The early days: On-Line Systems (1979-1982)
The history of Sierra On-Line starts back in the 70ies, a story of 2 ordinary people, living in Los Angeles, who dreamed about making enough money to, one day, move to a cabin in the woods. Ken Williams was a programmer, moving from one job to another, gaining experience on the way. His wife, Roberta, whom he met in high school and married at the early age of 19, stayed at home to take care of their son, D.J.
In 1979 Ken left a company called "Informatics", became an independent consultant and started working on a tax income program for the IBM mainframe. For the purpose of his independent business, he created a company under the name "On-Line Systems". One day he found a program, labeled "Adventure". It was the game "Collosal Caves", the very first adventure game ever made. While Ken had little interest in it, he figured Roberta would, since she always had a great passion for stories and fairytales, so he took the program home. Upto that point, Roberta, who had recently given birth to their second son, Chris, was not interested in computers at all. It took a bit of persuation before she sat at the terminal, which Ken brought home. However, once she started playing "Collosal Caves", she got immediately hooked to it. After finishing the game, she went to a computer game store in San Fernando Valley and bought all their adventure games, all of which were text adventures. While she enjoyed playing those games, she felt like she could do a better job and started becoming obsessed with the idea of creating her own adventure game.
When Ken's younger brother, Larry, brought an Apple II microcomputer at their home, Ken saw potential in the machine and, in January 1980, bought one for himself with the intention to build a FORTRAN compiler for it. While Roberta did not particularly enjoy the $2,000 that was spent on the Apple II, she also saw it as a golden opportunity to create her own adventure game. So, while sitting at her kitchen table, she started writing down her ideas and, a few weeks later, she had come up with a story: a murder mystery which takes place in an old house, a mixture between Agatha Christie's "Ten Little Indians" and the board game "Clue". She named the game "Mystery House". One thing would distinguish Mystery House from all other adventure games. It would, for the first time ever, support graphics!
She did not know how to program though, so she would have to convince Ken to help her out with it. Knowing that Ken was fully occupied with his FORTRAN project and that he would probably not take her ideas seriously, she lured him at their favourit steakhouse, "The Plank House", and, after a good meal and a couple of glasses of wine, explained her ideas to him. As Ken saw how passionate Roberta was about it and how the entire story was already worked out, he agreed to help her with the programming. Roberta would write the ingame text and design the graphics on a graphic tablet which Ken had brought home for her. Roberta's mother, Nova Heuer, would draw the cover for the game.
The game had no colors, no sound and no animations, only 70 simple 2-dimensional drawings, made by Roberta.
1983: The cartridge disaster
In the early 80s, a large number of companies fought to become the leaders in the new and very attractive market of home computing. However, while the the home computing market was growing fast, it was also still very small at that time.
Venture capitalists had seized some control of Sierra On-Line after lending Sierra On-Line money for the development of early games. They wanted the company to turn their attention towards cartridge-based computers, and invested lots of venture capital on the development of software for systems such as the Atari VCS, Coleco AdamColeco and VIC-20, systems which were about to fall out of fashion. These investments ten did not pan out, and in mid-1984 Sierra On-Line was on the brink of bankruptcy. Stuck with piles of cartridges for millions of dollars that no one wanted to buy, the history of Sierra On-Line nearly ended.
The resulting disaster forced Sierra to cut its number of employees from 120 to 30.
1989: Sierra On-Line goes public
1990: Sierra acquires Dynamix
1992: Sierra acquires Bright Star Technologies
Bright Star Technologies, an educational software firm founded by programmer Elon Gasper, was added in 1992 just as the educational software market was becoming the fastest-growing segment of the software industry. The timing was perfect for Sierra: according to Software Publishers of America, annual home educational software sales rose from $146 million to $243 million in 1993. Bright Star benefited from improved distribution and marketing, and Sierra was able to build on Bright Star's HyperAnimation, Talking Tiles, and Alphabet Blocks offerings. The success of this enterprise resulted in 19 new employees being hired at Bright Star in the first year, quadrupling the work force.
July 1996: CUC International Inc acquires Sierra On-Line
In 1996 Sierra was sold for $1.06 billion in stock to CUC International. The acquisition, announced on February 20, 1996, was completed on July 24, 1996. By then CUC (Comp-U-Card) International was a Stamford, Connecticut based, technology-driven retail and membership services company that provided access to travel, shopping, auto, dining, home improvement, financial and other services to nearly 40 million consumers worldwide. Chairman of CUC was Walter Forbes, one of the members of the board of Sierra.
1997-1998: Cendant Corp: CUC fraud revealed
Hospitality Franchise Systems (HFS)
Henry Silverman, a business executive and private equity investor created Hospitality Franchise Systems (HFS) as a vehicle to acquire a number of hotel franchises in the early 1990s. Among Silverman’s purchases were such brands as Ramada and Howard Johnson's as well as Days Inn, which he was able to buy for $290 million (almost half what he had sold it for) after the company had filed for bankruptcy in 1991. Silverman quickly took Hospitality Franchise Systems public in a 1992 IPO. HFS was among the fastest growing companies of its size in the 1990s and the company’s stock had risen from its IPO price of $4 per share to $77 per share by 1998. But then, Silverman would lose not only a large amount of his money, but also his reputation as a genius dealmaker due to one single transaction: the merger of HFS with CUC International in December 1997 to form the new company, Cendant Corp.
"Potential accounting irregularities"
Only months after the merger, on April 16 1998, Cendant announced that it needed to restate 1997 results, due to potential accounting irregularities in some CUC businesses, which Cendant discovered while preparing results for the first quarter. 1997's profit would be reduced by $100 to $115 million, or 11 to 13 cents a share from the previously announced $1 a share. The day of the announcement, Cendant shares lost nearly a third of value after NYSE market close, losing $8 billion in market cap. Henry Silverman, the chief executive of newly formed Cendant, lost about $500 million of his own holdings. Cendant stated that it was considering lawsuits against former CUC officers and others. Earlier in April, shortly before the annoucement of irregularities, Cendant's vice chairman and 2 executive vice presidents, all from CUC, were leaving to "pursue other interests".
January 1999: Havas acquires Sierra On-Line and its affiliates
On November 20, 1998, Cendant announced the sale of its entire consumer software division to Paris-based Havas S.A. (A division of Vivendi S.A.). With this sale, Sierra became a part of Havas Interactive, the interactive entertainment division of the company.
February 1999: Chainsaw Monday
On February 22, 1999, Sierra announced a major reorganization of the company, resulting in the shutdown of several of their development studios, cutbacks on others and the relocation of key projects and employees from those studios to Bellevue. About 250 people in total lost their jobs. Also shut down was Yosemite Entertainment. They sold the rights of Headgate Studios back to the original owner. With the exception of the warehouse and distribution department, the entire studio was shut down. Game designers Al Lowe and Scott Murphy were laid off. Lowe had just started work on Leisure Suit Larry 8. Murphy was involved in a Space Quest 7 project at the time. Layoffs continued on March 1, when Sierra terminated 30 employees at the previously unaffected Dynamix, 15 percent of their workforce.