Mastertronic was founded in 1983 by Martin Alper, Frank Herman and Alan Sharam, they also had some financial backing from another small outside group of investors, and had all previous experience in video distribution. The first premises were in the back of Alan Sharam's offices (he was also a surveyor at the time) in George St, London W1.
Initially they used to make up packages of 100 tapes ("dealer packs") and send them out to newsagents, toy shops, motorway service stations, just about anyone who would take them. At that time (1984) the mainstream retailers refused to take budget games because they had had bad experiences in the past, however Mastertronic eventually won them over by showing that new games would regularly be produced to replace old stock and by producing games that sold well. Another key figure at the time was ex-Notts batsman Richard Bielby who ran a distribution network servicing a large number of small retailers.
Much of the early output was supplied by just two producers - the Darling brothers who of course formed Codemasters as soon as they could break their contract with the company, and Mr Chip Software who continued to do games for Mastertronic for some time.
Mastertronic also notably pioneered the 'colour coding' for games by having a coloured triangle on the top right hand corner of the front and rectangles on the inlay spine with the catalogue number and format:, Spectrum games were yellow, C64 were red and Amstrad were orange. This led many software houses to use variations on this theme but keep the colour coding so people could easily identify the format, Mastertronic for a time went one step further and their 199 Range had the cassette boxes coloured the same
In actual fact all the directors knew little about games, they even used to boast that they never played them! When programmers came in with demos, someone would have to setup the machines, load the games and even plug in the joysticks for the directors. Mastertronic never employed programmers directly (unlike Virgin Games who later had a staff of 6). Everything was bought in from outside, either directly from the authors or from other games publishers. In its heyday the company were deluged with games from enthusiastic amateurs and ultimately managed to publish quite a few of them.
In late 1985 Mastertronic launched their MAD label, this stood for 'Mastertronic's Added Dimension' and meant that they could sell these games at a slightly more expensive price. The first ever MAD game was 'The Last V8' and other games on this label included Master Of Magic, Spellbound, Hero Of The Golden Talisman, 180 and more.
Martin Alper, who had the most marketing flair, went to the USA in 1986 to set up Mastertronic Inc. The UK company was managed by Frank Herman, whilst Alan Sharam increasingly specialised in sales and logistics (warehousing, packaging, controlling production schedules). As the business continued to grow Mastertronic created another label in 1986 - 'Entertainment USA'. A lot of US programming houses wanted an outlet to sell games, and so Mastertronic moved in, often using Hubbard or Whittaker to re-do the music. In 1987 Mastertronic decided to expand their distribution of software and began exporting titles back across the Atlantic, so the label "Bulldog" was created primarily to distribute the 'Best of British' games in the US.
In 1987 Virgin entrepreneur Richard Branson purchased the 45% of shares held by the outside investment group. The remaining 55% was held by Alper (25%), Herman (20%) and Sharam (10%) and they sold out in 1988 in a highly complex deal which required their continuing involvement in the business and achievement of profit and cashflow targets. The company was renamed the 'Mastertronic Group Ltd', and later was merged with Virgin Games to create 'Virgin Mastertronic'.
Mastertronic also bought out Melbourne House in early 1988 when that label was struggling with financial problems (Melbourne House kept its label identity) - this also meant that they had first refusal on re-releases of games such as Way Of The Exploding Fist. And so their re-release label 'Ricochet' was born. They pulled off a few major re-releases at £1.99, most notably Crazy Comets and Impossible Mission.
It was Frank Herman who, in early 1987 spotted that Sega had no UK distributor for the Master System range. Mastertronic sold all they could get that year and were then appointed as distributors in France and Germany as well, and thus was Sega Europe born. Branson undoubtedly wanted to buy Mastertronic in order to get into the growing Sega business, and by 1991 nearly all the company's turnover, and certainly all the profit, came from Sega business. As a result nearly all the staff moved over to Sega when they bought the business and only a handful of Virgin games programmers stayed with the publishing side (quickly renamed Virgin Interactive Entertainment). By that time the budget business was dying and nobody cared about it. In any case the competition had become intense as everyone was now recycling their old full price games as budget games. And of course the kids who used to buy C64s and Spectrums were now buying Segas and Nintendos.
After the Sega takeover Frank became deputy Managing Director of Sega Europe and Alan was Managing Director of Sega UK. Martin left the UK and became resident in the US.
History based in large part on the experiences of Anthony Guter, a financial controller at Mastertronic 1985-1991
Mastertronic was bought up by Virgin, becoming Virgin Mastertronic and went on for a while before disappearing into Virgin Interactive Entertainment.