Hoping to reignite consumer interest in its computers, Commodore International Ltd. has teamed up with a spinoff of McLean-based Control Video Corp. to offer a home computer software and information network.
Officials at both Control Video Corp., a home computer networking company, and Commodore confirmed that the two companies have reached a tentative agreement to license and market home computer network services through a newly formed company called Quantum Computer Services. According to a CVC official, the deal is worth "several million dollars."
The venture potentially puts Commodore, which has seen its home computer revenue and profits slump dramatically over the last nine months, in a position to become an important player in the emerging electronic home information services market.
The agreement also breathes new life into Control Video, a venture company that originally wanted to be "the MTV of video games," according to founder William von Meister. However, the collapse of the video games market left the company on the verge of extinction with millions of dollars in losses. Quantum is designed explicitly to take advantage of the Commodore alliance.
Through Quantum, Commodore would be able to offer computer owners the chance to sample new computer programs on a trial basis, as well as electronic mail services and the ability to retrieve information such as up-to-the-minute stock quotes as if it had its own telecommunications network.
"We do believe that telecommunications is going to be the next stage of the home computer market's development," said Clive Smith, Commodore's vice president of strategic planning.
With more than 2 million of its computers in homes throughout the United States, Commodore is the nation's largest manufacturer of home computers. The company is also one of the largest manufacturers of modems -- devices that enable computers to "talk" with one another over the phone lines -- with over a quarter-million of them sold.
Commodore clearly hopes that the software and information services its new network could provide will boost both modem and personal computer sales. In addition, it might spark new interest in its computers that rest unused in people's homes.
There are already several personal computer network services -- including Dow Jones News/Retrieval, Compuserve and The Source -- which serve thousands of personal computer owners. After years of running at a loss, those networks are now reportedly profitable.
As part of the venture, Commodore is expected to launch a "major" direct-mail advertising campaign to its computer owners to get them to subscribe to the new service, which is tentatively called Explore. A major print advertising campaign is also possible.
The company will "bundle" in a floppy disc with its $39.95 modem that will enable users to hook into the network.
Control Video President Jim Kimsey, who will run the new Quantum venture, expects subscribers will pay roughly $10 a month for access to Quantum's menu of home computer games, programs and database services. With 100,000 subscribers -- 5 percent of Commodore's installed computer base -- the company could gross roughly $1 million a month.
The move into network services marks a major shift for Commodore in that, historically, it has made its money by producing and selling low-cost personal computers in high volumes. Indeed, the company is gambling that its new high-powered Amiga computer -- technically similar to Apple's Macintosh and tentatively set for a July introduction -- will rekindle interest in its personal computer hardware. Commodore's efforts to sell low-cost software have been hurt by the general malaise and glut in that market.