Console Wars

by Blake J. Harris

  RON LUKS/SYSOP: A nice note to end the conference. Thanks for your questions. I would once again like to thank Minoru Arakawa, Howard Lincoln, and Peter Main for joining us tonight. We enjoyed having you online.

  HOWARD: Thank you Ron. On behalf of Mr. Arakawa and Peter, I’d also like to thank the conference participants. We’ve enjoyed being online with all of you and look forward to doing this again. GA

  RON LUKS/SYSOP: Before we sign off, I’d like to remind everyone of some additional Nintendo activities going on during the next few weeks. Starting on Monday, October 24, video clips (in both Mac and Windows formats) will be available for downloading from our online Nintendo promotional area. (“GO NINTENDO”) This will include never before seen footage.

  RON LUKS/SYSOP: Also starting next week, we’ll be holding a Donkey Kong Trivia Contest. The grand prize winner will get an all-expense paid trip to Nintendo. Donkey Kong country Game Paks and other prizes will be awarded. Consult the contest details in the promotional area.

  RON LUKS/SYSOP: Then on November 8th, Nintendo will host another online conference with the video game designers and technicians behind Donkey Kong Country. Here’s your chance to get the inside track on the development of a video game.

  RON LUKS/SYSOP: Goodnight everybody. Thanks for attending.

  The conference has ended

  “What about now?” Milken asked again at the end of 1994. “Are you ready to allow yourself to enjoy working again?”

  “Nope, not yet,” Kalinske said, noticeably less optimistic than he had been before. With no autonomy when it came to hardware, he focused even more on trumpeting Sega’s software. This had always been the primary focus, but Kalinske could sense the inklings of desperation. Decent games were marketed like they were good ones, the good games were launched like they were the greatest thing ever, and because Sega was now supporting so many platforms, the software was more and more being rushed to market. Kalinske was beginning to feel like a prisoner, locked in a cell by Sega of Japan, and he couldn’t help but laugh at the irony when he, Rioux, and Toyoda were dressed in prison stripes to promote the release of Sonic & Knuckles at a videogame competition held in Alcatraz. He had tried to remain upbeat, and most of the time he continued to find a way, but on November 24, 1994, those bubbles of hope seemed to burst all at once. That was the day when Sega released the 32X and Nintendo released Donkey Kong Country, which perfectly epitomized the different approaches between the two companies. Sega offered another new gizmo, which was expensive and would require entirely new software (which had been hard to get developers to make because Sega just had too many different systems). Nintendo offered a breakthrough game in the middle of the console’s life cycle, which not only reinvigorated the SNES but hinted that there would be more like this going forward.

  Although the 32X would lose momentum rather quickly, Sega’s reputation and market prowess had managed to create large demand for the launch. But even this caused a problem for Sega internally and externally. SOA had rushed the 32X to market in order to meet Nakayama-san’s Christmas deadline, but SOJ had failed to produce the requested number of units. SOA had wanted a million, but SOJ, who refused to relinquish the hardware manufacturing responsibilities, only provided four hundred thousand units. Not only did this upset the underserviced retailers, but it made the launch look weak, which became something of a self-fulfilling prophecy. For the first time since Kalinske took over the company, a Sega product was met with mediocre reviews. He took no comfort in watching the failure of something he had said would fail; instead, he chose to keep fighting for his team. That meant putting all his eggs into Sega Saturn’s basket. The hardware was lousy and developers were shying away, but Kalinske felt like SOA’s marketing muscle could turn this into something special, something that would even outdo Sonic 2sday. So his team decided that on September 2, 1995, they would launch the console on what they now called “Sega Saturnday,” shooting for the biggest console launch ever, and gathering the kind of momentum that 32X had sorely missed.

  Meanwhile, Nintendo was living not in the future but fully in the moment. The launch of Donkey Kong Country was the most successful in videogame history, selling more than seven million copies in only six months and helping Nintendo reclaim Christmas. Additionally, Nintendo had taken a page out of Sega’s playbook and launched their “Play It Loud” marketing campaign, which beautifully merged Nintendo’s straight-arrow mentality with Sega’s edgy attitude.

  This was a blow to Sega, but what Nintendo was doing on the marketing front hardly compared to what Sony was up to. With Race and Anderson in charge, the plan was to continue to push the envelope further than Sega ever had: edgier, wackier, cooler. Under Kalinske, Sega had indeed slain Nintendo and was the new king, so Race wanted to position Sega the same way that Sega had once positioned Nintendo: as the lame establishment that had forgotten how to have fun. Sony started running competitive ads against Sega: If you buy a Saturn, then your head must be up Uranus. This was the first time in Race’s career that he’d worked for a company so flush with cash, and he was having the time of his life doing anything and everything he wanted. It’s like having money in high school, he had been heard to say, and the confidence he exuded made him a shoo-in for homecoming king.

  “But I can’t stand to see you like this,” Michael Milken said to his friend. “When did you become a masochist?”

  “A masochist?” Kalinske asked. “So I’m not a martyr anymore?”

  “A man can be both,” Milken explained.

  Kalinske shook his head. “It’s not that, Michael. But I just can’t go ahead and give up here. There’s too much at stake. And as long as we do something big with the new system, then it will be like all this stress never happened.”

  “But I thought you said it’s no good.”

  “I’m not a technical guy—what the hell do I know?” Kalinske asked. “So it doesn’t have the right number of polygons or whatnot. As long as we have the right games and the right messaging, then it could work.”

  “The right messaging?” Milken laughed. “Just when I think you’re an okay guy, you remind me that you’re still a marketing maven through and through.”

  Kalinske shrugged. “It’s all just telling stories.”

  And the story that Sega needed to tell now was that its players were even younger and hipper than Sony’s crowd. This led Kalinske to make a tough decision and find a new athlete to become the face of Sega Sports and the center of the subbrand’s football franchise. Although this effectively ended his personal and professional relationship with Joe Montana, Kalinske felt like it was the right thing to do. But it was hard to feel good about the transition as Fornasier reluctantly passed along negative reports about Montana’s replacement, Deion Sanders. Montana was unanimously described by those he worked with as a “class act,” while everyone who came into contact with Sanders described working with him as a “nightmare.” He didn’t show up at meetings, wouldn’t speak directly to those he was working with (his preferred form of communication was through his entourage), and when he did speak, it was always in the third person. But Sega had no choice but to put up with him: he was the face of Sega Sports for the beginning of the new console war.

  “All right,” Milken said. “You’re not there yet. But let’s keep talking, okay?”

  “Sure,” Kalinske said. “Even a marketing maven is wise enough to realize it would be foolish to turn down free sessions of flattery and therapy.”

  Kalinske had not yet reached his breaking point, but Steve Race did everything in his power to push him there. “Relax, Tom, it’s just a joke,” Race said, putting an arm around Kalinske’s shoulder.

  They were in Las Vegas for the 1995 winter Consumer Electronics Show, which would be the last one that Sega ever attended. Thank God, just about everyone thought, after all the years that the CES treated videogames like the fad they didn’t turn out to be. Going forward, the videogame industry would have its own trade show: the Electronic Enterta
inment Expo (E3), the first of which would take place on May 15 of that year in Los Angeles. This was the direct result of the videogame trade association that Kalinske had spearheaded, and it was there that Sega, Sony, and Nintendo would all unveil their next-generation consoles. But that still lay in the future. Today Kalinske had awakened in Vegas to find himself a victim of the latest prank from the guys at Sony. Apparently, in the middle of the night, all of the Sonic memorabilia displayed throughout the hotel where he was staying had been defaced: displays torn down, posters given mustaches, deflated Sonic balloons strewn throughout the lobby. Obviously Race (or Race’s guys) were behind this, but if Kalinske had had any doubts, they vanished when he saw the hotel’s pool, which was overflowing with large black balloons inscribed with the letters “PS-X.”

  Kalinske looked at Race and shook his head. “I know it’s a joke,” he said, “but don’t you think this one went a little too far? I don’t really care, but between you and me, I don’t need anything else lowering morale.”

  “They’re just balloons!”

  “Steve,” Kalinske said, mustering all the patience he could find, “please stop.”

  “Tom,” Race said, matching the pattern of his speech, “no.”

  Race gave Kalinske another pat on the shoulder, then walked away. Later that evening, Race would prove to be a man of his word when he arranged for Sega’s evening party to be overrun with thousands of napkins that said “PS-X Welcomes Sega to CES!” Kalinske shook his head and readied himself to lead his guys into their final Consumer Electronics Show. But before turning around, he made sure to take a moment to put on a brave face.

  Kalinske wasn’t the only one learning to perfect a brave face. Diane Fornasier had become quite skilled herself, although for entirely different reasons. She was twelve weeks pregnant and didn’t want to let anyone know because she was afraid that if people found out, she might lose her job. Not lose her job as in getting fired—she knew that wouldn’t happen, especially not with Kalinske in charge—but slowly get looped out of plans, conversations, and strategies to the point that her value to Sega would drop to zero. Therefore, until the moment was right, she planned to hide the morning sickness, act slightly embarrassed to be gaining weight, and continue to accept drinks of alcohol and pour out the contents when nobody was looking.

  By the second week in February, though, she could no longer keep the secret. At her age, the pregnancy was already considered high risk, and those odds got even worse when she learned that she was having triplets. Not long after revealing the news, she went to see the doctor and found out that at least two of the triplets had passed away. She worried that this was her fault because she had kept working at Sega, but the doctor assured her that was not at all the case. In light of the circumstances, however, he recommended she get a week of bed rest.

  Although the doctor had confirmed that the miscarriages had nothing to do with work, Fornasier was filled with guilt. Yet still, even feeling that way, she wanted to work. If it had been any other job, she’d likely have exited a while back, but this was Sega. This was the company that had taught her to take, that had given her the life and career she’d had always hoped was possible. And with the current hardware transition and so much at stake, she felt particularly obliged to repay Sega. This was significant because it demonstrated the unbending dedication that many felt toward Kalinske and the company; it’s also significant because, in a nutshell, Fornasier’s commitment touched upon the reason Kalinske hadn’t left to go with Milken. If she hadn’t given up, and neither had Rioux, Toyoda, and so many others, then how the hell could he give up?

  After a week of bed rest, Fornasier went in to speak with Kalinske. She wanted to go back to work, but not quite yet and not full-time. She didn’t know if something like that might be possible, or how that kind of arrangement might work, but if it interfered with any of her responsibilities, she promised to find a way to—

  “Diane,” Kalinske said, “don’t worry about any of that. Take all the time you need. I mean that. Whatever arrangement works for you, I’ll make it work for us.”

  “But what about—”

  “Nope,” Kalinske said, cutting her off. “We’re not even going to continue this conversation until you put to rest all that doubt. Whatever you need. I mean it.”

  Fornasier was touched, and relieved in a way that she hadn’t been in months. “Thank you, Tom.”

  “I mean this so incredibly sincerely: it’s the least we could do,” he said, staring at her until he was sure it had sunk in. “Besides, you have to admit that the timing works out not so bad, with Mike joining us.”

  Mike was Mike Ribeiro, a marketing wunderkind from Hilton Hotels who had recently joined SOA to fill Ed Volkwein’s position and run the marketing department. For many who had been with Sega since the beginning of the decade and watched the company grow, Ribeiro’s arrival symbolized the final piece of Sega’s transformation from scrappy go-getter to just another company. This likely had much more to do with the timing of his arrival and the unwinnable situation that he had been thrust into than with his personality or talents; after all, Sega had plenty of candidates to choose from (at least among those Sony hadn’t already gotten). But Ribeiro differed from his predecessors in one significant way: for him, it really could have been widgets. Through the years, some members of Sega’s marketing team had loved playing videogames, while others didn’t really embrace the pastime, but regardless where anyone fell on the gamer spectrum, they all appreciated the art of product development. That’s why even those who didn’t like playing games loved selling them; they were selling stories, adventures, friends from an alternate reality. But for Ribeiro, all that really mattered was the marketing. In essence, he represented to those at Sega the same thing that Sega itself had represented to Nintendo: style not only superseded substance, but it did so to the point that substance was almost moot.

  Normally, Kalinske considered a mentality like that dangerous, but when it came to Saturn, an inferior system in just about every way possible, this was exactly what Sega needed to make a final stand on Saturnday.

  “You must cancel it,” Nakayama advised Kalinske while the two were at a steak restaurant in the Bay Area.

  “I don’t think you understand what you’re saying,” Kalinske replied.

  “We must go sooner,” he said, meaning to move up the launch of the Saturn.

  “Nakayama-san,” Kalinske said, still trying to wrap his mind around this, “with all due respect, we’ve spent an uncountable amount of hours coordinating the launch of this new system, and it all hinges upon that release date.”

  “No,” Nakayama said with something that resembled a pout. He turned his attention to carving out a large piece of steak, seemingly losing interest in the conversation.

  “We can’t just change our plans like that,” Kalinske said. How could Nakayama be blind to what was going on at SOA? Sony was coming, and not only did they have a better system, but they were aggressively poaching Kalinske’s employees. Just days earlier Sega had honored a Third Party Analyst named Kirby Fong as employee of the year; twenty-four hours later, he left for a higher-paying job at Sony. “Especially not with the new trade show only weeks away. We need to put our best foot forward.”

  “That’s what I am thinking,” Nakayama said, in a sweeter voice that seemed to indicate he believed they were now on the same page. “It makes for a perfect opportunity to launch our new Saturn.”

  “Wait, you mean to actually launch it there?”

  Nakayama nodded slowly. “See? It’s perfect.”

  Kalinske vehemently opposed this idea; it made absolutely no sense. But in the course of his explaining why launching at E3 would effectively kill Saturn in the United States, he started to see what had caused Nakayama to feel this way. SOJ had launched the Saturn on November 22, 1994, and thus far the results had been rather strong. With 170,000 systems sold on just the first day, the Saturn appeared well on its way to becoming Sega’s most succe
ssful console in Japan. Why had the Saturn triumphed where the Mega Drive and Master System had not? One reason was certainly the software. Although only five titles were available at launch, one of them was Virtua Fighter, which was currently the most popular arcade game in Japan. Another reason for the success could be SOJ’s rowdier and more aggressive advertising campaign. And another reason, the one Kalinske assumed Nakayama suddenly valued most, was that Saturn had entered the market two weeks before Sony’s PlayStation (which, notably, still outsold the Saturn).

  “With Genesis, we went first,” Nakayama explained, “and you have seen how we reaped this reward. We must embrace the opportunity and also do the same.”

  “Nakayama-san,” Kalinske said, “I don’t quite understand what’s been going on over the past year, but up until now I’ve gone along with the plan. This, however, just can’t happen.”

  “It is not for you to decide!”

  “Yes, it is!”

  “You must better understand the situation!”

  The conversation escalated, the same tone at different volumes, until Nakayama got up and walked out on Kalinske, who was left alone at the table. How could Nakayama be acting like this? Even in the past, when they’d disagreed, Nakayama had always made efforts to compromise, or at least make it seem that way. But this time it was different. Or maybe it wasn’t. Maybe this was just the first time since the tide had turned that Kalinske refused to budge. Either way, if this was what Nakayama wanted, then this was what would happen. If Kalinske didn’t launch the Saturn at E3, then he’d be replaced by someone who would. For a second that didn’t sound like such a bad fate, but he just wasn’t ready to quit. The situation looked dire, but maybe, just maybe, Nakayama’s way would work out. The Saturn had indeed been successful in Japan, so perhaps it wasn’t such a bad system after all. And as he sat there alone in the restaurant, Kalinske suffered from the hidden problem that faces men of great inspiration: they can talk anyone into anything, even themselves.