Console Wars

by Blake J. Harris

  “Yes, you did. But in the process you also saved the day. And I think the only fair thing to do now is to buy you a cape.”

  “Like Superman?”

  “Exactly,” Kalinske said. “Of course, yours doesn’t need to be red like his. The color choice is completely up to you. But whatever you pick, it should match your boots.”

  “Boots too?” Toyoda asked.

  “Look, I know that I’ve already thanked you a million times,” Kalinske said, speaking more like a friend than a boss, “but you deserve every one.”

  “Thank you, Tom,” Toyoda said, sounding more like a friend than an employee.

  “Seriously, I don’t even want to think about the mess we’d be in without Naka,” Kalinske said, shaking his head at how such an alternate future would play out. He was referring to Yuji Naka, the creator of Sonic The Hedgehog, who was known for his genius programming skills, legendary perfectionism, and notorious temper. In late 1991, following Sonic’s staggeringly successful release in the United States and its less overwhelming but still impressive release in Japan, Naka was discontent. He was fed up with Sega of Japan for a variety of reasons, including his financial compensation (around $30,000, though he did later receive bonuses), his treatment by management (which was giving him a hard time for taking fourteen months to complete the game, as opposed to the standard ten) and for needing a team of four people (as opposed to the usual three). Naka was also bothered by the lack of recognition.

  This game and the whole Sega vs. Nintendo debate never would have existed without him, yet he was hardly ever referenced anywhere for his hard work. It’s not like he was asking for his name to be in the title, but Sega of Japan wouldn’t even allow his name to appear at the end of the game. It was company policy not to credit anyone from the development teams, partially to instill an all-for-one attitude, but mostly to prevent other companies from knowing who did what, which would allow them the chance to poach programmers. Naka understood the policy, but that didn’t make it right. Artists sign paintings, writers get bylines, and a movie director’s work is hailed as “A film by So-and-So.” His desire for credit was less about ego and more about peace of mind. Naka felt so strongly that he found a secret way to credit himself and his team. At the end of Sonic The Hedgehog there is a seemingly blank screen. In reality, however, it’s a black screen with black type on it, revealing the names of those that had built the game. Because it was black on black, no player would be able to read this, nor would Sega even be aware that it existed, but Naka and his team would always know.

  Sega of Japan knew that Naka was displeased with certain aspects of the job, but they were shocked when he unexpectedly quit, exiting Sega just as they were hoping to begin development of a sequel. When Toyoda found out about this, he traveled to Japan and met with the now-unemployed Naka. With Kalinske’s blessing, Toyoda did everything in his power to convince Naka to remain with the company. Naka appreciated the effort, but he’d heard it all before . . . until Toyoda suggested that Naka come to America and make the sequel there. They would pay him more, guarantee him better recognition, and allow him to bring any ten employees of his choosing. Naka and his team would conduct their work at the Sega Technical Institute (STI), the game studio run by Mark Cerny in Palo Alto. Cerny was a game prodigy famous for creating Marble Madness when he was sixteen years old; no doubt Cerny would be a kindred spirit who could help smooth out any wrinkles in the process. Naka accepted Toyoda’s proposal and came to America with the so-called Sonic Team to create a sequel for fall 1992.

  “Is he happy here?” Kalinske asked now. “Naka, I mean.”

  Toyoda closed his eyes and silently laughed to himself. “No. But that’s Naka. He’ll never be happy. This is part of his process.”

  “All right,” Kalinske said. “Well, don’t hesitate to let me know if there’s anything I can do to make him less unhappy.”

  “Of course.”

  “I’ll check in with marketing to see if they’ve made any progress on the sequel,” Kalinske said. “What about the rest of the development slate? How are we looking?”

  “We’re very strong in original product,” Toyoda said. “But we can use some more intellectual property. I’d like to spend more time in Los Angeles to see what we can get.”

  “Perfect. Do it,” Kalinske said. “Are there any doors you’d like for me to open? It would be great if we could get something going with Spielberg. Or even Lucas.”

  Toyoda’s eyes lit up at the mention of the famous directors. “I will let you know.”

  “Great,” Kalinske chirped, always pleased to show off his Rolodex. “Then let’s talk pricing for a second. Nintendo responded quicker than we expected, and we need to react.” On January 10, mere months after releasing the SNES, Nintendo dropped the price of their console from $199.95 to $179.95. Peter Main could claim that Nintendo was crushing Sega all he wanted, Kalinske thought, but a 10 percent drop like that said otherwise. There were also rumblings from retailers that Nintendo would slash the price even further in the coming months. The price war had begun, and Kalinske looked forward to the many skirmishes ahead. “I like where we’re at price-wise, for the moment, but we need to think about staying aggressive.”

  “How aggressive?”

  Kalinske did some quick calculations in his head. “How about $99.95?”

  Toyoda nearly laughed. “Come on, Tom.”

  “Not right away,” Kalinske said defensively, but Toyoda remained unconvinced. “Fine, let’s discuss with Paul, and get sales and marketing to weigh in. Either way, we should look to have something ready for Boca.” Kalinske was referring to Boca Raton, the site of the first annual Sega Summit. Though Sega had found success at CES and could now be considered a big fish in the big consumer electronics pond, Kalinske and company thought it would be even better to have a pond all to themselves. Out of this desire came the Sega Summit, where hundreds of retailers would be invited to Florida for a week of fun, sun, and golf, with intermittent presentations for products, sales strategies, and marketing campaigns. The summit’s retailer-friendly approach presented another chance for Sega to prove they were the anti-Nintendo, and that they were here to stay. Sega was evolving the industry, and there was now room for two.

  “That is not much time,” Toyoda said, now doing some quick calculations of his own. The Sega Summit would begin on May 11. “But I think we can make it work.”

  “Good,” Kalinske said. “Speaking of price, has Japan realized yet that they need to be more aggressive themselves?”

  Toyoda sighed, but before he could reply, a graceful giraffe scampered into the office. No, actually, it was EBVB, moving at a speed that betrayed her usual elegance.

  “What’s going on?” Kalinske asked.

  She ignored him for a moment to pat down his desk in search of something.

  “Hello, Ellen Beth,” Toyoda said politely.

  But he too was ignored as her mysterious quest continued.

  “What do you need?” Kalinske asked.

  She stopped mid-frisk. “I’m looking for your remote control.”

  “Sure. What for?” Kalinske said, reaching into his desk drawer.

  “I would like to perform a magic trick for the both of you,” she explained. “In the blink of an eye, I will magically dispel the notion that all press is good press.”

  “Okay,” Kalinske said, already smiling as he handed her the remote.

  “Thank you, sir,” she said, turning on the television. “Now, as you can both see, this is an ordinary television. Made in Japan, but plays garbage made in America.” She rapidly flipped through the channels before stopping on a news station. “And without further ado, bippity boppity boo.”

  Van Buskirk tried to return the remote to Kalinske, but he was too focused on the breaking story to take it back from her. He could hardly believe his eyes and ears.

  Howard Lincoln gallantly took the podium at the Madison Hotel ballroom and announced that executives from several of the ar
ea’s leading companies would be presenting an offer to buy the Seattle Mariners. “All of the shareholders of the new company will be Seattle-area residents,” Lincoln stated, “and all the decisions will be made here.” He then explained that this newly formed ownership group, the Seattle Baseball Club, would be presenting an offer of $125 million to purchase the team. Unsurprisingly, his remarks set the ballroom filled with businessmen, journalists, and policy makers abuzz. The uproar was partially based on local fervor for the baseball team, but more so because the Seattle Baseball Club’s lead investor was Hiroshi Yamauchi, Nintendo’s Japanese-born president. And if his bid was accepted, then Yamauchi would become the first non-American to own a piece of America’s pastime.

  In truth, Yamauchi cared little for baseball. His game of choice was Go, the ancient Chinese board game renowned for its difficulty. But despite his lack of interest in balls and strikes, Yamauchi had agreed to bid when Arakawa revealed the opportunity one month earlier. Arakawa, like his father-in-law, also lacked a love for the game, but he believed that buying the Mariners and keeping them in Seattle would support a community that had already lost a baseball team once before.

  It had happened back in 1970, just one year after Seattle had gotten their first professional baseball team, the Pilots. Following the Pilots’ disappointing inaugural season, the team’s owner, Dewey Soriano, realized that perhaps he had bitten off more than he could chew. The team was losing money, primarily because they played their home games at a decrepit minor league stadium that seated only 19,500 and had a reputation for losing water pressure by the seventh-inning stretch. It was a bad situation, but help was on the way. Just one year earlier, citizens of Washington’s King County had approved a bond for $40 million to build a domed stadium, which played a heavy role in Major League Baseball’s decision to grant Seattle a team in the first place. The stadium was expected to be complete by 1972, at which point the franchise would likely recoup its losses and begin to flourish. Soriano, however, couldn’t afford to wait. The ownership group had already run out of money by the end of the season, and with a recent petition by stadium opponents delaying construction, Soriano wanted out. After the season, he engaged in a series of secret meetings with former Milwaukee Braves minority owner Bud Selig, who was leading an effort to bring baseball back to Wisconsin.

  Several weeks later, during Game 1 of the World Series, Soriano agreed to sell the Pilots to Selig for $10.8 million. Despite having a deal in place, baseball’s owners voted down the sale as a result of vigorous pressure from Slade Gorton, Washington’s attorney general. Gorton believed that Seattle was being swindled, and he refused to allow the city to lose what it had fought so many years to get, especially when they had already earmarked $40 million in public funds to build a multipurpose stadium. Gorton urged a wealthy community member to buy the team, and he got his wish when Fred Danz, a local movie theater chain owner, stepped up to the plate. Danz strongly believed that having a major league team would make Seattle a major league city, and he also felt that the domed stadium would bring a lot of revenue and jobs into the community. In November 1969 Danz signed a contract to buy the team for $10 million and was quickly approved by the American League, but one month later the deal fell through when he revealed that he didn’t actually have the money. The drama continued into 1970, and in early March the Pilots reported for spring training still unsure where they would play. With the season scheduled to begin in weeks, the owners granted approval to the original deal they had nixed, which would move the team to Milwaukee.

  Once again Gorton protested. He filed an injunction on March 16 to stop the deal, but his legal action was trumped by another: Soriano’s ownership group filed for bankruptcy and announced that they would be unable to pay coaches, players, and office staff. Up until this point, the team’s equipment had been sitting in Provo, Utah, where drivers awaited instructions on whether they should drive to Seattle or Milwaukee. They got their answer on April 2 when the Pilots were officially declared bankrupt, five days before the season was set to begin. In the next five days, Bud Selig, the franchise’s proud new owner, changed the team name from the Pilots to the Brewers, in honor of the Milwaukee minor league team that he had cheered on as a boy. Though he was able to change the name, there was not enough time to order new uniforms with the navy and red colors from those Brewers teams of yesteryear. Instead, the newly minted Milwaukee Brewers were forced to adopt the blue and gold of the Seattle Pilots, a color scheme that the team still wears to this day, and on April 7 this new-old team squared off against the California Angels. They lost 12–0.

  Though the former Pilots lost the game that day and Seattle was devastated to have lost its chance at becoming a major league city, Slade Gorton refused to throw in the towel. He obtained the services of famed trial attorney Bill Dwyer and, on behalf of the city, they filed a suit against the American League for fraud, breach of contract, and violations of the Sherman Antitrust Act. They claimed that as a result of promises made by Major League Baseball, the city of Seattle had made several large expenditures, notably $1,115,000 to purchase Sicks’ Stadium and $1,800,000 more to make improvements demanded by the league. The legal drama persisted for years until the American League voted on January 14, 1976, to give Seattle an expansion team in 1977. Baseball in the city was officially reborn on April 6, 1977, when the Seattle Mariners, rather fittingly, lost to the California Angels, though by a score of only 7–0 this time.

  Attorney General Slade Gorton, now a local hero, became Senator Slade Gorton in 1981. And while it’s impossible to say that baseball would never have returned to Seattle without his persistence, it’s fair to assume that when he watches the Mariners take the field, he feels the pride of a parent watching his son play ball. For this reason, he was particularly troubled to learn on December 6, 1991, that current owner Jeff Smulyan had given up on Seattle and would be moving the team to Florida unless a local investor bought the team by March 6, 1992. His ultimatum tugged at the city’s heartstrings, but despite communal love for the Mariners, nobody seemed willing to make a bid for the team—until Arakawa, who understood the emotions at stake, brought the situation to Yamauchi, who agreed to buy the team so that it could remain in the city where it belonged. To Gorton, who received the good news on Christmas Eve, this was utterly incredible, but the exclamation point came with an obvious question mark: would Major League Baseball approve the sale to a Japanese investor?

  In order to increase the likelihood of acceptance, he met once again with the same local businessmen who had declined to buy the team earlier and asked these true-blue, apple-pie-loving Americans if they would consider purchasing a minority stake. Through these efforts, the Seattle Baseball Club was formed, with Arakawa serving as chairman, Lincoln as its spokesman, and a group of investors that included Hiroshi Yamauchi, Chris Larson (Microsoft’s senior program manager), John McCaw (executive vice president of McCaw Cellular), Frank Shrontz (chairman of Boeing), and John Ellis (chairman of Puget Power). Of these seven individuals, only one was not at the press conference: Yamauchi, whose absence further ignited skepticism about Japanese investment in American baseball. After all, the only thing more suspicious than finding an elephant in the room is being invited to an elephant’s party and finding no elephant at all.

  Lincoln was aware of this fact and worked to downplay Japanese involvement with the club’s operations. He explained that the financiers were “passive investors who intend to leave the operation of the club to professional baseball people.” Though concern about foreign ownership would linger through the press conference and likely into the months to come, it was clear that Howard Lincoln was thrilled by this opportunity and the good that Nintendo was able to do for its home state. Unlike Yamauchi and Arakawa, Lincoln loved baseball, so perhaps it was fitting that he was the one up there on the stage. Or perhaps it was more fitting that game-changing news for a team that was born out of a lawsuit would be announced by a litigator whose legal mind was instrumental in building
an 8-bit empire that had just shocked a three-dimensional world.

  24.

  FYRIRGEFNING SYNDANNA

  Olafsson’s thin fingers danced across the keyboard, the thrill of this ritual evident on his face. From his apartment on New York City’s Upper West Side, he spent the morning’s pre-dawn hours tapping away with the dizzying grace of a concert pianist. There was a certain satisfaction in seeing one’s progress scroll across the screen, as well as the ability to delete unwanted thoughts. Word processors, in a sense, had given man the power to reinterpret the entire human experience.

  In addition to being a physicist, Olafsson had taken up a side career as a writer. While rising up the ranks at Sony, he continued to pursue his passion for storytelling, and in 1991 the Icelandic publisher Vaka-Helgafell released his first novel, Fyrirgefning Syndanna (The Forgiveness of the Sins). The 286-page thriller tells the story of Peter Peterson, an expatriate businessman living in Manhattan, who suddenly passes away. In addition to bequeathing his two children a vast fortune and a Park Avenue apartment, Peterson has also left them a grave secret. They discover a sheaf of pages, written weeks before his death, that reveal a crime of passion committed in the throes of unrequited love, a crime that had burdened Peterson for his entire life. The story they unravel spans their father’s boyhood in Iceland, the Nazi occupation of Denmark, and his business career in modern-day Manhattan. Olafsson’s debut novel was well received, drawing comparisons to the work of Ibsen and Dostoevsky, and in December 1991, Fyrirgefning Syndanna was nominated for the Icelandic Literary Prize.

  Writing and the art of translation were both difficult undertakings, but at least with those endeavors the artist remains in control of the outcome. The same, however, could not be said about the world of business. Commerce was a kitchen filled with so many cooks, each of varying competence and inclination, that rarely did a dish fully satisfy the diner’s hunger. Nowhere had this been more evident than with regard to Sony’s future in videogames. In June 1991, Nintendo had publicly humiliated Sony. Now, six months later, many of Sony’s senior executives were pushing to work out a new deal with Nintendo, one that would allegedly offer a “nongaming role.” In contrast to the title of his book, Olafsson believed that forgiving Nintendo would put Sony’s software aspirations in purgatory and effectively kill any future hardware plans. Though the majority of executives disagreed with Olafsson, he had some strong allies on his side, the most important of which was Sony president Norio Ohga, and it was becoming clear that two distinct forces were growing within Sony: the old guard, who wanted to work with Nintendo or not be a part of this industry at all, and a newer generation who believed that videogames were the future of consumer electronics. The old guard held much of the clout, but the newer generation had Ohga’s support. Eventually these opposing forces would meet head-on and alter Sony’s trajectory.