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

  The U.S. launch of Dreamcast was hailed as a big event, with retailers selling out of the nearly 1 million units Sega shipped. But just as unforeseen circumstances slowed the Japanese launch, an unexpected hiccup earned Sega of America bad press. A slight manufacturing glitch in many of the Midway games caused the music to skip. The problem was easily corrected, but Sega’s perfectly choreographed launch was marred.

  Appearing to have some momentum, Sega enjoyed great hardware sales, with over 1.2 million consoles sold by the end of the holidays. During January, Sega experienced an expected dip in sales. Unfortunately, that dip continued through spring, even as Sega and its third-party partners expanded the Dreamcast library with a wide variety of games.

  Monster Pockets

  The initial shipment was just around 200,000 or so—fortunately, we were able to sell out. Then there were additional orders of 100,000 more and then another 100,000. By the end of 1996, we reached around 1 million. So we were very grateful. But we originally thought of it as a one-time product.

  —Yasuhiro Minagawa, director of communications, Nintendo Co., Ltd.

  On February 27, 1996, Nintendo Co., Ltd., released a new cartridge for Game Boy called Pokemon (short for pocket monsters) into the Japanese market. What no one could possibly have suspected at Nintendo was that the company had done more than publish a game—it had started a small industry.

  An outside company called Game Freak created the concept for Pokemon and proposed it to Nintendo at a time when Shigeru Miyamoto, the man who created Mario, just happened to be looking for a game that would allow Game Boy players to exchange items using Gamelink cables. Miyamoto oversaw the project from Nintendo’s side as it evolved into a full-fledged RPG for children, a universe in which children captured and trained friendly monsters, then entered them to fight in competitions. To create a need for players to exchange monsters, Nintendo created two different versions of the cartridge, red and green, each of which had a few unique creatures. The only way to collect all 151 creatures would be to trade.

  Believing that the game would have limited appeal, Nintendo shipped only 200,000 copies of Pokemon on its first release. But Pokemon’s popularity grew steadily, and several stores ordered more copies of the game. Seizing an opportunity, one of the teams behind Pokemon set up a partnership with an animation studio to create an anime cartoon for television. When the cartoon became the highest-rated kids’ show in Japan, Nintendo started licensing Pokemon to toy, trading card, clothing, and food manufacturers. Pokemon soon became a billion-dollar industry.

  Pokemon has become such a phenomenal success…. At the very beginning just a few people knew this cartridge, and it was word-of-mouth that spread its popularity without the media noticing it. The cartoon came one year after the debut of the Game Boy game. We are continuing to sell a lot of the Game Boy games, but now we have movies. We have so much merchandise and the trading cards; but the growth was a gradual process.

  —Hiroshi Imanishi, general affairs manager, Nintendo Co, Ltd.

  In 1998, Nintendo finally exported the Pokemon phenomenon to the United States as part of a massive movement designed to bring new life to the aging Game Boy. The U.S. release of Pokemon bore little resemblance to the Japanese one, as the cards, games, and television show all hit within a few weeks of each other; the success was immediate. The syndicated Pokemon cartoon show became the hottest kids’ show on television, and Pokemon Red and Pokemon Blue became the bestselling games on the market. Pokemon trading cards became such a hot item that some elementary schools banned children from bringing them to class. Parents even initiated lawsuits, claiming that the way Nintendo and its partners marketed Pokemon trading cards was a form of gambling.

  On November 23, 1998, Nintendo released Game Boy Color, a long-anticipated version of Game Boy with a color screen. In the spirit of Game Boy efficiency, Game Boy Color’s 32,000-color screen did not use backlit technology. Like other Game Boys, it had to be played in a brightly lit area or players would not be able to see the images on the screen. On the other hand, it could run for 10 to 12 hours on two AA batteries.* With the launch of Pokemon and Game Boy Color, Game Boy sales shot into record territory.

  The boost could not have come at a better time. In 1999, nearly every video game company in Japan saw a significant drop in sales. Because of the relatively low cost of developing and manufacturing Game Boy cartridges and the brisk sales brought on by Pokemon and Game Boy Color, Nintendo had a profitable year.

  In the United States, Pokemon sales gave the entire industry a boost. Video game sales generally drop in transition years in which new hardware systems are released, but U.S. game sales rose by $1 billion in 1999. The rise could be summed up in two words: Game Boy.

  In 1997, the last year before the U.S. release of Pokemon, handheld game sales amounted to approximately $294 million. Nintendo released Pokemon in September 1998, and handheld sales surged to $466 million. From the moment they were released, Pokemon Blue and Pokemon Red became the hottest games on the market. In 1999, however, handheld game sales rose to $1.26 billion, representing 18 percent of the market. In short, the market had not grown; Game Boy did.

  The Big Week

  In February, Sony staged a trade show called PlayStation Festival 2000 to demonstrate the games that were under development for its new console, which was to be officially named PlayStation 2. By this time, the entire gaming world seemed consumed with excitement over the new console. But there were only nineteen games on display at the show, and PlayStation Festival 2000 left many attendees unimpressed.

  Then rumors began circulating that for all of its power, PlayStation 2 was distinctly hard to program. Shinji Mikami, the Capcom designer credited with creating the popular Resident Evil and Dino Crisis games, complained that Sony had created insufficient tools to support PlayStation 2. Having created bestselling games for Dreamcast, Saturn, Nintendo 64, and PlayStation, Mikami said PlayStation 2 was the most difficult system he had ever worked with.

  Sony provided an extensive library with PlayStation. The library would do a lot of the work, but with PlayStation 2, there is no library. We need to create our own library, which poses its own set of problems in that there are so many choices to achieve the same effects.

  —Shinji Mikami, game designer, Capcom

  If you focus on making full use of all the specs, it will be very expensive and time-consuming to produce a game. Instead, if you can focus on one aspect of the game, then I believe you can produce a great game. For example, in an action game, accentuate the gameplay even to the point of compromising other aspects like graphics.

  —Gozo Kitao, general manager, Konami

  Despite the bad showing at PlayStation Festival 2000 and the complaints of many developers, a few spectacular games were already underway for PlayStation 2. Keiji Inafune, the designer best known for his Mega Man games, was developing a samurai game titled Onimusha: Warlords, with spectacular graphics. While Inafune conceded that he did have some problems, he felt that many of those problems were partially caused by the huge amount of additional power PlayStation 2 offered, giving game designers too many options at once.

  Until now, because of the limitations of the hardware, when I asked a programmer if something could be done, [he] would say it couldn’t be done. With PS2, [programmers] tell me, “Yes, maybe, but it will take a long time.” How long, they don’t know.

  So now, as a producer, my dilemma is what do I do? Do I let them go with the concept without knowing how long it will take to implement it? In a sense, there are no hardware limitations now and there is a large learning curve for programmers.

  —Keiji Inafune, game designer, Capcom

  At Konami, Hideo Kojima quietly began working on Metal Gear Solid 2, a PlayStation 2 game in which players helped an ex–special forces soldier infiltrate a terrorist group and destroy a giant robot. Kojima, a self-described cinemaphile, claimed that PlayStation 2 was not as powerful as he had expected; but when he revealed video clips fro
m his game at the 2000 Electronic Entertainment Expo, his videotape was the talk of the show.

  I was actually expecting something much better; and we were not getting what we expected. In the early days, I really dreaded going to work because I knew we were not going to get what we expected. The quality of the graphics that we have right now is the bottom line. They are going to get better.

  —Hideo Kojima, game designer, Konami

  The Japanese launch of PlayStation 2 took place on Sunday, March 4, 2000. This was by far the most anticipated video game launch in history. Newsweek ran a cover story about the new console the week before the launch, and reporters and camera crews from all over the world descended on Akihabara, Tokyo’s “Electric Town,” to cover the story.

  Sony promised to ship 1 million consoles for the launch. A few weeks before the launch, a high-level consultant working for Sony stated that the company would ship 2 million units, but Sony quickly released an official statement denying his claims.

  The actual launch was a very orderly event. Most stores presold their entire inventory weeks before the deliveries were made. Long lines of customers who did not want to take a chance on shortages formed in front of these stores on March 3. The stores opened their doors and began handing the consoles out at midnight on March 4, and the distribution went smoothly.

  A few electronics stores and several large department stores sold their PlayStation 2 allotments on a first-come, first-served basis. These stores generally opened at 11:00 A.M.. but to avoid causing traffic problems, they opened at 7:00 A.M. on the day of the launch. Thousands of people gathered in front of these stores. According to the manager of a Laox store, 4,000 people lined up at his door. When asked how many consoles he had to sell, he said he had about 200. Within three hours of opening, every store had sold out. In all, 600,000 consoles were sold, but it was obvious that Sony could have sold two or three times that number.

  For the next few days, Japanese newspapers carried all kinds of stories about PlayStation 2. One big story concerned a boy who managed to purchase a PlayStation 2 and was riding his bicycle home from the store when two strangers drove by on a motorcycle and grabbed the bag out of his hands. Another story involved a teenager who tried to commit suicide by jumping out of an Akihabara building because he was unable to purchase a PlayStation 2. Strangest of all were reports that the Japanese government determined that PlayStation 2 was a super computer capable of guiding missiles and imposed a limit on exporting the consoles.

  The big sales of PlayStation 2 did not extend beyond the hardware, however. Of the thirteen games available on the day of the launch, only Namco’s Ridge Racer V seemed to appeal to consumers. When asked, many consumers said they were looking forward to the April release of Tekken Tag Tournament, a fighting game that was also from Namco, but PlayStation 2 software sales remained low for the first few months. DVD players had not sold as well in Japan as they had in the United States. In the first few months after its release, the number-one use for PlayStation 2 was as a DVD movie player, and the leading software title for the console was the DVD version of the Keanu Reeves movie The Matrix.

  Sega Enterprises chairman Shoichiro Irimajiri said he was elated with the results of the Sony launch.

  In Japan, PlayStation 2 is the first console that is selling only for hardware. In the past, the console was only a box without software; but people are buying the PlayStation 2 without any software. It’s the image of this PlayStation that is interesting. So [people are really buying the] DVD player function and the big image of the PlayStation 2, which was created by Sony. I don’t feel PlayStation 2 will have a big impact on the market this year.

  —Shoichiro Irimajiri

  Sega’s wounds ran deeper than the feisty Irimajiri confessed. In June, Irimajiri resigned as chairman of Sega Enterprises and took a lower post. He was replaced by Isao Okawa, chairman of Sega’s parent company CSK. According to Okawa, Sega hoped to position Dreamcast as an Internet device both in the United States and Japan. Toward that end, Sega of America opened its own Internet service provider—Sega.com.

  * Sony always reported shipment statistics rather than sell-through, which was the kind of statistic that Nintendo and Sega generally used.

  * PlayStation 2 was so powerful, in fact, that Star Wars creator George Lucas later commented that it had more on-the-fly rendering power than all of the computers he used to make Star Wars Episode One.

  * Virtua Fighter 3 did not do well in U.S. arcades.

  * Sega marketing, always a sucker for alliteration, billed the launch as 9/9/99 for $199.

  * Of all the games released for Dreamcast in its first year, only Soul Calibur sold over 1 million units worldwide.

  * Energy efficiency was always the hallmark of Game Boy technology. Lynx, Game Gear, and TurboExpress all had better, clearer screens. Nomad, which played Genesis cartridges, had a library of larger, more visual, and generally better-made games. But Game Boy was the most portable system, in that it could go several times longer on two AA batteries than any of the previously named systems could go on six AAs.

  NeoGeo Pocket Color (NGPC), a competitor that came out in 1999, on the other hand, had better technology and longer battery life. By the time it came out, though, Nintendo had already sold more than 80 million Game Boys worldwide. NGPC never stood a chance.

  Three Horses and a Pony

  When you consider the strength of the PlayStation 2 hype, the cost of marketing a new platform in the North American market … When you consider that Microsoft has announced a $500 million marketing program for the launch of Xbox and that Nintendo has a $5 billion war chest and the overall power behind Sony’s PlayStation brand, Sega does not have the ability to compete against those companies.

  —Charles Bellfield, vice president of marketing and corporate communications, Sega of America

  Well, it’s good to see that not everybody squealed. It’s amazing the stuff we’ve read about this product, you know, that … we [supposedly] had a developers’ conference. None of us knew we had [one], but we had one in Redmond and everybody came from all over the world.

  —Seamus Blackley, chief Xbox technical officer, Microsoft Corporation

  Microsoft Joins

  And we had some guys at Microsoft who came and said, we should do a console.1

  —Bill Gates, Chairman, Microsoft Corporation

  On March 10, 2000, less than one week after the launch of PlayStation 2 in Japan, Microsoft chairman Bill Gates stepped onto a stage in the San Jose Convention Center to give the most anticipated speech of the Game Developers Conference. Dressed in a leather jacket with a large green “X,” he uttered the anticipated words that ignited the crowd:

  It’s very exciting to be here today and have the opportunity to announce a whole new platform, a platform that all of you are going to take in directions that we can’t even imagine.

  —Bill Gates

  Gates’s announcement was the culmination of a year of rumors and speculation.

  The project began in 1999, around the time that Sega and Sony first started jockeying for position. Sega’s modest plans for Dreamcast, which were virtually unchanged from the plans for Master System and Genesis except for the inclusion of a modem, might have gone unnoticed by Microsoft management; but Sony’s “Trojan horse” strategy for taking over living rooms was another story. Sony’s PlayStation 2 was attracting a lot of attention, and it would clearly do more than simply play games. Microsoft executives saw Sony creating a new market.

  A couple of things happened [at] about the same time roughly a year ago. We hold an executive retreat [every year], in which the senior management of Microsoft goes away and ponders the company and the kinds of things they’re doing. And one of the things they spent a lot of time talking about [last year] was rooms beyond the den, shall I say, where Microsoft … where important things are going on in the world of technology and Microsoft doesn’t have a big presence. One of those rooms is the living room.

  Well,
we’re not a big player at this point [in living rooms], and if you look at the kind of entertainment that happens there, consoles are a huge part of it.

  —Kevin Bachus, former director of third-party relations, Xbox Team, Microsoft Corporation

  Built by intelligent, technology-savvy people, Microsoft always attracted those who grew up playing video games. Some employees brought in arcade machines that they set on free-play and placed in buildings for employees to use. A skybridge between two buildings on the main Redmond campus had so many coin-operated games that it looked a bit like a video game arcade.

  Microsoft also attracted many elite veterans of the video game industry. Joe Decuir, an Atari engineer who helped develop the 2600, moved to Microsoft.* Howard Phillips, Nintendo’s “man who plays games for a living,” joined Microsoft’s entertainment division, as did David Thiel, who did the sound for Q*Bert.

  With all of this talent and enthusiasm, it was only a matter of time before groups of employees got together and developed game systems on their own.

  But Microsoft has never built a computer for sale, and in February 1999 it certainly had no official intention of making a game computer. Nonetheless, on the company’s campus, in Building 27 and Building 5, a “garage-shop” game console was taking shape in the spare time of four engineers, Seamus Blackley, Kevin Bachus, Ted Hase, and Otto Berkes.2