Prodigy extends service across the U.S

Discount Store News, Sept 17, 1990

Prodigy Extends Service Across the U.S.

WHITE PLAINS, N.Y. - Prodigy has rolled out its interactive information and shopping services nationally, hoping thereby to expand its reach and become a more attractive marketing vehicle for retailers and manufacturers.

The service, available in 23 markets before the national expansion, has reached 465,000 individual members in 270,000 households, or about 1.7 subscribers per household. It should have 1 million members by the end of the year, said Prodigy president and chief executive officer Ted Papes at a press conference in New York detailing the rollout.

An increase in Prodigy's price to $12.95 a month from $9.95 was downplayed at the conference. A one-year subscription for $119.40 (which works out to the old $9.95 price) was cited as the cost of the service. Executives said the new price reflected higher operational costs and would raise the portion paid by members, similar to magazines capturing a larger share of their costs from subscribers.

As Prodigy raised its price, online computer rival GEnie, which has about 35 merchants on its service, lowered its fee to $4.95 a month. But that price is for non-prime time access and covered only retailer and selected other services. GEnie's main moneymaker, chat services, continues to be priced by hourly use, $6 during non-prime time and $18 during prime time.

Prodigy's rollout included improvements in its operational functions and expanded information features. It didn't involve any changes in the service's advertising presentations or new retailers.

Rather, Prodigy, a $1 billion partnership between Sears and IBM, is banking on its broader reach and improved functionality to attract members which would then make the service a more magnetic marketing medium for retailers and manufacturers.

To aid its rollout, Prodigy has tripled the number of stores distributing its start-up kit to about 11,000 units, with another 4,000 due to be added by Christmas. These merchants range from full-line discounters like Sears to specialty retailers like Lechmere, Office Stop, ComputerLand and Walden Software.

Prodigy has about 200 "clients," retailers like Sears and Highland Superstores selling merchandise, manufacturers like Fuji and Ford advertising products and soliciting marketing leads and service providers like British Airways and Dean Witter brokerage using the service for all three functions. Executives said that number has remained constant, but "Interactivity Report," a newsletter that monitors the interactive information business, noted that Prodigy only had 155 clients as recently as May.

Papes said the list of clients changes as companies' use of Prodigy varies. Some are on the service year round while others tie in Prodigy with other advertising plans, he explained.

It plans to spend about $20 million promoting its national rollout to both consumers and clients. Papes said Prodigy was going after retailers in categories like books where it didn't have a full complement of retailers. It remained open to companies in other areas that have a large number of clients like consumer electronics which has about two dozen merchants.

Papes declined to disclose the amount of merchandise sold over the service.