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SoftKey

SoftKey
SoftKey Software Products, Inc.
21602 North Third Avenue
Phoenix, AZ 85027
USA
Year Founded:
Year Defunct:
1983
2001
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SoftKey International was a publisher and distributor of CD-ROM based personal computer software for Windows and Macintosh computers during the 1990s. Their products typically consisted of software intended for home audiences, especially compilation discs containing various freeware or shareware game software. SoftKey enjoyed great success by offering "jewel-case only" products, which they dubbed their 'Platinum' line.

Canadian entrepreneur and investor Kevin O'Leary, a former Canadian TV sports producer, started Softkey International in his living room on a $10,000 investment. As a repackager of high-end business software for the consumer market, Softkey succeeded in its mission to become "the Campbell's Soup of software". By 1994, Softkey was a billion-dollar consolidator in the educational software market, acquiring no less than sixty rivals, such as WordStar, Broderbund and Spinnaker Software. It then moved to Boston and took the name of one of its acquisitions, The Learning Company (TLC).

In 1995, SoftKey introduced a number of new children's educational software titles, branded under the KeyKids line.

Mattel bought in with great enthusiasm at the top of the market in 1999 at US$3.65B, but ultimately found itself losing money with 467 software titles. This acquisition was intended to broaden Mattel's product line and help Mattel sell more products that appeal to boys, but TLC began reporting unexpected losses before the deal was even completed. The deal was supposed to immediately add $50 million annually to Mattel's bottom line. The company instead lost $82.4 million in that fiscal year because of a number of problems with the acquisition, including a loss of a key distribution deal and a high return of unsold products from retailers. In October, Mattel announced that its earnings would fall well below expectations, prompting the departure one month later of TLC's O'Leary and another founder. Mattel ultimately sold the company to The Gores Group, LLC, (GTG) for a share of future profits. GTG said of TLC's business structure, "[it] was a textbook example of a business built mostly by cobbled-together acquisitions, which were then purchased by a larger company with little idea of how to make the pieces fit together." The company was quickly turned around. Said James Bailey, President of GTG, "there were seven separate Internet initiatives, all run by different people. Some of these people had never met each other, even though they worked in the same building." In 2001, Gores sold The Learning Company's entertainment holdings to Ubisoft, and most of the other holdings to Irish company Riverdeep.