Focus Story: Clean and Dark
 Companies
Enteractive Distribution, Business Logic, Dark Basic Software
Products
The Ultra series, including Ultra WinCleaner and Ultra Anti-Virus.
Dark Basic
Marketing Overview
Entertactive Distribution, LLC was founded in 1997 and is an interesting hybrid of software publisher and affiliate label distributor. The company is the brainchild of Howard Luxenburg, a veteran of retail software marketing veteran with over 19 years of industry experience. Enteractive publishes its own titles, but its main business is a variant of affiliate label publishing. The company's business model is focused around providing publishers of retail products, particularly international developers, with an opportunity to enter the US retail software market.
The channel is historically reluctant to accept new products from small, one-or-two-product firms. Affiliating with Enteractive allows such companies to enter the market under the umbrella of a company with an established sales track record and proven channel expertise. Enteractive's approach has been a success; with sales increasing from $0 to several million dollars in revenue over the six years of the company's existence. And Enteractive, though it is careful about the products it finally accepts, is always actively looking for new products it can add to its affiliate label portfolio, unlike many channel resellers and distributors.
Enteractive's model typically splits the revenue on its affiliate titles on a 70% to 30% ratio, with the 70% going to the affiliate. Revenues are calculated on title prices before channel markup and after all channel MDF overhead has been accounted for. The publisher is normally responsible for building final product and shipping it to the Enteractive warehouse. The publisher also undertakes responsibility for end-user marketing. (Enteractive will provide assistance and recommendations in this area if requested by the developer.) Enteractive is responsible for all channel sales and marketing programs, and also handles returns, swap outs and similar tasks. The company works closely with Channel Sources, a MR company that focuses on the retail market.
Extractive's first affiliate success was with its "Ultra" series of Windows utilities, including Ultra WinCleaner, Ultra Anti-Virus, and Ultra Destroy-It as well as its suite of the aforementioned products. The utilities market is fiercely competitive, with giants Symantec and McAfee dominating this category. Enteractive's Ultra series, developed by Business Logic, a Canadian firm, has nonetheless carved out a niche for itself by offering high quality products that match the key functionality of its larger rivals but cost 20% to 40% less. (Ultra Anti-Virus, for example has an ESP of $29.95.) The products are clad in distinctive bright red and yellow "Tide detergent" style packaging and are consistent sellers in such outlets as Staples, Wal-Mart, Office Depot, Circuit City, and CompUSA.
The company has had its setbacks. One of its great disappointments was a typing program developed by a French company designed to compete with perennial favorite Mavis Bacon. Despite the high quality of the product and enthusiastic acceptance by users during testing, the product failed to make much impact on the market. Judging that the Mavis brand was drowning out the product's presence, Enteractive recommended the developer license the popular cartoon character "Garfield" in order to help the product "claw" its way back on retail shelves. Such deals are not cheap, costing typically a 5% to 15% royalty on each sale. Advances range between $25K to $100K. Nonetheless, the developer decided to make the investment and the package will be reintroduced as Garfield's Typing Pal Junior.
Having established itself as successful channel retailer, Enteractive was approached in 2001 by an English developer, Dark Basic Software, with an intriguing product, Dark Basic. Dark Basic is a development language/platform optimized for 3-D game development. The program allows the novice fragger or real time strategy addict to take command and build a wide variety of different games, including first person shooters, racing simulators, RPG adventures, and sports titles.
Enteractive's first response to Dark Basic was that the product fit outside the parameters of the market categories they understood and felt comfortable with. It seemed to make more sense to sell a development language through a cataloger such as Programmer's Paradise and via established direct channels for this category of product. On further reflection, and after discussing the product with Channel Sources, Enteractive changed its mind. Dark Basic, with an ESP of $69.95, was aimed both at gamers and people who like to write games, who also are usually gamers. Research indicated that both audiences like to go to stores to buy the latest gaming titles, hang out in retailers, test out game consoles, and "grok" the latest in high-tech. Dark Basic seemed to be a better fit to the retail channel than first thought. Enteractive took the product on.
Outcome
Dark Basic was a solid channel success. The product exceeded sales projections, selling well in such critical venues as CompUSA. Based on its success, Enteractive now plans to release Dark Basic Professional, a major upgrade of the original. The new release will have an ESP of $99.95.
Lessons
Enteractive's history illustrates that affiliate label relationships can cover a wide variety of different types and revenue arrangements. The company's success has been based on treating its developer's fairly, coaching them on effective marketing techniques and requirements, and being willing to take a chance on new products when it makes sense. Of course, a publisher looking to work with a company such Enteractive must be willing to shoulder a fair amount of the marketing burden, including building packaging and executing end-user marketing. The reward for this is the ability to make more money than is typical in affiliate label relationships.
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