Over the last few years, I have over the years collected as much info as I can on the history of Sierra, and I'll give you some a rough outline I've written for those who are interested, as it does make for an interesting (albeit sad) story. It starts with a brief flash at the glory days of Sierra--1989 and 1990--as a prelude to the real meat of Sierra's rise and decline. I haven't gotten up to 1998 yet, nor do I know much about the pre-1990 period besides that which is covered in the book Hackers; But I will give what I can, and hope I am portraying history as accurately as possible:
Sometime during 1989 or 1990, in the period in which the film studio United Artists was in financial ruin, Ken Williams, Chairman, Chief Executive Officer and President of Sierra On-Line, had a meeting with Bill Gates, then the CEO of Microsoft. At this meeting, according to Ken, he offered to sell Sierra to Gates, having had profound respect for that visionary industry leader. Gates turned Ken's offer down. However, their conversation proved both fruitful and had profound effects on the history of Sierra in years to come. As the conversation turned to the fall of the once great United Artists, the two CEOs discussed how United Artists had operated on a "hit" based business model, in which they needed a new hit yearly to survive. Ken came from this meeting resolved not to let Sierra share the fate of United Artists - not to let Sierra's destiny be governed by the whims of a given year, but rather, instead to build a business which would have consistent success, leaning on properties which could be "rebooted" yearly, updated and upgraded for each passing year. Returning from the meeting, Ken then decided Sierra's business model going forward into the 1990s:
Sierra's product line would be split into three equally important chunks, which would represent what were at the time the leading areas of success in the computer software industry. One third of Sierra's product line would consist of Educational and "Edutainent" software, which, as the 1980s turned to the 1990s, was a massive industry. Productivity Software, itself also a growing field, would occupy a third of the company's focus, and lastly but most importantly, the final third of Sierra's product line would increasingly consist of what Ken would later term "Perennial Products" such as the NASCAR, Red Baron, Caesar, Print Artist, and SWAT product lines - Games and software that could in Ken's words be ''re-vamped'' each year. He may even have intended to eventually marginalize, and perhaps phase out 'Adventure games' entirely or reinvent them utterly--He foresaw their slow decline in popularity years before it happened as the 1990s saw the failure of the legendary Zork franchise and with it, Infocom.
Thus Sierra began to buy non-adventure game companies: Dynamix in 1990, known mainly for their simulation games as well as an edutainment company, Bright Star Technologies in 1992, known for their revolutionary lip-synching technology; The acquisition of a French software developer, Coktel Vision in October 1993, expanded Sierra's international business. In March 1991, Sierra entered into a merger agreement with Broderbund Software, one of the largest educational software companies in the world at the time; the idea was to combine Sierra's strengths in entertainment software with Broderbund's strengths in edutainment to create the largest publishing house for computer software in the world. The combined company would be called Sierra-Broderbund. However, disagreements in the post-acquisition leadership of the combined company led to the disintegration of the merger in April 1991.
In early February 1992, Ken made an overture to buy Id Software, after receiving from id a demo of Wolfenstein 3D; The attempted acquisition failed, though it did make for a funny story with regard to the differing corporate cultures of both companies. Ken on the failed id acquisition:
"I wish I had been able to persuade them to work with us. I would have pushed harder, but I have never been into violence, and really didn't want to publish violent games -- even knowing that I had a fiscal responsibility to shareholders to "do the right thing" for the company.
A funny part of the story is that I didn't realize how "casual" they were, and met them at a fancy french restaurant. I wore a coat/tie, and they showed up in totally ripped up clothing, and in flip flops. I didn't care, and would have happily swapped them clothes - but, the restaurant was freaked out. I was a good customer, so they moved us off to a private room, where we were stared in amazement by any of the restaurants other patrons who happened to see us.
It was a great evening, and one I shall never forget. They are amazing guys and deserve all the success they've had."
Ken's new strategy was working; as of 1992, consisted of 300 employees overall, and was only growing later with each passing year. By 1994, the company was the market share leader in PC gaming, and second only to Microsoft in computer software overall. Their main competition was considered to be Electronic Arts and Microsoft (as of a 1998 corporate profile).
After a year of upheaval, in January 1994, Sierra officially moved its headquarters to Bellevue, Washington. This marked a major turning point for the company; Ken wanted the company to grow, and Oakhurst was becoming increasingly hard to manage as the headquarters of an ever-growing corporation; it was also very hard to persuade new employees (especially executives) to relocate to a relatively obscure, small town.
To some employees, the move to Bellevue marked the end of an era for Sierra, and resulted in a profound change in the atmosphere of the company; In the view of some former employees, the move to Bellevue saw Sierra becoming more of a corporation, rather than being a "family" of co-workers all living and working in the same area. Its new headquarters located not far from those of Microsoft, Sierra was now a corporation, in a big, very different city with a much different culture from that of Oakhurst. Yet, the move worked - Sierra, by the end of 1994, was a powerhouse; It remained an innovative developer, and was becoming an increasingly respected publisher; its games lined up on the best-seller charts and, while the company was briefly plagued by financial woes due to the (unfortunately) bungled experiment with the first ever online multiplayer gaming system, called the The ImagInation Network, all was bright in Bellevue. The company negotiated a partial sale of INN to AT&T, and it was renamed The Sierra Network. Sierra would continue to partially own the company until 1996, and would retain exclusive rights to develop games for it.
In June of 1994, a man named Michael Brochu was appointed the Chief Financial Officer and Senior Vice President of Sierra by Ken (who was then CEO and President of the company as well as Chairman of the Board). Brochu steered Sierra into an acquisition focused direction--The idea came from Ken's vision of the company as detailed in 1990, but Brochu was brought on board to help "make it happen." Ken has since attributed a good deal of Sierra's growth and success in the mid 1990s to Brochu. .
Ken stated: "Although I was technically a bureaucrat, I delegated the paper shuffling to the greatest extent possible, and was VERY involved in building product. When the company was sold in 1996, we were the leader in consumer software, and had distribution in virtually every country in the world."
In 1995, Sierra went on buying spree of smaller companies to further enlarge the company and expand the company's product line into new and unexpected areas of computer software. 1995 saw the purchase of the following developers:
Impressions Software--Known for their racing and sports products
Sublogic--Known for their flight simulation software
The Pixellite Group--Known primarily for their line of Print Artist software
Green Thumb Software--Knowing for their gardening software
Arion Software--Known for their cooking software
Rather than absorb most of these companies, as is common in acquisitions, Sierra allowed many of the companies they bought in this period to retain their own separate location and corporate identity and they were allowed a level of semi-autonomy with respect to development. Sierra was now an empire with many diverse client kingdoms operating beneath the Dome, all of which shared merely upper management, sales, distribution and marketing resources.
Later the same year, P.F. Collier embarked on a joint venture with Sierra to produce an interactive encyclopedia, which further pulled Sierra into the then blooming, untamed world of Multimedia. In June 1995, Sierra and Pioneer Electric Corp. signed an agreement to create a joint venture that would develop, publish, manufacture, and market entertainment software for the Japanese software market. This created a new company called Sierra-Venture. With Sierra and Pioneer investing over $12 million, the new company immediately manufactured and shipped over twenty of Sierra's most popular products to Japan and created new titles for the Japanese market, expanding Sierra's sales and distribution resources to the farthest reaches of the world.
Meanwhile, the adventure game share of Sierra's sales fell to 36 percent in 1995 from 47.4 percent in 1994, while education sales hovered around 14 percent of the company's income. Most of the growth came in the simulation category, nearly doubling from 15.2 percent to 27.9 percent in a single year.
This sudden, massive growth quickly also added layers of bureaucracy to the company. As 1995 came to a close, Ken became increasingly tired of the 'drudgery' as he put it of running a large, publicly traded company day to day--He was a hacker, a programmer, a pioneer by nature, not a paper pusher--He had never enjoyed running a company and had longed to once more focus on product, and as the company grew, his duties became increasingly heavy, and so in October 1995 he promoted Michael Brochu to the position of the Chief Operating Officer and President of Sierra. Brochu was now responsible for the day-to-day management and operation of Sierra, which allowed Ken to focus on developing product. Ken would still remain Sierra's CEO and Chairman, but Brochu would steer the company's corporate development, while Ken focused increasingly on the creative direction Sierra took. As he put it himself in an interview in early 1996:
"I'm not sure how typical I am of other CEOs...most of my time is spent looking at product. Sierra has roughly 70+ games in development at any point in time. It is a full time job to review and comment on this much product. I have successfully been able to shovel most of the drudgery of running a large company off onto others so that I can focus on product.
We have a process at Sierra where every three months Jerry Bowerman (our head of R&D) and myself try to visit every division to see every product in the company. Believe it or not, this requires a FULL MONTH on the road! We spend from 8 a.m. 'til at least 9 p.m. every night going through product. Our goals include checking to see if the product looks like it will finish on time, and on budget, but what we are really looking for is to do anything we can to support the developers as they try to build "Sierra quality" product. It isn't staying on budget that causes a hit—it's having the greatest game. Many products have been nuked during these quarterly visits....To me, everything is about being able to build awesome product. Everything else is just garbage you have to do in business. Anything that allows us to built better product, or take better care of our customers, is good...I'd much rather focus on producing an awesome game than worrying about whether or not we're showing what great art we can do—or, that we know how to program for a DVD drive."
Meanwhile, Sierra's rapid growth had made them appealing to prospective buyers--In the summer of 1995, Sierra went on many "Good Buy" lists in investment houses. In early February 1996, Walter Forbes, CEO and founder of CUC, Inc., who had been a member of Sierra's Board of Directors since 1991, approached Ken after a board meeting and surprised him with an offer to buy Sierra; This shocked Ken, as Sierra wasn't for sale. With Forbes' offer being over 100% of Sierra's stock price, the decision was in the hands of Sierra's shareholders, and Ken, as Chairman, had a responsibility to them and could only hope to the best deal possible for the company post acquisition.
CUC outlined their initial vision for what Sierra would be like post-acquisition, and Ken flatly turned the deal down, and laid out his terms.
The next day, the heads of CUC buckled to his demands:
To quote Ken,
"1) I was to go onto CUCs board as Vice-Chairman. My understanding was that this would put me "above" Bob Davidson, even though he would run the software business day to day. My goal was to give him the independence he needed to succeed, but I thought this corporate role would allow me the visibility, and voice, to intercede if things weren't going well.
2) I was to become the third member of the "Office of the President" with CUCs two existing co-Presidents
3) A software board was going to be formed, which would have Bob Davidson, Myself, Mike Brochu (Sierra's President) and I believe Kirk Shelton of CUC (who is not in jail)
4) No major decisions were to be made (such as dropping product lines, or consolidating functions) without prior review by the software board
5) I was to stay responsible for Sierra's R&D"
CUC and Sierra entered into a merger agreement on February 20th, 1996, and, with the approval of both companies' shareholders, the sale closed and Sierra officially became part of CUC on July 24th 1996. In the meantime, Sierra another company: Headgate, which was known for Golf games; Headgate was acquired in April 1996 even in the midst of corporate upheaval. Sierra by this time in 1996 had over 1,000 employeees--with approximately 700 in development, and the rest in other areas such as marketing and distribution.
Ken was indeed appointed a Vice Chairman of CUC, and a Member of the Office of the President in September 1996, and Michael Brochu, Sierra's President, was at the same time named a Senior Vice President of CUC Software. Brochu was also named a Senior Vice President of CUC, Inc. Brochu joined CUC's senior management group in developing new business opportunities and acquisitions. His responsibilities also included several consolidated functions within CUC's software division, including presiding as president of CUC Software's international business, budgetware and OEM relationships--But even with these expanded duties, he remained Sierra's President and thus ran Sierra day to day.
It turned out that Ken's titles meant little in actuality. Bob Davidson (CEO of Davidson & Associates, an educational software company) was placed in charge as CEO of CUC Software, which included Sierra, Davidson, Blizzard Entertainment, and Knowledge Adventure. Davidson and Ken had very different ideas as to the future of the company and often clashed. Davidson attempted to take Sierra's more ''risque'' products such as Leisure Suit Larry and Phantasmagoria off store shelves on moral grounds; Ken fought against it. The software board, which Ken had hoped would leverage control of the software divisions product lines, met only once. Bob and Ken wrestled over Sierra's R&D. Essentially, Ken had been told all he wanted to hear by CUC during the negotiations, and while technically, they had made legal agreements to the same, none of their promises meant anything when all was said and done and the ink was dry on the deal.
In Ken's own words: ''Far more discussion went into how Sierra would be structured post acquisition than into the price. I wanted Sierra to survive for many generations to come, and would not accept a scenario that I didn't believe in. At dinner the first night after their proposal, CUC revealed their grand vision on how the business would operate. I felt that it was non-viable and rejected the proposal.
Ultimately, a structure was created that I believed in, and believed could make Sierra an even stronger company. Unfortunately, once the deal was done, I discovered I had no power to control things, and they got out of hand.
Yet, despite the hardship, Ken continued on as CEO of the company hoping to steer the company as best he could through a six month period of transition as Sierra's employees adjusted to their new corporate overlords. Continuing to take the lead in Sierra's march to the 21st century, he entered into an exclusive deal with Valve, a newly formed company, in November 1996, to publish for them an action game called "Half Life." Half-Life would seem, to most eyes in 1996, to be merely a Doom clone, but Ken saw promise in both the young startup company and their product; the deal was signed, and Sierra was granted exlusive rights to Half-Lif. Sierra had never been a figure in the action genre, and this move, while a profound change in direction for Sierra, would prove to be perhaps their most profitable decision.
"Sierra On-Line is thrilled to have the opportunity to publish Half-Life," Ken later remarked in a June 1997 press release, "Valve's enhancements to the Quake engine technology introduce gameplay and design elements that will thrust Half-Life to the forefront of first-person gaming. Gamers will agree that the results are nothing less than mind-boggling."
