Mastertronic's founders gave up their other interests
and committed themselves to succeeding as publishers by
selling games as cheaply as possible. Other publishers
seemed to be concerned only with the process of creating
the software and marketing an image, a strategy aimed
directly at the consumer, with the hope that customer
demand would somehow bring the games into the shops. In
contrast, Mastertronic aimed its strategy at the distributors
and retailers. If the games could be put on the shelves
then the low selling price would do the rest.
The core of the strategy was the idea of budget software
- games priced at less than £3.00 at a time when
most good sofware was £5.99 or more. In fact Mastertronic
went for £1.99 as the basic price. I will explain
how this worked later on. The founders believed it possible
to build up a reasonable market share from their experience
in video distribution, in which both Frank and Martin
had been active. I'm not sure what the connection was
with Alan, who was a partner in a surveyor's practice
in London. However the business began in the back room
at Alan's office in George Street, in the heart of the
West End. The company started trading on 1 April 1984.
My involvement began in August 1985.
Why was it called Mastertronic? As part of a general marketing
plan in which the word Master was going to be used with
lots of other words. I think in the very early days it
was intended to distribute various electrical products
but only the computer games were successful.
We briefly published records under the name Mastersound
and videos as Mastervision. These were not particularly
succesful ventures. We also used MasterAdventurer for
those games that fell under the adventure category. This
was partly due to early dealings with Carnell Software
to publish an elaborate adventure game for the Spectrum
called Wrath of Magra. Carnell Software was in financial
difficulties and ceased trading in the summer of 1984.
We republished two of their earlier releases, Volcanic
Dungeon and Black Crystal.
The computer games market in the
UK in 1983
The first computer games boom was based on the Atari consoles.
This collapsed around 1982/3 but the new generation of
cheap programmable computers was emerging. This was led
in the UK by Sinclair products (the ZX80/81/Spectrum range)
with fierce competition from Commodore's Vic 20 and C64.
The retail end was poorly organised. Console games had
been sold by a variety of outlets typically electrical
stores, photographic shops and some of the high street
chains. These pulled out of the market. Mail order was
popular for consumers living away from town centres. But
in a town centre where did one go for a computer game?
There were virtually no specialist games shops. Were games
toys or published products like books and records, or
did they rightly belong with consumer electronics alongside
the computers on which they ran? There was no obvious
answer to this question.
What was certain is that the trade was in disarray. The
failure of the first consoles made retailers suspicious.
The buyers for the large high street chains of which Boots,
WH Smith and Woolworths were leaders, were confused by
the different sorts of home computer. They did not know
how to cope with suppliers that might produce a good game
one month and then nothing but failures thereafter. They
were afraid to commit to buying product unless they could
be sure of returning it for a refund, but who knew how
long the new games publishers would be in business? And
how did you sell a computer game anyway? A customer could
flip through a book, listen to a record, pick up a toy.
Games were slow to load and needed some understanding
which counter staff lacked. It seemed crazy to put a tape
into a computer, wait five minutes for it to load and
then watch the potential customer play with it for ten
minutes before deciding not to buy. Retailers were not
persuaded that there was any profit in the business.
Mastertronic was started by men who understood distribution
and marketing. They knew nothing about computer games
and were proud to boast that they never played them (but
this is no different to the heads of large record companies
who never hear the music of their stars). When programmers
came in with demos, someone would have to setup the machines,
load the games and even plug in the joysticks for the
directors. Mastertronic never employed programmers directly
(unlike Virgin Games who at the time we merged had a programming
staff of six). Everything was bought in from outside,
either directly from the authors or from other games publishers.
Once established, we were deluged with games from enthusiastic
amateurs and managed to publish quite a few of them.
Before the company started trading, the business strategy
had been defined. The separate elements were each vital
to success. These were distribution, sourcing and pricing.
Distribution - the key
Mastertronic's founders had backgrounds in video distribution,
another boom/bust trade and used their contacts to set
up distribution to retailers. At the beginning the high
street chains were not interested. But because the games
were cheap it was easy to persuade small retailers to
take them. Mastertronic set up a network of self-employed
distributors, with some knowledge of merchandising, to
reach outlets that the mainstream wholesalers missed.
A key figure in setting up these networks was Richard
Bielby, ex- professional cricketer with Leicestershire.
(His claim to fame was that he was the other man at the
stumps on the day Sobers hit six sixes off an over.) Bielby
and his wife kept in touch with dozens of shops and traders,
bought in bulk from Mastertronic and broke the stock into
manageable units for their sub-distributors and merchandisers.
Many had experience of the video distribution business,
now rapidly consolidating as big high street operators
took over. They were glad to switch to computer games.
They found sweetshops and garages, video shops and groceries,
even motorway service stations. Shops were encouraged
to take "dealer packs", 100 games at a time
mounted on cardboard racks. They were asked just to give
the products some space. Sale or exchange agreements meant
they undertook no risk.
The nervousness of the retail trade about the continuity
of computer games product was profound. Buyers did not
want to rely on publishers who might not deliver new product
on time. They wanted the same sort of assurances that
the long established record and book publishers could
supply, with guaranteed releases of new titles and buyback
arrangements for overstocks. Mastertronic set out to provide
these assurances. While other publishers based their marketing
strategy on the output of one or two key programmers,
Mastertronic cast its net wide and aimed to have a constant
flow of new titles.
Unlike its competitors, Mastertronic did not entrust the
storage and distribution of its products to wholesalers.
Determined to control the distribution process, the directors
set up their own warehouse. In the early days this was
a cellar in Paul Street in the unfashionable part of the
City of London. Most of the employees were casual labourers.
To take on the overheads of a warehouse was a bold step,
one which very few publishers would ever do. But for Mastertronic,
the key was to keep promises about delivery. No publisher
working through a wholesaler could guarantee when products
would be issued. A customer buying from Mastertronic could,
if he wished, go to the warehouse and collect his goods
there and then. Running the warehouse kept the directors
in touch with the physical side of the business. They
were forced to understand how to pack games, what sorts
of packaging broke in transit, what sort of labelling
was required by retailers, and every aspect of distribution.
Mastertronic also notably pioneered the colour coding
for games by having a coloured triangle on the top right
hand corner of the front and rectangles on the inlay spine
with the catalogue number and format: Spectrum games were
yellow, C64 were red and Amstrad were orange. This led
many software houses to use variations on this theme but
keep the colour coding so people could easily identify
the format. Retailers, who understood very little about
computer games, liked this system and it enhanced the
professional image of the company.
Sourcing the product
Because Mastertronic was a publisher and not a software
house, its first big problem was to find the product.
One important source was Mr. Chip, a software house run
by Doug Braisby. (The business still exists and is now
called Magnetic Fields.) The games he sourced sold 395,000
copies in the first 15 months of Mastertronic's life (to
June 1985). But this achievement was eclipsed by another
key source, the brothers David and Richard Darling, themselves
destined to become major players in the industry. Having
mastered the art of quickly developing games for the Vic
20 and C64, the Darlings set up a partnership with Mastertronic
which gave them both a royalty and a share of the profits
on the sales of their games. It was astonishingly successful.
In that hectic first 15 months nearly 750,000 games written
by the Darlings were sold, netting them some £85,000.
Professional programmers would have been glad of such
sales. For two boys of school age this was evidence that
games were likely to be better than education and as soon
as they could, the Darlings left school, terminated the
deal with Mastertronic and set up their own company, Codemasters.
To put these two sources in perspective, about 2.1 million
units were sold of all titles in that first 15 months.
Thus the deals with Braisby and the Darlings secured 55%
of the early Mastertronic sales. Later on, as Mastertronic
became known, many people approached us with finished
games, or just ideas, keen for us to publish their work.
The early Mastertronic games were produced for the computer
formats that were dominant at the time. The C64 and Spectrum
were the main machines. The marketing strategy required
a flow of titles so that retailers had compelling reasons
to keep the games prominent in their shops, and to attract
and hold the interests of the consumers.
Between April and June 1984 Mastertronic launched 32 titles:
13 on the C64, seven on the Vic 20, nine on the Spectrum,
two on BBC and one on the Dragon. Seven titles were by
the Darlings, eight by Mr Chip and four by CME software.
Almost all were derivative, based on popular arcade games.
Hence we had Spectipede on BBC and Spectrum based on Centipede,
Munch Mania on C64 based on Pacman etc. But a couple of
titles stood out – the Darling's BMX Racers on C64,
and Vegas Jackpot on C64 and Vic 20 by Mr Chip. BMX Racers
was not, I think, based on an arcade game and it was the
first of a number of extremely successful games aimed
directly at young boys, unlike most of the arcade games
that used abstract Space Wars concepts. 340,000 were sold.
Vegas Jackpot sold nearly 300,000 units, including a rare
version for the Dragon. I don't know why. What is the
point of playing a simulated fruit machine on a computer
when the only point of a fruit machine is to gamble?
Great care was paid to the appearance of the games and
to the image of the publisher. Quality artwork was commissioned
for the inlay covers. Some of these pictures, particularly
those with science fiction themes, undoubtedly helped
many an undistinguished game to sell. There was a Mastertronic
logo and colour coding to help retailers identify the
computer format. The three key suppliers – the tape
copier, the arthouse and the printers – were all
geared to fast responses. They understood that it was
often crucial to get a certain number of titles out each
Pricing and profitability
In 1983-4 most computer games retailed in the UK at prices
between £4.99 and £7.99. Retailers disliked
cheaper games because they made less profit and the public
were suspicious of the quality of budget games (quite
rightly so in the majority of cases). Mastertronic games
were priced at £1.99. How could we do it?
At that time all computer games in the UK and Europe were
distributed on cassette tape, similar to that used for
musical recordings. Computers using floppy disks were
available, most notably the C64 and the models aimed at
business, such as the Apple, Commodore Pet and Tandy ranges.
But these were mainly sold in the US. In Europe the cheaper
tape-based models had the overwhelming part of the games
market. Games were short, reflecting the limited memory
capacities of the computers. The largest was the C64,
with its supposed 64,000 bytes of memory. In fact the
amount available to run programs was about 38,000 bytes,
the rest being used by the computer for internal operations.
Computer code that filled this space fitted onto a short
length of tape that could load in about five minutes.
For a reasonable print run, a tape duplicator could produce
copies for about 25 pence each. Mastertronic, aiming for
large product runs, bought its tapes at 22 pence (some
assistance was gained in the directors having part ownership
of the tape duplicator). Inlay cards cost about three
pence each. The artwork cost anything up to £1,000;
assuming a print run of 20,000 this reduced to five pence
per unit. Other distribution costs might add five pence
So a game could be duplicated and put out to market for
a total cost of some 35 pence. The other main cost was
the software itself. Games could be purchased outright
but most authors wanted royalties, not wishing to lose
out in case of success. The standard deal that was offered
in 1984 was an advance of £2,000 and a royalty rate
of ten pence a unit. Many young authors were very happy
to take this, especially when Mastertronic went on to
sell 50,000 copies or more. In later years royalty deals
moved closer to the standards in book publishing with
royalties based on a percentage of receipts but in 1984
this would have made no difference, all games were sold
at the same price anyway.
Having set the costs, the profit depended on the wholesale
price. Here the calculations work backwards. From a retail
price of £1.99, VAT (15% at the time) took 26 pence.
Retailers expected to make a margin of 30%. They would
therefore not buy at prices higher than about £1.30.
Between this price and the production cost of 45 pence
was a margin wide enough to cover advertising, overheads,
the profits of distributors and (provided there were not
too many), the costs of failed titles. In practice, Mastertronic
sold to distributors at about 90 pence a unit, reduced
to around 80 pence in the more competitive late 1980s,
and at about £1.30 when able to distribute directly
This pricingstructure would generate good profits provided
sales were high enough. If the total sales of a title
were just 10,000 units then raw material and distribution
cost might be £3,000, artwork and advance to author
a further £2,500 and the receipts about £9,000.
So this would bring a reasonable gross margin of 38%.
But in the early days we easily exceeded 10,000 units
per title. The ten C64 titles released at the start of
Mastertronic's life sold on average 40,000 in the first
year and over 50,000 before being withdrawn from sale.
The Vic 20 titles achieved 44,000. Surprisingly the early
Spectrum releases did less well but still averaged 28,000.
Budget pricing was proved to be perfectly viable provided
that most titles achieved good sales, and in the fast
growing market of 1984–6, at the "pocket-money"
price point of £1.99, they did.
The company matures
Rapid growth required more staff and the development of
internal systems for accounting, sales, stock control
and royalties. The company left George Street for a flat
overlooking Regent's Park in a block everyone called
Park Lawn (it was actually named Park Lorne). By now there
was a games buyer, John Maxwell, with two assistants and
some PR, accounting and secretarial staff.
I joined in August 1985 as Financial Controller. I had
to put in financial systems and replace a useless computer
system with something suitable for such a fast-growing
business. Because we relied on outside sourcing for all
our games, we were scrupulous about keeping good records
and paying royalties promptly (four times a year). This
was one of my key responsibilities. It also brought me
into contact with many of the programmers.
Park Lorne was too small and in September 1985 Mastertronic
found new offices in Paul Street (where our warehouse
was situated). We stayed there until merging with Virgin
Games in September 1988.
New models of computers began complicating the business,
because we now had to consider whether it was worth making
conversions of existing hits and what to do about new
games. The more types of computer, the less shelf space
available for each individual format in the shops so that
in a way this reduced the choice of games. The Amstrad,
C16, MSX and Atari computers all became established in
this year. Few of our competitors took much notice of
the C16 and for a while we were the only company with
a range of games for this machine. Each title sold in
huge quantities. For example Squirm on the C64 sold 41,000
but a year later the C16 version sold 82,000.
In late 1985 we launched the MAD label, this stood for
Mastertronic's Added Dimension and was the first, deliberate,
step away from the pure budget game. MAD games retailed
at £2.99 and were intended to be better quality.
The range was launched with a party on a boat on the Thames
where the authors demonstrated the first games in the
range: The Last V8, Master of Magic, Spellbound and Hero
of the Golden Talisman.
The MAD launch was an exception to our policy of not spending
a lot on marketing. Our competitors spent plenty on advertising,
mainly in magazines. We rarely advertised. This probably
reduced the amount of editorial coverage about the company
and puffs for forthcoming releases but I think we got
fair reviews once games were released. The press had been
fairly contemptuous of us at first. In 1985 there was
a grudging acceptance that budget games were at least
value for money and some as good as any full price product.
In 1986 Mastertronic became "cool".
We began to be deluged with games, game ideas and propositions.
Sample tapes arrived daily and were placed in the "magic
postbox" for evaluation. People would walk in off
the street and if we liked what they had we would sign
them up there and then. I once overheard Frank Herman
asking a hopeful programmer if he had an Amiga. When the
kid said he did not, Frank told him to take a spare one
from our own testing area. The popular TV show "Jim'll
fix it" featured us creating a game for a youngster.
This was marketed as "Supertrolley" and featured
a cover with a cartoon Jimmy Savile.
Some programmers visited us regularly. I enjoyed meeting
guys like David Jones (Magic Knight series), Clive Brooker
(Empire Strikes Back, One Man and His Droid, Lap of the
Gods), Kevin Green (Skyjet, Flash Gordon, Space Hunter),
and Jim Ferrari (King Tut, Human Race, Hollywood or Bust).
Now and then Rob Hubbard would pop in to hand over his
latest tune. We even had the shaggy-haired one, Jeff Minter
Several programmers worked for the company for a while
as technical advisors - Stephen Curtis (Nonterraqueous,
Soul of a Robot, Into Oblivion) Richard Aplin (Destructo,
Fly Spy, Ultimate Combat Mission) and Tony Takoushi (Frenesis,
A few vanished without trace and I was unable to pay them
outstanding royalties. Where are you now, Nigel Johnstone
(The Captive, Spooks) or M & S Srebalius (Rockman,
Rest in Peace), Paul Ranson (converted Bump Set Spike
to Amstrad/Spectrum), Raymond Tredoux (Star Force Nova),
Sean DeBray (who sold the same game as Ghettoblaster to
Virgin and Streetbeat to Mastertronic)?
In 1986 the business outgrew the little warehouse in Paul
Street. We outsourced distribution to a packaging company
in Dagenham, confusingly called Masterpack (I can't
remember if this name was just co-incidence or if the
packaging company renamed itself when it got our business).
We soon became the biggest customer of Masterpack and
eventually had our own dedicated warehouse on the site.
In this we continued to be different to nearly all of
our competitors who relied upon wholesalers to stock and
distribute their product.
Software had been sold in the USA from the beginning by
a local distributor. In 1986 Martin Alper, who had the
most marketing flair, went to California to set up Mastertronic
Inc. This company could only distribute C64 games at the
start because all the other 8-bit computers were virtually
unknown in the USA. Gradually Martin introduced games
for the new 16-bit machines and Mastertronic Inc. began
to take on a different profile to the UK based business.
Links with US software houses provided a new source of
games and the label Entertainment USA was created to showcase
these in Europe. This was balanced by another label, Bulldog
(Best of British), which took its name from one of our
customers who we acquired when they were on the verge
of going bust.
We also found exclusive distributors in the major European
markets and thus created the impression of a truly international
group. In France and Germany we formed Mastertronic SA
and Mastertronic GmbH, owning 51% of the shares in each
with the local distributor keeping 49%. (When we tried
to register the name in France we faced obstruction from
the literal minded authorities who protested that the
word was neither a real name nor that of a product and
was therefore unacceptable.)
The UK company was now managed by Frank Herman, whilst
Alan Sharam increasingly specialised in sales and logistics
(warehousing, packaging, and controlling production schedules).
Around the late summer of 1986, we recruited Geoff Heath
as Director of Marketing. Geoff had run both Activision
and latterly Melbourne House. He was a heavyweight in
the games industry and his appointment marked a step up
in Mastertronic's internal development. His long term
target was to bring us into full price software.
16 bit computers became popular and for the first time
the quality of games for the home machines such as the
Amiga and Atari ST seemed similar to those in arcade machines.
The 16-bit range was launched, appropriately enough, on
a new label called 16-Blitz although the name was not
used for very long.
Mastertronic Inc. began to develop a range of new arcade
games that would run equally well on home computers. We
agreed to buy a large number of Amiga chips from Commodore
to power the new arcade machines. This venture, called
Arcadia, nearly killed the company because the project
developed slowly and the games were poor quality and not
well suited for arcades. This demonstrated a weakness
in our setup - any games player could have explained that
a home computer game is fundamentally different in design
to an arcade game. But nobody asked games players.
Dominance in UK distribution
The success of the budget range and the growing influence
of Mastertronic led to us becoming the main supplier of
both budget and full price software to a number of major
retailers in the UK, notably Toys'R'Us and Woolworths.
Some full price publishers were happy to let us re-release
their older product at a budget price and of course this
was easy business for us. The Ricochet label was born,
featuring in particular games from Activision, Martech
and US Gold. We also created a special label, Rack'it/Rebound
for Hewson. I doubt if acting as a wholesaler was really
in our best interests - it was very distracting and time-consuming
for all the staff, quite expensive because we had to a
lot of special packaging, and led to a neglect of the
We had always steered clear of full-price software but
changed direction radically in 1987. Mastertronic bought
the famous UK publisher Melbourne House, when that company
was struggling with financial problems, from its Australian
holding company Beam Software. Melbourne House kept its
label identity and a few of the staff joined the Mastertronic
team, notably Rachel Davies the marketing manager, and
general manager Martin Corrall. Ironically they were reunited
with their old boss, Geoff Heath. This move meant that
we had first refusal on re-releases of games such as The
Hobbit, Lord of the Rings and The Way of the Exploding
Fist. However the main justification for the purchase
was to provide a vehicle for the sale of full price games,
a market from which Mastertronic had previously excluded
itself, and in particular as a sales outlet for the home
version of arcade games. I disagreed with the purchase
because we could have easily launched our label with the
£850,000 purchase price (although legal disputes
about work in progress meant that we only paid over part
of the price).
Virgin buys in
In 1987, following negotiations between Herman and Richard
Branson, Virgin Group purchased the 45% of shares held
by the outside investment group. In that year, Mastertronic's
turnover was about £8 million and pre-tax profit
£1 million. The deal valued the group at around
£10 million. The remaining 55% was held by Alper
(25%), Herman (20%) and Sharam (10%) and they sold out
in 1988 in a highly complex deal which required their
continuing involvement in the business and achievement
of profit and cashflow targets. The company was renamed
the Mastertronic Group Ltd., and later was merged with
Virgin Games to create Virgin Mastertronic.
In September 1988 we left Paul Street and joined forces
with the Virgin Games staff in their mews offices in a
side turning off Portobello Road in London's Notting
Hill. This signalled the beginning of the end of the key
Mastertronic budget business. Virgin were not really interested
in it – they wanted our Sega franchise (see below).
The decline and fall of the budget
Sales peaked in 1986 and then declined almost as fast
as they grew. The number of titles released actually increased
in 1987/8 so the unit sales per title were falling rapidly,
eroding the profitability of the business to the point
that there seemed no point in continuing.
The decline had several reasons:
• New competition in the budget market from companies
like Codemasters and from full price publishers like US
Gold releasing their own budget labels.
• The growing market for 16-bit computers. We produced
budget games for these but there was never the same buoyancy
in this market. Perhaps people felt that having bought
a more expensive computer they should only buy more expensive
• Loss of interest by the management of Mastertronic
– the absorption of Melbourne House and the merger
with Virgin took up huge amounts of management time (including
my own). There was almost nobody to take an active interest
in the budget business, even though this was the cash
cow that made everything else possible.
• Declining quality of budget games – this
a personal view. We had begun to rely heavily on a few
software houses such as Binary Design, Icon Design, Palmer
Acoustics and less on individuals. We paid the software
houses large advances (in some cases for games they never
delivered) and had less money available to pay to solo
programmers. The high pressure and lack of experience
in the software houses tended toward formulaic and highly
derivative games. These in turn did not impress the customers
and the reputation of Mastertronic declined.
• The revival of the games console market, spearheaded
by the Nintendo Famicom and Sega Master System. Fortunately
this was one development that we were heavily involved
It was Frank Herman who, in early 1987 spotted that Sega
had no UK distributor for the Master System range. We
applied and were appointed distributor for one year. Martin
Corrall, who was somewhat at a loose end after the absorption
of Melbourne House, was the ideal manager for this new
line of business. We sold all we could get that year,
the UK distributorship was renewed and in addition we
were appointed as distributors in France and Germany,
and thus was born the huge business that was to become
Sega Europe. In 1991 the group turnover was around £100
million, a phenomenal growth. Nearly all of the sales,
and certainly all of the profit, came from Sega products.
Staff numbers soared but the traditional games publishing
side began to be neglected. Full price games such as Golden
Axe and Supremacy were achieving significant results and
making the budget business seem irrelevant.
In early 1991 Sega expressed interest in taking over the
business. Virgin Group was happy to sell (probably to
raise cash for the airline). Sega had no interest in the
games publishing side. As a result nearly all the staff
moved over to Sega when they bought the business that
summer and only a handful of Virgin games programmers
stayed with the publishing side (quickly renamed Virgin
Interactive Entertainment). By that time the budget business
was dying and nobody cared about it. In any case, the
competition had become intense as everyone was now recycling
their old full price games as budget games. And of course
the kids who used to buy C64s and Spectrums were now buying
Segas and Nintendos.
After the Sega takeover, Frank became deputy Managing
Director of Sega Europe and Alan was Managing Director
of Sega UK. Martin stayed with Virgin and continued to
head up VIE for several years, remaining resident in the
US. And I also moved to Sega where I became European IT
Sometime around 1992-3 VIE pulled out of budget games
altogether and the Mastertronic name just died. Quantities
of unsold games came back from the retailers and some
are still being sold today. Somehow the name continues
to bring back memories. There must be many thousands of
kids who could not afford the more expensive games and
who were able to enjoy gaming thanks to Mastertronic.
The business really was unique - it could not be replicated
today. Games are now developed by teams of programmers
and designers and typical retail prices are £30
to £45. The days when a teenager could walk unannounced
into an office, load up a tape and instantly be offered
a publishing deal have gone. But there was really a time
when this happened. It is beginning to feel like a legendary
era but it was only twenty years ago.
An old employee?
If anyone reading this ever worked for Mastertronic, or
indeed produced any games for them, feel free to let
us know your experiences of working there.
back to the articles
|» F.A.Q. - look here before you send off an email.
» Credits - the list of people who made all this possible.
» Scene interviews - C64 sceners answer 20 questions about their time in the scene.