Console Wars

by Blake J. Harris

  “Actually, I wanted to talk to you about something else entirely,” Kalinske said. “I was wondering: do you know anyone in the hardware business?”

  “Many people,” Glen answered. “We can venture to Silicon Valley if you’d like.”

  “What about when it comes to hardware for videogames?”

  Glen scratched his nose in thought, his big Brass Rat MIT ring shining in the sun. “Are you asking if there’s anybody at Sega of Japan that I deem trustworthy?”

  “That wasn’t my intention,” Kalinske said. “Although I now realize I probably should have asked you that a few months ago.”

  “Then what is it you are curious about? Contacts at Nintendo?”

  “Contacts who can help us build a next-generation console to defeat Nintendo.”

  Glen nodded as he quickly tried to figure out what scenario might have prompted this inquiry. “Well, it was my understanding that Sega of Japan was nearing completion of a 32-bit prototype. Is that not accurate?”

  “No, no,” Kalinske said. “That’s accurate. But my worry is what happens if that prototype isn’t everything that we want it to be.”

  “Gotcha,” Glen replied. “Nobody comes to mind, but I’ll put my ear to the ground. Is there any company or region where I should direct my efforts? And, for that matter, any that I should avoid?”

  “You don’t need to waste your time looking at Sony,” Kalinske stated. “But otherwise the entire board is open. However, I would suggest that, in the spirit of team building, it would be helpful to find someone that SOJ might like working with.”

  “Message received,” Glen replied, already sifting through his mental Rolodex. “Given the current trajectory of our conversation, a question comes to mind.”

  “What’s that?”

  “Regardless of whether or not my efforts prove fruitful, have you considered what would happen in the so-called next generation if Sega were to develop hardware inferior to Nintendo’s?”

  “I’ll tell you, Doug, I’ve given that question a lot of thought.”

  “And is there a scenario in which that turn of events doesn’t reverse everything that we’ve done to Nintendo over the past two years?”

  “Only one,” Kalinske replied. “We crush Nintendo’s spirit so much during this 16-bit generation that by the time we fight that next war, they’ve fallen too far behind to ever catch up.”

  Glen blinked several times while considering this. “That doesn’t seem likely.”

  “No, it does not,” Kalinske echoed. “But a man can dream, can’t he?”

  In March 1993, Kalinske tried once again to turn that perpetual dream into reality, this time by inviting Seattle Mariners slugger Ken Griffey Jr. to come visit Sega and discuss making a game together. Griffey accepted the invitation and, just prior to the start of the baseball season, visited Redwood Shores with his wife, Melissa, and agent, Brian Goldberg.

  After greeting his guests, but before giving them the deluxe tour, Kalinske delivered the disclaimer that everyone in the room appreciated, even though they knew it to be almost entirely false. “I just wanted to start off by saying that Sega’s interest in developing a Ken Griffey Jr. baseball game has absolutely nothing to do with Nintendo’s ownership of the Mariners.”

  “Oh, yeah, of course,” Griffey said, acquiescing in the lie. His wife nodded.

  “That never even crossed our minds,” Goldberg added, making it unanimous.

  The truth was that in this case the truth didn’t matter. At least not when it came to intentions. Griffey and his agent were using Kalinske for leverage with Nintendo just as much as Kalinske was using them to try to embarrass his competitor. Best-case scenario: Sega and Griffey make a game together. Worst case: they don’t, but Nintendo is forced to spend more money to sign Griffey.

  “Speaking of which,” Kalinske began, “how has everything been working out with that new ownership group? A smooth transition, I hope?”

  Griffey and his wife spoke positively about the change and Nintendo’s involvement with the team. Everything had been good so far, no complaints, and it was great that the team had been able to avoid being uprooted.

  “And from a negotiation standpoint,” Goldberg added, “I can confirm that they’ve been nothing short of a class act.”

  Goldberg was referring to the new four-year, $25 million contract that Griffey had signed during this past off-season, making him one of the highest-paid players in Major League Baseball (not too far behind the six-year, $43.75 million deal that Barry Bonds had just signed with the San Francisco Giants). As thought bubbles full of dollar signs filled the room, Kalinske couldn’t help but wonder how much it would tick off Main, Lincoln, and Arakawa if this guy they were paying $25 million signed with Sega and not Nintendo.

  After the false formalities were out of the way, they spent the next few hours playing all sorts of videogames (Griffey was particularly impressed by the Sega CD), while Kalinske bragged about his company and how his marketing team could be an asset to Griffey. “Just look at what we’ve done with Joe Montana,” he explained. “Even though he’s nearing the final stages of his career, the guy has never been hotter.”

  Although this may have sounded like nothing more than a throwaway sentence, just another chance to brag about what Sega could do, it also conveyed the other big reason that Kalinske wanted to sign Griffey. Since 1990, Joe Montana had been the primary face of Sega’s sports games. Montana was perfect for the job—the man was a winner (with four Super Bowl rings) and also a class act (he never complained about doing commercials, promotions, or signings)—but there was no getting around the fact that his days of playing football would soon be coming to an end. At the end of the 1990 season, a year in which he had won MVP, Montana injured his elbow in the NFC Championship game and missed the next two seasons. While he was sidelined, his backup, a young lefty named Steve Young, miraculously transformed into one of the best quarterbacks in the league (and even won the 1992 MVP award), which all but ensured that either Montana’s career was over or he’d soon be traded to play out his final years with some desperate franchise. Either scenario wasn’t particularly appealing to Sega, which made Kalinske and his colleagues eager to find a new face for its sports games. In addition to this, there was one other big reason why the company was making a push to find a new, younger face for its sports games: a new subbrand called Sega Sports.

  As part of the shakeup that moved Nilsen to global marketing and gave Diane Fornasier the Genesis, she was also put in charge of brand and product management. At the time, Sega was expanding so quickly that she and other executives wanted to take advantage of this by building a variety of powerful subbrands. This would eventually lead to categories specifically for women, and another one dedicated to children, but the first place they decided to strike was the digital playing field. It was a logical place to begin, both because Sega had a strong roster of sports titles and because of the runaway success of the Electronic Arts subbrand EA Sports (whose John Madden Football and NHLPA Hockey ’93 were among the top-selling Genesis games). After the decision was made to move forward with this, a study was commissioned to decide what to name the subbrand. Consultants came in, pitched ideas, spoke with ordinary people, and ultimately decided that the new Sega sports line should be called Sega Sports. So with Sega Sports poised to launch in late 1993 and Joe Montana not getting any younger, what would be more perfect than bringing on Ken Griffey Jr. right now?

  With all this in play, Sega of America’s CEO tried his hardest to woo the coveted superstar during his visit to Redwood Shores. After they finished with the tour, Griffey, his wife, and his agent spent a few hours back in Kalinske’s office discussing baseball, videogames, and everything in between. It was a fun day for everyone, which left Kalinske even more hopeful that Griffey might spurn Nintendo and come over to the dark side.

  Days later, news of the meeting leaked, and the Seattle Times ran a story by Bob Sherwin with the headline “Genesis of a Conflict: Griffey
Talks Video to Sega, Not Nintendo.” The article (abridged below) details how both parties instantly benefited, and further illustrates the philosophical differences between Sega and Nintendo:

  SUNDAY, MARCH 21, 1993

  PEORIA, Ariz. – Seattle outfielder Ken Griffey Jr. has become involved in some video-game intrigue that may not have Nintendo officials reaching for the joystick.

  “In all fairness to Nintendo and the Mariners, we have let them know about it,” Griffey agent Brian Goldberg said. “We’ve given Nintendo a chance to respond, in what other way they want to respond.”

  But privately, the word around Nintendo is that if Griffey signs with Sega it would be considered a disloyal act.

  “They (Nintendo) had the first chance,” Griffey said. “It wasn’t like I came to them and said, ‘Let’s make a game.’ They called me and asked me. But they did nothing. If you want to call that disloyal, you can.”

  As Kalinske read the article, there wasn’t a thing in the world that could have wiped the smile off his face.

  Weeks later, Kalinske’s face was filled with another tough-to-remove smile. This one, however, had nothing to do with Griffey, but rather a man named Garske—Chris Garske, Sega of America’s VP of licensing and acquisitions.

  “I take it you like the idea?” Garske asked.

  “Yes,” Kalinske said, still smiling. “But I have to admit that I like the news almost as much as the idea.” The news was that Nintendo would be censoring their version of Mortal Kombat by changing certain elements, like the color of the game’s graphic red blood to a bland gray. Although Howard Lincoln had made this decision a few months ago, this was the first that Kalinske had heard of it. This could be huge! If Nintendo was going to release a dulled-down version of the game, then Sega needed to find a way to capitalize on that. But figuring out how exactly to do that was now a much trickier question after what Sega had been working on over these past few months.

  After the MPAA had turned down the opportunity to rate videogames, Sega forged forward on their own. They created the Videogame Ratings Council (VRC) as a new governing body to rate and review all game content. Initially, it would only be games published by Sega, but the goal was for the VRC to rate games by all companies and for all systems. Impartiality was important, as was quickly establishing a reputation for integrity, which is why Kalinske made it a point to bring on Arthur Pober as the first head of the VRC. Building this organization out of thin air was a large part of the challenge, but so was actually creating the ratings themselves. How many tiers should this new system have, and where should the age cutoffs be? What was the difference between violence, cartoon violence, and graphic violence? And should more realistic games (like those for the Sega CD) be held to a higher standard than those for 16-bit systems?

  After working with Pober, speaking with psychologists, and conducting weeks of internal discussions, Sega came up with a three-tiered system:

  GA (General Audiences): Appropriate for all family members. No blood or graphic violence. No profanity, no sexual themes, and no use of drugs or alcohol.

  MA-13 (Mature Audiences): Parental discretion advised. Game situations and characters are appropriate for teenage judgment. These games may contain some levels of blood and graphic violence.

  MA-17 (Adults Only): Not appropriate for minors. Games include complex situations that call for mature judgment. Could have lots of blood, graphic violence, mature sexual themes, profanity, or drug or alcohol usage.

  With the VRC created and these criteria now in place, Sega was ready to move full steam ahead with its rating system. But then there was the issue of Mortal Kombat. What kind of message would it send if one of the most anticipated games in years earned the harshest rating? And what would that mean for game sales? If only there was a way to make Sega’s version more violent than Nintendo’s, avoid the MA-17 rating, and maintain the integrity of the VRC, all at the same time. And that’s where Garske’s idea saved the day.

  “Some sort of blood code,” Garske explained to Kalinske. “So when you buy the game, it comes without any of that over-the-top gore and violence. But then all you have to do in order to get the game to look just like it does in the arcades is enter a code. A combination of buttons and then boom—blood everywhere.”

  “And it would be called the blood code?” Kalinske asked.

  “Yeah,” Garske replied. “Or we can change it to something else.”

  “No,” Kalinske said. “I like it.”

  The blood code—a way for Sega to have its cake, eat it too, and also have some left over to throw in Nintendo’s face.

  47.

  THE MAN WHO CAME

  FROM PEPSI

  Beauty may be in the eye of the beholder, but as George Harrison sat through the final cut of the Super Mario Bros. movie, he felt rather certain that there were very few beholders who would find any beauty in this monstrosity.

  “Why are Mario and Luigi at a nightclub?” he whispered aloud, prompting the Japanese man beside him to glance his way and politely smile.

  Harrison was here, at a small movie theater in Pasadena, because Arakawa had asked him to fly down to Los Angeles, pick up the legendary Shigeru Miyamoto, and escort the creator of Mario to a special screening of the movie based on his videogame. Up to this point, Miyamoto had not yet seen any cuts of the film, so it was important that Harrison keep him in good spirits for the viewing. Amazingly, given his reputation, Miyamoto appeared to be nothing other than jovial from the moment Harrison picked him up. He remained upbeat as they inched through the LA traffic, didn’t lose steam as the film butchered his iconic characters, and politely smiled whenever Harrison would sigh and whisper something rhetorical aloud.

  “And why on earth would Mario dance like that?” Harrison muttered to himself, once again earning an affectionate smile from Miyamoto.

  George Harrison was Nintendo of America’s new director of marketing and corporation communications, taking over for the recently departed Bill White. This promotion, making him Peter Main’s right-hand man, was an incredible opportunity, but it left no traces of enthusiasm on Harrison’s face. There were a couple of reasons why this was the case. One was that Harrison had an uncanny talent for staying even-keeled. Whether he was hearing good news or bad, he always had the look of someone who’d just been informed what time it is: thankful, thoughtful, and calculating. The other reason he wasn’t jumping for joy was that just nine months earlier, Harrison had been under the impression that he had already been given this job.

  George Harrison was initially recruited by Nintendo in late 1991, just a couple of months after the launch of the Super Nintendo. At the time, he was director of new ventures at Quaker Oats, in charge of investing in external projects or acquiring small companies that would fold nicely into the brand. Although his work there was undoubtedly impressive, what really appealed to Peter Main was the line on Harrison’s résumé right below that. Prior to joining Quaker Oats, Harrison had been the director of U.S. marketing for PepsiCo from 1981 to 1987, fighting on the front lines for the second place soda-maker during the so-called cola wars that dominated the decade.

  Much like the current battle between Sega and Nintendo, the cola wars represented a heated corporate rivalry between Pepsi, the scrappy upstart, and Coca-Cola, the established market leader. Although the companies had been battling each other since the end of the nineteenth century (Coke was founded in 1886, Pepsi in 1898), Coke paid little attention to Pepsi, the perpetual follower, until 1975, when the underdog drastically amped up their marketing efforts and issued the now-famous “Pepsi Challenge.” Originally, the challenge entailed blind taste tastes at malls around America, but it eventually expanded to be more than just an amateur science experiment; it came to embody the revitalized spirit of the company. Pepsi wasn’t just challenging Coke, but challenging Americans to break the status quo and drink something different from their parents. This youth-oriented approach soon evolved into a full-fledged slogan “Pepsi: The choice
of a New Generation.” By 1983, Pepsi had begun to outsell Coke in supermarkets nationwide, and they were looking for something big to put them over the top. That something turned out to be Michael Jackson, who signed a record-breaking $5 million endorsement deal which made him the face of the Pepsi Generation and, quite literally, the King of Pop. Jackson was a huge part of Pepsi’s rise, but the underdog’s biggest coup didn’t come until Coke made a blunder that almost ruined the company.

  While Pepsi was conducting taste tests in public, Coke was conducting similar tests in private. The company’s senior executives commissioned a top-secret internal research program, called Project Kansas, whose objective was to create, test, and brand a new, better-tasting cola. After years of tweaking chemical formulas and testing diverse focus groups, a sweeter soda was born. This reformulated beverage, imagined to be the future of the Coca-Cola brand, was named New Coke and launched in 1985. It didn’t take long for the backlash to begin, and when it did, it was unlike anything a Fortune 500 company had ever experienced before. Coke’s customer support received complaint calls around the clock, and within weeks they had received over four hundred thousand angry letters. The situation got so bad so fast that a consortium of Coca-Cola bottlers even sued their supplier for changing the product.

  On July 10, 1985, less than three months after New Coke was launched, Peter Jennings, the anchor of ABC News, interrupted General Hospital to announce that Coca-Cola’s executives had admitted that they were wrong and announced that Coke would be returning to its original formula. As quickly as the backlash had come, so did the celebration for the return of the iconic beverage. Within forty-eight hours of the announcement, over thirty thousand people called Coke’s hotline to commend the decision, and Arkansas senator David Pryor famously called this “a meaningful moment in U.S. history.” By the end of the year, Coke was back to the original formula everywhere, and the cola wars resumed pretty much where they had left off. Back and forth, back and forth it went, with both companies striving to make soda a metaphor to define lifestyle.