“We have budgets for a reason,” Nakayama reminded him. “Correct?”
“Believe me, I know that you don’t love getting calls like these,” Kalinske said. “But it’s my job to evaluate opportunities and then ask.”
“As with Wal-Mart?” Nakayama asked with a tiny groan.
Kalinske was rendered momentarily speechless, as things had still not progressed on that front as well as he hoped. While Sega had been running the Genesis store in Bentonville and taken over the city’s billboards, for the time being Wal-Mart continued to stonewall Sega, though Kalinske was convinced they were about to crack. “Hey,” Kalinske said, “it takes money to—”
“To make money, yes.”
“I was going to say that it takes money to take people’s money, but I admit my wording was primarily a function of attempting to spice things up.”
Nakayama chuckled, though his skepticism was still evident. Neither man said anything for a while. Finally Nakayama broke the silence. “Okay, Tom, keep doing what you are doing. Sega of Japan will help out.”
Nakayama hung up, though Kalinske could still hear Nakayama’s groan ringing in his head.
Week 6: Altering the Beast
“Make a fucking decision already!” Steve Race shouted and then slammed down the phone. Race’s words were loud enough to draw Kalinske to his office, but rational enough not to cause him concern.
“What’s wrong?” Kalinsked asked.
“I don’t know,” Race said, trying to shrink complex frustrations into a string of intelligible words. “Just having my patience tested by our friends in Japan. First they won’t show me game footage, then they won’t even share a synopsis, then all of a sudden they might send me some screenshots, but a synopsis is still off the table. How the hell do they expect me to sell a mystery box with goddamn question mark inside?”
“Don’t worry about that nonsense right now,” Kalinske suggested. “There’s a whole other beast I could use your help with.”
With the marketing plans coming together, Sega was now faced with the logistical conundrum of getting Sonic from production lines in Japan into living rooms in America. Because the game would be bundled with the Genesis, this wasn’t simply a matter of sorting, shipping, and selling. The situation was made more complicated by the fact that at this very moment Sega’s warehouses were overflowing with about 150,000 unsold Genesis systems containing Altered Beast, with about 100,000 more collecting dust on shelves at retailers all across the United States. Financially Sega couldn’t afford to just write off a quarter of a million systems, but commercially they couldn’t in good conscience sell soon-to-be obsolete systems to customers who would feel foolish or deceived that they didn’t get Sonic. Sega could have waited until the rest of the Altered Beast systems sold out, but they weren’t selling all that fast to begin with. Besides, the whole point of unleashing Sonic now was to cuckold the Super Nintendo.
The whole situation had a vaguely solve-for-X middle-school-algebra feel to it and ideas were tossed around for days. Finally, they found a way to kill two birds with one stone, and set a schedule to make it happen:
June 15: Lower price of Genesis + Altered Beast to $149.95
June 30: Third-party “Graduate to Genesis” promotion ends
July 1: Begin promotion entitling customers to receive a free Sonic game by mail
Mid-July: Begin shipping Genesis units + Sonic The Hedgehog to retailers
Mid-July to mid-August: Ship remaining Genesis units + Altered Beast to select retailers
September 15: Exclusively sell Genesis + Sonic The Hedgehog at $149.95
This final strategy would offer the best of all worlds. Customers would be happy to get two games for the price of one, and retailers would be happy to unload the old hardware systems. Meanwhile, while the retailers were busy unloading the 100,000 units of old inventory, SOA and SOJ were busy with their own 150,000 units, though the product didn’t physically travel far. The employees on both continents would open boxes of the old systems, remove the console, and then repackage it into a brand-new box containing Sonic on the cover and the new game inside.
Week 7: Sonic Boom
Unlike movies, books, and music albums, in 1991 there was no official release date for videogames. When a game hit stores was a matter of logistics, not premeditation. There were just too many variables and too many unaffiliated retailers; besides, mostly the product came in from Japan in dribs and drabs. As a result, there was no game-changing D-day for Sonic The Hedgehog but rather a period of several weeks in late June and early July when the blue blur started showing up in stores. Nevertheless, as soon as Sonic sped into the homes and hearts of a few players around the country, word spread exponentially—in schoolyards, on college campuses, and around watercoolers. And because Kalinske had been granted approval from Japan to pack Sonic with the system, it wasn’t just $50 games that were flying off the shelves, but Genesis consoles that cost three times that much. And when people bought a Genesis, not only would they end up buying more games later but, most important, they likely would not purchase a Super Nintendo. A line had been drawn in the sand, and the only way to hang out with Sonic was by stepping onto Sega’s side.
As sales of the Genesis doubled, tripled, and then quadrupled, Kalinske couldn’t help but stare at the figures in his office and secretly want to see the faces of Sega’s board of directors in Japan. He knew how stupid they’d thought he was to give it away for free; he remembered how condescending their smiles had been when they shouted at him in Japan. What were they feeling at this very moment, Kalinske wondered, and what would they be feeling a month from now when Sega of America’s success continued to grow? Kalinske allowed himself just a moment to gloat.
Then Kalinske reminded himself that Sega was one company, and together SOJ and SOA were inciting a pop-cultural revolution. And yet, even as he had this thought, a small part of him couldn’t help but root for Sega of America to beat the living daylights out of Sega of Japan and make those directors choke on their condescending smiles. It was only a small part of him, but it was a part of him nonetheless.
Week 8: The Happiest Place on Earth
Financial reports, sales figures, and market breakdowns can capably tell a story, but the power of numbers will never compare to that of anecdotal evidence. And in the weeks following Sonic’s release, everyone at Sega had their own story. A friend called to say that his son kept curling up in a ball and trying to zoom around the house. Some kids at the mall were tapping their shoes like Sonic. The guys at the comic store were arguing about who would win a race between Sonic and the Flash. The realization amongst Sega’s employees that what they did in this small office made real-life ripples filled their lives with an anything-is-possible excitement that most of them had lost at some point during their childhood.
Kalinske collected similarly inspiring anecdotes of his own, though his favorites were the secondhand stories that his daughters shared about their Sonic-loving friends at summer camp. To celebrate Sonic-mania, he took his family to Disneyland. Kalinske and Karen locked arms and led the way, the giddy girls scampering along by their side. Together, they strolled through the crisscrossing little streets of Kalinske’s favorite section of the park, Fantasyland. In addition to the teacups, it had the Matterhorn, Mr. Toad’s Wild Ride, and It’s a Small World. He knew that it was en vogue to mock It’s a Small World, to call those animatronic dolls creepy or brush off the music as maniacal, but he loved how it was one of the few rides that actually tried to impart a message: peace, love, unity, community. It strived for more and maybe it failed, but there was something respectable about how it tried.
Kalinske was humming the ride’s hypnotic music when Karen gently nudged him. “Look,” she said.
Kalinske assumed that it must be another Sonic The Hedgehog devotee, doing something hedgehoggy. But it wasn’t. He followed the path of his wife’s gaze to a father and daughter moving in the opposite direction. The father was sweaty and tired but tr
ying his best to remain enthusiastic as he pushed a pale little girl in a wheelchair. It was Bruce Kaspar and his daughter Anique, Kalinske’s former neighbors from Los Angeles.
Karen flagged them down, and they all talked and laughed and remembered when. A couple of times Tom and Karen kindly tried to probe about what was wrong with Anique, but Bruce brushed off the question and explained that she was just sick. Following this encounter, the Kalinskes would learn that Anique had pediatric AIDS, but even before they were aware of the diagnosis, they could tell that the situation was bad. Despite the gravity of her illness, however, Anique wore the biggest smile of them all. Happy and upbeat, she shone with a joy so real that it was contagious.
The two families spoke for a while, vowed to keep in better contact, and then went their separate ways, each enjoying a day in the happiest place on earth.
Week 9: Humans Against Genesis
“Play it again,” Kalinske instructed during a meeting between Sega’s marketing team and account executives from Bozell, the advertising agency that Michael Katz had worked with to create Sega’s previous “Nintendon’t” campaign. The executives were presenting the first national Sonic The Hedgehog commercial. In the spot, a fashionably bespectacled woman dressed like a librarian sits at a desk and speaks to the camera in a saintly, nun-like tone of voice. As the president of a fictitious organization called HAG (Humans Against Genesis), she denounces Sonic for his blazing speed and smarty-pants attitude, and ends by asking why he can’t be more like “that nice boy Mario.” After running the ad for a second time, the executive stopped the tape. “So?” he asked expectantly.
As all eyes redirected toward Kalinske, he remained silent for a moment. “So?” Kalinske finally said emotionlessly, matching the executive’s cadence. “That about sums it up. So what? So this woman is telling us to ignore Sonic and we’re supposed to care? What’s the point of this?”
Kalinske looked around. “I mean it. What’s the point of this commercial? What’s the message? What do we want people to feel when they watch this?” The room was stunned into silence. They had never seen Kalinske like this before, at least not in the office. He continued on, questioning the reason for the commercial’s existence—not in a particularly cruel way, but not in a particularly kind way either.
“It’s supposed to be funny,” an executive finally said in defense.
“Yes,” Kalinske said. “It’s supposed to be funny. But this is just derivative. It’s an obvious rip-off of Saturday Night Live’s Church Lady. But at least she’s less likable. She’s prissy without any glimpse of warmth. She’s angry on the outside, not the inside, and that makes the HAG joke fall flat.”
“Kalinske’s spot-on,” Race interjected. “If we’re serious about going to war with Nintendo, then it’s time for us to start launching grenades.”
“There you go,” Kalinske said, nodding to Race. “Someone who gets it.”
“But you approved the HAG concept!” the executive reorted.
“Yes,” Kalinske said with a slap in his voice. “And I’d approve it again and again. It’s a clever idea if done right. It’s supposed to make Genesis owners feel proud to be outsiders, but this is just confusing. It doesn’t work.” Kalinske shook his head. He had a lot more to say but saw no point in saying it. It was too late—this was the spot they had produced. “I don’t like it,” he said, and left the room.
Kalinske and Race went to his office and began scribbling ideas on a pad. None great, but some decent. Better than the Church Lady ripoff, at least. He kept filling up the page until he felt certain of the answer. He didn’t yet know the what, but he knew the how, and he needed to speak with Shinobu Toyoda. “Hang tight,” Kalinske said to Race. “I need to speak with our friend Shinobu.”
“Be careful what you say around him,” Race cautioned.
Kalinske paused before opening the door. “Why’s that?”
“Oh come on,” Race said, as if it were obvious. “The guy’s a banana. Yellow on the outside, white on the inside; who knows where his allegiance truly lies.”
Kalinske rolled his eyes, left the room, and made his way to Toyoda’s office. He knew that some at Sega still questioned Toyoda’s devotions, but there wasn’t a doubt in Kalinske’s mind which side he was on. That’s why he was completely unafraid to approach Toyoda with what he was about to ask. “I need your help.”
“Of course,” Toyoda said, waving him in. “Tell me what is required.”
“That ad is all wrong. I know it’s tongue-in-cheek, but we’re going after ourselves when we ought to be going after Nintendo. Steve is right, we need to go negative, and I need you to get Japan on board.”
Toyoda gave a noncommittal nod. “There is a chance this can be done,” he said. “But hard because they did not even like us to say ‘Genesis does what Nintendon’t.’ ”
“Good,” Kalinske said, “because that’ll be complimentary compared to what we need to do. I’m talking head-to-head, in-their-face, no-turning-back stuff. Like what we did at CES, but on a national scale.”
Toyoda adjusted a shirt cuff as he thought this over. “I know how we can do this,” Toyoda said at last with a proud smile. “But we can only get away with something like this once.”
Week 10: Attention Nintendo Console Owners
Toyoda’s strategy for slipping a new commercial past the Japanese gatekeepers was quite simple: he wouldn’t tell them until it was too late. He and Rioux would move money around to pay for the new ad, which could be done with relative ease due to the skyrocketing sales of the Genesis. Meanwhile, Sega’s marketing team would work with Bozell to create the new ad, which would be ready in time for the release of the Super Nintendo. Three days prior to the start of the campaign, Toyoda would inform Japan about the spot. He would act as if he had been caught off guard, and would offer to do everything in his power to pull the ad. In reality, however, it would be too late to stop the process, and the commercial would air, at least for a few days. If SOJ was angry, at least SOA would get a few days out of the ad. And if SOJ was okay with the ad, so much the better. Either way, the commercial would air.
Kalinske was in his office working with Nilsen on a concept to deliver an uppercut to Nintendo on national television. Or, rather, that’s what they were supposed to be doing. Instead they’d gotten sidetracked as Nilsen paged through a newspaper in search of an article that might be worth reading aloud in his best radio-announcer voice. For most of July, newspaper-fishing had become a favorite pastime as a string of small but unfavorable developments at Nintendo translated into lucky breaks over at Sega.
It had started on July 5 when a federal judge ruled in favor of Galoob Toys, makers of the Game Genie, in a copyright infringement that would likely cost Nintendo of America $15 million. Then on July 19, Mike Tyson, the face of Nintendo’s popular boxing game, was arrested and charged with the rape of Miss Black America contestant Desiree Washington. Two days later, on July 21, for the first time in three years, a Nintendo product was not the number-one-selling toy in the country. They had been displaced by a gigantic water gun called the Super Soaker. Kalinske made it a point to use every piece of good news, no mater how small, to motivate the troops. He would also clip these articles and send them to Wal-Mart each week along with a barrage of sales reports to show them how quickly the Genesis was flying up the sales charts.
“Anything good in there today?” Kalinske asked.
“Let us see, let us see,” Nilsen said, flipping through the newspaper. “Here’s something,” he said, though didn’t seem particularly pleased. He laid the paper on the desk for Kalinske to see for himself. It was a notice that occupied more than a quarter of the page and began with the headline “Attention Nintendo Console Owners.” In the line below that, it read:
Did you buy a Nintendo Entertainment System game console between June 1, 1988, and December 31, 1990?
If so you are entitled to a $5 coupon.
The notice went on to explain how the attorneys general fr
om all fifty states had brought a price-fixing case against Nintendo, which had been settled when Nintendo agreed to pay back $25 million to their customers—in coupons.
“Those brilliant bastards,” Kalinske said, more impressed than annoyed. For years Nintendo had been fighting federal pressure regarding their business tactics at the retail level. Some called their tactics monopolistic, some believed Nintendo was merely being admirably aggressive, and others believed the government’s case was nothing more than a witch-hunt, another case of Americans trying to stymie the influence of Japan (an argument partially aided by the fact that the initial charges were brought against Nintendo on December 7, 1989, which also happened to be the anniversary of the 1941 attack on Pearl Harbor). Whether the charges were valid, the government’s threat was undoubtedly real, and for years Nintendo had been operating with the sword of Damocles dangling over its head. Now, however, it seems they had managed to steal away the sword and invert the entire situation into an advantage. Instead of facing stiff, crippling penalties like those inflicted upon AT&T and General Electric in years past, Nintendo’s punishment was to offer $5 off to customers, who’d have to spend at least $50 to use the coupon. That wasn’t even a slap on the wrist—it was more like a government-issued printing press allowing Nintendo to keep minting money.
“You worried?” Nilsen asked.
“Worried?” Kalinske said. He believed that the 8-bit NES was nearing the end of its life cycle, so the coupon itself didn’t particularly bother him. What nagged him, however, was Nintendo’s political savvy. It was as impressive as it was ominous. “Worried? Hardly!” Kalinske belted. “The stronger they are, the sweeter it’ll be when we finally take them down.”
Console Wars Page 18