CD Software Sales $140 million in Second Quarter, 1994
Sales up 421% From Second Quarter 1993

November 1, 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 second quarter of
1994, total sales of reporting companies were $139.6 million, a 421%
increase from $26.8 million in the second quarter, 1993. Unit sales were
3.97 million, a 257% increase from 1.11 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 Br0derbund, Comptons
New Media, Knowledge Adventure, Microsoft, Mindscape 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. Although
growing rapidly in absolute terms, OEM sales have been steadily falling as
a percent of overall sales. In Q2 '94, OEM channels accounted for 44% of
unit sales and only 15% of revenues. In the second quarter of 1993, OEM
channels accounted for 60% of units and 35% of revenues.

"Overall revenue growth for the second quarter was nearly half-again faster
than the units growth," said David Tremblay, SPA Research Director. "Over
the period, the average wholesale per CD went from about $24 to about $35.
For the most part, this was not due to price increases, but to shifts in
the mix of channels and types of products sold. Compared with Q2 '93, the
mix in Q2 '94 was much more heavily weighted toward higher average priced
non-OEM channels. In addition, business products, with average prices 5 to
10 times higher than other categories, accounted for a higher proportion
of sales in the recent quarter than they had in the prior. Taken together,
these shifts leveraged very strong units growth to even more spectacular
revenue growth."

Consumer-oriented products dominated the sales results collected by the
SPA, but business products did make head-way in the second quarter.
Content-based products (encyclopedias, dictionaries, etc.), home education
products, and games and other home products were the only categories which
accounted for at least 10% of unit sales Q2 '94, the same group as in Q2
'93. Taken all together, these three categories accounted for 88% of units
in Q2 '94, and 89% in Q2 '93. These three consumer-oriented categories
accounted for 62% of revenues in the Q2 '94, down from 82% in Q2 '93, as
the languages & tools category and the business products category
picked-up strength. Together, the languages & tools and business products
categories accounted for about one-third of revenues in Q2 '94, compared
to under 10% in Q2 '93.

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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