ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, December 15, 1996 TAG: 9612140001
SECTION: BUSINESS PAGE: 3 EDITION: METRO
DATELINE: SALT LAKE CITY
SOURCE: KRISTEN MOULTON ASSOCIATED PRESS
How about this for fan mail: ``You've probably heard this a lot, but you guys rule!'' ``You guys are BAD!''
Not typical e-mail from customers, but then SingleTrac Entertainment Technologies Inc. is not a button-down concern.
Rather, it is a blend of two worlds: the hip, young video game market and the technological sophisticates who saw a business opportunity and grabbed it.
The Salt Lake City company made a big splash in the video game market a year ago when its first games, Twisted Metal and WarHawk, debuted for the Sony PlayStation console.
Twisted Metal, featuring a commando battling 13 armed enemy vehicles in an urban setting, was named game of the year by an industry magazine. WarHawk, in which the player pilots a futuristic assault craft against a madman, was runner up for best PlayStation game.
Since then, growth has astounded SingleTrac's founders, who recently sold a $4 million-plus share of the company to Microsoft and teamed with the software giant for distribution of future personal computer games.
President Mike Ryder said he and co-founders Todd Kelly and Mike Bartholomew knew there would be a market for three-dimensional games when they left 3-D graphics pioneer Evans & Sutherland in spring 1994. E&S is best known for its flight-training simulators.
But they didn't dream of the success they've had.
``I would never have believed it,'' said Ryder, who plans to move the company from a 5,000-square-foot suite in a downtown office building to a space triple that size. The staff of 50 will likely double in a year.
SingleTrac's success is due in part to timing.
The game console market is growing fast after a three-year trough that preceded the new 32-bit consoles for which SingleTrac designs its games. The market it targets, which includes entertainment software for PCs, is expected to grow from $1.9 billion this year to $3 billion next year and $3.75 billion in 1998.
``You've heard the phrase, `I'd rather be lucky than good','' said vice president Kelly. ``We've been both.''
The ``good'' part is what attracted Microsoft.
Computer games are increasingly sophisticated and it's tough to find developers who can deal with the complexities, said Ed Fries, general manager of Microsoft's games group.
Microsoft wants to boost its 4.8 percent share of the PC games market. The Redmond, Wash., company has acquired other game developers, but this is its first equity stake in one.
``We want to have the games that push the envelope technologically. That's why we saw the fit with these guys,'' Fries said. ``These guys come from the military simulator business. They really know their stuff.''
The deal gives SingleTrac ownership of its games, and all rights to publish and distribute those games on compact discs for consoles, the boxes that sit atop a television and use the monitor. Microsoft will publish and distribute the games for PCs with Windows 95 operating software. SingleTrac will get a nice cut from PC game sales if the games do well.
``This is a model for future relationships,'' said Fries.
For SingleTrac, it means a top-notch company will put its PC games on the store shelves while it concentrates on the even-bigger market: console games. ``It was a deliberate strategy to limit the risk for us,'' said Ryder.
It also will let SingleTrac put its name on the games.
Two years ago, Sony made a small investment in the fledgling company and gave it an advance on royalties to bring the first four games to market.
The founders, who initially worked out of Kelly's dining room and even on picnic tables at an archery club, needed the money desperately.
But they gave up ownership of the four games and essentially became developers-for-hire. The second two games, Twisted Metal 2 and Jet Moto, hit the stores this month.
Turning over ownership of the games was the only way to get started, Ryder said. ``In a way it was paying our dues. There is no way we would have had the capital to do it.''
Now that SingleTrac must ramp up to become a publisher, it will be looking for more capital in a private placement of stock this winter.
The challenge is to manage the fast growth and build a sales team and distribution channels for the SingleTrac brand games, the first of which will reach stores next fall.
The founders want to balance the need for a loose, creative corporate culture with the structure to ensure all deadlines are met.
``We've tried to make it so people are empowered to do the best they can,'' said Ryder. ``We build toys and it's fun, but it's still a business.''
LENGTH: Medium: 90 lines ILLUSTRATION: PHOTO: AP. Mike Ryder is president of SingleTrac Entertainment.by CNBHe finds the company's rapid success in the 3-D video business hard
to believe.