Console Wars

by Blake J. Harris

  But that all changed at the pivotal management meeting on June 24, 1992.

  After Sony’s board of directors had made it clear that they had little interest in moving forward, Ken Kutaragi stunned them by revealing the console he had been secretly working on for months. In early 1992, he internally recruited the engineers behind Sony’s System G (a special-effects engine that retailed for $250,000), and persuaded them to help him build a new and improved system capable of rendering 3-D graphics. By this point, he already had a basic design concept, although it was still in the architecture stage. Nevertheless, he believed it was vastly superior to anything out there, as well as to anything in Sega’s and Nintendo’s pipeline, and this was what he proudly presented to the executives on hand. This was the moment he had been waiting for.

  Unfortunately, Sony’s directors still weren’t fully convinced. Like before, with the Super Famicom audio chip, they fixated on the defiance and not the brilliance. Luckily for Kutaragi, also like before, Ohga was there to protect him. During that meeting he quizzed Kutaragi on the capabilities of this proposed console and how such a product would fit into the overarching Sony brand. Kutaragi adeptly answered all of Ohga’s questions and did so with a bravado that many in the room interpreted as arrogance. When the young engineer finished presenting his creation, Sony’s chairman appeared torn. Kutaragi picked up on this and challenged his boss by asking if he was going to sit back and accept how Nintendo had treated Sony. This reminder of those fresh wounds filled Ohga with rage, and looking at what could be Sony’s bandage emboldened him to trust his gut. “There is no hope of making further progress with a Nintendo-compatible 16-bit machine,” he said. “Let’s chart our own course.”

  Norio Ohga may have been the boss, but executing this order would not be an easy thing. His voice was loud, but not always louder than the collective scream of Sony’s board of directors. If they wanted to cut this project off at the knees, or continue to play mix-and-match with Nintendo, they had enough leverage to do so. To protect Kutaragi from this type of torture, and to protect Sony from potentially serious internal conflict, Ohga did some corporate reshuffling. Kutaragi and nine members of his engineering team were moved to Sony Music, which had a separate facility in Tokyo’s Aoyama district. At Sony Music, Kutaragi worked under one of his mentors, Shigeo Maruyama, and had the autonomy to beginning moving forward with his plans. It was still a small team, and taking this console from concept to completion was still a long shot, but at least they had a chance. And to give this project the best chance of going all the way, Kutaragi began to put together a team, which started with bringing in Phil Harrison in September 1992. Harrison knew games, having been the head of development for a software publisher named Mindscape, and his arrival marked a new level of seriousness for Sony’s solo console efforts.

  Still, those efforts couldn’t be taken too seriously. As Kutaragi spearheaded hardware development and Olafsson pushed forward with the software, Sony’s board of directors continued to play tag with Nintendo. And on October 12, 1992, Sony was finally “it.” Exactly three days before Kalinske traveled to New York for the unveiling with Olafsson, there was a headline in the Seattle Times proclaiming “Nintendo, Sony Join Forces on CDs.” Since the article in question didn’t provide any specifics of what this supposed deal entailed, it was clearly meant to be a message from Sony’s old guard that they were still a force to contend with.

  “It’s complicated,” Olafsson reiterated, shaking his head. “I realize this is not quite the response you were hoping for, but I think this actually works to our advantage.”

  “How’s that?” Kalinske asked, sincerely hoping his friend had a good answer.

  “Because,” Olafsson said with a wispy smile, “we can tilt the variables of the equation in our direction.”

  The equation was for a next-generation console, and the direction that both Kalinske and Olafsson had in mind entailed a joint relationship between Sega and Sony. Although the relationship between the men (and their companies) had perhaps begun with the intention of sticking it to Nintendo, it had evolved to something much greater than that. There was still the feeling that by working together they could be stronger than Nintendo, but what made the relationship possible was a shared vision. Videogames were no longer just videogames, but rather a Trojan horse to get inside the living room and be at the forefront of the entertainment revolution. This was the level after the Next Level, and it was time for Sega and Sony to go there together.

  “This is my thinking,” Olafsson explained, narrowing his eyes slightly. “This news will no doubt be greeted by those at Sony Music as it has been by both you and me—further undue nonsense with Nintendo. But beyond the frustration, there is a significant lesson to glean: Sony is still quite open to videogames, as long as they are running this race with a giant by their side. Well,” Olafsson said, his eyes popping open, “a giant is a giant is a giant, and I have a feeling that Mr. Kutaragi would be much more comfortable with someone of your stature.”

  Kalinske considered this. “Do you really think he’d be able to work with SOJ?”

  “Ah,” Olafsson said with a smile. “You’ve heard of Mr. Kutaragi’s reputation.”

  “I think everyone in this room has heard of his reputation.”

  “It’s true, he is no picnic to work with. But it’s also true that he’s brilliant, and he cares deeply about his work. So I would suspect that he’s smart enough to travel down the road most likely to take his work toward fruition.”

  “Good,” Kalinske said, a weight lifting off his shoulders. “That all makes sense.”

  “For the most part,” Olafsson said. “But what about on your end? There is the matter of Mr. Nakayama and his reputation.”

  “Gee, Olaf,” Kalinske joked, “who spilled that secret?”

  Olafsson tapped the side of his head. “Firsthand intelligence.”

  “Nakayama-san can also be a difficult man to work with,” Kalinske acknowledged, “but when push comes to shove, he’s always stood by my side.”

  “Good,” Olafsson said. “Good, good.”

  With business out of the way, Kalinske and Olafsson discussed their families and plans for the holiday season, and then walked through the lounge together, enjoying what would be the first step in a long-term, symbiotic, and game-changing relationship.

  “Will you have time to take in some sights before leaving?” Olafsson asked.

  “Just one sight, unfortunately.” Kalinske replied. “And it’s in Long Island.”

  Olafsson raised an eyebrow, until he realized what could possibly be worth seeing out there. “Please say hello to Greg for me,” Olafsson requested. “And ask him to tell you about his recent visit to Germany.”

  “Why, what happened in Germany?” Kalinske asked.

  “I’d tell you myself, but how dare I deprive you the joy of curiosity?”

  38.

  SOMETHING WICKED THIS

  WAY COMES

  “Is all that blood really necessary?” Kalinske asked, as he hovered over the arcade cabinet for a brand-new fighting game. Beside him were Greg Fischbach and Jim Scoroposki, the men whom he had trekked out to Long Island to see.

  “It’s part of the ambience,” Fischbach cheerfully explained. He was a slender man with sandy blond hair and a refined fashion sense that somehow seemed to match the perpetual smirk on his face. “Besides, the kids are gonna love it!”

  “Yep,” added Scoroposki, a bulky fellow who was generally short on words.

  “I’ll bet,” Kalinske reluctantly agreed as one of the characters on screen ripped out the spine of another. The game in question had been dreamed up by a pair of game designers named Ed Boon and John Tobias. Instead of using traditional animation, they used digitized graphics to create a fighting game they had originally hoped would star either Akido master Steven Segal or European star Jean-Claude Van Damme. After resistance from Segal and Van Damme, Boon and Tobias decided to create their own characters, their own rule
s, and their own mythology. The result was an intricately detailed and very, very bloody story that followed complex characters fighting against each other for the chance to represent earth in a battle against an evil monster in a cosmic tournament that would decide the fate of humanity. They spent ten months creating and perfecting their vision and weaved in all sorts of special moves and hidden secrets. They called their masterpiece Mortal Kombat. It was like Street Fighter II on speed.

  “I’ve seen a lot of hits in my time,” Fischbach explained, “but this one, trust me, it’s the one.”

  Although Fischbach tended to speak about any subject as if he knew it inside and out, when it came to videogames he really did. He and Scoroposki had met in 1983 when they were both working for Activision, the software company made famous by being the first third-party licensee for the Atari 2600 (and then made wealthy by releasing hit games like Pitfall! and River Raid). Four years later, the two began to think about forming their own software company and following in Activision’s footsteps—except in this case they sought to become the first American licensee for Nintendo.

  At the time of their mutual brainstorm, Nintendo’s success wasn’t a foregone conclusion. The NES had just enjoyed a very successful 1986 Christmas season, but there were still plenty of naysayers claiming fad and predicting imminent doom. Skepticism was in the air, and as firsthand witnesses to the crash of ’83, Fischbach and Scoroposki knew the hazards of such an endeavor. But they were young and optimistic enough to shrug off the risks in favor of the potential rewards. After deciding to take the plunge, the only thing left to decide upon was a name for their endeavor. Fischbach said that he would be okay with anything as long as it began with an A or a Z. Scoroposki did him one better and came up with Acclaim, which would trump their alma mater, Activision, in the phone book.

  They contacted Howard Lincoln in the spring of 1987 and became the first American company to join Nintendo’s third-party licensing program. Fischbach and Scoroposki quickly realized that their skill set wasn’t necessarily in creating games from scratch, but rather in publishing titles made by others. They were businessmen at heart, blessed with the hustle genes in their DNA, and so they set to work obtaining the rights to games that they could then publish for Nintendo. They released their first title for the NES in September 1987, an action-adventure game called Star Voyager. As per their strategy, this wasn’t a groundbreaking title, but actually an updated version of a game with the same name that had been released for the Atari 2600 in 1982. They made a deal with the game’s developer, ASCII Entertainment, to release Star Voyager for the NES, and then followed it up with four more titles to fulfill their quota: Tiger Heli (originally a Japanese arcade game made by Toaplan), 3-D WorldRunner (developed by Square), Wizards & Warriors (developed by Rare), and Winter Games (a game made by Epyx that was originally released in 1985 for the Commodore 64). Acclaim got all of these titles out by Christmas 1987, and by the first quarter of 1988 the company had made more than $1 million in profits. Sensing the opportunity of a lifetime, Fischbach and Scoroposki took their young company public and received a windfall of cash, which they used to acquire other, smaller publishers and to expand their licensing endeavors. Now, instead of simply publishing content developed by others, they could purchase the rights to make games based on hit movies, television shows, and sports. This led to hit NES titles like Rambo (1988), Airwolf (1989), and WWF WrestleMania (1989). By 1989, Acclaim had reached $109.3 million in revenue. Fischbach and Scoroposki were pleased, of course, but their hustler DNA whispered for more. They wanted to expand, to build an empire, but that was difficult to do with Nintendo’s stringent licensing agreement permitting only five games per year. They asked Lincoln to increase their quota, but Nintendo was unwilling to set a precedent of exception. There was, however, a loophole that Nintendo was willing to allow: if Acclaim purchased another licensee, then they could double their output. Fischbach and Scoroposki got the message, and in April 1990 Acclaim paid $13.75 million to acquire LJN Toys, an entertainment company known for making great toys (like Oodles and Thundercats) and lousy games (like Back to the Future and Friday the 13th). Between the two entities, they could now make ten games per year, and in 1990 Acclaim reached $140.7 million in revenue.

  If the money was rolling in for Acclaim, then it had to be rolling in even faster for Nintendo, which physically manufactured the cartridges and also got a percentage of every game sold. Through mutual benefit and reciprocal affection, a deep friendship blossomed between Acclaim’s Fischbach and Scoroposki and Nintendo’s Lincoln and Arakawa. They spoke frequently by phone about matters both personal and professional, and even though Acclaim was based in New York and Nintendo in Washington, the four of them made an effort to get together for dinner every four to six weeks, sometimes on the East Coast, sometimes on the West Coast, and sometimes in the cities they remembered from the history books they’d studied as boys.

  “Hey Greg,” Kalinske said, as gory highlights from Mortal Kombat continued to scroll before his eyes. “I was with Olaf the other day and he suggested that I ask you about Germany. Any idea what that’s supposed to mean?”

  Fischbach’s eyes lit up at the memory. Or maybe it was just the bloody red reflection on his face. “Right, that fateful day in Frankfurt,” Fischbach said, shaking his head. “No shouting from Howard, but it was still a pretty wild time.”

  In the summer of 1991, Fischbach and Scoroposki had traveled to Germany for a dinner with Minoru Arakawa; his wife, Yoko; and Howard Lincoln. It had been set up like all their other around-the-world dinners, but this one would be different. After years of lucrative, symbiotic work with Nintendo, Acclaim would begin publishing games for the Sega Genesis. They had no idea how Arakawa and Lincoln would respond to this news and were not particularly eager to find out.

  It would have been easy to say Acclaim’s decision to work with Sega was about business, not friendship, but that wouldn’t be completely accurate. As close as Fischbach was with Arakawa and Lincoln, he was equally close to Hayao Nakayama and considered Sega’s leader to be a good friend. They had met a few years ago on one of Fischbach’s increasingly frequent trips to Japan. Nakayama had known that he had no chance of luring Acclaim away from Nintendo’s NES and to Sega’s Master System, but he asked anyway. Fischbach, of course, had declined, but they did find a way to do some business together. Nintendo of America may have had a famously strict licensing agreement, but their contract applied only to America. In Japan, however, Acclaim had no exclusive relationship with Nintendo, and Nakayama was able to license games like WWF WrestleMania from Fischbach’s company. As their business relationship blossomed, so did their friendship. When Fischbach traveled to Japan every other month, he could always count on two things: dinner with Nakayama, and that at some point during that dinner Nakayama would make a plea for Acclaim to publish games for Sega. At first it was cute and flattering, like a naive middle school girl asking out the high school quarterback, but now that girl was all grown up and a knockout. Fischbach didn’t believe that anyone could effectively cut into Nintendo’s market, but Sega of America was making major moves and could not be ignored. Kalinske had changed the culture over there, Sonic was speeding through stores across America, and Sega’s grassroots marketing efforts were so damn aggressive that they were impossible not to admire. For these reasons, the last time Fischbach had seen Nakayama and once again been asked to publish games for Sega, he’d responded that he would at least consider the idea. Acclaim was a public company, after all, and at the end of the day he answered to the shareholders. If releasing games for Nintendo and Sega would increase revenues, then that was what Acclaim ought to do. The question was whether, after Acclaim began working with Sega, Arakawa and Lincoln would continue to allow them to release games for Nintendo. If they didn’t, then Acclaim would have to make a choice, and back then those kinds of choices always ended in favor of Nintendo.

  Fischbach and Scoroposki reached Germany in the afternoon and, after checking
in, had thought about bringing all of this up at the hotel where all of them were staying. But, feeling anxious, they decided to postpone the conversation until dinner, for which they had reservations at a gorgeous place about twenty miles outside the city. The five of them were unable to all fit into one cab, so Fischbach and Scoroposki hopped into the first taxi and then Mr. and Mrs. Arakawa and Howard Lincoln jumped into the next, following them to their destination. As such, Fischbach and Scoroposki found themselves in the backseat of a cream-colored Mercedes taxicab, coming up with potential segues to bring up the issue at hand. In the middle of the last-minute brainstorming session, however, their cab got into a horrible accident.

  The Arakawas and Howard Lincoln saw it all happen before their eyes. The taxi in front of them, carrying Fischbach and Scoroposki, was making a left-hand turn, but the taxi driver must not have noticed the oncoming car, which broadsided the taxi, crushing it and sending it into a nearby ditch. The occupants of the taxi had to be dead—there was no doubt in the minds of anyone who had seen the accident.

  Except that moments later, Fischbach, Scoroposki, and the driver stumbled out of the taxi. They were dinged up, with cuts and bruises, but had not suffered anything near the damage that had been done to the car, which was totaled. The folks from Nintendo hugged their friends tightly, partly out of joy and partly to confirm that they weren’t seeing ghosts. Somehow Fischbach and Scoroposki had survived.