The Ultimate History of Video Games: From Pong to Pokémon and Beyond—The Story Behind the Craze That Touched Our Lives and Changed the World

by Steven Kent

  —Chris Stamper, cofounder, Rare, Ltd.

  One of the strengths of Chris Stamper’s design was that it showed objects on the Silicon Graphics workstation with the same amount of detail that they would have when displayed on the Super NES. Hence, when the Stampers showed Takeda their boxing game on a Super NES the next day, it looked almost identical to the game they had shown him on the workstation the day before.

  When we took the guys from NCL [Nintendo Co., Ltd.] to the art department and showed them what we had, they kept looking under the table. I asked what they were doing. They said they were looking for the big computer because they didn’t understand that everything was being done in the small box.

  —Tim Stamper, cofounder, Rare, Ltd.

  Impressed with what he had seen, Takeda returned to Japan and reported the invention to Nintendo chairman Hiroshi Yamauchi. When Yamauchi responded by asking the Stampers what kind of game they wanted to make, Tim said that he wanted to make a game with the character Donkey Kong. With Yamauchi’s and Donkey Kong creator Shigeru Miyamoto’s blessing, Stamper and his design team began work on the game.

  Knowing that they were working on an all-important holiday release, the people at Rare went to great lengths to ensure the quality of their game. Their in-house musician created several themes to accompany the game. The art was inspired by concept drawings that Miyamoto sent over, but Tim Stamper’s team had license to take the concepts in their own direction. Stamper mapped out the levels for the game by drawing sequences of sketches on Post-it notes, then arranging them in a straight line.

  The process for creating the objects and characters in Donkey Kong Country involved building 3D images using flat polygons. Once the shapes were complete, the artists would assign textures and colors to various polygons to add skins for their wire-frame creations. The artists used objects from Rare’s converted farmhouse-headquarters to create images. When they needed textures for trees, they plucked leaves from a tree. When they needed a texture that resembled rusted metal for a wheelbarrow, they scanned an old shovel.

  The end result was a side-scrolling game with characters that moved smoothly but looked as real and three-dimensional as the dynamations in a Ray Harryhausen movie. Rare had created new characters for the game, and the storyline was filled with British puns and humor.

  When editors and buyers saw their first demonstrations of Donkey Kong Country at CES, they immediately knew what the big game of 1994 was going to be.

  The first time I saw Donkey Kong Country, I realized that Super NES could do everything that Nintendo said it could do.

  —RJ Mical, former fellow, the 3DO Company

  Sega’s Showstopper

  When you have an installed base as large as Sega has with the Genesis, and you come out with anything that costs less than $200, some people are going to buy it. That makes the release of the 32X a very nice financial event for Sega as a company.

  —Trip Hawkins

  Sega’s big CES product was 32X. Originally named “Mars,” 32X was billed as the poor man’s entry into “next generation” games. It was a mushroom-shaped peripheral that snapped into the cartridge slot of the Genesis console, giving it 32-bit processing power that Sega said would enable the system to work 40 times faster. In the heart of 32X sat two Hitachi 32-bit RISC chips, a 3D graphics processor capable of rendering 50,000 polygons per second, and some minor enhancements designed to work in tandem with Genesis audio and visual technology. Sega had already announced plans to release a superior 32-bit CD-based system called Saturn in Japan; but retailing at $159, 32X was supposed to be a much less expensive alternative for people who already owned a Genesis. The one question Sega was not answering, however, was whether a Genesis with Sega CD and 32X would be able to read Saturn software. Always happy to report his competitors’ flaws, 3DO-founder Trip Hawkins charged that it would not.

  Everyone knows that 32X is a Band-Aid. It’s not a “next generation system.” It’s fairly expensive. It’s not particularly high-performance. It’s hard to program for, and it’s not compatible with the Saturn.

  —Trip Hawkins

  Sega executives argued with Hawkins’s rhetoric, furiously telling people that he did not know what he was talking about. Even as they did this, however, they refused to state once and for all whether the 32X and Saturn were compatible.

  Both systems have the same architecture. You read between the lines.

  Sega has never abandoned its customer base. When we released the Genesis, we created an adapter that allowed them to play Master System cartridges. The 32X lets you run titles from your Genesis library.

  —Richard Brudvik-Lindner

  Hawkins, of course, had been correct. The 32X was not powerful enough to run Saturn software. It was, however, a huge improvement over the original design that was created by Sega of Japan. The project, which eventually turned into 32X, began as an entirely new console that was developed in Japan. When the unit was demonstrated to American executives, however, the reaction was less than favorable.

  We were told that there was going to be a thing called the Genesis 2. It was going to be another version of Genesis—an entire system. The only difference was that it was going to have double the colors and a lower cost.

  So Joe Miller said, “Oh, that’s just a horrible idea. If all you’re going to do is enhance the system, you should make it an add-on.” He said, “If it’s a new system with legitimate new software, great. But if the only thing it does is double the colors … ”

  —Michael Latham, former executive producer, Sega of America

  Joe Miller, head of Sega of America’s research and development, fought against the idea of releasing an entire new game console that was little more than a Genesis with a larger color palette. At his suggestion, 32X was changed into a peripheral and made more powerful with a new set of processing chips. At Miller’s suggestion, Sega of Japan made 32X a more significant product. What the company would not do is make it into a Saturn.

  Joe may have been “the father of the 32X,” but in his defense, he had to choose between bad choice number one and bad choice number two. I think he picked the better choice and made a valiant effort to make the best of an impossible situation.

  —Michael Latham

  Once the design specifications were completed, Sega worked hard to evangelize the new platform in the third-party community, but the system was a tough sell. The top developers knew about Saturn and Ultra 64. They also knew about a new console that Sony planned to release in 1995. Anybody who had read the design specifications of any of the new consoles knew that 32X could never hope to compete, and no one felt any enthusiasm about its chances.

  Sega got the same response from journalists. More seasoned journalists, such as Electronic Games editors Arnie Katz, Joyce Worley, and Bill Kunkle, questioned the logic of releasing inexpensive and full-priced game consoles that basically played the same games.

  Sega claims it is segmenting the market like General Motors. “The Saturn [the 32-bit machine] is the Cadillac, the Neptune [a never-released Genesis-32X all-in-one console] is the Oldsmobile, and the Genesis is the Chevrolet,” says Rioux. Already analysts are worrying about this wide array of products. “There are too many planets; it is a confused strategy,” says Edward Brogan of Jardine Fleming.4

  In an effort to win journalists over, Sega held a huge party at a San Francisco dance club. The event turned out to be a fiasco. Sega flew journalists in from all around the country and put them up in the Sofitel, a hotel located beside Sega’s Redwood City headquarters.* That evening Sega hired buses to drive the journalists to the dance club. The party began with Tom Kalinske giving a speech, then a local rapper performed a lengthy piece about the greatness of 32X. The music was too loud and the 32X games that Sega had placed around the dance club were so unimpressive that no one wanted to play them. Most attendees crowded into the lobby of the dance club to escape the loud music. Some journalists tried to leave, only to discover that the buses had departe
d and would not return until the party was over.

  The retail community, on the other hand, greeted the news about 32X enthusiastically. Sega could not keep up with the demand among retailers, but when the unit actually went on sale, the public did not bite. One problem was that only six games were available at launch. While two of the launch titles were strong—Virtua Racing and Doom—other 32X games were inexplicably bad. One, a fighting game called Cosmic Carnage, looked and played so poorly that reporters made jokes about it.

  We were rushed. We had to get games out for the 32X and it was going to be such a close cycle. When Cosmic Carnage showed up, we didn’t even want to ship it. It took a lot of convincing, you know, to ship that title.

  —Michael Latham

  As some members of the press predicted, 32X did not sell well. Within a few months, Sega dropped its price to $99 and it was ultimately cleared out of stores at $19.95. And Sega’s woes were just beginning.

  The Return of Kong

  The video game market fell into a three-year slump in 1993. In September 1993, Nintendo Co., Ltd., reported a 24-percent drop in profits. The following September, Nintendo reported a 32-percent drop in worldwide sales.5

  After a decade of torrid growth, the market is slumping. Sega’s earnings plunged 64 percent last year. Nintendo reported a 41-percent drop; its stock has declined drastically over the last year, and no respite is in sight. Nintendo has “another bad year coming,” predicts Joseph Osha of Baring Securities in Tokyo.6

  The late November release of Donkey Kong Country stood in stark contrast to the gloom and doom faced by the rest of the video game industry. After three holiday seasons of coming in second to Sega, Nintendo had the biggest game of the year. Sega still outperformed Nintendo in overall holiday sales, but the 500,000 copies of Donkey Kong Country that Nintendo sent out in its initial shipment were mostly sold in preorder, and the rest sold out in less than one week. Shortages were inevitable, and many retailers accused Nintendo of purposely undermanufacturing the game to drive up demand.

  While analysts criticize Nintendo for trying to milk its existing technology, the 16-bit machine, even as others were leapfrogging that technology by moving to 32-bit machines with a CD-ROM drive, the bestselling item in the industry this Christmas was Donkey Kong Country, a game written for that supposedly outmoded 16-bit platform. In the last 45 days of 1994, Nintendo’s new game sold 6.1 million units, making it the fastest-selling game in the 20-year history of the video game industry and clearly a hotter item than Sega’s new Sonic & Knuckles title. Visually, the game is at least as impressive as those played on 32-bit machines.7

  By the end of the 16-bit generation, Nintendo would go on to sell 9 million copies of Donkey Kong Country, making it the bestselling game since Super Mario Bros. 3. Donkey Kong Country made Rare, Ltd., Nintendo’s most important second-party developer. It established the Super NES as the better 16-bit console and paved the way for Nintendo to win the waning years of the 16-bit generation. More important, Donkey Kong Country sounded the death knell for Jaguar and 3DO by convincing consumers that the first systems in the next generation of game consoles had little to offer that could not be found on Super NES. Donkey Kong Country may not have destroyed the competition, but it certainly cleared the way for the more impressive competitors that were about to arrive.

  * 3DO handled digitized video better than other game consoles. Some of the more popular items available in the Asian market, which were not available in the United States, were pornographic CDs.

  * Yes, for those of you who remember, I did give Tempest 2000 a D+ score in Electronic Games. What can I say, I repent.

  * Coincidentally, Sega headquarters was located on Marine Drive, a location that had once been used for a safari park and was the exact location Nolan Bushnell used for the coming out party that he threw for Sente Games.

  The “Next” Generation (Part 2)

  For a company that is so new to the industry, I would have hoped that Sony would have made more mistakes by now.

  —Trip Hawkins, founder, the 3DO Company

  $299.

  —The entire text of a speech at the first Electronic Entertainment Expo, Steve Race, former CEO, Sony Computer Entertainment of America

  An Industry-Wide Low

  By 1995, the video game industry appeared to be dying. According to the toy market-tracking NPD Group, the U.S. console market netted $4.55 billion in 1993. By 1995, that number was down to $3.07 billion. The NPD Group’s TRST data showed a 17-percent drop in 1994, followed by a 19-percent drop in 1995.

  In 1992, the year Sega smashed Nintendo’s dominance in the U.S., Sega’s U.S. video game sales rose 50 percent, but it barely made a profit on them. In 1993, Sega’s earnings dropped 64 percent to $112 million. In contrast, Nintendo profits fell 40 percent in 1993, but it still pulled in $500 million in net profits and over $1 billion in pretax profits. It also has no debt and $3.3 billion in cash, and controls 70 percent of the world video game market. Sega has $700 million in debt and about 25 percent of the world market.1

  Having lost the temporary boost it received from Street Fighter II and Mortal Kombat, the arcade business was in even worse shape. Taito, the company that ushered in the golden age of arcades with Space Invaders, closed its U.S. offices in 1995, and Data East sold its pinball division to Sega of America. That year’s Amusement and Music Operators of America show, held in Dallas, was even smaller than in previous years, and rumors of companies closing were rampant around the floor of the show. One Data East employee was so unsure of his company’s future that he applied for jobs at the show in a unique fashion. Data East was demonstrating an arcade machine that took people’s photographs and printed them on sheets of half-inch stickers. The employee made stickers of himself holding a little sign that said, “hire me,” attached them to his business cards, and handed them out to other companies.

  The two companies hit hardest by the 1994 and 1995 drops in the market would ultimately be the 3DO Company and Atari. They had failed to build sufficiently solid customer bases to withstand the storm that was about to strike in Japan.

  The Tsunami Hits Japan

  On November 22, 1994, Sega released a 32-bit video game console called Saturn in Japan. Breaking with tradition, the launch took place on a Tuesday, causing added annoyance for Tokyo commuters because the response to Saturn was so phenomenal. The 200,000 consoles that Sega shipped sold for 44,800 yen, or approximately $469. Most stores had customers pre-reserve their consoles and sold out their entire inventories more than a month in advance. Days before the launch, lines formed in front of those stores that sold their Saturn inventory on a first-come, first-served basis. Their supplies came nowhere near to meeting the demand. But the star of the day was not the Saturn console but a Saturn game—Virtua Fighter.

  It was developed by Sega’s most famous internal development team—AM2, led by Yu Suzuki. Suzuki was Sega’s answer to Nintendo’s Shigeru Miyamoto. Having created such arcade classics as Space Harrier, Hang-On, Out Run, and Virtua Racing, Suzuki had reached minor celebrity status. But Suzuki’s biggest console hit was the Saturn version of Virtua Fighter, a fighting game featuring 3D polygonal combatants using a variety of authentic fighting styles, ranging from Kung Fu to professional wrestling.

  Suzuki’s games reflected his wide-ranging tastes. Suzuki was a man of sophisticated discernment who collected fine wines and drove a Ferrari to work. His game designs often reflected his style, offering a nearly perfect mixture of realism and fantasy, wrapped in the most technologically advanced arcade cabinets on the market. Suzuki constantly pushed his managers to allow him to add features to his designs. His games generally had force-feedback controllers that rumbled or shook in response to action in the games and the largest and highest-resolution monitors of any games on the market. When his bosses balked at the cost of building his proposed Space Harrier cabinets, Suzuki promised to return his salary if the game bombed. It was a major success.

  In the early 1990s, Su
zuki was one of the first arcade designers to experiment with 3D polygonal graphics.* His first use of this technology was a game called Virtua Racing, which went on to become an international arcade smash. Suzuki followed up with Virtua Fighter.

  The brawlers in Virtua Fighter were not as ornate as the 2D combatants in Mortal Kombat or Street Fighter II. Because of the early technology available at the time, the artists who created the game had to create each character with less than 1,200 polygons. This resulted in fighters with square shoulders and boxy-looking arms. Although Suzuki’s foray into 3D graphics did not compare well against the polished cartoon look of other fighting games, it paved the way for beautifully fluid body movements.

  As an arcade game, Virtua Fighter was one of Sega’s most successful games in Japan. The incarnation of Virtua Fighter that appeared on Saturn was almost indistinguishable from the arcade game. It did not come bundled with Saturn (no games were packed in with the console), but at a price of 7,800 yen (more than $80) the Virtua Fighter CD sold at nearly a one-to-one ratio with Saturn consoles.

  On December 3, 1994, Sony launched a new console called PlayStation into the Japanese market. Unlike Sega, Sony was not an established game company, and only 100,000 consoles were shipped at a retail of 39,800 yen. The launch was not as highly anticipated, and many people who had not preordered consoles were able to purchase them at stores before the inventory ran out. Unlike Sega, Sony did not have famous in-house design teams. The most notable game for PlayStation was Ridge Racer, a solid translation of an arcade racing game. Namco published both the arcade and PlayStation versions of this game.