Console Wars

by Blake J. Harris

  It became clear to Pober rather quickly that in a room full of leaders, Kalinske and Lincoln were the ones whose voices carried weight. And that was a good thing, because he’d worked with them before and knew them both to be capable of one of the rarest of feats: not letting personal feelings or selfish desires cloud their judgment. And so by the end of the day, while nobody would be fool enough to say that Sega and Nintendo (or Kalinske and Lincoln) had become friends, they had certainly become friendlier than they’d been before, and demonstrated that they were willing to put down their swords in order to fight for the greater good.

  “What do you think?” Kalinske asked Joe Miller, who had come into his office not long after CES to check out the latest prototype of the Mars project.

  “I think what you think,” Miller said, “just with some more technical language.”

  “Can it be salvaged?”

  “Anything can be salvaged, but the question is at what cost? Regardless, I’ve been speaking with a couple of the guys at SOJ, and if this is a road they are intent on going down, I have to seriously suggest that we consider doing this as an add-on.”

  Kalinske shrugged. “Pitch it as the next Sega CD?”

  Miller nodded. “Yes, except I would note that the movie-like quality of those titles and the unique look of a compact disc make it an easier pitch.”

  “Yeah, well,” Kalinske said, “if we’ve got to cut off either our hands or just our thumbs, the thumbs seem like the better choice.”

  Kalinske relayed this feedback to Nakayama, who was now preoccupied with Project Saturn, which had run into a lot of developmental issues. SOJ needed all hands on deck to fix the Saturn and decided that Miller and his SOA crew should finish up the Mars themselves. As a “compromise,” they let him do it as an add-on. It was now Sega of America’s problem to salvage a product they didn’t even want to exist in the first place.

  Some merely saw this as a hiccup in Sega’s plans for world domination; after all, on the surface Sega still had a bigger market share than Nintendo. But there were others internally who could see that the tsunami was headed their way and it was time to get out. Two of those men were Richard Burns and Doug Glen, who had decided that it was time to ride off into the sunset and into another opportunity. Both losses hurt Kalinske, as did remembering that Glen had a reputation for leaving companies that had reached their tipping point in order to join the next big thing.

  Whats that? Whatcha working on? Mind if I take a look?

  Harman had recently grown accustomed to the constant interruption of questions like these from his colleagues, but it was starting to become a distraction. He knew there was nothing but good intentions behind these inquiries, and he wouldn’t have expected any less from Nintendo’s congenial open-door atmosphere, but as Rare got closer and closer to finishing the game that he hoped would finally crush Sega, staying focused was more important than ever. That’s why he decided he had to speak with Arakawa.

  “I see,” Arakawa said, weighing the situation. “What shall be done?”

  The most obvious solution would have been for Harman to work out of Rare’s office in Leicestershire until the game was complete, but that also would have defeated the purpose of building up NOA’s product development capabilities. So in the spirit of this objective, he offered an alternative solution. “With your permission,” Harman explained, “I would like to build a sealed-off area dedicated solely to development.”

  “Okay,” Arakawa replied, surprising Harman.

  “You don’t need me to provide additional explanation?”

  Arakawa shook his head. The decision was made.

  “I just want to make sure you fully understand what I’m asking for,” Harman said. “Basically, it would be the equivalent of a top-secret, game-centric fort somewhere in the middle of our office.”

  “Yes,” Arakawa said. “This is a good idea.”

  Harman smiled serenely, fantasizing about what exactly his treehouse for adults should look like.

  When Glen, Burns, and other members of the team left, Kalinske did the same thing as always: smile, nod, and wish them the best of luck, never revealing the icebergs of discontent below that winning smile. That’s what he did during the good days (like the “Hedgehog Day” event that Fornasier arranged to take in Punxsutawney on Groundhog Day 1994), and that’s what he did during the bad days (like when he saw specs for Sony’s upcoming PS-X console).

  It was rare that anyone could get far enough under Kalinske’s skin to unleash the full spectrum of emotions, but Peter Main had made a career out of accomplishing rare feats. And in February 1994, there was something about the way that Main painted Kalinske as a charlatan that got so far under the president of Sega’s skin that it sawed deep down into his bones.

  They were at Piper Jaffray’s annual industry conference in New York, where a couple hundred bankers and retailers gathered each year to hear about the profits and potential of the videogame industry. Speeches would be made by a variety of analysts, representatives from premier software companies (like Acclaim and Electronic Arts), and of course Peter Main and Tom Kalinske. Just like at the CES shows, it was always a war of words between the two, but this conference each February (along with the Gerard Klauer Mattison one each October) offered an unusual chance for both men to engage in that war from the same room. It was especially exciting for those in attendance to watch as they slung arrows, argued over numbers, and couldn’t stop glaring at each other.

  Normally, Kalinske enjoyed playing up the rivalry and reacting to Main as if they were mortal enemies. But this year, because of everything going on inside Sega, playing a game of heroes and villains just didn’t seem as appealing. He was sick of the charade, year after year, and wanted Nintendo to just go away. Hadn’t he done enough to vanquish them by now? Or at least relieve them of some of their arrogance before Sega went into decline?

  Despite the fact that since the release of Mortal Kombat Sega had become the leader in 16-bit, Peter Main still talked about Kalinske as if he were some rube from the toy industry. “Now, after I’m done speaking,” Main said, “I’m sure my competitor will try to fatten you up with all sorts of numbers. But I’d like you to ask yourself what these numbers really mean, and where he came up with some of these magical statistics. Oh, and while you’re at it, find out if he has any idea what the difference is between sell-in and sell-through.”

  After the snickers of laughter and a few never-short anecdotes from Main, Kalinske finally got his chance to speak. His words carried none of that for-the-greater-good attitude that they’d held at the offsite meeting in Vegas. “Is it just me, or does anyone else feel like calling up Dr. Kevorkian whenever Peter Main is done speaking?” And from there, Kalinske didn’t relent. “Did you ever notice how Peter Main or any of those guys at Nintendo never have the guts to say my name, or even the word ‘Sega’? It’s always ‘our competitor’ or ‘another company in the industry,’ but I suppose we should take this as a compliment. After all, it’s the same way my daughters refer to the boogeyman and other things that scare them.”

  Although Main, like Kalinske, had a talent for removing personal feelings from judgment, he did not share Kalinske’s skill at removing them from his face. He looked angry, as well he should be, because just as with that dog-drinking-from-the-toilet commercial, Kalinske wanted to turn everything into a popularity contest.

  “But we shouldn’t be surprised,” Kalinske continued. “I’d be scared too if I were them. Peter wants to talk about numbers, so let me pass along some figures that I notice he forgot to mention. In November, the Nintendo Company announced a drop in earnings for the first time in ten years.”

  As murmurs rippled throughout the audience, Kalinske’s eyes glanced at the window, and he noticed that the snow was still coming down hard. There was a storm passing through the city and they were expecting a few inches or more, but as the relentless whiteness kept falling, he couldn’t help reflecting that there was a certain beauty to it. O
f course, it wouldn’t make finding a cab any easier, but to a guest from California, the snow came as a nice surprise.

  “Anyway,” Kalinske continued, “as I was saying, the numbers look pretty grim. Peter also forgot to mention that Nintendo’s first-half pretax profits dropped 24 percent from the same time last year. Meanwhile, for those in the audience who like to compare and contrast, Sega’s half-year pretax profits are up by 4.3 percent.”

  Kalinske went on to describe the many reasons he believed the two companies were going in opposite directions, and did so with that poke-the-bear flair throughout. “Now, I realize that there are some of you listening,” he continued, looking to convert any lingering doubters in the crowd, “who might not believe a word that I’ve just said. Forget the marketing, you might say; forget my management style, the work of my team, and Sega’s commitment to remaining on the cutting edge. That’s not the reason that we have surpassed Nintendo, you might think; it’s all just because we were first to market way back when. Obviously I don’t agree with that analysis, but even if that’s how you feel, I’ve got news for you: it’s going to happen like that once again.”

  It was true. Nintendo had made a grave mistake by letting Sega beat them to the 16-bit market, and they had conceded over the past few months that Sega was going to speed past them once again. Nintendo assured the press that everything was going extremely well with Project Reality and that the new hardware would apparently retail for under $250, but that as part of the company’s commitment to excellence there would be a slight delay. Project Reality wouldn’t hit stores until late 1995, which would be one year after the 3DO and likely several months after the Sega Saturn (as well as Sony’s hardware system, if they decided to take the leap and enter the market with a system they were now calling the PS-X). Kalinske still wasn’t particularly excited about SOJ’s mandate for Saturn and Mars, but at least they’d get to market quickly and provide Sega with additional opportunities to try to finish off Nintendo. And in keeping with the spirit of knocking them off the ledge, he didn’t stop needling them throughout his speech.

  When Kalinske finished and the after-conference mingling had come to a close, it was snowing harder than before—there must have been at least eight inches on the ground already, maybe even ten. Just then Kalinske caught the tail end of a conversation between Main and Michael Goldstein, the president of Toys “R” Us, as they made they their way toward the elevator. Main was still trying to cast aspersions on Kalinske’s sales figures, and so Kalinske decided to intervene.

  “Do you really think I make this stuff up?” Kalinske asked, following the two of them into the elevator.

  “Why, hello, Tom,” Goldstein said, happy to have both men together to settle this.

  “It wouldn’t be the first time,” Main replied, staring past Goldstein at his competitor. “And I hardly suspect it will be the last.”

  “How about this?” Kalinske suggested as the elevator descended. “When we leave New York, why don’t you come back to Redwood Shores with me? I’ll show you the data we used to come up with these numbers.”

  “What the hell is that going to accomplish?” Main asked. “I doubt your numbers, not your ability to create a paper trail.”

  “Gentlemen, please,” Goldstein interrupted, but the sparring continued even as they reached the lobby, and it had nearly gotten physical by the time they stepped out onto the snow-filled streets. “Without Nintendo there wouldn’t even be a goddamned videogame industry!” Peter Main declared, now inches away from his competitor’s face.

  “What the hell do I care?” Kalinske asked, moving even closer. “Do you expect me to be grateful or something? This is business, not charity.”

  “It was a business until you came in here with all your bullshit!”

  “Then it must hurt even more, to be losing to nothing more than bullshit.”

  Before any punches could be thrown, Goldstein wedged himself between Main and Kalinske. “Come on, it’s time to go back to your hotels.”

  Both men wanted nothing more than for Goldstein to suddenly vanish, leaving them to try to transfer years of unrelated frustrations into each other’s face, but the president of Toys “R” Us refused to give them this gift. He tried to flag down a cab so that he could send one of them away, but it proved very difficult because of the snow.

  Eventually, after several failed attempts to hail a taxi, Kalinske decided to walk uptown, and he slogged away through the thick snow—maybe because he felt this made him the bigger man, or maybe because he was just too brittle to maintain all the anger. But more likely it was because by walking uptown on this one-way street, he’d be able to intercept a cab that otherwise might have gone to Peter Main.

  58.

  ROSES ARE RED

  Throughout most of February 1994, New York City was puddled in snow and slush. It made getting around town much more difficult than usual, but the blizzard-like weather wasn’t enough to keep Al Nilsen and Ellen Beth Van Buskirk apart. Since Nilsen had moved to New York for Viacom, and Van Buskirk had moved there as well to work at Sega Channel, they tried to stay in touch and get together for coffee every so often. Not only did these connections confirm to both that this friendship was of the lifelong variety, but whenever they got together it had the strange effect of rekindling that old Sega magic. Alone each of them was a smart, confident, and clever individual, but together they became something else. Over the years it would always be that way, not just with the two of them, but also with Kalinske, Rioux, Toyoda, Fornasier, or any of the others who had unknowingly forged this unbreakable bond. Perhaps that was what made team success such a beautiful thing; the wins and losses were inherently impermanent, but that feeling among those on the roller-coaster ride would somehow sustain forever.

  “Remember that time we stayed up at CES all night and created the Core System?” Van Buskirk mused. “And remember how annoyed those Nintendo guys looked the next morning when we came out before them with $99?”

  “I’m still not convinced that night followed the normal rules of time,” Nilsen said. “I’ve gone over it in my head several times since, and I’ve come to the conclusion that between two and four a.m., at least eight hours actually passed.”

  “Oh,” Van Buskirk added, happily tapping the table, “and remember how strangely talented Diane was when it came to breaking and entering?”

  “How could I ever forget? How is she? Have you spoken to her?”

  “She’s great. Enjoying life, enjoying work, and enjoying whatever comes in between. Actually, and please don’t repeat this, she and Don are trying to get pregnant.”

  “Of course not,” Nilsen said.

  “Oh, remember when we all had to pull that Aladdin EPROM heist?”

  “Um, I’m sorry to interrupt this trip down memory lane,” Nilsen said, “but I’m going to have to pull you over and check your license.”

  “My license to go down memory lane?” Van Buskirk asked.

  “Yes,” Nilsen said. “I believe it’s called a nostalgia permit.”

  “Oh, sure. And why is it that my license has been revoked?”

  “Because you still work for Sega!”

  “True. But not really. Sega Channel is different.”

  Van Buskirk had expected the transition to be something like being traded in baseball, going from, say, the San Francisco Giants to the New York Mets (definitely not the Yankees; she was forever a woman who despised the designated hitter). But moving from Sega of America to Sega Channel turned out to be more like being traded from the San Francisco baseball Giants to the New York football Giants. It was a completely different sport and not nearly as fulfilling. She still completely believed in the vision of the company—it was a brilliant idea whose time would certainly come—but for the moment the cable operators made it impossible in the present. By June 1994, Sega Channel would have a total of twenty-one companies signed up to carry the service, but the cable companies were so boringly bureaucratic and so disinterested in making
the system work well or easy to use that it was going to be a struggle. Van Buskirk was up for the fight, but she missed all of her friends back in California. Well, except for Nilsen.

  “How are Beavis and Butt-head?” Van Buskirk asked.

  “Oh, you know,” Nilsen replied. “They’re always trying to get me into trouble, but so far I’ve managed to resist their bad influence.”

  “Good for you!”

  “Thanks, EB! Wait, am I still allowed to call you that?”

  “Why not?”

  “I don’t have to call you EBVBK?”

  One month earlier, on January 15, Ellen Beth Van Buskirk had married Bob Knapp, the man she had met almost a year earlier at Gate 81. Nilsen was there, and so were Rioux, Fornasier, Race, Glen, and Schroeder (the whole gang, except for Kalinske, who had suffered a tennis injury earlier that day). It was a nice little reunion and made for an even more memorable wedding day.

  “I told you I wasn’t going to take his name,” Van Buskirk reminded Nilsen. “Otherwise my name would just turn into a tongue twister.”

  They had a laugh as they mentioned favorite tongue-twisters and challenged each other to see who could repeat them faster. After racing each other through Sally’s efforts to get into the seashell business, Van Buskirk remembered that she had brought something she wanted to show him. “Have you seen this?” she asked, pulling out a copy of the February 21 issue of Business Week.

  “Oh, wow,” Nilsen said, smiling at the issue. On the cover was a drawing full of Sega characters: Sonic, Tails, ToeJam, the race car from Daytona, and a few others. Above them, the name Sega was in bright yellow letters, with a laudatory subtitle: “The $4 Billion Company That Stung Nintendo Is Making a Risky Push into the Exploding World of High-Tech Entertainment.”