Funding keeps DataPlay open
Co. hopes venture capital lines up next week
By Matt Branaugh, Camera Business Writer
October 5, 2002
One week after putting its employees on mandatory furloughs, troubled disc-maker DataPlay Inc. landed a small amount of funding, enough to keep it going at least one more week.
Employees who checked in with the Boulder company Friday learned the furloughs remain in place until at least next Friday. But the emergency funding offers a sliver of hope DataPlay can still find the venture capital it needs to stay alive.
The company desperately needs the money -- as much as $50 million -- to launch an aggressive marketing campaign for the tiny discs and disc players it spent four years and $120 million developing.
While the company's executive team continues meeting with investors, the bridge funding at least signals some optimism, said Todd Oseth, DataPlay's senior vice president of business development.
"We keep the lights on and a hope of making this happen," said Oseth, who declined to say how much was raised.
The privately held DataPlay is also considering strategic alternatives, which could include a sale or merger of some kind, he said.
The company's troubles began a year ago, when glitches delayed the launches of both the tiny, half-dollar-sized discs, which can hold 500 megabytes of content, and the disc players. Record labels have signed up several artists for the format, including country stars Brooks & Dunn and teen pop artists Britney Spears and 'NSync.
Products, available on several Web sites, including Amazon.com and CircuitCity.com, finally began hitting Best Buy's shelves in August, but not before DataPlay was forced to ax half of its staff worldwide.
On Sept. 25, the company told its 120 workers, including the 80 at its Boulder headquarters, not to come to work until further notice. Employees are allowed to take any remaining vacation and sick days as a way to collect a paycheck.
Some analysts openly ques-
tion whether the technology's arrival came too late. While DataPlay contends its products are selling, it knows it can't sustain solid, long-term success without any advertising.
Prerecorded discs cost about the same as compact discs, while blank discs are priced at about $10 each. The players hover around $300.
By comparison, a spindle of 50 blank compact discs retails for as little as $10. DVD players that also play compact discs sell for as little as $60.
"If any product sells right now, it's unbelievable for one reason: No one knows it exists," Oseth said.
Some units are selling from foot traffic, he added.
"It must really be an eye-catcher," he said.
Contact Matt Branaugh at (303) 473-1363 or
branaughm@dailycamera.com.
