This interview took place in June 2002. Anthony Guter was the Financial Controller of Mastertronic from 1985 to 91. All the views expressed below are personal and are not necessarily those of other staff of Mastertronic.
When you joined Mastertronic how professional were they?
I joined in August 1985, when the market for computer games was very different to today. There were a large number of very small publishers operating in a highly localised market. Nobody knew which of several different computer formats would be the market winner. Thanks to the Sinclair range, cheap games computers using tape drives dominated the UK and some European markets. In contrast, in the US, computers were better designed for business purposes as well as games and the cassette tape drive was obsolete.
I think Mastertronic, compared to its competitors, was a highly professional operation. The guys who set up the company understood that sourcing games was relatively easy - the hard part was marketing and distribution. So all the emphasis was on creating a brand image, establishing distributor chains, persuading the larger high street stores to stock the product and ensuring a fast turn-round from the tape duplicators and the printers so that fresh supplies of successful games could be produced quickly. And because the actual profit per unit sold was small we could not afford to waste money. We did not advertise anything like as much as full-price software houses, and this, I think, led to some resentment against us from the games magazines.
Mastertronic never employed in-house programmers to write games - everything we published was produced either by other software houses or by freelance authors. This was in contrast to many of our rivals. It was an ideal approach for the fast output of many diverse games -this was when thousands of kids were trying to get rich quickly by writing games - not so good for creating a consistent throughput of a series or for developing highly complex games, but we left that to the full-price software houses. One huge advantage was that it kept our overheads low and outsourced the risks of software development to others.
We did of course employ specialists to review and test games, to encourage and assist authors and to provide technical expertise. As well as our permanent staff we had some temporary assistance from several of our authors - including Nigel Johnstone, Richard Aplin, Stephen Curtis andTony Takoushi though they rarely stayed long, preferring to further their freelance careers.
Do you feel that you improved/modified any stage in their operations?
As well as putting in the financial systems that the company needed, I ensured that things were done honestly and legally. The industry in general had a poor reputation, with a history of bankruptcies, ripped-off authors and shady business practices. We set out to run the company to high standards and we succeeded, as became clear after 1986 from the number of competitors who wished to work with us. I designed and administered our sales and royalty systems. Before I joined, these were not too good, nor properly understood. The in-house computer systems were almost useless and nobody believed the figures. I put in good systems that were accurate, reliable and up to date. We never had any disputes with authors about sales figures or the accuracy of our royalty statements, and we paid everyone on time, every three months. I don't think many of our competitors could say the same.
Based on my accounts and forecasts we were able to make credible pitches to investment companies and eventually we were acquired by Virgin.
How important was the C64 market to Mastertronic?
Absolutely vital. Mastertronic was born sometime in 1983, but not incorporated as a limited company until 1 April 1984, which is when my records start. In the 15 months to June 1985 (the financial year end), we sold 890,000 C64 tapes - 43% of our total sales. Including the Vic this rises to 66%. In the 1985-6 season the C64 sales were over 1,200,000 but down to 30% of the business as the Spectrum and Amstrad sales were growing fast.
There was a fierce rivalry between Spectrum and C64 programmers, and games-players. To publishers the differences between the machines were a real drawback because we had to convert games from one format to the other. This increased the cost and slowed down the time to bring new games to market and really worked against the best interests of customers.
The great feature of the C64 was its music. Rob Hubbard produced some classics for us - such as One Man and his Droid, Hunter Patrol, Spellbound, Phantoms of the Asteroid and my favourite Master of Magic. These are still regarded by many as classics and having music of this quality on budget-priced games definitely enhanced Mastertronic's reputation.
What was the general atmosphere like at Mastertronic?
Exciting, amusing, tense, frustrating, bitterly irritating, fun - all of these from time to time, sometimes all at once. Most of the time it was just like any small business with people arranging sales, the phones ringing, heaps of paperwork. We only employed between 12 and 18 people in our office. But the special nature of games publishing made it different to the average business. You never knew what games were going to sell well, or what sort of reviews they might get in the magazines. A kid might walk in with a demo game that would sell 50,000 copies. I took great pleasure in looking over the shoulders of the games testers as they examined games sent in for our consideration. The business was constantly growing and changing. We did far more than just publish budget games. For example:
* We republished software for a number of other publishers, including Hewson, US Gold, Martech and Activision.
* We were the exclusive wholesalers of all computer games to Woolworths (because our distribution facilities were so good).
* We had exclusive rights in Toys'R'Us and employed a number of merchandisers who kept their shelves stocked. Briefly we made our own joystick - the "Magnum".
* We even made CDs, having acquired the rights to some old recordings including "Stand by Me" just at the time that it came back into the charts.
In 1987 we took over Melbourne House, famous for The Hobbit and Way of the Exploding Fist and this changed our whole way of thinking. Up to then we had rather scorned full-price software but now we had joined the big league and had to learn how to manage more complex productions.
Also in 1987 we began distributing Sega Master Systems in the UK and soon after became their main European distributor. The Sega business grew so fast that within a year it provided nearly all our turnover and budget games publishing ceased to be a key part of the business.
The founders of Mastertronic wanted to make a lot of money quickly. They thought they could do this either by selling out after a couple of years or by launching the company on the Stock Exchange. They were keen to find any way to exploit the name and reputation of the company. This led them into a number of risky business ventures, of which the most risky was "Arcadia", the attempt to make amusement arcade machines using the new Amiga chips. The theory was that the same game that ran on an Amiga could go into an arcade machine, enormously reducing the development cost. The trouble was that there are huge differences between a game designed to take money on an arcade machine and a game designed to hold interest running on a home computer. Those of us in the company, including myself, who actually played games, knew this. The directors, who did not play games, did not. We committed to buying a huge number of chips and nearly bankrupted the business. Managing this venture was certainly exciting but this is form of excitement that one can do without!
Did you admire any other competitors?
We were rather scornful of most competitors, not because of their games but because of the amateur way they sold them. We had our own warehouse and distribution systems and dealt directly with shops whereas everyone else sold to wholesalers, whose knowledge of computer games was poor (though not as poor as the high street retailers). Our competitors therefore had no control over how their games were displayed, and did not even know how they were selling.
We did respect the quality of games from the top software publishers, but also regarded them as way too expensive. We did not bother much worrying about our budget competitors like Firebird who seemed unable to produce a steady flow of games and to market them effectively. We did however take notice of Codemasters. They took a heavy bite out of our market. The Darlings had worked closely with Mastertronic for two year and learned their lessons well.
I remember going to a show in 1985 and seeing (and indeed buying) Skyfox on the C64. - Until then I had not really understood how big was the gap between a really good game and an average game, and I regarded most of Mastertronic's output as no better than average. In 1986 Mercenary made an even bigger impression (I still think this a great game, though on the Atari ST rather than on a C64)
When Mastertronic started its own labels do you feel this was good or bad?
I think this was good - it made us look a lot bigger and more diverse than we were, and was no more than any of our competitors were doing. The name Bulldog actually came from a small wholesaler called Bulldog Distribution who got into financial difficulties and who we took over in 1986. The business was no real use to us but we liked the name. Several labels were invented for other publishers who wanted us to re-issue their old full price product at budget prices, such as Rack-it for Hewson and Americana for US Gold. Another label, Entertainment USA, was created when we began working closely with several American writers, including Sculptured Software and Randall Masteller. Soon afterwards, this name was used by Woolworths (with our permission) as the new name for their wholesale business.
The biggest change was the launch of MAD in September 1985. Until then all our games were £1.99. Retailers were always unhappy about this price, as they thought they did not earn enough profit. MAD games at £2.99 were much more attractive to them. We did try to make sure that only the better games went on the MAD label but I'm not sure that we persuaded our customers.
Did Mastertronic have a good track record with programmers?
I think we did. One of the very first publishers we worked with was Mr. Chip Software (Vegas Jackpot, Kikstart, Hero of Golden Talisman and many others) and we continued with them for years. Richard and David Darling wrote many of our best-sellers (including Chiller, BMX Racers, Last V9, Master of Magic).Though they broke away to form Codemasters, they did so as part of their own long term business plan and we parted on amicable terms. A number of talented individuals wrote for us in the early years and provided follow-ups. These include David Jones' Magic Knight sequence (Finders Keepers, Spellbound, Knight-Tyme, Stormbringer), Stephen Curtis (Nonterraqueous, Soul of a Robot, Into Oblivion), Clive Wilson (Se-Kaah of Assiah, Kobyashi Naru, ZZZ, Shard of Innovar, Majik). We worked on longer term programs with Sculptured Software (Street Surfer, Panther, LA SWAT) Binary Design (180, Feud, Rasterscan, Colony, Zub) and even Codemasters.
We were totally professional when dealing with authors. We offered them fair royalty rates and usually paid a reasonable advance up front. As soon as we were happy with a programmer, and him with us, we would pay them advances on signing a contract for a new title before any code had been written.
In the six years I was involved there was only one real dispute with a programmer. The Bitmap Brothers, for whom we published Xenon on Melbourne House, got very stroppy about the way we calculated the value of some exports. This was sorted fairly amicably.
Is there anything about that era that you would change, if you had the opportunity?
I would have just one type of 8 bit computer. Preferably a C64. There were far too many types of computer and many talented programmers were employed to do conversions rather than create original products. The waste of ability was frightening, as was the waste of money for companies like us. We thought that MSX enforce standardisation but this never took off in Europe. Nobody could be sure which format would prevail so you had to make sure you had games in all the likely formats. It wasn't so bad when 16 bit computers appeared but programmers still had to choose whether to learn on Amiga or Atari ST (or PC for the far-sighted)
Any memories of Tronix, the spin-off club/magazine?
I still have a copy of Tronix 2. I would love to see issue 1 again. The club was created as a typical Mastertronic bit of marketing - nice idea but nobody in the company actually wanted to spend any time or money on it. It folded, as far as I can recall, with issue 2. There were some nice marketing gadgets as well, like folding pens.
What we should have done was to set up a database of members and made it worth their while to join, thus bolstering interest in Mastertronic. A wasted opportunity.
What was it like when Virgin became involved?
We nearly ran out of cash in 1987, having bought Melbourne House and with heavy financial commitments to the Arcadia project. Virgin stepped in with support and took a minority stake. In the summer of 1988 they completed the acquisition. What they wanted was our incredibly successful Sega distribution business. Mastertronic merged in with Virgin Games. Virgin had their own team of programmers and they wrote many of their games in-house. They continued producing full price products.
Our market for budget games started to decline sharply in 1987 - a typical game might sell 50,000 units in 1986 but only 15,000 in 1988 and 5000 in 1990. This was the impact of more competitors and many companies dumping their previous full-price product.
Soon after the completion of the merger all the marketing effort went into full price games under our Melbourne House label and it was clear that the budget side was sliding into oblivion. Sega sales were booming so much that nobody really cared about the traditional Mastertronic business - we recruited many staff but all for Sega.
This was a hard time for me, since I had to merge the financial systems of the two companies (having only just got over swallowing up Melbourne House), and I began working much more on IT support and less on financial management. I used to have close involvement with programmers, and saw (even play-tested) new games but that gradually faded away.
There was an element of fun with Virgin - Richard Branson himself once memorably said that if you don't find a business fun then you shouldn't be in it. Virgin Group gave its subsidiaries a huge degree of autonomy and we ran things the way we wanted. We had to move offices though, from Paul Street in the grotty part of the City of London to a mews just off Portobello Road, in the grotty part of Notting Hill.
I suppose that part of the magic of Mastertronic was when it was very small, and the whole office could hear if our MD was in a temper, or the sound of a new game being tested, or when I could lean out of my window and shout to half of the staff having lunch in the café across the street. In 1987 we sponsored a car in the Le Mans 24 and everyone went over to France for a sleepless weekend. You don't do that sort of thing in a bigger company.
Are you still interested in computer games/emulation?
Very much so. I love being able to play old 8 and 16 bit games on my PC. The "snapshot" features that let you save the state of the game just before you get to a tricky bit, are brilliant. When I think of how much we used to waste waiting for them to load and then always having to start again from the beginning…
Having recently replayed many Mastertronic titles I am forced to admit that most were not very good but then neither were most games in general.
Who owns the rights to the classic Mastertronic titles?
We used a standard contract that said that the copyrights of a games remained with the author but exclusive use was assigned to Mastertronic. I can't remember if the assignment was in perpetuity, for a fixed period, or for only as long as we were making commercial use of the title. Mastertronic became Virgin Mastertronic, which became Virgin Interactive Entertainment. Sometime around 1992-3 budget games production ceased and VIE became a mainstream American producer of full price games, going out of business around 1998. By this time nobody cared about the budget back catalogue. I can't give a definitive answer but I suspect that the original authors can argue that the assignment of copyrights have reverted back to them, given that no commercial exploitation is taking place and that nobody can prove that they have taken over the contracts from VIE. If you look at Magnetic Fields' web site, you will see that they have renounced their claim to all their 8 bit titles so you can freely use any title produced by Mr. Chip Software.
If anyone would like to know who owned the rights in a title, I can give them the names as recorded in my database as they were known at the time but I have no idea what may have happened after 1991.
