CD Software Sales $136 million in First Quarter, 1994

Sales up 366% From First Quarter 1993 and Exceed Very Strong Christmas
Season

August 22, 1994 (Washington, DC) - The Software Publishers Association
(SPA) today released figures from its CD Software Sales Report, which
tracks sales of software sold on Compact Disks. For the first quarter of
1994, total sales of 73 reporting companies were $135.8 million, a 366%
increase from $29.1 million in the first quarter, 1993. Unit sales were
4.44 million, a 256% increase from 1.25 million in the prior year's
quarter.

Information for the first quarter report is based on the aggregate sales
information of 73 participating companies, including Broderbund, Comptons
New Media, Knowledge Adventure, Microsoft, The Software Toolworks and
World Library. The companies provide sales information to the Chicago
accounting firm Ernst & Young, which prepares the report for the SPA.

The SPA's CD Software Sales Program differentiates between two different
sales channels: Sales to original equipment manufacturers (OEMs), who
bundle the CDs with hardware, and sales through other channels, including
all types of retail outlets and direct sales to end users. In Q1 '94,
non-OEM channels accounted for 52% of unit sales and 83% of revenues.

For most of the industry, the final calendar quarter has the highest sales
of the year. CD software sales in the final quarter of 1993 were $102
million on about 4 million disks, and accounted for half of sales the SPA
tracked in its CD Sales Program for all of 1993. Sales in the first
quarter of 1994 - $135.78 million on 4.44 million CDs - easily surpassed
even Q4 '93's very strong sales.

"The explosive first quarter growth was fueled by consumer purchases, not
by bundled sales," said David Tremblay, SPA Research Director. "Revenues
from bundled software doubled over the period, but sales through other
distribution channels increased by an astounding 550%. Consumers are still
receiving software when they buy CD drives. What our latest figures show
is that they are continuing to buy software even after they buy their CD
drive. With the tremendous growth forecast for the installed base of CD
drives, this segment of the software industry appears to be on a steep
growth curve."

Traditional personal computer operating system (DOS, Windows and Macintosh)
increased their share of sales in this quarter. Products that operate on
those platforms accounted for 95% of units and revenues in the first
quarter of 1994, up from 87% and 85%, respectively, in the first quarter
of 1993.

Consumer-oriented products dominated the sales results collected by the
SPA. Content-based products (encyclopedias, dictionaries, etc.), home
education products, and games and other home products accounted for 90% of
unit sales in Q1 '94, up slightly from 88% in Q1 '93. These three
consumer-oriented categories accounted for 76% of revenues in the Q1 '94,
down from 80% in Q1 '93. Although consumer products dominated, the highest
growth category was in a business-oriented category - languages and
programming tools. This category contains products such as C compilers,
programming tools, code libraries, and multimedia development tools. This
category grew from $1.5 million (5% of revenues) in Q1 '93 to $24.2
million (18% of revenues) in Q1 '94.

The Software Publishers Association is the principal trade association of
the PC software industry. Its 1,100 members represent the leading
publishers in the business, consumer, and education markets. The SPA has
offices in Washington, DC, and Paris, France. SPA press releases are
available on-line through CompuServe (GO:SPAFORUM).

Software Publishers Association
1730 M St, Northwest, Suite 700, Washington, D.C. 20036
202-452-1600,  Fax: 202-223-8756

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