William von Meister is one of those entrepreneurs who intuitively appreciate that 11 percent of a thousand is greater than 80 percent of a hundred.
That's why he's certain his newest venture, GameLine, is going to gobble up more dollars than Pac Man. "Everybody tells us it's a 'can't-miss' proposition," von Meister asserts.
Those are usually famous last words, but several industry sources believe that GameLine could be the most successful consumer electronics product launched this year. What GameLine will do, says von Meister, is transform Atari's VCS 2600 videogames unit into a computer terminal that can retrieve everything from the newest videogame to the latest stock quote. It would also let GameLine members send "electronic mail" messages to each other.
There are an estimated 14 million Atari VCS units in homes around the United States, industry analysts contend. All are sales targets for GameLine and its Master Module.
"It's the Master Module that gets you access to all kinds of good stuff," says von Meister.
Designed on the back of a napkin at a Washington restaurant last June, says von Meister, the Master Module fits into the Atari unit like an ordinary videogames cartridge. The module, however, is a small component with memory called a modem that enables computers to "talk" with one another over the phone lines, permitting the GameLine subscriber to call up and tap into GameLine's central computers.
The GameLine user would connect the Master Module to the Atari and the phone, call a toll-free number, sign onto the network and examine a menu of videogames. Using the game unit's joystick and blaster-button, the subscriber selects the desired game and it is "downloaded" and stored in the module's memory. It takes about 20 seconds for a game to download into the Master Module. The phone then disconnects from the GameLine network and the subscriber is free to play. GameLine's central computer records the transaction for future billing.
Control Video Corp., von Meister's Vienna, Va.-based company that is marketing GameLine, plans to retail the Master Module for between $50 and $60 and expects to sell more than 250,000 by the end of the year.
Von Meister cofounded The Source, the McLean-based company that was the first personal computer time-sharing network. It, too, promised an array of computer games and other computer-based information services. However, von Meister became embroiled in a lawsuit with his partner and left The Source to move into consulting. The Source, which has yet to turn a profit, is now owned by Reader's Digest.
The real money in GameLine won't come from the module sales; it's expected to come from network usage, much in the same way that the phone company makes its money.
Von Meister hopes to get that usage by putting the newest and best home videogames on the network on a "pay-per-play" basis--the videogames equivalent of "pay-per-view" television. "We have active negotiations or inked deals with all the videogames companies but Activision and Atari," says John Kerr, Control Video's vice president for marketing. Games such as Demon Attack and Frogger will be available.
GameLine expects to charge $1 each time a customer selects a game, and for that amount, the average player should be able to play about one hour. At this point, for the venture capitalists funding GameLine, the numbers speak louder than words. If 250,000 Atari VCS owners sign up for GameLine and each subscriber plays only once a week, that means monthly revenues of $1 million and yearly revenues of $12 million. That, von Meister asserts, is "well above" Control Video's break-even. If von Meister's assumption that 10 percent of Atari VCS owners become subscribers holds, that turns GameLine into a $60 million-a-year business in less than two years.
Von Meister's financial backers include Hambrecht & Quist and Kleiner, Perkins, two of the top high technology venture capital companies.
Several games companies believe that GameLine would be useful both as a test-market and as a way to promote new games. The design of the Master Module discourages unauthorized copying of the games and, says von Meister, offers the games companies an additional revenue stream from GameLine royalties. Moreover, he insists, GameLine complements the sale of games cartridges. "GameLine lets people sample before they buy," he says, "It's paying $1 to see what you're going to spend $30 for."
However, von Meister stresses, the key virtue of GameLine is that through its telecommunications network, it creates a community of users. For example, GameLine players can have their top scores logged into the central computer and displayed on a national, regional, or local basis. "The 'vanity screen,' just like the one in the arcade games," says von Meister, "will be available on Day One."
More intriguing, perhaps, is the notion that games will be the entering wedge for other kinds of information services. Control Video will offer SportsLine, listing sports scores and facts, in conjunction with GameLine, and is negotiating for access to stock quotes. It also is exploring the idea of home banking services. "We're going to turn the videogames jockey into an information junkie," says von Meister.