Console Wars

by Blake J. Harris

  Glasses of cheap red wine clinked and a sense of camaraderie permeated the room. As the first course was served, Kalinske regaled his employees with old stories of Mattel in a wistful, fairy-tale tone. Rioux, having been there, jumped in from time to time, while Toyoda wore a smile on his face and occasionally shook his head in disbelief.

  At the other end of the table, Al Nilsen was sitting between Hugh Bowen and Ed Annunziata.

  “Did you run that idea by Al?” Bowen, on Nilsen’s right, said to Annunziata.

  “No, no, he won’t like it,” Annunziata, on Nilsen’s left, replied.

  “Tell him, tell him,” Bowen said, egging him on.

  “Nah, man, I’m telling you, he won’t like it,” Annunziata replied.

  Nilsen realized right away that this conversation had been rehearsed and that he was being set up. But the pasta primavera looked good, and it occurred to him that the only way he’d be able to enjoy his meal in peace was to let Tweedledum and Tweedledee finish their skit. “All right, Ed. Tell me all about whatever it is that I won’t like.”

  “Okay, so it’s like this . . .” Annunziata started, his eyes shining with excitement. Ed Annunziata was a self-taught programmer from New York whose laid-back demeanor and free-flowing vibe made him feel at home when he moved to California. He had been hired by Sega’s head of product development Ken Balthaser in 1990 to become the first producer at Sega of America. For the most part, his job entailed “localizing” games from SOJ, meaning that he slightly altered titles like Ghouls ’N Ghosts and Phantasy Star 2 so they could be understood and enjoyed better by Western audiences. But he hadn’t joined Sega just to be SOJ’s errand boy and was finally starting to produce his own games. At the moment he was working on Spider-Man vs. the Kingpin and was looking forward to working on original projects as SOA gained more autonomy. “I got this idea for a game, but it’s unlike anything you’ve ever seen before.”

  “He’s not kidding,” Bowen echoed. “It blew my mind.”

  “Forget about Mario and Sonic. Forget about saving the princess and racing through levels to stop the bad guy. This isn’t about good or evil. This is about life. Not life as we know it, because we all play that game every day, but life beneath the surface of the ocean. Infinitely long and infinitely deep, where beauty meets danger, and the everyday isn’t corrupted by the nonsense of words. This is the world’s last great unknown, but not for much longer. Because we’re going to let people pick up a controller and transform into a dolphin.”

  For the next forty-five minutes, Annunziata told the incredible tale of a dolphin who gets caught in a storm and loses contact with the other members of his pod. With nothing but the power of his sonar, he has only one chance of reconnecting with his beloved pod: by going on a quest across the ocean. He’ll need to trek to the Arctic and find a revered whale, swim into a deep cavern and meet the oldest creature on earth, and eventually find his way to the lost city of Atlantis.

  When he finished, Nilsen was at a rare loss for words. “Wow.”

  “I told you!” Bowen said.

  “Just . . . wow,” Nilsen said again. “How did you come up with that?”

  “An artist never reveals his secrets,” Annunziata said before chugging the rest of his glass of wine. “But I’m getting nice and drunk, so all such rules go out the window. It’s just been, like, growing in my mind for months. It started when I read this great book called The Founding, which was from the POV of a humpback whale. Then I got into reading all this stuff from John Lilly about taking LSD and going into a sensory deprivation tank. The guy spent his entire life trying to communicate with dolphins. And then one day I just asked myself: how can I translate all that into a side-scrolling game?”

  “Let’s do it,” Nilsen said, prompting Bowen and Annunziata to nearly collapse from shock. Nilsen knew this was exactly the kind of risk that Kalinske had been talking about, an opportunity that would redefine Sega. Though nothing like this had ever been done before, Nilsen didn’t even have a doubt. He reasoned that if Annunziata could pull off even half of what he described, Sega would still have an incredible game, something special that could spawn a whole new genre while helping to differentiate Sega from the companies flooding the market with me-too games.

  And as the evening wore on, any remaining seeds of doubt from the Consumer Electronics Show were washed away by a mighty river of wine. Kalinske watched with pride as his employees spent the long evening sharing stories that had been locked away in the attics of memory, hopes and dreams from the past, and hopes and dreams for the future. For the rest of the week, Sega’s team of dreamers would endure every punch that the industry had to throw. But six months later, at the summer Consumer Electronics Show in Chicago, it would be a completely different type of fight.

  17.

  SHOWDOWN

  It really was quite lovely, this Super Nintendo device. And durable too, thought Olaf Olafsson as his fingers danced atop the machine’s pale gray exterior. Of the hundreds of people who had shown up for the great unveiling of the Super Nintendo at the 1991 summer CES at Chicago’s McCormick Place, it was safe to say that Olafsson was the only one pedantically focused on aesthetics. The rest were there to see the games, the graphics, and the next five years of their lives begin to take shape. That’s why, by eight in the morning, hundreds had already arrived and thousands more were on their way. The wait was finally over.

  Having satisfied his curiosity, Olafsson moved through Nintendo’s massive booth. No, “booth” wasn’t the proper word. Their display was more like a towering black fortress that had erupted out of the gray-carpeted floor; at least five times the size and twice the height of any other videogame company’s booth. The height not only enhanced Nintendo’s prominence but also blocked out the sharp halogen lighting above. As a result, the shade, the black color scheme, and the dark floor all served to masterfully highlight the bright, bouncing colors of their videogames.

  It struck Olafsson as both odd and impressive that Nintendo had so ably managed to balance the dark with the light. Not just today, but in general. To suit their needs, Nintendo expertly toggled between coming across as a fun-loving toy company and presenting themselves as a gravely serious tech firm. While it was hardly unusual for an organization to wear two faces, it was rare for one to go so long without having to choose one path or another. But then again, there was no competitor out there who could force Nintendo’s hand.

  Olafsson checked his watch and realized it was time to go. Nintendo’s press conference would begin shortly, and it was important that he be there. He adjusted his tie and moved against a strong current of smiling faces funneling in. Normally he was immune to such infectious excitement, but the grin on his face revealed that today was a special occasion.

  Less than twenty-four hours earlier, Olafsson had given a press conference of his own, in which he announced that Sony would be getting into the hardware business. The journalists were immediately intrigued by the prospect of Sony competing against Nintendo—two giant Japanese firms going head-to-head. He could already imagine the overly dramatic articles that would be published, filled with comparisons to battles between Godzilla and Mothra. But actually it was the opposite: Sony was going into business with Nintendo.

  In late 1992, Sony would be releasing the Nintendo PlayStation, which would be a peripheral device that attached to the Super Nintendo and play games on CD. At this time, it was generally understood by both experts and laypeople that CDs would soon become the standard delivery mechanism for all entertainment: music, movies, and videogames. It just made too much sense. A CD could hold ten times as much information as a 16-bit game cartridge at one-tenth of the price. Perhaps there was a whimsical charm to game cartridges, but this was a matter of technological Darwinism. And Sony was thrilled to be evolving with Nintendo.

  The alliance was fantastic in so many ways. Working with Nintendo gave Sony clout in the videogame space. The creative relationship would ensure that the PlayStation had top-level
games (which was especially key because Sony’s software publisher, Imagesoft, was still struggling on that front). And last but certainly not least, this could be a financial windfall. Not only would Sony make money on each PlayStation sold, but just like Nintendo (and Sega) they would get to play the role of toll collector and collect fees from software companies who wanted to create games for their CD-shaped roads.

  Olafsson’s announcement yesterday had created a stir, but not nearly the whirlwind that he anticipated after Nintendo did the same at their press conference. After all, a proclamation from the king carried more weight than one from the noble prince. And as Olafsson took a seat in the front row of the conference room at McCormick Place, he eagerly awaited being handed the keys to the kingdom.

  As per usual, Nintendo’s press conference was packed. This one, however, carried an extra flair of excitement and felt like the beginning of a grand new era. Olafsson was unsure who the speaker would be. Typically, that honor would go to the president, in this case Minoru Arakawa, but he didn’t enjoy speaking in public. Instead, Nintendo’s official proclamations were made by either Peter Main or Howard Lincoln. Olafsson was curious how they decided who would speak at which occasion, and he made a mental note to explore this in future meetings.

  At 9:00 a.m. Lincoln stepped to the podium. He welcomed the audience, invited them to check out Nintendo’s booth after the speech, and then spoke at length about the Super NES, which would hit stores on August 23, 1991. All systems would come with the groundbreaking new Super Mario World game, while four others would immediately be available for purchase: F-Zero, Pilotwings, Gradius III, and SimCity. Their library would quickly grow, with eighteen games available by Christmas.

  Lincoln confirmed that, as with the Super Famicom, there would be no backward compatibility and the 16-bit Super NES couldn’t play 8-bit NES games. Sensing a degree of dissatisfaction, he quickly assured everyone that Nintendo was still very much committed to supporting the 8-bit system. He expected at least forty new 8-bit games in the second half of 1991, though obviously the company’s focus would shift to the more advanced Super Nintendo. Based on the perpetual sold-out situation in Japan, Nintendo had nothing but the highest of expectations. They estimated selling two million units by the end of the year, and already anticipated shortages during the Christmas season. Blah, blah, blah, Olafsson thought. Hand out a memo, smile for the camera, and let’s move on to more important matters. Everyone already knows what you’re about to say: Sony + Nintendo = CD-ROMance.

  “Compact discs will play a key role in Nintendo’s vision for the future,” Lincoln finally announced, now ready to reveal the plans for Nintendo’s new CD unit. Olafsson stirred in his seat as the crowning moment inched closer. “And who better to partner with than the company that invented the audio compact disc: Philips Electronics.”

  Wait, what? A tremor of shock and confusion swept through the room as journalists raced to take note that Lincoln had said Philips and not Sony. After Lincoln said it again, confirming that his words were not a slip-up, all eyes turned to Olaf Olafsson, who tilted his head and furrowed his brow. Was he shocked, appalled, furious?

  In truth, he was none of those things. He was merely plotting his next move.

  “Did he just say Philips?” Nilsen whispered to Kalinske as both men stood in the back of the room. “As in not Sony?”

  “It would appear that way,” Kalinske whispered back, speaking a little louder than he intended due to the unexpected smile on his face.

  Kalinske kept his eyes fixed on Olafsson. He didn’t personally know Sony’s president of electronic publishing, but he was impressed by the man’s reaction, which showed class, tact, and diplomacy. In fact, by the time Lincoln concluded his press conference, Kalinske could have sworn he detected a hint of amusement in Olafsson. He wanted to go over and introduce himself, but realized that it wasn’t the right time. Reporters were swarming around Olafsson, looking for an emotionally charged quote, and Kalinske and Nilsen should have returned to Sega’s booth fifteen minutes ago.

  What neither of them knew was that only a few weeks earlier, Arakawa and Lincoln had flown to the Philips world headquarters in Eindhoven, Netherlands, for a meeting with Gaston Bastiaens, head of the Compact Disc Interactive (CD-I) group. The Nintendo executives had traveled there at the behest of Yamauchi, who was growing concerned about an alliance with Sony. He had realized that the deal he signed in 1988 gave Sony the right to control software for a joint CD venture. This detail hadn’t appeared to be a problem back then, when Sony was exclusively a consumer electronics company, makers of televisions, stereos, and music devices like the Walkman and MiniDisc player. But with their acquisition of CBS Records and Columbia/TriStar films and now the creation of an electronic publishing group, they were growing too ambitious for Yamauchi’s tastes. Sony was already the supplier of the key audio chip in Nintendo’s 16-bit console, and he didn’t want to enter any alliance that would grant Sony any additional power.

  This change of heart led Nintendo to go behind Sony’s back and sign a deal with Philips. As per their arrangement, Philips would create a CD-ROM drive that hooked up to the Super Nintendo to play games on CD. Additionally, the CD titles that Nintendo created would be compatible with Philips’s CD-I players. Naturally, Nintendo would control the licensing rights to all CD games regardless of which system they wound up being used on. Because Japanese contracts tended to be succinct, with a large reliance on good faith, Yamauchi felt that he could break the contract and ditch Sony without penalty. He also decided not to inform Sony of his side deal with Philips, to ensure that Sony’s humiliation was made public.

  Although nearly every journalist was now locked on Olafsson, a reporter from Fortune swam against the current and ambled over to Kalinske and Nilsen in the back of the room. “How about this for a headline?” the reporter asked by way of an introduction. “Sega Execs Crash Nintendo Press Conference: Leave Cowering in Fear.”

  “Well, well, well,” Nilsen said. “If it isn’t Nintendo’s biggest fan?”

  The reporter blushed. “Nonsense. I worship at the altar of journalistic integrity.”

  “Well, what can we help you with?” Kalinske asked.

  The reporter looked at Nilsen with a glint of gloat in his eyes. “The Super Nintendo features 32,768 colors, 256 of which can appear on-screen at the same time, eight highly sophisticated sound channels, and a clock rate of 3.58 megahertz. How does Sega plan to compete with this?”

  Kalinske raised an eyebrow. “Journalistic integrity, eh?”

  “Hey,” the reporter said with a smirk, “these are just the facts.”

  “Follow us,” Nilsen said.

  The reporter reluctantly followed Kalinske and Nilsen under a golden “Seal of Quality” and into Sega’s booth. Like Nintendo, their color scheme was black on black, but that was all they had in common. Sega’s setup, bathed in sunlight, exuded an elegantly zany joie de vivre. There were bright colors blinking everywhere, upbeat music throughout, and a giant blue hedgehog standing by the entrance to greet guests as they entered. Sega did a good job of positioning themselves as the offbeat alternative to Nintendo’s autocratic reign, but that alone didn’t make their booth spectacular. Any mutt trying to out-bark the top dog would have done the same. What Sega did that no other company would have dared to do was acknowledge that it was a dog-eat-dog world.

  At the heart of their booth was a television displaying highlights from Super Mario World. Directly below it was a television showing off Sonic The Hedgehog. In an industry where Nintendo coated the ground in eggshells and cautioned all to walk slowly, Sega was going head-to-head at full speed. The differences between the two games were self-evident: Sonic ran laps around Mario. The Super Nintendo was still three months away from being released, and already it looked extinct.

  “Nintendo may have 32,768 colors,” Nilsen said to the now speechless reporter, “but I think it’s safe to say that Mario literally pales in comparison.”

  Af
ter considering several creative ways to meet Kalinske’s challenge to prove that Sega had the better game, Nilsen had hired a team of researchers and set up play tests around the country, where boys and girls were brought in to play Super Mario World and Sonic The Hedgehog and decide which was the better game. Since Sonic had been kept under wraps and the Super Nintendo had not yet been released, none of those involved in the experiment had had any experience with either game, though of course most already knew of Mario from previous games. And that’s exactly what Nilsen wanted. He specified to the researchers that 90 percent of the subjects should be NES owners and at least 75 percent had to consider one of the Mario titles to be their favorite game. He wanted to stack the deck so that the results of these experiments didn’t merely tell him what he wanted to hear but would prove to Kalinske that, beyond any shadow of a doubt, they had a winner. By the end, 80 percent chose Sonic.

  “So what do you think?” Kalinske asked.

  “It’s great,” the reporter conceded. “But devil’s advocate: it’s just one game.”

  “So young, so naive,” Nilsen said, walking him through the rest of the booth. Sonic was certainly their best game, but it was only one of many. The various displays showed off other titles that would be released later that year, like Mario Lemieux Hockey, ToeJam and Earl, and Quackshot Starring Donald Duck. Sega’s already bountiful library of games appeared even more impressive beside those from Electronic Arts, which had been churning out hit after hit exclusively for Sega. The unusual romance between EA and Sega turned out to be a godsend for both companies; amazingly, Joe Montana Football had not only wound up being a megahit, but was in some weeks even outselling the Madden game it had been derived from.