Living through these battles, George Harrison learned a great deal about marketing, brand equity, and the hidden psychological advantages of being an underdog. So much of what Pepsi did was about bloodying Coke’s nose and provoking a reaction, and so much of it worked because Coke had been caught off guard with Pepsi and had to do twice as much to make up for earlier mistakes. As a result, Harrison’s biggest takeaway from his experience at Pepsi was the importance of reaction: how to respond, when to respond, and, most important, when it was better to just stay on the sidelines.
In a world where most marketing folks want to come up with the next big thing (e.g., Sonic 2sday, a head-to-head mall tour—basically what Al Nilsen did so well), Nintendo was pleased to find someone who appreciated the importance of picking one’s battles. This mentality fit perfectly into the Arakawa-inspired, Main-executed NOA devotion to long-term strategy over short-term shakeup. Plus, Harrison came with the added bonus of having a glimpse into the heart of their competitor, having worked for what could be considered the Sega of the cola wars. So in March 1992, Harrison accepted the job of Nintendo of America’s director of advertising and promotion, making him the company’s number two marketing man behind the incomparable Peter Main.
Or so he thought. But when he arrived in Redmond, he discovered that Bill White (the man he thought he’d been hired to replace) had been shifted to a newly created position running corporate communications. This surprise led him to believe that either White had been on thin ice for a long time or Nintendo was actually a terribly disorganized company. And based on everything he had witnessed thus far in his career at Nintendo, it certainly didn’t appear to be the latter. Naturally, Harrison was frustrated by this turn of events (although it was hard to tell because of his perpetually even keel), but any ill will quickly evaporated when he fell in love with Nintendo’s unique corporate culture and the fast-paced environment of the videogame industry. Compared to the food industry, this was rapid-fire. Pepsi was a blast, but the products didn’t change. There was Pepsi, there was Diet Pepsi, and then you do it all over again. But at Nintendo there were new games each month and, similar to the Hollywood business model, it was a hit-driven industry, where opening weekend would typically make or break a title. There also turned out to be an unexpected fringe benefit to working at NOA: father-son bonding. Harrison didn’t know the first thing about videogames, but his six-year-old son did, and the boy would stay up with his father, testing out titles and giving him insights on which games to advertise and which features to highlight. After years of playing corporate Chutes and Ladders, Harrison felt like he had finally found the perfect job. Although some outsiders were perplexed by why he would join Nintendo during a period of decline, this never bothered Harrison. From his perspective, Tom Kalinske was nothing more than the videogame industry version of the Man of La Mancha: getting everyone excited with all sorts of hype until everyone realized that Sega was nothing more than smoke and mirrors. Nintendo’s slow and steady pace suited Harrison well, and then in early 1993 it suited him even better, when Bill White was suddenly gone and he got the job he’d once thought he already had.
“Fantastic!” someone shouted when the credits for Super Mario Bros. rolled down the screen. There was laughter, there was clapping, and when Harrison turned to Miyamoto there was still that smile. Harrison was nervous to hear what he had to say and braced for the worst; even soft-spoken creative geniuses must have a mean streak, and there seemed no better time to strike than when your masterpiece has been butchered.
“So, what did you think?” Harrison asked. The movie was obviously horrible; all that mattered now was how annoyed or upset Miyamoto would be.
Miyamoto cocked his head in what appeared to be a sincere period of thought. The movie was scheduled to be released next month, May 28, 1993, to be precise, but a furious reaction from the game’s creator could potentially change all that. Finally he spoke, and when he did there was no yelling or screaming. Nothing that even, for a moment, betrayed his gentle stuffed-animal-come-to-life personality.
He was a good sport about it all, and appeared confident that the people who watched the film would be able to separate what they saw from what he had spent years creating. Like most people at Nintendo, it appeared that he possessed an instinctive talent for knowing which battles were worth fighting.
After the screening, Harrison flew back to Redmond and met with the president of NOA to make good on the second part of Arakawa’s request.
“George,” Arakawa greeted, ushering the young executive into his office. “Tell me, have you seen the film?”
“Yes,” Harrison said with a gentlemanly nod as he took a seat opposite his boss’s boss. “I watched it from start to finish with Mr. Miyamoto.”
“Good,” Arakawa said, curious but never quite showing it. “What did you think?”
“It’s sort of a bad-news-and-good-news situation,” Harrison said. In addition to looking out for Miyamoto, he had been tasked to watch the film and determine if it had turned out so badly that Nintendo ought to pay however many millions for the distribution rights and then never let it see the light of day. “Well, the bad news is that the movie is really bad. It’s just terrible.”
Arakawa nodded; this was hardly a surprise.
“But the good news is that it’ll be in and out of theaters so quick, no one will notice it. So we’re better off to just let it go and die then to pay a king’s ransom merely to stick it on a shelf somewhere.”
“Do you feel certain of this?”
Harrison considered the question. It was definitely one of the worst movies he had ever seen, and there was no way it could help Nintendo take back any market share from Sega. There was a temptation to just make it go away (after all, Nintendo had the money to make that happen without issue), and also an urge to publicly make light of the situation, but those were the kinds of reactions meant for the Pepsis of the world. The Cokes, the market leaders, needed to shrug off these kinds of things and just keep moving forward. “Yes,” Harrison said. “I’m certain.”
“Very good. Then we move on,” Arakawa said. And so they did.
Meanwhile, as Nintendo was formidably playing the role of a market leader like Coke, Sega was plucking a page right out of Pepsi’s playbook. Ten years earlier, Michael Jackson had helped boost Pepsi to the top (albeit momentarily), and that’s who Sega was counting on to now do the same for them. It was a lot to ask from Jackson (especially after his earlier game, Moonwalker, had only been a mild success), but this time he’d have help from another celebrity: Sonic The Hedgehog. And so, as per his deal with Sega, Jackson was hired to create the sound track for Sonic 3. Kalinske not only believed that this would be Sega’s biggest game yet, but that this would be the first in a new genre of videogame sound tracks that would be consumed like a pop music album. It all seemed so perfect, except there was one small hitch to the plan.
As suspected, Sonic 3 would not be ready in time for the 1993 holiday season, but with Fornasier’s any-day-can-be-Christmas strategy, the delay was almost moot. Timing, at least initially, was not the problem with Sonic 3, but the size of the game was starting to become one. Since this would be Yuji Naka’s last Sonic title for the Genesis (after this, he would begin developing for Sega’s next generation 32-bit console), he wanted it to be the best and biggest of the franchise, and for him to accomplish that to his liking the game would need to be 24 megs, which was 50 percent larger than normal. Although the size issue certainly presented challenges, it didn’t really become a problem until Naka realized that making a quality 24-megabyte game would take longer than he had initially thought. On second thought, Sonic 3 probably wouldn’t be ready until summer 1994. Delaying a game was never ideal, but it usually wasn’t crippling because marketing plans could still be moved. With Sonic 3, however, things were a little more complicated because Sega’s promotional wizard Tom Abramson (whose prowess would soon earn him Advertising Age’s Promotions and Event Person of the Year award for 199
4) had recently attained marketing’s Holy Grail: a Happy Meal at McDonald’s. This was a major achievement for Sega, financially as well as symbolically, but the problem was that Sonic 3 would need to be released some time during the first quarter of 1994. Based on Naka’s current prognostication, that was absolutely impossible. This left Sega with two options: either cut down Naka’s game and release it earlier, or let Sonic’s creator just do what he did best and lose the McDonald’s promotion. When laid out like that, the decision was simple, until Paul Rioux complicated everything with a Hail Mary idea that could potentially solve everything.
Years earlier, Rioux had remembered seeing a contraption that, when attached to a videogame cartridge, could add new characters, levels, and additional content to the original game. It was almost like the Game Genie, except instead of granting powers, it revealed all new worlds. What if Sega could harness that technology? The big feature of Sonic 3 was a new playable character named Knuckles, and that had to be accounting for a good part of the delay, right? So what if Sega released the first half of Sonic 3 without this Knuckles character and then, a few months later, they sold a contraption that would essentially “unlock” the rest of the game? Would that work? Amazingly, it would. Sega could then release the equivalent of Sonic 3: Part 1 in February 1994 (with nothing but a small cameo from Knuckles), and then when Naka was done they could release the second half. The concept might be a little confusing to sell, but that could be solved with clever marketing, so the real question was whether two Sonic games in 1994 (plus a Sonic-themed pinball game in late 1993) would cause consumers to become sick of Sonic’s hero. This was certainly a very realistic possibility, but Kalinske and company were never ones to back down from a challenge, especially one in which they had Michael Jackson on their side.
As Kalinske sat in his office reading about the “lock on” technology that would make Rioux’s Sonic plan possible, the stars were aligning to knock Nintendo out of the solar system. Everything was coming together, until suddenly it was not.
“What do you mean?” Kalinske asked, speaking into the phone with a frustrated desperation. “You’re kidding, right? Please, tell me you’re kidding.”
It was Olaf Olafsson on the other end. “I’m afraid not,” he said with a sigh. “They couldn’t make it work. ‘Creative differences,’ that was the party line.”
“I can’t believe this,” Kalinske said, digesting the fact that Sega and Sony had abandoned the plans to jointly release a next generation console together. “I don’t really know what to say, except that I’m sorry.”
“Oh, please,” Olafsson replied. “You tried your best.”
“That’s what scares me,” Kalinske said. “I did, I really did, and they still couldn’t find a way to make it work.”
“Don’t beat yourself up. It’s just business. These things happen.”
“Am I correct to assume that Sony will be moving forward without us, and that you will be launching a console on your own?”
“Hopefully,” Olafsson answered.
“Well, if you do,” Kalinske said, “then I wish you the best of luck.”
“To you as well, my friend,” Olafsson replied.
After the men hung up, each allowed himself a final moment to theorize about what could have been before moving on to the much more pressing theoretical question: is the videogame industry big enough to support having three horses in this race? And if not, which horse is headed to the glue factory?
48.
MARCH OF THE LEMMINGS
The world is full of misconceptions, but perhaps none more fatally fantastical than those involving the lemming. As legend has it, these feisty creatures are prone to combating periods of overpopulation by blindly marching one by one off tall cliffs and unceremoniously plummeting to their deaths. It’s unclear where this global rumor began, but evidence suggests that its popularity spread from Disney’s 1958 Academy Award–winning documentary White Wilderness, which highlighted this unusual and unnatural behavior. Although it was later discovered that the filmmakers had flown in the featured lemmings from Canada and had actually tossed them off the cliffs by hand, it was too late to reverse this morbid misconception. The false legacy was further perpetuated in the 1970s with an outrageous off-Broadway show (National Lampoon’s Lemmings, which launched the careers of John Belushi and Chevy Chase), in the 1980s with a famous Super Bowl commercial (Apple Computer’s 1985 ad featuring a flock of blindfolded businessmen following each other off a cliff), and then again in the 1990s with the release of an extremely popular computer game (Lemmings, where players must stop these pixelated creatures from marching to their doom). Although Sony’s Olaf Olafsson was in the enlightened minority of individuals who knew the truth about lemmings, he also knew the metaphorical value behind this urban legend. And that’s why in May 1993 he traveled to Liverpool, England, for a pivotal meeting with Psygnosis, the publisher of the addictive, misconception-perpetuating computer game.
“On just the first day, we sold fifty-five thousand copies on the Amiga,” a Psygnosis employee explained while giving Olafsson a tour of the company’s headquarters in South Harrington. Although every game publisher’s offices are naturally tech-heavy, the piled-high workstations and futuristic 3-D renderings at Psygnosis gave Olafsson the impression that he had died and gone to high-tech heaven. “And several reviewers actually gave Lemmings an unprecedented perfect score!”
“Very impressive,” Olafsson commented, pleased with everything that he had been shown thus far. “Well worth the plane ride to Liverpool.”
After things had fallen apart with Sega, it became clear that the only way Sony could generate the developmental talent and technological resources to support their own console would be to acquire a publisher or partner with someone else. And since Sega and Nintendo were the only viable hardware makers (sincere apologies to Atari, SNK, and NEC), purchasing a game publisher was now a top priority. Since the top Japanese game makers would likely be too expensive (and also tip off Nintendo to Sony’s big plans), the most likely candidates for acquisition were the big U.S. publishers like Acclaim, Activision, or maybe even Electronic Arts. Although each of these companies had impressive track records, Olafsson was less concerned about what a potential acquisition had already accomplished, and more interested in what they were capable of doing next. It was this forward-thinking logic that led him into deep discussions with John Ellis and Ian Hetherington, the managing directors of Psygnosis.
Ellis, Hetherington, and a gentleman named David Lawson had founded Psygnosis in 1984 with the goal of fusing their devout interests in art, rock music, and videogames. In the following years, the company’s artistic ideals and strategy for selling games had much in common with the early years of Electronic Arts; both focused almost exclusively on computer games, both flaunted a bohemian fascination with graphics and technology, and both gorgeously marketed their software like music albums (Psygnosis, in fact, often had the packaging designed by Roger Dean, the artist famed for his album covers for the rock band Yes). But come the early 1990s, Electronic Arts transitioned to making games for consoles, while Psygnosis continued to remain dedicated to higher-powered computers. Why would two companies that started around the same time, with similar creative ambitions, take such divergent directions? Some of the difference can be attributed to EA being a publicly traded company (and beholden to bottom-line-focused shareholders), but most of the difference can be attributed to the console’s lack of popularity in Europe. Consoles were significantly less popular in Europe than they were in Japan, the United States, and even South America (although in the last of these this demand was mostly supplied through black and gray markets).
To better understand the state of the British videogame industry, imagine the 1980s as a pop-cultural experiment in which the United States was the test subject and the United Kingdom was the control variable. For both countries, the decade began with a pandemic of Pac-Man fever that infected the masses until the videogame crash of 198
3. In the aftermath of this disaster, names like Atari, Arcadia, and Coleco were tossed aside in favor of Apple, Amiga, and Commodore, as both countries simultaneously swore off videogames and prepared to get their interactive entertainment fix from the burgeoning personal computer industry. As the science fiction novels had been prognosticating for years, computers were finally here to take over our lives (and our living rooms), giving rise to ambitious new software companies like Electronic Arts and Psygnosis. Given the high cost of computers, neither company enjoyed any sort of overnight success, but by 1987 both had developed a reputation for publishing highbrow, high-tech, caviar-quality products. And as the end of the decade approached and the prevalence of personal computers increased, the future looked bright for both companies until something unexpected happen in the United States: Nintendo.
In the process of miraculously resurrecting the videogame industry in America, Nintendo’s triumph had the strange effect of killing the computer game industry. Not directly, nor completely, but the seemingly inevitable personal computer revolution was thrown off course by Nintendo’s unexpected videogame evolution. At first, companies like Electronic Arts resisted, refusing to be stymied by the 8-bit console’s less sophisticated parameters, but soon that resistance became futile. By 1990, only 15 percent of households owned a personal computer, while nearly 30 percent owned an NES. But that was all just statistical static when compared to the frequency of game companies striking it rich by making games for Nintendo. And as more software developers migrated to consoles, the quality of computer games stagnated, which in turn hurt the computer industry, which indirectly helped the console industry. The circle continued viciously on and on until the only games that really mattered came in 8 or 16 bits.
Console Wars Page 51