“Well, not everyone can be as popular as you, Madeline. There are a lot of kids out there who just want someone to like them. Enter Mickey Mouse.”
Kalinske continued his tour and stopped in front of a large display of Teenage Mutant Ninja Turtles, the most recent plastic sensation. “I’ve been thinking that these guys embody the tone that we should be trying to strike. Playful, but edgy—cool, but no leather jackets. You know what I mean?” Nilsen and Schroeder nodded, taking it all in. “And I’ve seen a few episodes of the cartoon. They do a great job of establishing the universe.”
They passed through the boys’ action hero section into the pink and purple world of girls’ dolls. Kalinske didn’t notice until he was face-to-face with Bathtime Fun Barbie, dressed up like a mermaid. Schroeder and Nilsen noticed his subtle flinch.
“Don’t like running into her, do you?” she asked.
Kalinske rolled the question over. “It can be a little strange sometimes.”
“I’m sure it doesn’t help that she’s just about everywhere,” Nilsen said.
Schroeder could tell that the sight of Barbie really did strike a nerve. “Would it make you feel any better if I told you she was just a piece of plastic?”
“If only that were true,” he said with a sigh. He glared at the doll and moved on, his mind racing with ideas to try to put Barbie in her place.
Day after day, Kalinske, Schroeder and Nilsen worked to turn this critter into something more than lines on a page. At first their primary focus was subtraction, removing the fangs, the collar, the guitar, and the girlfriend. Then as he began to look more and more like a lost little hedgehog, they worked to add back some of that attitude, focusing less on gimmicks like a guitar or a girlfriend and more on his backstory and character. To better understand this speedy blue hedgehog, Kalinske had Schroeder write a thirteen-page bible that detailed the who, what, where, when, and why of his personality. He had grown up in Nebraska, lost his father at a young age, trained hard to develop world-class speed, and befriended a brilliant scientist who acted as a father figure until an experiment gone awry turned him into an evil villain.
Eventually, the creative forces at Sega of America got to the point where they no longer felt like they were making up the hedgehog’s story on the fly, but actually learning more about a character who truly existed. As they continued to redefine this character from a marketing standpoint, the designers and engineers at Sega of Japan were busy working on a “game like no other” in which the hedgehog would star. During this time, Nilsen did what he was often known to do and took things further by rechristening him Sonic The Hedgehog (with his middle name literally being “The,” on the reasoning that it would make a cool story one day).
Sonic wouldn’t just become the face of the company but also would represent their spirit: the tiny underdog moved with manic speed, and no matter what obstacles stood in his way, he never ever stopped going. Sonic embodied not only the spirit of Sega of America’s employees but also the cultural zeitgeist of the early nineties. He had captured Kurt Cobain’s “whatever” attitude, Michael Jordan’s graceful arrogance, and Bill Clinton’s get-it-done demeanor.
When the newly refined hedgehog was ready, Kalinske called up Nakayama. “We made some changes. I want you to take a look.”
“Okay,” Nakayama said. “I will call you back.”
“No, I’d like to stay on the line and hear your reaction,” Kalinske said as he faxed over a copy of Sega of America’s revised hedgehog.
Nakayama chuckled, but his good mood quickly devolved into a cold neutrality. “Oh,” he said. “This is not even the same hedgehog that we gave you! Where is his lady friend? And those sharp teeth of his?”
“This is not the reaction I was expecting,” Kalinske said, echoing not only Nakayama’s earlier words but also his distinctly disappointed tone.
Nakayama thought for a moment. He was a man who chose his words wisely, so it was significant whenever he took an extra moment to do so. “It doesn’t matter what I think. It only matters what will sell.” But over the following days, tempers at Sega of Japan began to flare. The games designers believed they should be in charge of every aspect of Sonic. In normal circumstances, this would likely be the case, but since the character of Sonic had initially been created for the goal of success in the United States, Sega of America believed that they knew best when it came to the tastes and preferences of their audience.
Days later, Nakayama called Kalinske back, sounding less open-minded. “My people do not like what you have done to their creation. It no longer resembles what they had in mind. We must revert to the original.”
Kalinske realized for the first time that despite being under the same umbrella, Sega was essentially two companies: Sega of Japan (SOJ) and Sega of America (SOA). It didn’t matter to SOJ that the new hedgehog might be better; all that mattered to them was that it wasn’t theirs. Although the friction between parent company and subsidiary was subtle, it certainly did exist and was real in a way that Sgt. Kabukiman was not.
Kalinske knew this was the moment that could make or break the company. He had to put it all on the line and urge Nakayama to reconsider. “I’ve been in the videogame business for about five minutes,” he began, “but I’ve been in the toy business for over twenty years. You know what the toy business really is? It’s not about size, shape, color, or price; it’s about character. You want to play with characters you like. You want to become a part of their world and let them become a part of yours,” Kalinske said, overwhelmed with passion. “I can only speak for myself, but there’s not a character out there that I’d rather spend some time with than our new Sonic The Hedgehog. And if I feel this way, I think there are a lot of others who will feel exactly the same.” Kalinske stopped and took a deep breath. He thought for a moment about reminding Nakayama about his promise to let Kalinske do things his way, and he also considered suggesting they conduct some market tests to see which hedgehog was more popular, but at the end of the day none of that mattered. This was about a vision, and if Nakayama couldn’t see that, then he didn’t deserve Sonic.
Nakayama finally broke the silence. “Tom, maybe I agree, but you must understand that there are people here of premium integrity who think differently.”
“I understand,” Kalinske replied. “So how about we try and change their minds?”
To share Sega of America’s vision for Sonic, Schroeder was sent to Japan with the unenviable task of convincing the programmers that although they may know how to develop great games, she and her colleagues knew how to develop great characters. This fateful meeting at SOJ began friendly enough, but when it became clear that Schroeder wasn’t interested in revising her vision, tempers began to flare. As a compromise, they suggested that each faction of the company simply have their own Sonic: you use your Sonic, and we’ll use ours. To support this multi-Sonic worldview, they cited how Mickey Mouse wasn’t exactly the same all over the world.
First off, Schroeder thought, I don’t even think that’s true. And secondly, even if Mickey does get localized in certain regions, she felt fairly confident that there wasn’t a territory in the world where Mickey had fangs (or Minnie had double-Ds). Thirdly, and most important, she didn’t want two Sonics. This wasn’t about Sega of America getting their way, but about creating something immortal that existed in the world’s collective imagination. And to do that, there could be no S(OA)onic and S(OJ)onic. Schroeder tried to make this point, but soon enough everyone had left the room. Although this impromptu boycott seemed to point toward a Sonic schism, whatever she had said in Japan appeared to have done the trick. When Kalinske next spoke with Nakayama, he and his team were given the green light to proceed as they saw fit.
With this mandate, Sonic sprinted toward the finish line, hoping to one day race past Mario and declare war on Nintendo. But in the coming months, those David-vs.-Goliath dreams were too often dashed by skirmishes between Sega of America and Sega of Japan. This cultural clash would lea
d to a standoff in which every decision, big or small, escalated into a battle of pride, principle, or sometimes just pure pettiness. This growing divide would be hard on everyone, but it would undoubtedly be hardest on Shinobu Toyoda, the liaison between the two factions. If Schroeder fought for a change, and Naka fought against it, it was Toyoda who was thrust in the middle and played the role of peacemaker. Kalinske knew that when it comes to war, everyone ultimately has to pick a side, and in the process of watching Toyoda constantly trying to broker peace between SOA and SOJ, he finally saw this man’s true colors. Toyoda looked like a Japanese man and sounded like a Japanese man, but when push came to shove, he remained loyal to SOA. It was the small things that Kalinske noticed: the way he translated fighting words into diplomatic terms, the way he might claim Nakayama had approved something that he’d never even seen. Most important were the subtle ways he moved the emotional chess pieces to get what SOA wanted, for example, by doing something like adding a ridiculous character detail and then gaining leverage over SOJ by offering to remove it.
But before any of those unnecessary battles in the Sonic wars would be fought, Kalinske was informed about a more pressing conflict: Sega’s negotiations with Electronic Arts.
“What negotiations?” Kalinske asked.
“I’m sure I must have mentioned this earlier,” Nakayama replied.
“Nope, doesn’t ring a bell.”
“Well, the situation at present is that Trip Hawkins of Electronic Arts has found a way to reverse-engineer the Genesis and now they have decided to make games without our approval.”
Kalinske was floored. “Didn’t we just release some of their games?”
“Yes,” Nakayama said. “You must go to Electronic Arts and show them that we mean business.”
Kalinske sighed deeply, looking at the fax machine. At least he had Sonic. At least there was that.
9.
TRIPPED UP
“Don’t act so surprised,” snapped Trip Hawkins, the brilliant but mercurial founder of Electronic Arts. “You had to imagine it would only be a matter of time.”
On Nakayama’s instructions, Kalinske had traveled with Rioux, Toyoda, and Sega’s legal counsel, Riley Russell, to the offices of Electronic Arts, where they met with Hawkins, marketing wizard Bing Gordon, CEO Larry Probst, and EA’s legal counsel. Over the past several months, negotiations had been going on between the companies about how to proceed now that EA had reverse-engineered the Genesis. It was a potentially fatal situation that could knock Sega out before they ever really entered the ring.
Kalinske wondered what other problems were out there, ones that he didn’t yet know about. After all, he had only just recently been informed of the fiasco involving Sega’s planned football game. As part of Michael Katz’s plan to hitch Sega’s wagon to a constellation of superstars, the company had signed Joe Montana to a $1.7 million licensing agreement. Since Sonic wouldn’t be released until next year, late 1991, Joe Montana Football was intended to be the flagship title for the Genesis—the game that branded Sega, the game that sold consoles, the game that kids begged Santa for this Christmas.
The problem, though, was that Sega’s games were designed in Japan, where they didn’t know the first thing about football, so Katz had decided to find a software developer in the West who could create a quality product in a short period of time. Luckily, a local software company called Mediagenic already had a football game in development that was about 30 percent complete. It was far enough along that it could be ready in time for Christmas, but unfinished enough that there was still room for it to be built around Montana. A few weeks before Kalinske joined Sega, however, Katz had discovered that the game was nowhere near complete. Ironically, when Katz found out about this, his first call was to Hawkins in the hopes that EA would sell them their new John Madden Football game and allow Sega to tweak it and rename it after Joe Montana. But Hawkins refused, believing he had a hot franchise in the making.
“Come now. You must have something to say,” Hawkins asked. “Comments? Questions? Perhaps a more eloquent form of flabbergast?”
“I guess the only question that comes to mind is how the hell you pulled it off, but I suspect that I don’t truly want to know the answer to that.” Hawkins didn’t respond, but his eyes shone with the glimmer of a shooting star swiftly slashing through the sky—one about to crash down to earth and destroy everything in its path.
It had all started about a year ago when Hawkins had a significant change of heart. Since founding Electronic Arts, he had been viciously resistant to the idea of creating software for videogame consoles. He saw them as pesky toys, nothing at all compared to the future of personal computers. This mind-set had made him look like a genius when Atari blew up in 1983, but by 1987, when the Nintendo phenomenon was in full effect, it made him look like some combination of foolish and pretentious. Even as Nintendo continued to rise, Hawkins vehemently defended his position, believing that the NES was no more than a Cabbage Patch Kid–like fad, and reminding his employees that the computer was the future. Besides, the graphics on the NES were mediocre at best and couldn’t handle EA’s enormous talents. But this all changed with Skate or Die!
With pressure mounting from his EA cohorts, Hawkins finally agreed to a small concession: he would allow EA to license their game Skate or Die! to another software company named Konami, granting them rights to distribute the game on various other systems (including the NES). The decision to forgo directly putting the game on the Nintendo yet allowing it to happen anyway may seem strange, but it stemmed mostly from the fact that Hawkins simply didn’t want to deal directly with Nintendo and their strict licensing agreements, which didn’t exist in the computer world.
EA received only a fraction of what Konami had made (which was only a fraction of what Nintendo had made), but the royalty from Skate or Die! for the first month alone was more money than EA made on its best-selling computer games. It was then that Hawkins decided while personal computers were still the future, console games apparently were also the future. Yet despite this realization, Hawkins still couldn’t stomach the notion of becoming beholden to Nintendo, which caused him to take a closer look at Sega. From a technical standpoint, the Genesis (with its 16 bits and 68000 Motorola processor) was better equipped to handle EA’s games, but even though Sega had such a puny market share, their licensing agreement wasn’t all that different from Nintendo’s. The rates were cheaper, of course, but conceptually they both believed that the hardware companies deserved to be paid a toll by the software makers. So to avoid this, Hawkins arranged for Electronic Arts to reverse-engineer the Genesis. Unlike Tengen, who bent the law to discover a work-around, EA would do this legally by setting up a “clean room” environment, which would create a Chinese wall between the engineers dismantling the machine and the engineers trying to rebuild it with the desired change (in this case, circumventing the console’s lock-out system). Now, a year later, Trip Hawkins excitedly stood before the guys from Sega with the grandeur of someone who had just knocked over a little boy’s sand castle.
“All right, Trip,” Kalinske said, while replaying the connect-the-dots of crap that had made up his day, “tell me how you did it.”
“Eh, who cares?” Hawkins mused. “A to B to C to D, and here we are. The question is, now what? What do you think is fair?”
“You’re getting nothing!” Rioux bellowed. “I’ll bet you they didn’t legally reverse-engineer the thing! Those guys are too dirty to ever bother with a clean room.”
“Would you really like to gamble away your company on a hunch?” Hawkins asked. He turned to Kalinske. “You’re new to these conversations. What say you?”
Kalinske snickered. “Who cares what I think? You’re holding all the cards.”
Hawkins struck a defensive tone. “You can drop the high-and-mighty routine. You think I wanted to do this? You think I like driving off the course?”
“How is this my fault?”
“You, Katz, Nakayama,
and those zombies at Nintendo. You guys just don’t get it. I spend years making a game, hundreds of thousands of dollars in development costs, and then when it comes time to recoup, I need to buy the cartridges from you, get your saintly blessing, and then after all that, pay you ten bucks for every game I sell.”
When Hawkins finished, Kalinske remained silent for a moment, this time by choice. Finally he said, “What? No fake tears? I mean, if you’re going to lob a sob story at me, at least go the whole nine yards.” The Sega team couldn’t help but crack smiles.
“I’m not being dramatic. I’m not by nature a dramatic person,” Hawkins said, which might have been the falsest statement he had ever spoken.
“It’s the price of doing business,” Kalinske said. “Those thousands you spent on making games . . . what about the millions we spent making consoles? We barely break even on those systems. We’re giving away razors in order to sell the blades.”
“But they’re my blades.”
“Yeah, well, they’re our razors!” Kalinske shouted. Toyoda nudged Kalinske in an attempt to calm him down.
Hawkins shot up. “Steve Jobs is an obsessive maniac and even he doesn’t make us pay him money to put our games on his computers.” This was, after all, the basis for Hawkins’s stubbornness. He came from the computer world, where anybody could make any game for any system. In some cases, the computer manufacturer even paid you money to develop for their system.
Kalinske sighed. “Oh, Trip, didn’t your mother ever teach you the difference between right and wrong?”
Hawkins sighed too. “Oh, Tom, the funny things a man will say when he’s down in the fourth quarter.”
Though the banter briefly lifted Kalinske’s mood, that comment reminded him of the Joe Montana Football problems. Even if Sega and EA found a way to play nice, there was still that to deal with. These battles with EA, Japan, and Wal-Mart only served to take Sega’s eyes off Nintendo and weren’t worth fighting. Kalinske briefly discussed the situation with Rioux, Toyoda, and Russell. They all agreed that having a close relationship with Electronic Arts, even if it wasn’t profitable, would be an incredible win for Sega. EA made great games, which was exactly what Sega needed at the moment. To make that happen and also save face, Toyoda came up with a strategy that he whispered to the others.
Console Wars Page 10