Data points: CD-ROM sales concentration.

For the fledgling CD-ROM and multimedia market, December's sales figures convey a very mixed message. Christmas shoppers invested heavily in new PCs and software--but according to sales statistics compiled by PC Data, the distribution of software sales was extraordinarily lopsided. The PC Data numbers, which are based on sell-through reports from more than 4,000 retail outlets, show that a handful of best-sellers captured the bulk of all Christmas sales dollars. The vast majority of CD-ROM titles were marginal performers, and most of these probably won't get a second chance at retail shelf space.

The chart above reveals how highly concentrated the CD-ROM market has become. Of the 2,175 active CD-ROM SKUs (stock keeping units) that PC Data tracked in December, the top-selling 5% generated a whopping 51% of all unit sales, while the entire bottom 50% of titles (1,088 SKUS) contributed less than 3% of total sales. In fact, if we look at the very top of the sales charts, the market turns out to be even more concentrated: In December, just ten SKUs generated 17% of all unit volume and 20% of total dollars.

PC Data's statistics also reinforce the common observation that the multimedia market is dominated by "throw-away" titles with short life cycles. Games accounted for 52% of CD-ROM sales in December, followed by educational titles with 26%; longer-lived business, finance, and productivity titles represented less than a quarter of total units. With this turnover, it's tough for even the most successful multimedia developers to build a sustainable revenue stream.

These numbers are a troubling counterpoint to the optimistic reports we keep seeing about the penetration of CD-ROM drives and the fabulous growth rates of the market as a whole. Clearly, the multimedia phenomenon is not a rising tide that lifts all boats; instead, it's a market where the odds of success right now can seem pretty remote.

PC Data, 11504 Links Drive, Reston, Va. 22090; 703/435-1025.