Computer Chronicles Revisited 97 — Byline, Higgins, Julie, and Mr. Gameshow

The November 1987 edition of the Computer Chronicles holiday buyers’ guide began with Gary Kildall showing Stewart Cheifet the Sony XV-T600 Picture Computer, a $600 machine that added pictures and titles to home VCR movies. It also came with a small handheld scanner. Kildall demonstrated how you could place the scanner over a black-and-white drawing and digitize the image so it would appear on an attached television screen. The controls on the scanner could then be used to fill in the colors on the image. (You could also use a trackball, Kildall noted.) The color palette appeared on the lower right-hand corner of the television screen. The completed color image was then added on top of some video of a recent trip that Kildall had taken to New York City.

Computer Retailers Nervously Optimistic

Before spending the remainder of the episode on holiday gift recommendations, there was first the obligatory remote segment of Wendy Woods narrating B-roll footage taken at a local mall in northern California. (My best guess is that it was the Bay Fair Mall in San Leandro.) Woods said that for almost every retail store, Christmas was the biggest selling event of the year. The colorful decorations were vivid reminders of the commercial importance of the holidays, and 1987 was no exception.

Nervous computer retailers were watching carefully to see if Wall Street’s October crash was a harbinger of bad times, Woods said. But that didn’t seem to be the case, at least for now. Daniel B. Williams, vice president of the retailer Home Computing Centers, told Woods that so far the market crash hadn’t put a dent in his business. His customers didn’t even mention it, likely because most of them didn’t have significant money tied up in the stock market to begin with. Indeed, Williams said November was a strong month for sales so far and that business had almost doubled within the past three days. So people were out at the stores and ready to buy.

Woods said that Christmas buying had a big impact on both sales volume and on the kinds of products that sold. Computer games, for example, represented about 75 percent of sales at this particular Home Computing Center store. But the popularity of entertainment software didn’t mean that Yuletide shoppers were less sophisticated. They seemed to be getting more selective. Williams added that many customers were now buying a second machine and trading up–or trading in–older machines.

Computer Gifts for the Business Traveler (Without a Secretary)

Back in the studio, Wendy Woods and George Morrow joined Cheifet and Kildall for the annual holiday round table. Morrow began by recommending Byline, a $300 desktop publishing package from Ashton-Tate, the company best known for the database program dBASE III. Morrow said he liked Byline because it allowed you to import files from other programs like dBASE III or a spreadsheet, format the data as you wanted, and publish a final document without altering the original files. Morrow felt this would become the standard for “civilized desktop publishing” in the future.

Morrow had two more recommendations for this round. The first was LapLink, a $100 software package that made it possible to transfer files between different PCs using an included serial cable. The software came on both 5.25-inch and 3.5-inch floppy disks. Finally, Morrow demonstrated Higgins on a portable computer. Higgins was a $200 organizer application published by Conetic Systems. Morrow showed how Higgins kept his appointment schedule, calendar, and telephone directory. It could even automatically dial someone directly from the directory. Morrow said it was the best piece of personal productivity software that he had seen. (He added that Higgins had taken the place of the secretary he could no longer afford.)

Moving on, Gary Kildall continued on his scanner kick by recommending the Complete Hand Scanner, a $249 portable device from Complete PC. Kildall said this device offered a low-cost way of getting images into a computer system. He demonstrated by scanning a Far Side cartoon by Gary Larson into an IBM PC. (Larson probably would not have been pleased by Gary’s brazen copyright infringement.) Kildall said the included software could also be used to manipulate the image and add text.

Next, Cheifet’s recommendations focused on mobile computing, something he that had a lot of experience with in these days as he regularly commuted from Pennsylvania to California to record Computer Chronicles. First, he showed the relatively low-cost Toshiba T-1000 laptop, which retailed for $800. (Morrow said that you could find them as cheap as $650 in Computer Shopper.) Cheifet said he liked the T-1000 because it was the smallest and lightest laptop he had ever used, weighing only about six pounds (2.72 kg). He noted there were limitations–the machine only had one disk drive, the LCD screen was not backlit, and the battery could not replaced–but it was a fully IBM-compatible computer that you could stick in your briefcase. Morrow asked about the battery life. Cheifet said it was about four hours, but if you added accessories like a modem or a RAM card that would eat up the battery quicker.

And speaking of conserving laptop battery power, Cheifet showed off his next recommendation–the Worldport 1200, a portable modem that ran off its own 9-volt battery and sold for between $150 and $200. Cheifet said the WorldPort worked with any computer and plugged right into his T-1000. He also showed a portable inkjet printer, the Diconix 150, which ran on rechargeable C-cell batteries and retailed for between $300 and $400. Morrow quipped that a year from now, you would see a similar portable product that would combine the functions of a printer, scaner, and fax machine.

Cheifet wrapped up by showing some smaller computer-related accessories for business travelers. The first was a $45 portable telephone jack that plugged into a hotel telephone receiver. This allowed you to connect a modem even if the hotel room’s phone was hardwired to the wall. Finally, he showed a $19.95 vinyl sleeve that was used to store floppy disks.

Fears of a (Toy) Bot Planet

Continuing her robotic toy arc from the previous year’s holiday buyers guide, Wendy Woods showed off Julie, a $100 talking doll from California-based toy company Worlds of Wonder. Woods noted the company marketed Julie as “the world’s most sophisticated doll.” Inside of Julie was a computer chip with 64KB of memory and a voice synthesizer. Julie was capable of speech recognition and could learn “secret” words. Woods attempted to have a conversation with Julie, which didn’t go so well. (Woods quipped Julie didn’t listen to her like most children.)

Julie also came with a built-in motion detector, Woods said. This meant Julie recognized when she was being moved and could vocalize that fact to a child. There was also a temperature sensor, so if you were to say put Julie in the freezer–which Woods said she did momentarily–she would tell you she was getting cold. Similarly, there was a light detector so Julie could know and say if it was getting dark. There was also an included picture book with various pads. Placing Julie’s hand on a pad would cause her to say the name of the adjacent item pictured.

After the break, the group returned for a final round of gift recommendations. Woods continued on theme and presented Mr. Gameshow, a $100 talking robot toy from Galoob. Mr. Gameshow was a 14-inch plastic figure of a white male game show host standing behind a podium on top of a computer base. Woods explained that Mr. Gameshow had speech synthesis and a 700-phrase vocabulary. The toy was designed to play four different games. Depending on the game, you used a letter touchpad on the base of the unit. The talking host would then give insults or compliments to the player depending on whether they did well in a game or not. The product also came with play money and an audio cassette with additional games.

Cheifet asked about the age level for Mr. Gameshow. Woods said she had a teenage babysitter who couldn’t stand the thing, but her father loved it. Morrow said that he found Mr. Gameshow rather interesting despite the fact he didn’t care for actual television game shows. Cheifet observed it was basically a computer game without the computer. Woods said that it was more a demonstration of what modern electronics was doing for the toy industry.

Animation and Artificial Intelligence

Moving back to Kildall, he recommended VideoWorks II, a $200 software package for the Macintosh published by MacroMind that was used to make animated presentations. He said it was based on the same principles as old-style animation where you laid out scenes by arranging keyframes. He showed a demonstration running on a Macintosh II depicting a group of race cars at a track. Cheifet noted that while this demo was silent and in black-and-white, VideoWorks II was capable of producing animations with sound and color.

Cheifet then showed off some inexpensive novelty software packages. The first was Ask God, a $50 program that claimed to use “artificial intelligence” to help you study the Bible. Basically, you could enter a natural-language query about a particular subject in the Bible, such as, “I want to know the meaning of the abundant life.” The program would then pull every phrase from the Bible that talked about the abundant life. (Morrow jokingly asked if any churches had actually blessed the software.)

The next item Cheifet displayed was Daily Features, a $15 program that provided quotations, vocabulary words, and trivia questions when you turned on the computer each day. He said it would make a good gift for a secretary who used a computer. Cheifet also showed a $6.95 program called “Fortune Cookies” that performed a similar function by providing daily fortune cookie slogans.

Finally, Kildall demonstrated Business Class for the Macintosh II. This was a $50 package from Activision–now known as Mediagenic–designed to help business travelers identify customs in various foreign countries. For example, if you clicked on London, it would bring up a screen detailing the currency exchange rate, a list of major airlines serving the city, local hospitals, and so forth. Morrow noted that Business Class required Apple’s HyperCard to run.

Paul’s Picks for the ‘87 Holidays

While he didn’t appear with the main panel this year, Paul Schindler used his customary software review segment during “Random Access” to recommend several holiday gifts of his own. The first was a $10 program called ‘Twas the Night Before Christmas published by Simon & Schuster. This included an animated musical Christmas card that played “Jingle Bells,” provided a re-telling of the eponymous story, offered a simple Christmas-themed puzzle game, and allowed children to write and print out letters to Santa.

Next, Schindler recommended an update to an item Stewart Cheifet discussed in a previous buyers’ guide show, Broderbund’s Science Toolkit. Schindler talked about a $40 add-on for Toolkit called Body Module." He said it was well-written software that was both fun and educational. Specifically, Body Module let you measure things such as your heart rate and the volume of air in your lungs.

Moving on to more expensive offerings, Schindler said that at the “outer limits of reasonable pricing” was Microsoft Bookshelf, a $300 CD-ROM compilation of reference books. He also recommended two luxury hardware items. The first was a $500 fax card from The Complete PC. The other was a $1,495 Dest scanner that could digitize any document and store it in on a computer.

Byline Proved to Be Short Lived

Let’s start with one of George Morrow’s recommendations, Byline. Ken Skier authored Byline through his Massachusetts-based company, Skisoft, Inc. Skier began his career as a writer. As an undergraduate at MIT in the 1970s he founded a creative writing program at the school and later served as a senior lecturer. Following a three-year stint at Wang Laboratories, Skier founded Skisoft in 1982 and authored a series of early computer programming books, including Beyond Games: Systems Software for Your 6502 Personal Computer.

Skisoft’s early software products focused primarily on word processing. In 1986, Skier demonstrated an early prototype of what became Byline to select reporters at COMDEX. A year later, Ashton-Tate released the finished program at an initial retail price of $395.

To be clear, Byline was never meant to compete with top-shelf desktop publishing packages like PageMaker or Ventura Publisher. Rather, Skier’s software offered a relatively inexpensive way to take documents designed in popular business applications like WordPerfect or Lotus 1-2-3 and apply some additional formatting. Byline did not have a graphical interface, and it probably wasn’t seen by most consumers as the “civilized” desktop publishing alternative that George Morrow made it out to be.

In fact, Byline had a relatively short life cycle. Although PC World said Byline had a “fairly successful” launch, plans to release an updated version never materialized. Ashton-Tate had announced Byline 2.0 at the fall 1988 COMDEX show in Las Vegas with a promised ship date of June 1989. But in November 1989, the company canceled the project. One Ashton-Tate executive told Wendy Woods’ NewsBytes that there were “insurmountable problems” with the release, notably difficulties with writing multiple different printer drivers. Additionally, Ashton-Tate CEO Ed Esber, Jr., told InfoWorld the cancellation was due to August layoffs at the company that had “swept aside many small projects.”

Worlds of Wonder’s Not So Wonderful Bankruptcy

I feel like the big takeaway from this episode involves a computer-related product that was not mentioned at all on the program–the Nintendo Entertainment System (NES). Although Nintendo of America first launched the North American version of the Nintendo Family Computer through a New York City-only test market in late 1985 before going national in 1986, it was 1987 that saw the NES start to reach the height of its popularity. The industry publication Toy & Hobby World reported in November 1987 that the NES was the top-selling toy that year in terms of the number of units sold.

And yet the Computer Chronicles gang seem too enamored with computer-driven robot toys like Worlds of Wonder’s Julie and Galoob’s Mr. Gameshow to notice the NES. In retrospect, this was funny for a couple of reasons. First, neither of the toys ended up holding a candle to the NES, which sold about 4 million units in 1987 alone. And second, both Worlds of Wonder and Galoob ended up playing supporting roles in the success of the NES, although neither company survived in the long term.

Let’s start with Worlds of Wonder. Donald Kingsborough, a former sales executive with the original Atari, Inc., founded Worlds of Wonder (WOW) in February 1985 to market technology-driven toys. WOW saw its first big hit during the 1985 holiday season with Teddy Ruxpin, an animatronic teddy bear created by former Walt Disney designer Earl Forsse that was able to “talk” thanks to a built-in cassette player. Frosse’s company, Alchemy II, licensed Teddy Ruxpin to Worlds of Wonder, which sold 41,000 units of the $79 bear in September 1985, its first month on the market. During that first holiday season, WOW shipped an additional 75,000 units. By the end of 1986, that figure had ballooned to 1.5 million.

Kingsborough wasted no time cashing in on his hit toy. Worlds of Wonder went public less than a year after the Teddy Ruxpin launch. The stock opened at $18 per share at its initial offering on June 20, 1986–raising nearly $112 million in capital–and ended the day at $29, marking the biggest debut for a technology stock in nearly six years. Kingsborough personally made at least $7 million that day by selling some of his own stock while still retaining about 20 percent of the company, according to Knight-Ridder. Of course, WOW’s first-day success would prove to be yet another case of irrational exuberance on the part of the stock market. Kingsborough’s company would never see a trading day to match that opening–at least not a positive one–and within 18 months, WOW would crash and burn in spectacular fashion.

To be fair, WOW was not a one-hit wonder (forgive the pun). Kingsborough followed up Teddy Ruxpin with the infrared toy gun game Lazer Tag in 1986, which also proved to be a substantial hit. It was also in 1986 that Kingsborough returned to his roots in the video game industry by agreeing to serve as the North American retail distributor for the Nintendo Entertainment System. As video game historian Alexander Smith recently explained to me in a conversation on Discord, Kingsborough and his top sales executives, Mark Bradlee and Jim Whims, essentially “taught Nintendo everything they needed to know about retail” in the U.S. market. In effect, Kingsborough and WOW leveraged the popularity of Teddy Ruxpin and Lazer Tag to coax retailers still smarting from the 1982-83 collapse of the Atari-led home video game market into carrying the Nintendo Entertainment System in their stores. And that strategy ended up paying off big-time for both the retailers and Nintendo.

Unfortunately, it didn’t do much for Worlds of Wonder. A couple of weeks after Wendy Woods gushed about WOW’s latest talking doll offering, Julie, the company filed for Chapter 11 bankruptcy protection. What went wrong? Well the first culprit was Julie herself. Kingsborough thought his talking doll would produce a third consecutive Christmas hit for WOW. After all, this new doll was far more technologically advanced than Teddy Ruxpin. But while it impressed the tech-savvy Computer Chronicles panel, it didn’t impress parents faced with a sticker price as high as $125 in some stores. You could have bought 10 “analog” Barbie dolls from Mattel for that same price. For that mater, you could have bought an NES, as the price of the base system had come down to around $80 by the 1987 holiday season.

WOW’s next problem was distribution. Denise Gellene, writing for the Los Angeles Times in December 1987, reported that WOW struggled to keep up with retailer demand. Its talking doll release for the 1986 holiday season, Pamela, was delivered late to toy stores. And even many shipments of Lazer Tag failed to arrive until that Christmas that year. The same delivery woes plagued Julie, which arrived too late for many retailers to effectively move the expensive dolls.

At the same time, Teddy Ruxpin’s success had inspired a lot of other companies to jump on board the talking-doll bandwagon. There was Axlon’s A.G. Bear, which Wendy Woods demonstrated in the first Computer Chronicles holiday episode back in 1985. (Axlon, of course, was owned by another Atari veteran, company co-founder Nolan Bushnell.) The more established toy companies like Mattel and Coleco also had their own talking dolls in stores for the 1987 holiday season. And according to the Times’ Gellene, none of them sold especially well, largely because parents thought they were all too expensive.

And even when WOW managed to ship and sell its products, its costs were high, in large part because Kingsborough had to spend millions of dollars promoting the toys. WOW reported a $130 million net loss in 1987. More problematic, the company carried around $300 million in debts, including $80 million from bond offering made in June 1987 to bring in much needed short-term cash. On top of that, WOW had around $130 million in unsold inventory when it filed for Chapter 11. The company’s creditors promptly forced Kingsborough to try and stem the bleeding by cutting prices drastically on the unsold inventory and laying off half of the company’s staff.

WOW limped along in bankruptcy court throughout 1988 and early 1989. In April 1988, the creditors forced Kingsborough out as CEO and replaced him with a management consultant, Stephen J. Hopkins. Hopkins brought in a former Mattel executive, Loewn Hldebrand, to try and clean up Kingsborough’s mess. Hilderbrand decided to move away from the $100-plus electronic toys and take the company back to “toy basics”, as it were. For the 1988 holiday season, WOW’s most notable new item was Germs, a collection of 12 different rubber toy germs that sold for around $3 each. (This followed yet another industry fad, so-called gross-out toys.)

Still in bankruptcy heading into 1989, WOW finally found a trio of buyers: Franklyn S. Barry, Jr., David Edelman, and Eli Jacobs. Barry was the former president of the Illinois-based toy company Fisher-Price. Edelman, a Buffalo-based businessman, came from the computer industry. Jacobs, a financier who had quietly built a business empire through leveraged buyouts and junk bonds, had also purchased a controlling interest in the Baltimore Orioles baseball team that same year.

The new ownership group named Joshua Denham as WOW’s CEO. Denham had previously served as president of Mattel Electronics before that business collapsed during the previously mentioned 1982-83 video game crash. Denham remained in direct control of WoW until December 1990, when he assumed an executive position with the parent company that Edelman and Barry had established to oversee their various businesses, including another toy company they had purchased, New York-based Lewco Corporation. Keith E. Schaefer, a vice president with NEC Technologies, was then tapped as WOW’s final CEO.

Schaefer’s tenure proved to be as brief and unsuccessful as those of his predecessors. In September 1991, Rhode Island-based toy giant Hasbro snatched the Teddy Ruxpin rights away from WOW after six years. A spokesperson for the rights owner, Alchemy II, told the press that WOW no longer had the resources to market the still-popular talking bear. A few weeks later, Barry and Edelman confirmed that they reached a deal to sell their stake in WOW to Jacobs. Edelman told the Buffalo News that they had pinned their hopes for a WOW rebound on the 1990 holiday season, which “turned into the worst toy season that the toy industry has had in the last 10 to 15 years.”

Meanwhile, Eli Jacobs’ financial empire was starting to crumble under the weight of too many junk bonds and leveraged buyouts. In 1993, Jacobs’ creditors forced him into bankruptcy and he ended up selling the Orioles at a bankruptcy auction to attorney Peter Angelos. It would seem that WOW got lost in the shuffle of this collapse. A local newspaper in Fremont, California, where WOW was based, reported that the company closed its doors for good sometime in October 1991, not long after losing the Teddy Ruxpin license.

Mr. Gameshow Didn’t Quite Sink Galoob–and Neither Did Nintendo

On August 4, 1971, San Francisco businessman Lewis Galoob died at the age of 52. In 1954, Galoob and his wife Barbara founded Lewis Galoob Toys, a small importer of toys and stationary items. The Galoobs formally incorporated the business in November 1968. In its early days, Lewis Galoob Toys’ most notable success came from distributing a Japanese toy called the Jolly Chimp, i.e., the cymbal-banging monkey.

Following Lewis Galoob’s death, his 21-year-old son David Galoob dropped out of film school to assume control of the business. The younger Galoob struggled to keep the company afloat while transitioning it from a toy importer to a toy manufacturer. Lewis Galoob Toys started to see some measure of success in the late 1970s after releasing a line of radio-controlled cars and trucks. The company took its next step forward in the early 1980s when it produced a successful line of action figures and accessories based on the NBC television program The A-Team, which notably featured breakout star Laurence “Mr. T” Tureaud.

Encouraged by the popularity of its Mr. T action figures, Galoob made a modest initial public offering in September 1984, which raised $12.5 million. But once the Mr. T fad inevitably passed, Galoob struggled to come up with its next big hit. The company decided to enter the talking-doll boom in 1986 with Baby Talk, which sold reasonably well. But then David Galoob decided to double-down on the electronic toy fad by making Mr. Gameshow the focus of the company’s 1987 holiday season. That would prove to be a major mistake.

Mr. Gameshow was the brainchild of Jeffrey Breslow, Howard Morrison, and Rouben Terzian, a trio of legendary toy designers then with the Chicago firm of Marvin Glass & Associates. (The three would leave Marvin Glass in 1988 to start their own firm, which is still in business today under the name Big Monster Toys.) David Galoob told the Associated Press’ Joyce Rosenberg that when the Marvin Glass team showed him the Mr. Gameshow prototype, it took him “about three seconds” to decide Galoob had to produce it.

Galoob started rolling out Mr. Gameshow to the press at the February 1987 American International Toy Fair in New York City. The reaction was mixed. Henry Schulman of the Oakland Tribune said the plastic game show host–named “Gus Glitz” by Galoob marketing–may have come with a 700-word vocabulary, but that was “about 699 too many.” And while Galoob claimed Mr. Gameshow was the “hottest new product among buyers” at Toy Fair, one buyer from Texas told Schulman that he was still unsure about carrying a $100 toy.

But overall, the press and industry analyst reviews of Mr. Gameshow were largely positive heading into the 1987 holiday season. Mr. Gameshow was essentially a talking doll combined with a series of simple “Wheel of Fortune”-style games, combining the latest fad with a more traditional category. Yet like Worlds of Wonder’s Julie, Mr. Gameshow sold at a premium price during a holiday season dominated by the NES and the return of video games, which the press and analyst community continued to largely treat as a dead market.

Put simply, Mr. Gameshow was a disaster for Galoob. After the holiday season came and went, retailers slashed the price from $100 to as low as $30. Galoob reported a $25 million loss for the year and had to negotiate two new lines of credit with its bank just to stay afloat. David Galoob realized he’d made a mistake betting the company on expensive electronic toys, so he decided to refocus on a less-expsneive category that had been successful for Galoob in the past: cars.

More specifically, very small and inexpensive cars. It turned out that another product David Galoob had licensed just before the 1987 holiday season was Micro Machines, a line of collectible toy cars that were notably smaller than the average toy vehicles of the time. Clemens V. Hedeen Jr., a Wisconsin attorney and toy store owner, came up with the idea for Micro Machines. Hedeen recalled to the Green Bay Press Gazette in 2018 that he was talking to a Galoob representative about developing a “new, reasonably priced car line” at a trade show. Hedeen then worked with a designer at his store to produce 24 prototype cars, which he sent to Galoob. “They loved it and wanted to go into contract immediately,” Hedeen said.

This time, David Galoob’s impulsiveness proved correct. The low-priced mini-vehicles were a hit with parents and kids. By 1989, Galoob reported a $20 million profit on $140 million in sales. And 75 percent of those sales came from Micro Machines.

In 1990, Galoob diversified its offerings to include a unique video game product known as the Game Genie. The Game Genie was not a game cartridge. Rather, it was an accessory for the NES that attached to a game cartridge and allowed the player to temporarily alter aspects of the game using various codes. For example, a player could use a code to gain unlimited lives in Super Mario Bros. The Game Genie even came with a booklet featuring codes for most popular NES games of the time.

A British company, Codemasters Software Co., Ltd., originally developed the Game Genie and licensed it to a Canadian firm, Camerica, Ltd., which subsequently sub-licensed the U.S. distribution rights to Galoob. One company that was not involved in this arrangement was Nintendo. Galoob had sought a license from Nintendo to release the Game Genie as an “official” NES accessory, but Nintendo declined.

Well, Nintendo did more than decline. Nintendo of America officials declared legal war against the Game Genie, which it saw as a means of creating “derivative works” that violated the copyrights of Nintendo-licensed games. Howard Lincoln, Nintendo of America’s senior vice president and general counsel, told the press that the Game Genie represented an existential threat to home video games: “We cannot stand by while the essence of our business, the creation of ever more challenging video games, is put at risk by the Game Genie product.”

Galoob technically fired the proverbial first shot, filing a lawsuit in a California federal district court seeking a declaration that the Game Genie did not violate any of Nintendo’s NES copyrights. Nintendo of America followed up a few weeks later, filing a counter-claim that in fact the Game Genie did violate its copyrights and trademarks.

Although Nintendo won a preliminary injunction against to temporarily halt sales of the Game Genie, Galoob ultimately prevailed following a bench trial before U.S. District Judge Fern M. Smith. In July 1991, Smith issued a judgment holding that when consumers bought and used a Game Genie to temporarily modify their NES games, they did not create a “derivative work” under copyright law. Thus, Galoob was not contributing to any copyright infringement. And even if it did, consumers still had a right under “fair use” to use the Game Genie for their own enjoyment. Nintendo appealed Smith’s ruling, but she was upheld by the U.S. Ninth Circuit Court of Appeals in a 1992 opinion.

Even with the success of Micro Machines and the Game Genie, however, Galoob remained a small player in the larger toy market. For comparison’s sake, while Galoob reported sales of roughly $240 million in 1997–making it the number-three toy company in the United States–the number-two company, Hasbro, had $3.18 billion in sales. And Galoob was struggling to keep up. In October 1997, Hasbro and Galoob won the licensing rights from Lucasfilm, Ltd., to produce toys for the upcoming “Star Wars” prequels. (Hasbro would make the big toys, while Galoob would make the smaller toys.) But Galoob had to offer Lucasfilm 20 percent of the company’s stock–at $15 a share–just to get that deal done. Ultimately, it proved to be a moot point, as Hasbro bought Lewis Galoob Toys in September 1998 for $220 million in cash, giving Hasbro complete control of the “Star Wars” toy license, which it continues to hold to this day.

Notes from the Random Access File