Questions for Tom Kalinske – president and CEO of Sega of America fr

It can't really be simplified to "Sega killed itself" - the company shifted its focus from one market to another and the Japanese arm did rather well (particularly the arcade division). It was just the US branches that forgot how to function. And Bernie Stolar tops the clueless chart.

 

The way Sega was working, they could have only been really successful if they were globally popular, all at the same time. At one period or another, Sega was really popular in every market... just never at the same time.

 

They didn't forget, they were effectively neutered when SoJ relegated Kalinski to a figurehead, which made him leave. If I remember right (please correct me if I'm wrong) wasn't the Saturn losing money with every console sold? Stolar killed it yes, but either way, Sega was dying. One could argue his 9.9.99 for $199 campaign was the biggest reasons for the DC's success in the west. He made terrible decisions too, of course, but I think he bears too much of the blame.

Kalinske's '06 interview makes me believe the real blame may lie with Hayao Nakayama.

 

The money's in software - hardware usually sells at a loss (unless you're Nintendo in the pre-Wii U days).

But ultimately I see most of Sega of America's problems being a home-grown thing. From simple things like the game boxes sucking, to long-term marketing tactics like openly claiming the Saturn to be a 3D powerhouse and dismissing RPGs on the grounds of them not being as popular as the latest throwaway sports title. But honestly this isn't really all that interesting because it's blindingly obvious what was done wrong.

More interesting is all these wacky console ideas like the Neptune and the Pluto and the big VR craze and the bazillion cancelled games, and what Sega of Japan's position on all this experimentation was. It's a hilarious mess.

 

Yeah, Neptune and Pluto are fascinating historically, no doubt.

But actually, Saturn was more powerful than most people give it credit for. It had the capability of being excellent for 3D, though its strength lay in enhanced 2D games. The issue was (as it was in the PS3 a decade later) is that it was confounding to program for with its dual CPU structure. The PS1 was much easier to program for, so obviously developers would gravitate towards it. I'm not very technically minded, nor can I say I know anything about the Saturn technology first-hand, but I've actually seen a lot of evidence that the Saturn actually was more powerful than the PS1. It all came down to ease of development (ironic that Playstation got it right the first time around just to make the same mistake as Sega in the PS3.)

It's hilarious to see how Sega actually shot themselves in the foot with the Saturn. Again, in Kalinske's '06 interview, he states that the chipset being developed in the US for the Saturn was deemed "Not good enough" for SoJ, but it ended up being implemented in the N64 instead. Nakayama must have been beating himself up over that decision.

SoA's policy regarding RPGs was more broad than that, the 5-Star Game policy applied to all Sega software, and the final say was made in SoJ. Stolar applied a no-RPG policy to Sony while he was there, but he never instigated that at Sega from what I can tell. Again, most of the blame for that is on SoJ.

 

That's a chicken-and-the-egg situation.
If you don't have enough hardware sold, you won't have a userbase to sell software to.

No pain, no gain.

My impression was that SoJ didn't understand this properly, and that's why they disagreed with bundling Sonic (their best selling software) free with the console back in 1991. It's like they had absolutely no long-term plans, just a series of knee jerk reactions.

 

Only if there are no games at launch - the first purchased game tends to bring the platform holder into the black, and attachment rates are usually more than one.

Marketing plays a bigger role these days and usually sucks out all the cash. Back then things were simpler, and I reckon Sega's mistakes stem entirely from their inability to sell things on a different merit than "we have the best specs". Saturn's not better because of its arcade quality games and backing of years of development experience... it's because it has THREE PROCESSORS and THREE DEE

 

So are we going to get confirmation of whether our questions will be included or not? It would be great if potentially Barry could write up a confirmed list of planned questions or something so we know beforehand which questions Tom's going to answer. Interested in listening to the podcast regardless.

 

Platform makers don't make money from software sold, that's not how it works. They make money on software developed, which is passed on to the customer at the end. Hardware makers are unconcerned with software sales beyond that software needs to sell in order for more people to develop for it (and thus hardware needs to sell to make software sell well enough to entice developers to develop for it).

This is a major reason why video games are priced the way they are - because a large deficit is built up during development through various licensing agreements. After deduction from all hands involved, on a $60 game, a publisher/developer sees an average of $7 at retail. Game prices can't drop too low below the standard MSRP because, after a certain point, people start being unable to recoup development costs entirely and lose money on the game. This is how a game like Tomb Raider can sell 5 million copies and still lose money.

The so-called money hat arrangements that consumers like to go on about? It's not actually cash for games, it's a massive reduction in licensing fees. So, where a normal developer might have to pay $10 million in development fees on a normal project, microsoft might "money hat" a developer by lowering the cost of fees to, say, $1 million instead.

The way you guys are talking about software generating revenue is actually much closer to how steam works - steam monetizes the sale of games, microsoft and sony and nintendo monetize the development of games.

 

Awesome. That's great to hear Barry. Thanks for doing that. I'll be keeping an eye on this thread then. If you do choose to include my question go with the second edited redraft I did since I think the first version is far too long a question to ask. I'd love to hear Tom's response. Looking forward to your final selection.

 

The 32-bit console Sega initially acknowledged working on dubbed the "GigaDrive" was supposed to be backwards compatible with Mega Drive and Mega CD. I think that was in 1992 and came from Kalinske himself if I remember correctly. I'll see if I can dig up the original articles which may lead to some interesting questions for him about that pre-Saturn concept. That's if there is still time pre-interview.

 

Gigadrive (?):


Early Saturn design (mockup?):

 

Where did that come from? I don't recall GigaDrive ever having actual prototype hardware (or at least not a production type shell like that). Maybe concept drawings at most. It would be interesting if Sega did actually have prototype GigaDrive hardware at some point though. Anyway, gone through the magazine scans, now have to go through the non-scanned magazines.

 

that's what the caption hints at... although I suppose the clue is that it's pretty horrendus

 

Narrowing it down, this seems to be the point that Gigadrive was no more, and Saturn was the future. Sega Power August 1993 (published July 1st, 1993);

 

Probably first mention, Sega Power April 1992 (published March 5th, 1992);



Going through these magazines reminds me that there's so much other undocumented/proto stuff I need to document ...

 

MegaTech March 1992 (Published February 20th 1992)



Sega Pro March 1992 (Published February 20th 1992)



I don't have the original CTW interview, but suspect that "Gigadrive" was a media creation rather than a Sega codename (I may have read that name as early as 1991 in magazine speculation pieces - need to confirm). Anyway, questions based on these articles;

1; Was "Gigadrive" an actual Sega codename, or just media speculation.
2; Was it actually envisioned to have Genesis/Mega Drive backwards compatibility, and also Sega/Mega CD too?
3; Was it purely a conceptual console, or did it ever make it to the hardware prototype stage?

I'm sure there are many other questions you or others may have about the "Gigadrive".

 

There was also the Mega Drive based Teradrive, which plays on the Latin for Earth (Terra) and SI prefix Tera, which also fits with Mega (Drive) and Giga (Drive).

 

I suspect that to be unrelated. It was a machine produced in 1990. Every other system using the codenames dates to 1993+.

Except the game gear, but I don't remember -any- source for that being "project mercury" at any point.