Sierra-Online Case Essay Example

were generated based on early subscription numbers. Meanwhile, King Quest VI experienced a one-month delay from its initial September launch date, which could have a detrimental effect on marketing efforts and consumer awareness during the holiday season. Sierra On-Line's Annual Report (Exhibit 3) discusses exceptions to their standard amortization period, including a lengthening for CD-based products.

Sierra explains that decreasing the development period for certain products lowers the amortized costs, leading to increased capitalization and net revenues. Moreover, they have simultaneously increased the number of titles developed to adapt to market changes and consumer demands. Successful computer entertainment and educational software companies require creative, high-quality products that can be quickly brought to market. To achieve this, the focus should be on longer development periods from conception to creation and on swift production once an idea has been deemed appropriate.

Sierra On-Line stretched its development timeline by delaying some of its titles, using accounting methods that prioritized a favorable financial picture over the overall business economy. This tactic deceived investors and analysts with expectations of future sales and subscriptions.