Console Wars

by Blake J. Harris

  Another call, this one from White’s wife. “Will you be home for dinner tonight?”

  “No comment,” he replied.

  “That kind of a day, huh?”

  “You can’t even imagine,” he said. “I should be home by nine, provided Nintendo doesn’t go ahead and buy a football team.”

  White understood the good intentions behind purchasing the Mariners, but surely Arakawa couldn’t be naive enough to believe that the country would see the situation from his point of view. He wanted to give his boss the benefit of the doubt, but that was becoming harder to do as it became more and more clear that he and Arakawa suffered from irreconcilable philosophical differences. In short, the issue was that White was a classically trained student of advertising who believed in the divine power of marketing, while Arakawa was a master of product development who believed that marketing was pretty much a complete waste of time. This was particularly troubling to White in light of the fact that he was, you know, Nintendo’s director of marketing.

  Though Arakawa’s perspective may have seemed shortsighted, there was an anecdotal basis to his outlook. Over the past decade he’d heard from focus groups that the NES would never sell in America, that the Legend of Zelda was much too confusing, and that an Italian plumber made for a terrible hero. Experiences like these led him to believe that the fundamental problem with marketing was its reliance on the past. It looked backward, not forward, and failed to take into account innovation, trends, or cultural shifts in taste. At the end of the day, the only true predictor of future success was the quality of a product. In short: the reason a game sells is because it’s a good game, not because Bill White tells people to buy it.

  Though the differing philosophies occasionally produced friction over the years, it was never anything that didn’t evaporate in a day or two. After all, why bother blowing gaskets or holding grudges when things were going so well? But as Nintendo shifted to 16 bits and the era of good feelings came to a close, blind faith was gradually replaced with muted skepticism. Fingers that once had seemed to have that Midas touch were now being pointed to allocate blame. And as the company began to lose market share, White found himself disagreeing more and more with Arakawa and the direction that Nintendo was headed. Ultimately, though, his concerns didn’t matter much. Arakawa was Nintendo of America’s president, and his opinion was the magic wand that enchanted everyone and everything into action. Nothing exemplified the growing divide greater than how Nintendo responded to the emergence of Sega.

  For the past year, Sega had been going directly after Nintendo; naming names, trashing games, and making all kinds of bogus claims. At first it was almost cute, their yippity-yapping about how “Genesis does what Nintendon’t,” like a toy poodle barking in the face of a Great Dane. It was a nuisance, yes, but White knew it wasn’t worth the energy to fight them off. But then Tom Kalinske took over, and that poodle turned rabid. Sega lowered their price, signed up third-party developers, and painted Nintendo as nothing more than a cutesy kids’ company. Their bark was still much greater than their bite, but it was loud enough to warrant a response. Now was the time to put Sega in their place, either by launching a campaign that bit them right back or by feeding them some scraps and sending them away from the table. But this was not the Nintendo way. They refused to stoop to unsavory levels and negotiate with marketing terrorists.

  Sega realized that they could do or say whatever they wanted, without fear of retribution. At the Consumer Electronics Show, Sega had thrown Mario into a footrace with their too-cool blue hedgehog. Nintendo did not respond. Then they took their parlor trick on the road, setting up their side-by-side comparisons around the country. Still Nintendo did not respond. And then over the holiday season, Sega took things to the next level, airing negative ads, puffing up their numbers for the press, and continuing to find ways to exploit their new mascot, who was nothing more than a Mario ripoff in fast shoes. Once again, Nintendo did not respond.

  Looking back, White couldn’t believe that Nintendo had let this happen. Sega was nothing but a one-trick pony who had fooled the world into believing their hype. If only his bosses had allowed him to bark back, then they could have sent Sega to the woodshed before they became an actual threat. But now it was probably too late. White would never really know for sure, and that was the worst part. Even after everything Sega had done, Arakawa still refused to fight fire with fire. Though he had opened Nintendo’s purse strings and allocated $25 million to market the SNES, that money was earmarked for a wholesome, kid-friendly, gee-whiz campaign, which played right into Sega’s hands. But Arakawa wasn’t too concerned. He would forever be a slow-and-steady-wins-the-race kind of guy, patiently hoping that the nineties would turn out to be as much of a fairy tale for Nintendo as the eighties had been.

  Only time would tell, but there was one key difference between now and then. The reason that Nintendo had pulled off the impossible in the eighties was because they had fought for every inch. Now, though, they were sitting back and letting others take their precious real estate. Nintendo had underestimated Sega, undervalued backward compatibility, and underrated the importance of Howard Phillips’s freckled face. They were slightly wounded, but still very much the market leader. If they wanted to remain king of the jungle, then they should be spending their time searching for that same fighting spirit, not buying baseball teams. It was time for Nintendo to get back to work.

  What was done was done, however, and White was willing to adopt the key tenet of Arakawa’s philosophy: look forward, not backward. The bid for the Mariners had already been made, and the only thing they could do now was damage control. For the deal to go through, it would have to be approved by the commissioner, the ownership committee, and at least 75 percent of the twenty-six major league baseball teams. At this point, White didn’t know which of the two evils would be better: suffering through months of bad press only to watch the deal fall apart, or miraculously receiving ownership of the team and exposing the company to continued attacks. He started to give this question some serious thought, but was interrupted once again by a ringing phone.

  26.

  ORIGIN STORIES

  Kalinske didn’t mean to stare. It was against his nature to gawk at others, but he simply couldn’t help himself when glancing at Howard Phillips, whose neck was noticeably lacking a big, bright bow tie. The post-Nintendo Phillips looked older, wiser, and less two-dimensional. It was as if Charlie Brown had upgraded from his everyday yellow shirt with the black zigzag to a special-occasion navy sport coat. It was only a small change, perhaps, but it represented a redefinition of character. Howard Phillips was all grown up now, and the only thing that epitomized that maturation more than a revised fashion sense was the fact that he had come to San Francisco for a celebratory dinner with Kalinske and Toyoda.

  “For the sake of decorum,” Phillips said, speaking with a delicate cadence that seemed to expertly bend the English language, “I would like to express right off the bat that I have nothing but the utmost respect for Nintendo and my former colleagues.”

  From across the table, Kalinske and Toyoda nodded in unison. This was too fine a restaurant and too fine an occasion to let things devolve into a gossip session. Tonight was about one thing and one thing only: finalizing the deal for Nintendo’s former Game Master to come work at Sega.

  “Of course,” Toyoda said. “We will not speak ill of our competitor.”

  “The truth is that we have tremendous respect for Nintendo as well,” Kalinske said. “It’s just that, unlike you, we also despise them.”

  Phillips chuckled. As he did, Kalinske couldn’t help but notice a slight disconnect between the simplicity of his bulging smile and the complexity in his eyes. Perhaps Phillips harbored more of a grudge than he let on.

  “Speaking of the devil,” Kalinske said, “how’d you even wind up there?”

  “It all began a long, long time ago,” he said, his eyes suddenly shining. It was undoubtedly a tale he’d told many tim
es before, but also undoubtedly one that he loved even more with each retelling. When he spoke it was like a superhero revealing his origin story, the legend of how it all began. Over the next decade, there would be many tales filled with the pow! bam! zap! of success, but nothing would ever rival that initial experience. “At the time, I was just a student at the University of Washington. It was 1982, and one day my good friend—my roommate actually, Don James—got a job with this small, nondescript company that had set up shop in the southern district of Seattle.”

  “Nintendo?” Toyoda asked.

  “Bingo,” Phillips said. “They had been importing these giant, refrigerator-sized arcade cabinets from Japan until they realized it would be cheaper to simply send over the parts and have someone put the things together over here. So Don got hired on to do that job. And then after a couple months of him putting these things together, they decided they wanted someone to keep track of these things. So they asked me if I wanted a job, and just like that I became the warehouse manager.” Phillips shook his head. “There couldn’t have been more than ten of us back then. Myself, Don, Mr. Arakawa, and a few other helping hands. Who could have predicted what would happen next?”

  As Phillips told the story, Kalinske couldn’t help but feel a sense of compassion for Nintendo. It was like hearing about Goliath’s early years, when he was just a skinny kid who liked skipping rocks and making macaroni art. The fact that Phillips had been there since the beginning made Kalinske feel even better about bringing him to Sega. It would hurt Nintendo that much more.

  “Here am I,” Phillips went on, “just some kid working in the warehouse. And one day Mr. A. comes to me, shows me this game with a funny name, Donkey Kong, and says, ‘What do you think about this?’ He wants to know because the company isn’t doing so great and they want the next arcade game they bring in to be a big smash hit. So I turn it on and start playing the game, and a minute or so later I just blurt out, ‘Mr. Arakawa, we gotta bring this to the United States!’

  “Now, obviously I’m not saying that I’m the reason that they chose to import Donkey Kong, but I will say that the version of the game I played that day was not the same one that we sent out for people to play. Through trial and error I made some tiny tweaks to adjust for difficulty, timing, number of lives; that sort of thing. From then on, Mr. A. would always come to me and ask if a new game was cool or if it sucked. What needed to be done to make it better? Why wasn’t this as fun as it should be? It was a dream come true—I was like a focus group of one.”

  This was the real reason that Sega wanted Phillips. Yes, it would be satisfying to steal away Nintendo’s former mascot, but by this point Sega was past high school pranks and focused on going from good to great. Phillips, for whatever reason, had an unquantifiable, superhero-like ability to determine the anatomy of great, and Sega needed this now more than ever. That was why Toyoda had been wooing him for many months. For a long time, his overtures had been respectfully declined, but as Sega continued to trend upward, Phillips couldn’t help but seriously consider the opportunity.

  After leaving Nintendo, Phillips did not find the grass to be any greener at Lucasfilm Games. Less than a year later, he moved on to THQ, whose grass also wasn’t tinted to his liking. By this time, Sega’s offer to lead a development team and produce games was looking pretty good. In fact, it looked great, but Phillips was trying his best not to see it that way. As wonderful as the opportunity appeared to be, he couldn’t wrap his brain around joining the dark side. The games that Nintendo made were treasures that could be enjoyed by the whole family. No sex, no gambling, no violence. But Sega did things differently. Although they hadn’t specifically set out to publish unsavory content, by transforming themselves into the anti-Nintendo, Sega had become the primary outlet for more mature content. Onslaught, Streets of Rage, Fatal Labyrinth—just look at the titles of these Genesis games! Even with Sonic The Hedgehog, a great game for sure, why did they have to give him such a naughty attitude? What kind of values did Sonic teach to kids? Rowdiness? Rebelliousness? Perpetual impatience? Now, with only 16 bits, perhaps this lack of censorship was no big deal, but as the technology of videogames progressed, the differences in philosophy between Sega and Nintendo would only become more pronounced.

  And yet, even though Phillips felt this way, he had still agreed to join Sega. He resented himself for saying yes to Toyoda and cringed a little bit while driving to that night’s dinner, but working for them would be better than his current position at THQ, and there didn’t appear to be any other options. It was a bitter pill for him to swallow, but he promised himself that he would effect change from inside Sega, act as a moral compass, and stay true to himself.

  “With the success of Donkey Kong we became the largest shipper in the port of Seattle,” Phillips went on. “And every week we’d receive a delivery of about a hundred or so forty-foot containers. We never quite knew what to expect. Not even Mr. Arakawa. Sometimes it was just more Donkey Kong units, sometimes it would be arcade cabinets for a different game, and sometimes it would be a new toy or electronic device that Mr. Arakawa would have to decide if he wanted us to start selling.”

  “That sounds kind of exciting,” Kalinske said.

  “It was!” Phillips exclaimed. “It was like Christmas morning every week! And then one week it was like the best Christmas of all time. We were still pretty busy with Donkey Kong, I remember, and were getting a lot of that, but one of the containers was full of nothing but a bunch of boxes for Mr. Arakawa. And inside one of them was this thing called the Famicom. It was a goofy, very toy-ish-looking thing. White plastic, maroon trim, and a little cartridge of Donkey Kong that just slides right in. So we hooked the thing up to the TV and it was just un-frickin’-believable.”

  “Un-frickin’-believable.” That was a word Kalinske had never used before, and he felt confident that he’d end his days without it ever coming from his mouth. It wasn’t a matter of taste, but a function of age. His daughters could get away with it, maybe even Karen, but not himself. Words like that were part of the vernacular for a different generation. It’s funny how that works, the hidden truthfulness of language. Kalinske could throw his back out playing basketball and convince himself that it was a one time thing, and he could discover a gray hair and feel the distinguished pride of wisdom, but there was no way that he could ever say “un-frickin’-believable” without feeling like he was a hundred years old. But in a strange way, this disconnect was part of the reason he loved Sega so much. By going after teens and young adults, a demographic that he had never targeted before, he felt a small link to a youthful world of hope, change, and irony, one that his daughters would come into as they grew and which they would inhabit for many years.

  “This is so very fascinating,” Toyoda said. “What an interesting time.”

  “And it just kept on getting more exciting,” Phillips said, now speaking with a noticeable degree of nostalgia. “After Mr. A. decided that it was time to try to bring back the videogame industry in America with the NES, the question became which games we would sell here. By this time, they already had fifty games selling in Japan, but we were only going to release sixteen over here. So I played each of them, all the way through, and provided an analysis of which ones I thought were the best. After that, our head count grew from a hundred to a thousand, sales hit a billion dollars, and, well, things kind of went batshit crazy for a couple of years.”

  Kalinske and Toyoda laughed. The sensation that Phillips described, the sheer insanity of riding the roller coaster, had recently become a popular topic of discussion amongst Sega’s top executives. They didn’t want to jinx Sega’s success, but they felt a need to be prepared for the best. When it happens, that exponential expansion, it happens fast. And if the right pieces aren’t in place, companies can easily collapse under the weight of their own success (an inability to fulfill increasing orders, ill-advised partnerships, failure to adapt with changing technologies, etc.). So to avoid the pitfalls of newfound p
rofitability, Sega of America had brought in a trio of talented veterans: Doug Glen, Joe Miller, and Ed Volkwein.

  Doug Glen was a tall, bald, tech-savvy MIT grad who came on board to run business development. It was borderline impossible to spend a minute with Glen and not step away convinced that he’d missed his calling as a college professor. Instead of pursuing a career in education, however, he’d opted for a combination of Silicon Valley, Madison Avenue, and je ne sais quoi, arming himself with a sophisticated fluency in technology, advertising, and a multitude of Romance languages. With a finger in so many pies, he was the perfect fit to partner Sega with other companies on the cutting edge. At the top of Glen’s list, however, were launching a CD-based hardware system and exploring the futuristic concept of making videogames available to download directly to a player’s television. Beyond these diverse talents, Glen’s arrival also signified a superstitious victory of sorts: he had a reputation for joining companies that were about to become the next big thing.

  If Glen could be considered the kitchen manager responsible for selecting which ingredients ought to be part of Sega’s recipe for success, then Joe Miller would be the chef responsible for slicing, dicing, and mixing everything together. Miller was an engineer by trade and a perfectionist by reputation. People tended to see him in one of two ways: as pretentious and pompous, or as a genuine visionary. But regardless of which view people took, they always looked at him with an underpinning of reverence. When it came to engineering, Miller knew what he was doing and had the résumé to prove it. He had spent the past decade bouncing between gaming outfits (like Atari and Epyx) and computer companies (like Koala Technologies and Convergent), which made him familiar with a wide spectrum of software and hardware. He had initially been brought in by Sega’s head of product development, Ken Balthaser, to set up Sega’s new multimedia studio, where the company hoped to record top-notch musical acts and film live-action movie scenes to be used in games for the CD system they hoped to launch in late 1992. Around the time Miller finished building the studio, Balthaser decided to leave and start a software company with his son. Kalinske, Rioux, and Toyoda all believed that Miller would be the perfect successor, a nimble-minded guy who could handle consoles, peripherals, and software for the next generation. Miller agreed with this assessment but didn’t know if he wanted to accept the undertaking. He confided to Kalinske that, unlike other candidates, he had the benefit of several months spent observing Sega from the inside and did not appreciate the constant pressure that Sega of Japan exerted on product development. At the time, Sega of Japan insisted on reviewing every single R&D dollar spent, and when it came to projects that they didn’t fully support, SOJ had a habit of “delaying” discussions until they evaporated. So Kalinske told Miller to write up a list of everything that he wanted changed. The following week, Miller submitted a list, and a week after that Kalinske returned it. “It’s all taken care of,” Kalinske said. “So you’re out of excuses. Welcome to Sega.”