By 1992, Origin faced a cash shortfall caused by factors almost entirely outside its control.
Origin was a publisher, which meant manufacturing boxes and stocking them in the retail channel. In that primeval pre-Myst era, computer games shipped not on CD-ROMs but on 3.5-inch, 1.44-megabyte high-density floppy disks. Origin games, in particular, required lots of disks - often eight to ten disks that cost about 70 cents apiece. Cost of goods became such an issue that while Strike Commander was in development, the team jokingly suggested shipping the game pre-installed on its own 20MB hard drive. (Strike shipped on eight floppies in 1993, but CD-ROMs finally became commonplace in time for a later expanded edition.) Wing Commander was a huge, unanticipated success, and the high cost of manufacturing it consumed all the company's ready cash and more.
In a single year Origin's payroll skyrocketed. Prior to Wing Commander and Ultima VI, Origin games were created by a programmer or two, with some contract art and writing. Wing Commander had five core team members; Wing Commander II suddenly had 25. Star designer Chris Roberts, among others, drew a substantial salary.
While Origin's cash reserves were tapped harder than ever, the Apple and Commodore 64 platforms collapsed, taking with them many small retailers. Origin not only lost the sales of its Apple and C64 back inventory, but it suddenly had to eat bad debt from failed companies in the channel. Worse, Richard Garriott had chosen to develop new projects first on the Apple platform rather than the technically inferior IBM PC - "a horrific mistake," he now says. Retooling the pipeline would take six months.
Normally in this situation - high short-term expenses, but higher long-term potential - a company borrows money. But as bad luck would have it, at that time there was no money in Origin's home state, Texas. The savings-and-loan industry had collapsed following a real-estate bubble. With half the state's financial institutions unable to lend money, banks could ignore small businesses in favor of big, safe corporations. Just a year or two later, this crisis passed, but Origin got caught at just the wrong time.
As the Garriotts dipped into their own savings to make payroll, they contemplated options. Richard says, "Ultimately we chose EA because EA's vision for the future, their prediction of platform shifts, and their planning to meet that challenge was right on."
And, too, Trip Hawkins had left EA. "Had Trip still been there, there's no way we would have gone with EA," said an Origin staffer involved in the deal.
