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Mastertronic was originally a publisher and distributor of low-cost ("budget") computer game software founded in 1983. Their first games were distributed in mid-1984. At its peak the label was the dominant software publisher in the UK, a position achieved by selling cassette-based software at the £1.99 and £2.99 price-points. As well as being an exclusive wholesaler of computer games to Woolworth's, Toys "Я" Us and other leading retailers, Mastertronic sold software in outlets such as newsagents which had not been previously associated with the software market.
Later diversification included the setting up of US operations to source and distribute their software, as well as an unsuccessful arcade games division (Arcadia Systems). However, it was their decision to market the Sega Master System in the UK that ultimately proved most successful. It resulted in the Master System outselling its rival, the NES for a certain amount of time, and was cited by some as Virgin Group's reason for investing in the company (and later buying it outright).
As the budget software market declined, the Sega hardware distribution became the dominant part of the business, and the company was eventually sold (and merged into) Sega itself. Although the original company no longer exists, the rights to the name have been acquired by another company. The company, now known as Mastertronic Group, distribute low-cost PC software on CD-ROM. They also own the Sold Out label.
In 1983 Martin Alper, Frank Herman and Alan Sharam founded the computer game publishing company Mastertronic. The three had some financial backing from a small group of outside investors and previous experience in video distribution. Their initial venture involved bundling packages of 100 tapes ("dealer packs") and sending them to news agents, toy shops, motorway service stations, or just about anyone who would take them. At that time (1984) mainstream retailers generally refused to take the risk on budget games because of poor quality and sales. Mastertronic eventually won them over with a regular supply of good quality and high selling games. Another key figure at the time was ex-Notts Cricket batsman Richard Bielby who ran a distribution network servicing a large number of small retailers. The German market saw the establishment of Mastertronic Computerspiele GmbH after Frank Herman had approached John Kellas, already active in the computer games business in Germany, with a partnership deal in the new company, initially late 1983! Sales soared and soared and in 1985 Kellas sold over 1.5 million cassette based Mastertronic games in Germany. He remained with Mastertronic until 1988 when he established the German sales of Sega via the distributor Rushware GmbH. Kellas remained with Rushware as a consultant looking after the Sega Distribution until 1992.
In late 1985 Mastertronic launched their M.A.D ("Mastertronic's Added Dimension") label. This meant that they could sell games at a slightly higher price (£2.99). The first ever M.A.D. game was 'The Last V8' and many more were soon to follow.
Martin Alper, who had the most marketing flair, went to the USA in 1986 to set up Mastertronic Inc. The UK company was managed by Frank Herman, whilst Alan Sharam increasingly specialised in sales and logistics (warehousing, packaging, controlling production schedules). As the business continued to grow Mastertronic created another label in 1986 - 'Entertainment USA', when it began working closely with several American writers, including Sculptured Software and Randall Masteller. They wanted an outlet to sell games to the UK market, and so Mastertronic moved in, often using Rob Hubbard or David Whittaker to re-do the music. Soon afterwards, this name was used by Woolworths as the new name for their wholesale business.
In 1987 Mastertronic decided to expand their distribution of software and began exporting titles back across the Atlantic, so the label "Bulldog" was created primarily to distribute the 'Best of British' games in the US (The name Bulldog actually came from a small wholesaler called Bulldog Distribution who got into financial difficulties and was taken over the previous year). Several other labels were invented for other publishers who wanted them to re-issue their old full price product at budget prices, such as Rack-it for Hewson and Americana for US Gold. However by this time the market for budget games had begun to decline sharply. A typical game might sell 50,000 units in 1986, but only 15,000 in 1988 and 5,000 in 1990. This was the impact of more competitors in the budget market, with many companies dumping their previously full-price product at the cheaper price point.
Mastertronic bought out Melbourne House when that label was struggling with financial problems (Melbourne House kept its label identity) - this also meant that they had first refusal on re-releases of games such as The Way of the Exploding Fist. And so their re-release label 'Ricochet' was born. They pulled off a few major re-releases at £1.99, most notably Crazy Comets and Impossible Mission.
Having bought Melbourne House and with heavy financial commitments to the Arcadia project Mastertronic itself was now sufferering severe cash flow problems. Virgin stepped in and Richard Branson purchased the 45% of shares held by the outside investment group. The remaining 55% was held by Alper (25%), Herman (20%) and Sharam (10%) with John Kellas holding 49% of the German company until 1988 when they sold out in a highly complex deal which required their continuing involvement in the business and achievement of profit and cash flow targets. The company was renamed the 'Mastertronic Group Ltd', and later was merged with Virgin Games to create 'Virgin Mastertronic'. Virgin had their own team of programmers and wrote many of their games in-house, a major change to the way Mastertronic previously organised itself.
It was Frank Herman who, in early 1987 spotted that Sega had no UK distributor for the Master System range. Mastertronic sold all they could get that year and were then appointed as distributors in France and Germany(with John Kellas in a consultancy role) as well, and thus was Sega Europe was born. Branson undoubtedly wanted to buy Mastertronic in order to get into the growing Sega business.
for the game Universal Hero]]
Soon after the completion of the merger all the marketing effort went into full price games under the Melbourne House label and it was clear that the budget side was sliding into oblivion, the competition had become intense as everyone was recycling their old full price games as budget games. In addition, the children who used to buy 8-bit computers were now buying Sega and Nintendo consoles. Sega sales were booming so much that nobody really cared about the traditional Mastertronic business. Although staff recruitment actually rose, this was all for the Sega operations. By 1991 nearly all the company's turnover, and certainly all the profit, came from Sega-related business.
As a result nearly all the staff moved over to Sega when they took over the business from Virgin and only a handful of games programmers stayed with the publishing side (quickly renamed Virgin Interactive Entertainment). After the Sega takeover Frank became deputy Managing Director of Sega Europe and Alan was Managing Director of Sega UK. Martin left the UK and became resident in the US.
Compared to its main competitors, Mastertronic was a highly professional operation. The management understood that sourcing games was relatively easy while marketing and distribution was the hard part. Emphasis was set 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.
Mastertronic also notably pioneered the 'colour coding' for games by having a coloured triangle on the top right hand corner of the front inlay and rectangles on the spine with the catalogue number and format, for example ZX Spectrum games were yellow, Commodore 64 were red, Amstrad were orange and MSX were white. This led many software houses to use variations on this theme but keep the colour coding so people could easily identify the format, Mastertronic for a time went one step further and their 199 Range had the cassette boxes coloured the same. The US releases pioneered the plastic DVD-style cases now common among computer games.
Much of the early output was supplied by just two producers - The Darling brothers, who formed Codemasters as soon as they could break their contract with the company, and Mr. Chip Software who continued to write games for Mastertronic for some time. Mastertronic never employed in-house programmers to write games. Everything that was published had been produced either by other software houses or by freelance authors. This was an ideal approach for the fast output of many diverse games. At this time thousands of bedroom programmers were trying to get rich quickly by writing games. While this was not so good for creating a consistent throughput of a series or for developing highly complex games, one huge advantage was that it kept overheads low and outsourced the risks of software development to others. Mastertronic did employ specialists to review and test games, to encourage and assist authors and to provide technical expertise. As well as permanent staff temporary assistance came from several of game authors - including Nigel Johnstone, Richard Aplin, Stephen N Curtis and Tony Takoushi.
One of Mastertronic's key markets was the Commodore 64. The famed C64 composer Rob Hubbard produced some classic music for the company's C64 range such as One Man and his Droid, Hunter Patrol, Spellbound, Action Biker, Phantoms of the Asteroid and Master of Magic. These are still regarded by many enthusiasts as classics and having music of this quality on budget-priced games greatly enhanced Mastertronic's reputation. However because the actual profit per unit sold was small, the company could not afford to advertise as much as full-price software houses. In the opinion of Anthony Guter, this led to some resentment from the game magazines of the day, these problems may well have hampered more general coverage of the software range.
Although the original Mastertronic no longer exists (having been absorbed into Sega's corporate structure), the name has recently been purchased for use by another company who are now known as 'Mastertronic Group'. Frank Herman, one of the founders of the original Mastertronic and former chairman of Sega Europe is a part of the new company, and was involved in negotiations to buy back the name from Sega.
The new Mastertronic group has three business units; Mastertronic Games, The Producers (manufacturing and fulfilment) and Mad4Games (a mobile games service). The group has also purchased the low-cost software distributor 'Sold Out'. The label has been retained, and is (as it was previously) being used to sell software at the £5 (frequently "3-for-£10") price-point. The company is also distributing software under the old 'M.A.D.' imprint, as well as another label associated with PC Gamer magazine. Games on these labels are being sold for £10 (or "3-for-£20").
Mastertronic started the Great Indie Games publishing label, to spread independent games only available on the internet to shops.