Thoughts on Console Wars (book)?

It's... not very accurate when it comes to anything concerning Japan and Nakayama. Nakayama is made out to be an incompetent villain, which is a shame because the reality is just so much more interesting in its complexity.

 

I kind of wish the scope of the book had been more broad in terms of Sega's operations as well - the obvious stuff about the "console wars", as they were, is really the only one that would've appealed to mass markets (which is undoubtedly what Harris was aiming the book at), but there could've been more interesting info disclosed from Kalinske if pushed and published elsewhere

I don't know if it would've been his business, but there's always been a question mark over why Sega failed to create a indoor theme park in the vein of the Joypolis venues in the States - it could've been huge in their prime years. And yet, talks with Universal Studios and then Disney failed, instead leading to them creating the GameWorks entertainment venues with the former, and the latter doing their own thing with DisneyQuest (which also failed)

(it's been vaguely said that, as ever, differences between the way things rolled in Japan and American business was what put a stop to it, but there must be more to this)

I suspect there's a lot that could be said about that in particular, among other things, but we just don't know it yet because of people focusing in on Sonic vs Mario. And I don't blame them, that's an era we won't get back - however, it's always a bonus to have this kind of stuff out there and accessible before it too retreats into the past.

 

GameWorks was opened when Sega was at its greatest point of crisis in the US - SOA was basically gutted due to the massive failure of the Saturn, and Japan management was in a panic that would see Nakayama soon resign as president. It's a miracle that GameWorks was ever opened, and while I'm not that familiar with it, I imagine it's because the whole thing was set in motion years earlier and there were probably contractual obligations. I doubt Sega had an extra cent to invest in a risky venture like GameWorks at the time.

 

GameWorks, at the very least, had its own separate division that was created by SOJ, Dreamworks, and Universal in 1996 - after its later dissolution and bankruptcy, the numerous venues would be Sega Entertainment USA's problem (who were also separate). SOA weren't directly responsible for them, although their immediate losses likely ended up impacting them in some tangible shape or form along the line.

I think I'm right in saying SOA were involved in plans to have a Sega theme park in America up and running in 1994, originally within Universal Studios, then Disneyworld, until talks with both companies stalled. This was a result of SOJ's outlandish diktat for 100 Sega theme parks across the world by the end of the decade as part of the "Amusement Theme Park" concept they were hyping themselves up about, and forced all of the regional divisions to play along with by proxy - over $1 billion, largely from SOJ, went down the drain into this.

The 100 theme parks obviously weren't ever realistically going to happen, with the States basically receiving the failed GameWorks centres as a substitute, just eight Joypolis locations constructed in Japan, and the UK and Australia getting Sega World London and Sydney, which didn't go down well for numerous reasons, and ended up nearly killing off their amusement management companies in both regions (though the UK's would reform itself in the 2000s).


What I wonder here is just how much of a say SOA had in the planning for that original theme park venue which never materialised, and how what went wrong played into the internal politics at the time with Kalinske, Nakayama, et al - details are scarce on that particular story, whilst the failures that were GameWorks and the overseas venues, which were ran by separate subsidiaries within Sega, are more well-documented. Console Wars could've covered this, but of course its title and theme restricted its scope.

 

GameWorks venues were certainly quite something, but usually weren't exactly the amusement arcade-cum theme parks with attractions developed by Sega AM5 that SOJ had envisioned to roll out across the world - they were altered and downscaled to better suit the American market where venues like Dave & Busters were already becoming the predominant arcade venues, with a bigger emphasis on their food and drink outlets.

I suspect that if Sega had initiated their plans a couple of years earlier and actually managed to get a theme park location up and running in the States in say, 1993 or so, that side of the business wouldn't of failed to the extent that it did. It would've still not lived up to their expectations, but the profitable locations would've still kept a good stream of revenue - in reality, only Tokyo Joypolis really did that, which is why it's still open under CA Sega Joypolis.

 

Trusting a history book from the point of view of Kalinske is like trusting a used car salesman to be honest about finding you a good car.

 

There's also a book called The Rise and Fall of Sega, haven't read it yet but it seems interesting.

I enjoyed Console Wars, even though it's inconsistencies are jarring. Still, it's a nice "corporate thriller" book.

 

That book's sources are really out of date and basically rely on Western news articles, so no good Japanese perspective (instead the author takes a very opinionated negative stance against the Japanese side...).

The introduction/background to Read Only Memory's Mega Drive/Genesis: Collected Works is probably the best overview, although brief. It was written based on interviews with Kalinske, Rosen, Nakayama, Toyoda, and more, so it has a lot of perspectives that we don't usually see.

In that book, Sega co-founder David Rosen really downplays the America-Japan strife narrative that Kalinske pushes. Rosen says:

"I played the part of coordinator between San Francisco and Tokyo. There were always differences and problems; my time was spent on that. Tom was great, he did a hell of a job, but it wasn’t always easy for him to understand the decisions in Japan, and there they couldn’t always appreciate necessities like cutting the retail price of the machine. After the Genesis, Sega of America was interested in developing peripherals, while Sega of Japan wanted to move on. It wasn’t necessarily a friction, but there was a lot of going back and forth, helping to resolve issues with the ultimate aim of achieving what both arms of the company wanted."

Nakayama's and Toyoda's comments on the 32X are also really interesting (SOA didn't want the Saturn due to its expected high price--they proposed the 32X as an alternative, and because of their strong track record, Nakayama consented).

In recent years, there have been quite a few new interviews with senior Japanese staff that, in my opinion, really show what's being left out of the Console Wars narrative.

For an example, check out my article related to the Sega-Sony partnership:

https://mdshock.com/2019/03/18/sega-and-sony-new-insight-into-the-partnership-that-never-came-to-be/

 

I haven't read the book, but I'm watching the the documentary right now. I'm finding myself to be quite annoyed with the American perspective and even more annoyed with the marketing people who clearly don't appreciate the technical side of things. As others have said, Tom Kalinske in particular takes more credit than he deserves for things.

 

The documentary is basically fully about Sega. The book had perspectives from Nintendo and Sony as well.

 

This is actually really enlightening, not necessarily because this is new information but just how uncharged it is and I think it really does indicate that the perceived friction really was a two-way street. I don't think there's much denial that the Saturn's architecture caused issues and the strategy surrounding the Saturn's American launch was bungled, but hearing about the situation from a far less charged point of view makes things feel a lot more in perspective. I can imagine the pursuit of the 32X was seen as a pretty massive waste of resources at SoJ and they seemed to have a far better understanding of the inevitability of the generational shift than Kalinske and SoA did.

Is there any evidence to indicate that in some way the 32X was in part responsible for Sega's call to shadow drop the Saturn in the U.S.? I'm unfamiliar with whether or not we have any sources that goes into depth on the rationale there.

 

Yes, there is quite strong circumstantial evidence. Writing an article about the 32X is on my list of things to do that probably won't be done for a while because I can't get access to Nakayama's company speeches from 1994 right now (aside from this one). But I've read them and have a good sense of the initial 32X strategy.

It's important to keep in mind some points about Sega president Hayao Nakayama. Nakayama was very much a strong supporter of Kalinske, and Nakayama fought hard to give Kalinske what he wanted. Nakayama followed a very Western style of management - he pursued growth more heavily than most Japanese companies, and he recruited top management from outside rather than rely on home-grown talent (this became a big issue in 1993). He was a big fan of Kalinske. Nakayama's management style, I suspect, put him at odds with a lot of the longtime Sega upper management in Japan, who valued a more cautious, collective approach. But a lot of trust was placed in Nakayama--he was without doubt the primary architect of Sega's success throughout the 80s and early 90s.

About the 32X, the facts as we can be reasonably sure:

• Kalinske was publicly against a high-priced next-generation console, going so far as to say in mid-1993 that he would never sell a $500 console.
• Nakayama was concerned about the declining 16-bit market at the start of 1994, and to some extent, by the entrance of the electronics giants Sony and Matsushita into the game industry (see again this speech from 1994 for more perspective on these).
• In Jan 1994, Nakayama and SOA discussed options for increasing growth in the North American market, since SOA deemed a high-priced console impossible to sell (Nakayama agreed with this assessment). Nakayama at first suggested some kind of enhanced Genesis, and SOA's engineers countered with the suggestion for an add-on (something they had created failed proposals for several times in the past). Nakayama consented to the add-on.
  
• From Nakayama's speeches in early 1994, we can learn the initial strategy for the 32X: The world market was to be split, at least for the time being. SOA would focus exclusively on the 32X, while Japan would focus exclusively on the Saturn. Both sides were happy about this. SOA finally got to co-design its own hardware and it didn't have to sell the high-priced Saturn, while Japan could focus its efforts on its domestic market rather than on supporting the overseas markets. It's unknown when SOA would eventually market the Saturn, but presumably not until at least 1996.
  
• SOA invested heavily into the 32X--in terms of in-house development, attracting third parties, and advertising. Kalinske even went so far as to paint the Saturn in a negative light in order to promote the 32X. However, no one bought into it. Both third parties and the media were more interested in the Saturn. With almost zero outside support, the 32X was dead before it arrived.
• Meanwhile, the PlayStation had been released in Japan and was giving the Saturn fierce competition, and Sony was planning on releasing the PlayStation in North America in 1995.

With those points in mind, we can speculate:

• The Saturn's release date in North America was pushed up to late 1995 when it became clear that the 32X was not going to hold the market.
• SOA's focus on the 32X greatly disadvantaged the Saturn's eventual release. Software development for the Saturn was severely delayed. SOA's strategy of developing its own American-centric titles basically went out the window because they couldn't get anything ready in time. They had to rely on Japan's games, many of which didn't fit the North American market.
  
• Nakayama was desperate to save the severely threatened North American market in the face of fierce competition from Sony. One of these acts of desperation was the idea to have a limited early release of the Saturn. This of course wasn't the cause of the Saturn's failure, but only one of the outcomes of the failures to-date. It also may have been intended to draw attention away from the 32X (each customer who bought a 32X at that point was possibly a customer who would then not buy a Saturn).
  
• The Saturn might have had more of a chance in North America if SOA had been on board from the beginning. No distractions from the 32X would have meant they could have prepared more American-centric software and gotten more third parties on board. And it probably would have helped if Kalinske had not been so negative about the Saturn. In the end, Sega generally price-matched the PlayStation; if that had been known from the beginning, there was never a need to worry about selling a $500 console.

You might wonder: How could Sega have ever thought that the 32X would hold the market? But it's important to keep in mind how rushed the whole project was. The add-on that SOA's engineers originally envisioned was not what the 32X ended up being. The R&D department in Japan was stuck between a rock and a hard place: they had to give the 32X enough features to make it compelling to consumers and developers, but more than that, they had to keep the price low. Development on the Saturn began 2+ years before its release, but for the 32X, it was less than 10 months. R&D couldn't work miracles, and what resulted was probably not what management was hoping for.

Both the 32X and the Saturn failed in North America, and SOA essentially went bankrupt. Kalinske resigned, and Nakayama resigned from the SOA board, likely as a show of accepting responsibility for SOA's failures (in Japan, an executive resigning when a company is performing poorly is almost always seen as a sign of accepting responsibility for the poor performance). Shoichiro Irimajiri was installed as president of SOA and tasked with cutting what he saw as the excesses of the company, paving the way for the Dreamcast.

Is it just me, or is the reality of all this just so much more interesting than the narrative in Console Wars?

 

Vastly so. Excellent research! This puts that very tumultuous time in a far more understandable perspective.

 

This makes way more sense than the Kalinske narrative.

IMO if the 32x didnt exist and the Saturn launched normally with Doom, Star Wars Arcade and Knuckles Chaotix it would have done better. Not PS1 numbers, but could have been compeititve with Nintendo.

 

This has to be one of the BEST posts I've ever seen come from these forms! Bravo!

 

Thanks!