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Learning lessons from a changing market

October 13, 1998
by Pat McClellan

Some Armchair Market Analysis

Many of us were shocked to see g/matter close the doors this month, ending the reign of "the leading distributor of Director Xtras". I haven't talked with Terry Schussler (g/matter CEO) about the situation, but I'm thinking that maybe we shouldn't have been so shocked. You don't have to know any inside info to draw some conclusions, and even if you never bought anything from g/matter, those conclusions have a lot of impact on you and me.

Let's take a young company which specializes in really handy accessories for the #1 software for creating CD-ROM titles. Assume the year is 1994. Almost all of the computers sold at this time had brand new 2x CD-ROM drives, and people were clammering for media to play in them. The forecast for Director was the stuff that analysts dream of, so a company with specialty expertise focused on Director will surely thrive. And, as many of you also experienced, it was a great time to be a Director programmer.

Now, zoom forward to 1998. Director completely dominates its category: mTropolis is dead, no other challengers. So what's the problem? The problem is in how you define "the category". The bottom has dropped out of the CD-ROM consumer market. Internet is everything. Despite the great things you can do with Shockwave, it just hasn't been a sufficient replacement for the market demand created by the CD-ROM market.

Director's reputation as the premiere handler of media-rich content is not compatible with the anorexic-media demands of the internet. Starting with UCON 96, there was a dramatic shift in focus at Macromedia: the theme of that UCON was "Shocking the Web". I came away from that conference wondering why my needs as a CD-ROM developer were being de-emphasized. It was clear that Macromedia saw what the web was becoming, and starting with UCON 96, they were packing up Director and moving it to a new category -- a web tool.

As a web tool, Director is not the dominant player it was for CD-ROMs. Now, instead of pathetic competition from mTropolis, Director is facing off against dozens of new technologies including JavaScript, DHTML, ActiveX, Flash, mBed, RealMedia, Quicktime, a variety of cgi options and, of course, the much-hyped JAVA. This is a category that is difficult to define -- much more difficult than the CD-ROM authoring domain. It mixes public domain technologies (like DHTML) with companies & applications, but can roughly be described as tools to deliver media enhanced content on the web.

When Macromedia stepped into this arena, they knew that Director didn't have it sewed up. So they bought FutureSplash and turned it into Flash. Then they made Dreamweaver to get a leg up on the DHTML market. Then they grabbed some of web graphics market with Fireworks. Now they've got Generator. The point is that as the market has shifted, they have changed the focus of their business to move with the market. This is essential for survival.

I'm not here to second-guess g/matter's course, but they were clearly in a difficult spot. Director Xtras companies in general have a couple of challenges: 1) they are focused on a tool instead of a task; 2) currently, using Xtras with Shockwave is inconvenient enough to make it impractical. Add to that the fact that g/matter (and much of Terry's time) is generating revenues through his great seminar series. I don't know, but I'd guess there may have been a drop in demand for the seminar as many potential students spent their money on a JAVA course instead.

Lessons Learned

So what is the downstream impact on you? Is there anything we can learn from g/matter's misfortune that can benefit our business? Several things, I think.

First is the importance of constantly redefining yourself to move with -- or lead the market. That doesn't mean that you have to keep redesigning your business card. Rather, every company and independent contractor needs to be open to rethinking the business they do and the services they provide. Classic example: in the 1950s, Walt Disney redefined his "movie production company" as an "entertainment company" when he opened Disneyland. More recently, Netscape has realized that defining itself as a browser software company is a dead end. Now, depending on which article you read, they're redefining themselves as either a business networking company or a web portal (it's a good idea to know what you want to be.)

The point is, the market changes. Industry definitions change. The only way to survive is to focus on your core skills and your clients' core needs. By core skills, I'm not talking about skills like knowing how to use Director or Java. I'm talking about the the more basic skills that multimedia professionals are good at: learning and teaching new technologies, visually illustrating complex concepts, managing creative and production teams, creating intricately interactive systems to convey a message. These skills will always be in demand -- whether Director rules or Java takes over, whether you distribute on CD-ROM or the internet.

Second lesson: focus on tasks rather than tools. How many of you can work fulltime doing nothing but Director these days? Not me. There's a recent job posting on Direct-L that is looking for a candidate who is a master of Lingo, Java, JavaScript, HTML, cgi, etc. Some people have been making fun of that posting, but the fact is, they'll find more than enough qualified people.

While I would love to be able to make a good living doing nothing but Lingo, it's just not likely. Why? Because my customers don't care whether it's Lingo or Java or voodoo. They just want the job done in a reasonable amount of time, within their budget. It's up to me to figure out the best way to accomplish their objectives with the variety of tools at my disposal. I'll use Director when I can, but lately, that's less than half the time. And don't think that I'm abandoning Director for something better. In the last year, I've had to educate myself in JavaScript, Perl, FileMaker, cgi, and most recently, Cold Fusion. None of them is the all-in-one solution.

Perhaps on the bottom half of the career ladder, one can afford to specialize in a particular tool. But as your professional responsibilities expand to include project management and client consulting, you may need to soften your Director Evangelism. (This from me... editor of Director Online!) I am repelled by blind faith of any flavor. I love my Mac, but my customers don't care; so I must build my business around being cross-platform. I love Director too, but it isn't always the best choice for what my clients want.

In summary, in order to succeed in business, I must be able to see the world through my clients' eyes. I must approach each project by looking first at my client's business objectives. I must offer the services that my clients need, and if those services don't match what I want to be doing then it's time for me to redefine my market and get some different clients. Once the objectives and needed services are defined, then I can begin to assess which tools to use. Director is a great tool, but if you're going to bring your customers the best value, you're going to have to build a large set of tools and know when to whip it out. Lest you find yourself saying g/bye.

Patrick McClellan is Director Online's co-founder. Pat is Vice President, Managing Director for Jack Morton Worldwide, a global experiential marketing company. He is responsible for the San Francisco office, which helps major technology clients to develop marketing communications programs to reach enterprise and consumer audiences.

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