OverviewThe company was formed by three people - Martin Alper, Frank Herman and Alan Sharam, and began trading on 1 April 1984. They had some financial backing from another small group of investors. All had experience of video distribution. The first premises were in the back of Alan Sharam's offices (he was also a surveyor at the time) in George St, Central London. At no time did the company employ in-house programmers - all product was sourced from other publishers and then as we became successful, directly from individual authors and from software houses. In the beginning they used to make up packages of 100 tapes ("dealer packs") and send them out to newsagents, toy shops, motorway service stations, just about anyone who would take them. At that time the mainstream retailers in the UK refused to take budget games because they had had bad experiences in the past. Mastertronic eventually won them over by showing that new games would regularly be produced to replace old stock and by producing games that sold well. Another key figure at the time was an ex-professional cricketer (Nottinghamshire) batsman Richard Bielby who ran a distribution network servicing a large number of small retailers.
A couple of enterprising dealers spotted the company's potential and became its partners in France and Germany.
Much of the early output was supplied by just two producers - the Darling brothers (who later formed Codemasters), and Mr Chip Software who continued to do games for them for some time.
Anthony Guter joined in August 1985 as Financial Controller. He also managed the company's computerised business systems. During 1985 -87 the company boomed, with many games selling in large numbers. Some key retailers began to rely on the company not just to supply all their budget games but to act as wholesalers for full price software as well (Toys'R'Us being the most prominent).
Martin Alper 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). After the Sega takeover Frank became deputy Managing Director of Sega Europe, and Alan was Managing Director of Sega UK. Martin became resident in the US and continued to work for Virgin Interactive, which was soon taken over by Blockbuster Video.
In early 1987 the company bought out the UK interests of Melbourne House. This took them into full price software, something they have hitherto ignored. At this time they were also developing arcade software and hardware (based on the new Amiga chips) and there was an idea that the arcade games would be released on the Melbourne House label.
In 1987 Virgin Group bought the 45% of shares held by the investor group mentioned above. 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. Virgin Games was struggling as a full price games publisher and had no control over its distribution.
It was Frank Herman who, in early 1987, spotted that Sega had no UK distributor for the Master System range. Mastertronic obtained the franchise for one year and were then appointed as distributors in France and Germany as well for a further year, and thus Sega Europe was born. As a result nearly all the staff moved over to Sega when they bought the business and only a handful of Virgin games programmers stayed with the publishing side (quickly renamed Virgin Interactive Entertainment).
Mastertronic was eventually bought up by Virgin and became Virgin Mastertronic before getting completely sucked into Virgin Interactive Entertainment, Ltd.
TriviaThe magazine Retro Gamer published an article on Mastertronic's history in its issue #1. With the input of Anthony Guter, who was employed by Mastertronic as Financial Controller between 1985 and 1990, they published the calculation of Mastertronic's budget games (£1.99):
Tape production - 22p/unit
Inlay cards - 3p/unit
Cover artwork - about £1000/game
Other distribution costs - 5p/unit
Development - the usual deal was an advance of £2000 plus royalties 10p/unit
Mastertronic sold their games for about 90p/unit to distributors (after the market became more competitive, 80p/unit) respectively £1.30 directly to retailers.
Related Web Sites
- The Mastertronic site on Guter.Org (Anthony Guter's Mastertronic site. He worked at the company as financial controller between 1985-1991.