SMALL BUSINESS PROFILE: Reality Programming

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Reality Programming

After a couple fitful starts, Ariella Lehrer is on a roll with her life-based computer simulation games, including licensing rights to a major TV show.

By CHRISTOPHER KEOUGH

Staff Reporter





Like a character in “Emergency Room,” Ariella Lehrer’s life in computer games has been revived.

After forgoing a career in academia she has a Ph.D. in cognitive psychology from Claremont Graduate University Lehrer made the move to educational software. She consulted with IBM Corp., Learning Co. and Walt Disney Co. before realizing it left her unfulfilled.

“I got the bug most people in consulting do,” said Lehrer, in her offices along Hollywood Boulevard. “I wanted to create.”

The result, after one ill-fated attempt, is four-year-old Legacy Interactive Inc., a game maker trying to crack a market dominated by Electronic Arts and locally based THQ Inc. and Activision Inc.

She and two programmers with whom she had worked while consulting recorded quick successes with titles that included “Emergency Room” and “Mickey’s Crossword Puzzle Machine” for Disney. In 1996, Legacy Software scored a contract to develop four games for IBM. On the strength of that, the company went public, raising $4.5 million.

But IBM threw cold water on the company’s expansion plans when, in 1997, it abandoned consumer entertainment software and terminated Legacy’s contract. A Florida startup called Videocall International Corp. acquired Legacy Software in a reverse public offering. Lehrer walked away with $2 million and the rights to the name Legacy and her pride and joy, the real-life simulation game “Emergency Room.” “I knew that product had legs and we could sell sequels and make money,” Lehrer said.

In 1998, she launched Legacy Interactive Corp. and a few months later the company shipped “Emergency Room 2.” There are now seven games in the series, which lets the player treat patients in virtual emergency situations.

Subsequent real-life simulation products followed, including “Vet Emergency” (the animal world version of the popular title) and “Moon Tycoon.” This fall, “Combat Medic” and the company’s first licensed product, “Law & Order,” will hit the market.

“It’s so business development 101: you start in a niche you can own and push that niche as far as you can and then try to expand the niche evolve as a company,” Lehrer said.

The license for “Law & Order,” which was negotiated over 18 months with producer Studios USA, was a big deal in an industry that’s becoming more license-driven. She wouldn’t divulge the price she paid for the rights to the title.

“I negotiated for the (television show) ‘CSI’ license,” she said by way of comparison. “We didn’t get that license, but I can tell you it was over $500,000.”

Not afraid to ask questions

Lehrer pins a lot of the company’s success on a willingness to talk to other software companies and ask developers and designers for opinions. By bypassing more expensive market research, Lehrer is able to keep costs lower.

“In lieu of having the sophisticated (development) model we take our ideas out there and show them to as many people as possible,” she said.

Lehrer said she could take nascent products to the competition without fear of losing intellectual property because Legacy’s product line flies under the radar of bigger software companies.

“Partly, we’re in a category that I think has been overlooked by the big companies,” she said. “They’re in the first-person, ‘shooter’ business. That’s what’s going to sell a million units. We can sell a couple hundred thousand units because our costs are less.”

The company lost less than $100,000 in 2001, though Lehrer said she expected to be in the black this year.

Billy Pidgeon, an analyst at Jupiter Media Metrix, said Legacy’s focus on real-life games provides a niche, though he adds that the audience is limited. “As long as they stay small they should continue to do well,” Pidgeon said.

Lehrer thinks “Law & Order” is a significant step toward a jump in revenues. To increase the chances, she’s initiating a marketing campaign that will include television ads. Legacy Interactive also is looking to cross over from the PC platform to creating console games for the Microsoft Corp. Xbox, Sony Corp.’s Playstation 2 and Nintendo of America Inc.’s GameCube.

Legacy Interactive also is working to adapt its simulation engine for corporate training. The first application, which already is in development with American Honda Motor Co. Inc., would simulate a dealer showroom for salesmen to practice and hone their technique.


Legacy Interactive Inc.

Year Founded: 1998

Core Business: Development of reality-based PC games.

Revenues in 1999: $2.6 million

Revenues in 2001: $4.5 million

Employees in 1999: 2

Employees in 2001: 18

Goal: To reach profitability in 2002, expanding to console gaming platforms and sign more licenses.

Driving force: A fascination with computer games.

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