Ahh, I wasn't really aware of what made them go under. I had just assumed that their games went south.
It's a loooong story.
Basically,
CUC International Inc., a membership-based consumer services conglomerate with travel, shopping, auto, dining, home improvement and financial services offered to more than 60 million customers worldwide, approached Sierra to buy them. Sierra wasn't for sale, however, but had grown rapidly (Sierra bought 6 companies in 1995 alone and by 1996 had over 1,000 employees; In 1991 they had just 300.) which made them a lucrative investment to would-be buyers.
Walter Forbes (CUC's founder and CEO) was a member of Sierra's board of directors for over five years. He approached
Ken Williams (Sierra's founder, CEO and Chairman) sometime around late January or the beginning of February 1996 after a board meeting, surprising Ken with the offer. Initially, Ken declined the offer. However after Walter persisted, Ken,
Michael Brochu (President and COO of Sierra; He ran Sierra day-to-day while Ken focused on product. Brochu had made Sierra grow tremendously in the past 2 years) and had Walter along with other CUC people had dinner and CUC laid out their plans, essentially those plans were that they were going to buy a few other software companies and merge them into one.
Ken turned down this offer. However, CUC agreed to Ken's terms: The company created by the software companies CUC bought would
only share finances, resources, distribution, production and sales. Sierra would retain total creative autonomy, and no company would influence the other. They agreed to the creation of a software board (made up of the CEOs of all the software companies) which would oversee the direction of the software business and approve or veto any major decisions (acquisitions, etc). They also agreed to make Ken a Vice Chairman of CUC and Member of the Office of the President, which would they said allow him to oversee the games division directly.
Ken agreed to these terms and the sale was announced on February 20th and closed on July 24th 1996. Sierra was bought for roughly $1.5 billion.
Ken Williams stepped down as CEO of Sierra the day the sale was closed in July 1996 as part of the deal, though he stayed as an employee of CUC, (and initially at Sierra as a Strategic Development Advistor) until November 1997.
Ken was named a Vice Chairman of the Board of Directors and Member of the Office of the President of CUC in September 1996. Michael Brochu now ran Sierra totally as President, though Ken gave strategic advice and still wrote for InterAction until the Summer 1997 issue.
Along with Sierra, CUC bought
Davidson & Associates, Inc. (The largest educational software company in the world, since Sierra was the largest entertainment software company in the world),
Blizzard (which was owned by Davidson at the time), and
Knowledge Adventure (another educational software company), all of those companies formed CUC Software--a separate division of CUC.
CUC put
Bob Davidson (CEO of Davidson & Associates) in charge of CUC Software, which meant Sierra's President (Michael Brochu) reported to him, and violated every one of the promises they made: The software board only met once, and Ken's titles gave him little real power over the direction of Sierra or CUC Software.
Davidson wanted to LITERALLY take more adult oriented Sierra products (specifically Leisure Suit Larry and Phantasmagoria) off store shelves and stop production of them because they felt they were ''evil''. Davidson also made Sierra publish games developed by companies Davidson owned (For example, in 1997 Sierra published
Stay Tooned which was developed by Funnybone Interactive, and they published
Diablo: Hellfire for Blizzard)
Ken successfully fought against Davidson trying to take Sierra's adult products off store shelves and he and Bob Davidson did not get along, which created intense friction in the company as you had two guys with two very different views wanting to control one company. This began to bleed over into Sierra's employees and Ken was getting a lot of phone calls from upset employees.
CUC didn't want Ken back in charge of Sierra, and Ken didn't want to be at Sierra with Bob Davidson as his boss anyway, and so he asked to be transferred out of the software division around the Spring of 1997 and spent his last 9 months at CUC in charge of developing CUC's internet retail website, NetMarket (a site very much like Amazon.com)
Not long after Ken left, Bob Davidson (who had his own disagreements with CUC) resigned from CUC and CUC placed
Chris MacLeod (a marketing executive who had no video game industry experience at all) as the new CEO of CUC Software, and thus the guy Michael Brochu and the other game companies reported to.
Michael Brochu resigned as Sierra's President in October 1997 and MacLeod responded by breaking Sierra into three business units run by three different guys, all of whom reported directly to him; Thus a man with no experience in the gaming industry was essentially the CEO of Sierra--Things were beginning to get bad.
On the outside however, it seemed things had continued as they had before the sale: Sierra bought three smaller companies (Books that Work, Berkley Systems and PyroTechnix) in April and December 1997, which made Sierra even larger, and in one of Ken's final acts with Sierra got exclusive rights to publish
Half Life, which ended up being a mega hit.
More to come, I'm a little tired.....