.
One insight I have:
There’s no way the execs at Brøderbund and all those other companies didn’t understand what was going to happen when they sold themselves to “TLC” after they saw what happened to it. Those execs knew perfectly well they were selling out their employees and the future of the company. There were fat bonuses for the execs and sometimes smaller ones for managers when these deals went down so these people would profit personally while understanding what was going to happen to the future of their company and the people who worked for them.
Not directed at you, but I never understood why this is always a revelation on a site run by venture capital firm.
But, by now, the pattern is long since clear, yes. But it's so out of whack with how the rest of human interactions work, that it is perpetually surprising to most people. It's more or less institutionalized psychopathy.
It's not actually all bad though. At least in the educational software business of the time, there were various companies run by people who were trying to do more than personally enrich themselves. It's on a continuum... some were trying to do a lot more than just enrich themselves. Some were willing to do a little. For some, it was strictly about grabbing the most money, whether it was a short-term or longer-term play. Of course, no one running a company can simply not consider the money. And economic realities can force the hand of anyone.
Moreover, he manages to sell TLC for $3.5 billion to Mattel, which is forced to sell it for just $27 million 18 months later. Of course, that was a poor decision by Mattel's then CEO, considering she was warned not to do the deal: "TLC was a “house of cards.” The business was boosting its revenue by purchasing new companies, but the significant acquisition costs weren’t reflected in their top-line earnings."
Interesting that another shark on the show - Mark Cuban - also became a billionaire by selling his company to Yahoo at its peak, and Yahoo then essentially shutting it down.
A Mattel deal is doable, just make sure it's within reasonable values so that you don't get sued
Turns out those games are actually on Steam!
Thanks so much to OP for linking this article.
This is a weird footnote because 4.5x price to sales is not that crazy above the market average of ~1.5 at the time of this acquisition. It would make sense for a growth industry in the midst of the Dot Com boom in 98. It's certainly not crazy today, where companies trade at many times that (Pinterest trades at a 18x multiplier).
Great article by the way. I loved Rocky's Boots.
(Of course we can learn things from any game but I'm just wondering if people feel educational games were more educational than, say, Civilization)
I also think that I learned a lot from games that weren't explicitly intended to be educational, like planning and independent problem-solving skills.
"Rocky's Boots" was great fun and stealthily teaches fundamental logical concepts. I never got to play "Robot Odyssey" (the sequel) as a kid, but playing it as an adult was fun and I could totally see how it would boost logical / computational thinking.
> Buckleitner, who has been reviewing educational games since 1984, assured me of their quality. “They were good!” he said. “They had animation, music… for the first time you had actors speaking, kind of like comic books. They teach higher order thinking, so they fit well with school curricula.” That I never thought about it means they were doing their job.
Personally, I never felt I learned much from TLC games as a kid (although I enjoyed some games), and what I did learn I could've learned as well or better reading books or doing regular exercises.
In general, educational and brain-training games don't work, likewise, handing out laptops, and the better the experiment you run, the smaller the effects are. (This is true of education experiments in general, where effects are typically near zero.) Just because something is entertaining doesn't mean it's educational, and just because something is educational, doesn't mean it's more educational than what a kid would otherwise be doing, or educational about useful things.
But would you have read those books or done those exercises as willingly as you played the games? That's valuable enough on its own.
Various games taught me more about the rough timeline of (especially) ancient history than school ever did. Crusader Kings II let me follow the unstated meat of the plot of Hamlet intuitively, in a way that I'd guess the vast majority of modern people without some equivalent experience or very specific education could not.
Mavis Beacon taught me to type correctly. Early Web free-for-all chatrooms and FPS in-game messaging taught me to type fast.
I’d definitely pay $10’s for games comparable in quality to turtle, number munchers, the one with the cups and the fluids where you had to measure out exact volumes, etc.
This industry reminds me of what happened to atari: the ecosystem got flooded with $1 garbage, and the quality developers got pushed out.
The game industry recovered due to a technology transition combined with a business model innovation (more powerful consoles with severe licensing restrictions to keep quality up).
It is a shame that recovery hasn’t happened for educational software.
Is this some new trend? And am I the only one who finds this exceptionally irritating?
Perhaps the web dev is a geocities throwback.
'too neat an explanation'. 'neat' is an adjective, so there's no call for 'of' here. It's bad enough when people get this wrong in speech ...