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It’s 25 years since Sega of America made its biggest mistake

120 points| raudaschl | 5 years ago |forbes.com | reply

117 comments

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[+] gryson|5 years ago|reply
This narrative has been pushed quite heavily by former Sega of America CEO Tom Kalinske, but it leaves a lot out. Kalinske claims the Japanese president of Sega, Hayao Nakayama, forced him to launch the Saturn in NA before Kalinske was ready, and because of that, the Saturn failed and Kalinske resigned shortly after. As always, it's best to approach with caution when CEOs are assigning blame for company failures under their tenure.

The reality is far, far more complicated. Kalinske himself was against the Saturn going back to 1993, due to the predicted high cost of the console. This in turn led to the development of the 32X add-on for the Genesis as a low-cost entry into the 32-bit generation in NA, but the 32X failed spectacularly.

Most relevant, however, is that Sega failed to adequately compete against Sony in terms of garnering third-party support, both in Japan and NA. This is discussed at length in the excellent book Revolutionaries at Sony by Reiji Asakura (English translation available). The Saturn was difficult to develop for and Sega did not have good development tools early on.

Also worth reading is the recent account from former Sega president Hideki Sato, who was the head designer of the Saturn. He discusses many of the shortcomings of the console and Sega's strategy for it:

https://www.sega-16.com/forum/showthread.php?33506-Hideki-Sa...

[+] klodolph|5 years ago|reply
I agree that this is way more complicated.

Nobody knew what 3D hardware would look like in 1994, they were too busy inventing it. For example, the Saturn provides quads as your primitive, which seems weird to anybody looking at the Saturn today. The PlayStation and Nintendo 64 both used triangles.

You might have various reasons to prefer the Nintendo 64 or PlayStation, but from a developer's perspective, the main reason you would prefer the Saturn is probably because of its 2D performance. But a higher price point for better 2D performance is a tough sell.

It's also interesting to look at the different companies through the lens of what their strengths are. Sony has generally had pretty solid hardware design, Microsoft has generally made systems that are easier to develop software for, etc.

[+] macspoofing|5 years ago|reply
Great comment, and I agree. I do think Kalinske's rationalization is bullcrap ... but it also alludes to some truth, namely that Sega America and Sega Japan were not aligned on console strategy and were downright adversarial - and that certainly contributed to the failure of Saturn.
[+] Firehawke|5 years ago|reply
I've read in the past (sorry, don't have the link right now) that Sony also did some hardball with licensing.

In particular I've been told that they threatened Capcom over Mega Man 8 and X4, saying that if those didn't also show up on PSX, Capcom would lose their publishing license on PSX. If true, that would certainly add a bit of heat on licensees to publish on PSX and would result in Sega losing a lot of third-party exclusives.

[+] robdachshund|5 years ago|reply
You're missing three part where Kallinske was trying to make a deal with Silicon Graphics for the hardware that Nintendo ended up buying for the n64. This would have been a much better outcome. Sega Japan shut it down simply because Kallinske came up with it and they weren't going to answer to Sega America.

Kallinske was also agaisnt the 32x.

[+] egypturnash|5 years ago|reply
I feel like the whole 32x mess was an important part of this mistake.

"Hey let's release a weird upgrade pod for our successful last-gen console almost completely simultaneously with our next-gen console, I am sure developers will be happy to split their efforts across two machines! Especially if both of them have really weird architecture that's hard to program on."

[+] danbmil99|5 years ago|reply
My company was deeply involved with Sega Saturn development at that time. One of the problems was a serious rift between Sega of America and Sega Japan.

SOA was committed to the idea that the Sega Genesis had a few more years of life in it, and that the American audience was not as interested in new technology for its own sake. They were, rightly in my opinion, concerned that a change in platform would benefit the competition not them, given that they had a market-leading position at the time.

Japan was, also correctly I suspected, convinced that Hardware Supremacy was essential to maintaining their Market position. Unfortunately, internal politics at Sega Japan caused the Saturn to be overly complicated and expensive to produce. I also think Japan failed to recognize that Americans were much more price conscious and less status- conscious than the Japanese Market.

We all know who won in the end. I don't have any real evidence of this but my intuition is that Sony allowed their American arm more latitude and gave them more credibility with regard to designing the market strategy.

Sega allowed internal politics and the Japanese Centric vision to Cloud their decision making process.

And then they doubled down on their flawed strategy with Dreamcast... And the rest is history

[+] subsubzero|5 years ago|reply
Totally this, and if I recall the upgrade was like $170 itself which was really expensive for teenagers at the time, plus it was confusing, sega genesis, add the 32x, Saturn comes out in a few months, oh and also sega CD has been around a for a year or so, it felt really disorganized. I felt the only thing sega had going for it was non-censored games, mortal kombat for snes had non-red blood in the fights, genesis did not.
[+] vmception|5 years ago|reply
now its just "lets do a mid-life separate SKU with the same name and everything is compatible, but at least the airflow is better, maybe cheaper to manufacture, and maybe it outputs higher resolution"

its a better outcome, reminds me thats what happens when we allow companies to fail

[+] elsonrodriguez|5 years ago|reply
> I am sure developers will be happy to split their efforts across two machines

2.5 machines. There were a few SegaCD+32X games.

[+] karatestomp|5 years ago|reply
All the Sega stuff after the Genesis/Megadrive seemed really tied to their arcade efforts, in a way that Nintendo (and, toward the end of Sega's time in the market, Sony and Microsoft) didn't. AFAIK the 32x, Saturn, and Dreamcast were all only a little more different from their arcade counterparts than the NeoGeo was, which is why there were so many very faithful arcade "ports" on them (Star Wars Arcade and NBA Jam on the 32x, stuff like that). I've not seen that factored in to histories of the death of Sega's consoles, but wonder if it contributed in some fashion, or else helped stave off their demise.
[+] jklinger410|5 years ago|reply
Not to argue with your point because it is certainly valid, but the N64 had that expansion module for DK 64 and a few other games, yet managed to survive that.
[+] jmcgough|5 years ago|reply
For me as a kid, there was this sense of confusion and whiplash when it came to post-genesis hardware. The CD came out in 92, with no real notable games at launch: Sonic CD came out a year later, and Snatcher + Lunar at the end of its life in 95. The 32x came out shortly after in 94, and only saw a handful of games before being buried by the more powerful Saturn in 95.

With two major peripherals and a new console in a short period of time, each with its own library of games, it was hard to understand all that as a kid without internet access, much less afford it, so I stayed clear and sold my genesis for a SNES, then got an N64.

The short hardware life probably spurned a lot of 3rd party developers too.

Nintendo was much smarter, with longer cycles between major consoles, and no expensive enhancement add-ons to segment its games. When you bought a Nintendo console, you knew it would have a 5+ year road map and was a good investment (okay, ignoring the virtual boy). Every gameboy has had backwards compatibility with at least the previous generation, so it always felt "safe" to buy the newest model.

[+] duxup|5 years ago|reply
I recall the same thing.

Everyone understood what Nintendo was up to. Sega friends (that's how I thought of them, defined by the console they owned) would tell me about this or that technology, but not many games for this new tech.... on the Nintendo systems (and later my PC) I had games.

By the time the Saturn was out.... most Sega friends had converted to something else, it was already over.

[+] schnevets|5 years ago|reply
There's something beyond the obvious nostalgia factor that makes these 25 year old video game business stories so captivating. It might be from these massive corporations moving with a gut-driven, ride-or-die mentality or the fact that the only indicator that matters is sales.

In comparison, today's gaming industry is fragmented beyond all recognition. The audience has grown and matured, but every major player is a unique gumbo of F2P, overplayed IP, indie risks, and speculative technology. Also, they're all subservient to some larger corporate strategy.

Once again, my cynicism may just stem from my age, but it seems like there hasn't been much excitement for the past 5 years or so.

[+] jonny_eh|5 years ago|reply
And there's far less meaningful innovation in gaming today. VR was pretty promising, but has failed to be transformative. The new consoles' graphics frankly don't look much better than current ones IMHO, despite having 10x or 100x the performance. Game streaming is the most interesting and disruptive technology, once the major players figure out the right business model.

Back in the 90s, opening a gaming magazine was so exciting due to the crazy stuff you might glimpse.

[+] som33|5 years ago|reply
It's because the internet has given control of software to companies. Pre 2005 the only control game companies had over software was a few PC RPG's that had been rebranded mmo. In an internet enabled world, every game can be made client-server and have in game stores.

The internet is what ruined gaming because it gave corporations and developers too much power and control of the software and the ability to deny ownership, dedicated servers to their customers.

[+] otabdeveloper4|5 years ago|reply
> In comparison, today's gaming industry is fragmented beyond all recognition.

Not really. The gaming industry today is free-to-play MOBA games for Android and iOS.

Anything else is legacy that only keeps existing due to nostalgia of the 25+ crowd.

Granted, this crowd is the largest and the one with the most disposable income here in 2020, but it's obvious that going forward it will quickly wither and disappear.

[+] krustyburger|5 years ago|reply
I don’t think Nintendo has developed those issues, except for (arguably) overplayed IP.
[+] danbolt|5 years ago|reply
I’m been doing some Nintendo 64 development lately, and sometimes all ask the CEO at my workplace for advice or insights as he worked on Nintendo 64 games when he was younger.

It’s not uncommon for him to finish the conversation with noting that he worked on Sega Saturn before the Nintendo 64, and the former was difficult to work with due to its particular architecture.

[+] AdmiralAsshat|5 years ago|reply
My understanding is that the Sega Saturn was a nightmare to program for. Everything else at the time rendered with triangles, while the Saturn uniquely used quadrilaterals.

It's also been a huge pain to emulate.

[+] danbmil99|5 years ago|reply
Peculiar is an understatement. The development tools were also a nightmare
[+] FillardMillmore|5 years ago|reply
Out of curiosity, what kind of tools do you use to do N64 development?
[+] smolder|5 years ago|reply
It's hard to say what the biggest mistake was exactly. The Sega CD and 32x were bad ideas, compared to just creating a new console. The Sega Saturn would have been a great 2D console, but they delayed it to add a really strange (quads versus triangles) underperforming 3D capability to their design. I think the Saturn should have been released earlier in 2D only form, so they could move on to making a 3D capable console that trounced the PlayStation and N64 on a delayed timeline, perhaps even backwards compatible with the 2D Saturn.
[+] som33|5 years ago|reply
A CD based Sega system was a great idea but not as an add on, the reality is the cost of hardware back then and the nature of the console market being technology illiterate was the issue.

I was one of the few who got the original Sega CD, the early version one that mounted underneath the genesis. It had cool games like Darkwizard. The real issue was the cost of add on peripherals were too high to get any kind of market penetration. Back then parents bought videogames for kids for their christmas or their birthdays. They'd rent their favorite games from blockbuster/convenience store and then get their parents to buy their favorites.

The reality was consoles and games were expensive and most kids rented games back when sega and nintendo were the kings of gaming before PC gaming had taken off in 1990's.

So the financial barrier to console ownership and the high price tag for parents was the real issue. Sega had a lot of good idea's but not conceived in the right way or at the right time. They acted as if the gaming populations parents were rich.

That was the real issue with many console companies that allowed Sony to get a foothold into console gaming.

Playstation was as popular as it was because of piracy and backups thereby increasing its market, it was "microsoft" method of console dominance - we don't care if you pirate as long as you use our console.

Even if sony didn't intend that, Sony PS1 and PS2 became huge because of ability to pirate games on the platform.

Piracy paradoxically drove sony to success. Everyone forgets places like china, india and third world countries at the time that couldn't really afford games because the the ridiculous prices.

[+] lostgame|5 years ago|reply
Oh, fantastic! I love reading everything about this period of history.

The Saturn is my person favourite console and I greatly enjoy writing homebrew for it.

If you haven’t, and this is of interest to you; check out JO-engine, a fantastic FOSS Saturn homebrew development kit.

https://jo-engine.org :)

[+] crusso|5 years ago|reply
I remember the disappointment. I had a Genesis at the time, I loved it, and I was primed to be a continued customer for Sega. From my perspective, all they needed to do was to release a decent next-gen console with games support.
[+] macspoofing|5 years ago|reply
Not just Sega, but Nintendo as well. The N64 was a moderate success, but if it was a CD-based system and came out a year earlier, Nintendo would have cut the PSOne at the knees and maintained console dominance.
[+] Narann|5 years ago|reply
Sega fall was far more important than Nintendo in this era. N64 had world wide acclaimed games that Saturn couldn't even hope for. And most of those games couldn't have been created on a CD-based system at that time that imply very slow loading.

N64 fall was mostly due to:

* Lack of texture memory. Having nice looking game was hard and need tricks because you couldn't rely on big textures.

* (Very) bad developer API (actually ABI). Having being in N64 emulation, you truly see they have no idea how 3D rendering was supposed to be exposed.

* Cost heavy support (cartridge).

But even without fixing the last one, the both firsts killed the third party dev investment.

[+] yellowapple|5 years ago|reply
IMO, the cartridges saved the N64; they were a differentiating feature with their own set of pros and cons (the big pro being the lack of loading times that plagued CD-based consoles, and the big cons being the limited capacity and high unit cost).

Besides, in terms of longevity, I feel like the cartridges I've got lying around have aged a lot better than the scratched-to-hell-and-back discs I've similarly got lying around.

[+] bluedino|5 years ago|reply
Hindsight is always 20/20, but I wonder why Sega made decisions like using quads instead of triangles, and dual CPU's.
[+] danbmil99|5 years ago|reply
Most Japanese companies are not run like American companies. There is a deep culture of compromise and consensus over top-down leadership. One of the results of this is the need for every stakeholder in the company to have a hand in every decision, and to get a piece of every new product.

For the Saturn, this resulted in the console packed with little goodies that were created by different departments. Things like off to the side audio chips that did barely anything. Dual CPUs. Strange 3D tech that used quads instead of triangles.

A few years later, we did work with Sony, and they seemed for some reason to work more like an American company, in the sense that they say they need more able to make rational decisions and move quickly when they needed to.

No one who has worked for a Japanese company would ever use the word agile to describe them. Sony may be the exception, at least at that time.

[+] bitwize|5 years ago|reply
It allowed for repurposing of sprite-drawing hardware the Japanese were already familiar with. Most Japanese programmers at the time were at complete sixes and sevens with the sort of triangle-based, texture mapping 3D hardware that had been developed in the west. I guess Sega thought it would be either a faster path to developer success, or easier to implement in hardware, if the Saturn's 3D engine resembled the sprites that game and console makers already knew, rather than gamble on unfamiliar triangle rasterization.

Nintendo collaborated with SGI on the N64, giving them a HUGE leg up on ALL the competition with respect to rendering techniques -- perspective-correct, filtered textures when even the PlayStation could only do affine transforms on textures (leading to the "texture warping" phenomenon). But even their programmers had to come to grips with 3D, which was hard. One reason StarFox 2 was cancelled was because Nintendo wanted to use its camera code in titles like Super Mario 64 (and did NOT want word of this getting back to Argonaut).

[+] chrisseaton|5 years ago|reply
How do you even render a quad? What if it isn't planar? Does it curve or crease?
[+] arprocter|5 years ago|reply
Their arcade boards used quadrangles too, not that that really answers the question
[+] plerpin|5 years ago|reply
Sega had a lot of prior experience with quad-based 3D games. Their Model 1 and Model 2 arcade boards used quads.
[+] balls187|5 years ago|reply
The Sega Saturn was the first console I purchased with my own money.

The Saturn had some great games.

Three of the Four launch titles were great: Daytona (Rolling Start....), Virtua Fighter, and Panzer Dragon were far better than anything else available.

Street Fighter Alpha 2 was far superior on the Saturn compared to the PS version.

And Guardian Heroes (available now on Xbox Live Arcade) is probably one of the best, most underrated sprite based beat-em-ups.

Ultimately Sony crushed the competition with titles like, Resident Evil 2, Tekken 3, FFVII, Twisted Metal, etc etc. Which is crazy considering how strong the N64 was.

It's sad that Sega laid an egg, but the Saturn had it's time and place.

I'm really looking forward to what the Series X can do with it's project X-cloud. My feeling is that it's going to move towards PC gaming--once your console can no longer play games natively, it will switch to pixel streaming.

[+] raiyu|5 years ago|reply
The article misses the point entirely. It wasn't about launching early, or not having enough games, or wait times.

It comes down to pricing.

In gaming, the same thing has always played out. The console that can deliver the best value wins.

$399 vs $299 is a huge difference. That's the equivalent of $500 vs $750 today.

And don't forget that this was a huge step up already from the $150-199 price point of Super Nintendo.

At the end of the day, when it comes to mass appeal, it isn't the better technology that wins, but the one that combines the best price and performance, and people always underestimate that price is the bigger factor than performance.

[+] mikeryan|5 years ago|reply
The article covers that fact pretty clearly at the end no?
[+] simonh|5 years ago|reply
You're blanking on the 99s. It's the difference between $500 and $666 today.
[+] kevinmgranger|5 years ago|reply
It's pretty ironic that Sony almost made the same mistake with the PS3 at $599.

I say _almost_, because it might have benefited Sony as a whole anyway.

[+] cptskippy|5 years ago|reply
As a teenager with a job, the cost wasn't really an issue and the launch window meant there was plenty of time to save up the difference. What killed the Saturn for me and my circle of friends were the games.

I remember we rented a Saturn with all the games from Block Buster for like $50 for the weekend and were thoroughly unimpressed. Not long after, a Playstation popped up at Media Play (remember that store?) with demos you could play. I remember specifically going there multiple times to play Battle Arena Toshinden.