Tom Kalinske Explains Why He Left Sega Of America - Time Extension

He still remembers to blame SOJ. No way would SOJ block an NFL game since SOJ didn't even make NFL games (unless you want to count Great Football) and FIFA next-gen launched on the 32X before the Saturn and PS versions, that the reason it didn't come to the Saturn 1st Tom

If SEGA America hadn't been so sure the 32X was the winner and requested software for it. The Saturn would have been the next-gen console to get ports of Doom, and Virtual Racing Fifa and would have been all the better for it, even with a rushed date, which I believe was SOA idea anyway.

RealTime did a decent job with a 3D platform game and at least got it out. STI handling of the Sonic project was a complete mess from start to finish and where next to level was ever complete or fully realised

 

All corps make mistakes and at least SOA looked to get some sort of Sonic title out for the Saturn's launch, SOJ need to take the blame for rushed titles like Victory Goal, Clockwork Knight and Daytona which were released in a clear unfished state and Daytona USA was a terrible moment for Saturn 3D imagine and people inside SOJ should have known it wasn't good enough and needed more work and not to have the Sonic Team be order to make a Saturn Sonic game (until it was too late) was shocking.


I tire of Tom's spin though. I'll have far more credit for the person if he said that he made the wrong call with the 32X. He's like your typical big-mouth football manager. Takes all the credit for the good and none of the bad and then looks to blame the evil board members for issues and problems on and off the pitch...

 

Kalinske is often accused of revisionism. But I would argue that some of the people making that call are themselves engaging in a bit of revisionism. I don't know the man. He's definitely made false statements. But I am not so quick to jump on the bandwagon and deem him a serial liar.

He has, in his own ways, said the 32X was a mistake. That doesn't mean the Saturn was the right answer either though. Nobody really knows how things would have played out had "this" been done instead of "that". If SoA had done what you say they should have and it didn't do well against rivals, I think more people would be open to a 32X answer. In theory, the 32X seems like it could have worked. And if there were more games and they were a little better in quality, I think it could have had a real shot. But it wasn't executed well, and that falls on the shoulders of everyone involved, including Japan.

 

A problem with Kalinske is that he intentionally ignores the fact that Sega of America took a revenue nosedive under his leadership (before the Saturn released). He then acts confused about why Japan started to take more active participation in decision-making.

SOA was not a healthy company in 1994, and Kalinske's decisions to ignore the Saturn in favor of the 32X and to pump more money into expensive licenses was not the answer.

Here is Sega's CFO Shunichi Nakamura, writing earlier this year in the Nikkei. He is discussing the revenue decline and inventory management problems that began in 1994.

This is just one part of a volume of evidence suggesting SOA was mismanaged, and that Japan only caught on once it was too late.

 

How was SoE mismanaged at the time then?

 

As Nakamura states - they were accumulating unsold stock.

Basically, to keep their numbers up, SOA and SOE were ordering huge quantities of games and hardware from Japan. However, due to the downturn in the market, they weren't selling those games and hardware. Nevertheless, they kept ordering more and more. So, from the perspective of the Japanese head office, business was healthy in America and Europe. Once Japan discovered what was happening, a huge sum of money was tied up in unsold stock that then had to be written off to the great detriment of the overall company (causing the value of its stock to plummet).

Nakamura isn't the first to talk about this. People like Irimajiri also discuss it. Nakamura's comments are interesting, though, because he was the CFO and this problem was directly tied to his position.

 

I don't think there's a single reality where 32X worked. Not one. That's about as far as I can contribute past what's already been said, haha.

 

I knew what sort of liar he staring to taking credit for Sonic and the best one, was saying he did the EA SEGA deal for the Mega Drive. Overlooking it wasn't a good deal at all for SEGA and lost SEGA a ton in royalties. Tom didn't even join SEGA until September 1990 by which time EA was already printing their 1st MD game , it was in fact David Rosen who did the deal with Trip in the spring of 1990.

The big mistake was to think there was a market for the MD in 1995 and beyond.
When it was clear to many the 16-bit market was in decline with millions of unsold carts and lower game sales despite a massive user base. You could see that alone, with Sonic. Sonic 3 sold in nothing like the numbers the previous games did So many SEGA fans are already bored with 1988 hardware.

Sure SEGA Japan made the call of the 32X at 1st but when it was clear the Jag/3DO was not going to eat into 16bit market share and when in May of 1994 SEGA Japan was showing off the finished SEGA Saturn to the Japanese press with a late 1994 street date That was the time to have killed the 32X and move all production on the Saturn and even then SEGA would have lost to PS inthe west, but I think they had a real shot at Nintendo.

I'll have far more time for Tom if he just said he thought the 32X was a winner (which he clearly did) and said there were so many issues with Saturn it was a hard sell to developers and retail and thats why he felt the 32X was the better cal . Not come up with fanciful stuff of how he could have had Playstaion hardware (that was Nintendo tom) , SEGA Japan stopped NFL and FIFA games on Saturn made SOA ship hardware in May 1995 and all of SOJ staff were nasty and horrible to SOA which is never backed up by key SOA staff like Scott Bayless, Marty or the late Joe Miller.

Tom is like Phil Harssion or Jose Mourinho in the footy world. Takes all the credit for the good, but none of the bad and then looks to blame others for when things went wrong.

 

Again, it is fine to note inaccuracies in what Kalinske says, but treating him like a cartoon supervillain is not helpful.

 

He does lie, he even lies about the reasons why he left SEGA, its nothing to do with a rushed launch and was everything to do with Nakayama stepping down, the one man who backed TOM at SOJ

He doesn't need to spin or lie either. Tom did a good job he did a wonderful job with the SEGA CD, I also liked how he looked to take gaming into different markets with SEGA Soft and appealing to girl gamers with The Little Mermaid
and also older gamers with the Deep Water label.

Also, If Tom was still at SEGA in 1997. I've no doubt 3rd party Saturn support would have been better than it was under Bernie, in the USA. Tom would not have pissed off Working Designs for starters and I fully believe would have looked to translate Grandia to the Saturn in the USA. In so many ways Tom like Jose Mourinho on their day they're brilliant and the best at talking the talk and walking the walk, but when things go wrong they look to blame and slag off others, which I hate in people.

There's no shame in owning up to making a mistake

 

They Create Worlds' great episode on this (that I linked earlier on in the thread) explains it well - essentially, SOE had outright plunged into the red around that point due to the particularly bad market recession on the continent, which caused them to get in a loss-making price war with Nintendo. Meanwhile SOA only just broke even, though that of course wouldn't last long. So the unsold inventory piled up out of sight, and Irimajiri later had to write it all off.

Always worth noting that TCW also downplay Kalinske's bad blood claims, and posit that he partly started to have less freedom because Nakayama was bringing in far more middle management than before in Japan - again, some of the names cited by them were already there (they state Tokuzo Komai was as such, and I've definitely read somewhere that Mitsuo Wachi was first brought in during the late 80s), but I can easily see the logic in that thinking.

 

I find it interesting that people are claiming that there wasn’t a market for the Mega Drive beyond 1995.

Where I grew up, I knew a few people who had and kept playing around this time. Considering SEGA and Sonic were some of the main franchises of mine and my friends childhoods up until about 1998, and no one I knew even owned a Saturn, the Mega Drive was still doing mildly well. I was always under the impression that this was the case in a lot of places in the UK, and maybe elsewhere. There was certainly a market for people who simply didn’t have or couldn’t afford any of the next generation of consoles. A lot of my friends had GameBoy’s as well and there was only so much a kids’ parents could buy.

For further context, we bought The Lost World, the console’s final game in late 1997, and didn’t get a PlayStation until Christmas 1998. Sonic The Comic also continued up until around this time and slightly further beyond so I believe that Sonic and SEGA were still well settled into public consciousness enough for it to continue, though by 1998 it was certainly phasing out rapidly and after I got a PlayStation Sonic and SEGA really dropped off until Sonic hit the GameBoy Advance and became really popular again.

This is just my experience though.

 

I've done a lot of documenting of the decline of the 16-bit market, which started in 1993. Here's an article from Feb 1996 talking about how the game industry almost crashed then because no one was buying 16-bit games anymore:

https://mdshock.com/2022/05/09/a-second-atari-shock-the-decline-of-the-16-bit-console-era/

And you can check out this one and this one.

No doubt lots of people were playing 16-bit games into 1998, but the masses weren't buying new 16-bit games at full price, which was required to sustain the industry. They were buying the budget-priced leftover inventory that every company was clearing out to reduce losses.

This graph of Sega's export revenue sums up the problem nicely. Sega's export revenue at the start of 1995 was half of what it was at the start of 1993.



The American and European markets that the company depended on had dried up.

 

Wasn't there a global recession in the early 90s that people were still recovering from during the mid 90s? (maybe it was more like that in Australia). When the Saturn and Playstation first released, they looked impressive in the store displays, but they were prohibitively expensive.

I think it's clear to everyone that the combination of pushing both the 32X and the Saturn at basically the same time was a very bad idea. But if you had to chose between them, I think the 32X might have been the better option. The Saturn was rushed out too early and needed more time to incubate. Most of the internal Sega dev teams were not ready for 3D, so focusing the company's attention on a souped up version of the Mega Drive, which basically just raised it up to meet and exceed the Super Nintendo (more colours and SFX chip style polygons) was probably the right thing to do at the time. They might have even got it out the door sooner, if there was more of a combined commitment behind it.

Obviously, it wouldn't look as good as the graphics of the Sony Playstation, but Sony still had to prove themselves and those initial batches of games weren't that inspiring. If the choice was between a $700 investment in an unproven competitor, or a $250 upgrade for your current Mega Drive with loads of Sega branded software on the way (with Sega's full commitment behind the device), it might have been a different story. Obviously, the combined Neptune device would also have needed to be ready to go at launch for people who didn't already have Mega Drives, which was a significant problem in the Japanese market. And there should have been no mention of the Saturn to the press, Sega's only commitment would be to the 32X/Mars and Neptune. If there was any mention of the Saturn, there needed to be a firm guarantee that all your mega drive and 32X software would be backward compatible with a future successor.

Then Sega just fights their corner with quality software on a device that is better than SNES, but not as good as PSX. Once Nintendo starts to gear up for the N64, after a good 2-3 years of support for the 32X, then that's when Sega starts to push the Saturn, with a better port of Daytona and VF2 on launch. Sony is still in the mix of this 3 horse race, but it's not immediately clear who the top 2 end up being.

Of course, this means that the Dreamcast never exists in the form we received it, and if Sega never gets pushed to the bottom, then we wouldn't have seen as much of the imaginative, innovative and crazy shit that they tried to do to get back in the game. The successor to the Saturn would probably have been a lot tamer, with more sequels than new ideas.

 

It's not about saying there was no market. It's about saying that despite a vast user base, software sales were down year on year. So many gamers were getting bored of 2D gaming so if you were Amiga or Mega Drive fans and were ready to move on and here's the mistake Tom made 'Many' 8-bit/16-bit gamers were growing up and starting jobs and had the money to buy a £300 plus console to move to 3D, they weren't kids anymore, but young adults with cash on the hip. Like with the industry itself, people were growing up

SEGA should have dropped all support for the Mega Drive in 1994 and left support to the 3rd parties. A SEGA focused on just the Saturn and Arcade could have given Nintendo a real run for its money IMO. Instead, SEGA split its divisions, budgets and users with the 32X and Saturn. There comes a time in life to move on and the Mega Drive was 1988 tech that needed to be superseded.

Tom did a lot of good, but he thought price and price alone would win the 32 Bit battle and put all his backing to the 32X.

 

Kind of off-topic: Just saw Tom posted that he's retired on LinkedIn. Not super relevant, considering he hasn't played much of a role in the gaming industry for decades, but figured it was worth sharing. The wording is a bit odd, so I'm not sure if it's a new announcement or a, "Stop pitching me stuff," kind of post (especially considering he was in VC).

 

You could be right that Sega would have been better off chasing the older gamers and moving to 3D and competing against Sony more efficiently. But there is some downsides associated with this move. Apart from Yu Suzuki and AM2, hardly anyone else in Sega was ready for 3D (Naka ended up not being too far behind with the Nights engine). By rushing out the Saturn with a bad port of Daytona, they showed their hands too early. Consumers could compare Sony's Ridge Racer and Sega's Daytona side by side, and could see that Sega was not the right choice. If Sony is just out there on their own, sure it looks great, but there is nothing to compare it to. There is a still a bit of mystery about what Sega will have down the track. Sega fans might have been tempted to wait and see. Sony didn't get their biggest iconic game releases until 1997/1998 (ie Resident Evil, Metal Gear Solid, Final Fantasy). There was some time for Sega to take it slow.

And maybe I'm looking back now with a modern perspective, because I know graphics and 3D were a big thing in the mid-90s, but a lot of the Saturn's success in Japan seems to stem from high quality 2D games, especially 2D fighters, 2D shooters and JRPGs. I think this era could have been serviced by a 32X/Neptune console instead, with the Saturn getting a bit more development time.

Of course, like you said, you could just take the approach that the Mega Drive is dead, and 2D gaming is dead, and the whole organisation needed to get behind the Saturn and learn 3D gaming quick smart. Which probably would have worked too. I guess Nintendo kind of did that, mostly focusing on the N64 and 3D gaming behind closed doors while Rare churned out Donkey Kong Country sequels for the SNES. Incidentally, do we have Nintendo's revenue/profit charts for 1994-1996? Did they see the same drop while they only had 16-bit titles on the market?

 

The last choice seems like the only smart path they could've taken. Nintendo made the right call to buckle down on 3D and start getting everyone on board, Sega didn't. And it was largely due to rushing their Japanese studios with a system they weren't prepared for, and letting their western studios wade in the Genesis pool too long. All they had to do was make one plan and just take the time needed to get everyone committed to it. Don't blow the budget and dev time on two systems, just commit to one, get everyone acquainted with it, and don't rush it to market.

And sure, I'll acknowledge Saturn being 2D-heavy helped them a lot in Japan, and going full 3D cost Nintendo the popularity contest there (at least til Pokémon). But the N64 and it's games radically changed gaming for the better and kept a solid 2nd place to Sony in the west.

Now if Sega took this route, I don't think this would've ever led to them winning against Sony, but I could see them riding a reliably close 2nd/3rd place race with Nintendo. Which would've been a lot easier to survive from (and come back with a vengence) than the total wipe-out Saturn experienced.