Video games have had a relatively short but tumultuous history. Many companies have entered the arena on shaky legs only to be cut down years or even months later. Even seemingly unshakable industry giants have felt the sting of defeat, and some failures are so drastic they've changed not only the face of video games, but the world at large.
I'd like to take an opportunity to begin a new section where I discuss companies that have had long-lasting impacts on the games industry as a whole. Countless companies have played a part in shaping the industry as we know it today, and many current industry practices have ridden on the backs of unexpected innovation or shortfall. No other industry is quite as volatile as the games industry, and no other audience is as fickle or outspoken. This level of fluidity in the industry has led to many companies thinking outside the box in order to reinvent themselves or stay afloat in a business that bears steep penalties for failure. For our first outing, I'd like to take a look at one of the oldest game companies still in operation today, and a name synonymous with console gaming in the 90's:
Rise and Early Success
Few companies have had as much experience with failure as Sega, and few companies would have been as capable of dealing with the aftermath. Founded in 1940 as Service Games, the company originally designed and distributed coin-operated jukeboxes and slot machines throughout Japan. In the 70's, Sega--by then in charge of expansive manufacturing facilities and firmly entrenched in digital games--rode the surge in popularity with arcades of the era. Sega's true halcyon days, and the era that would firmly cement their name into the minds of an entire generation, were the years shortly after releasing the 16-bit Genesis onto the world.
Prior to the Sega Genesis, the only company that was capable of navigating the stormy home console market that had been brought on by the crash of '83 was Nintendo. Marketing the Nintendo Entertainment System more as a toy than a video game console, Nintendo was able to single-handedly revitalize a market many manufacturers had abandoned for dead. Once it was clear that consumers were ready for video games, Sega--who was clutching to a tenuous fraction of the market with the Master System--went back to the drawing board. The result was the Sega Genesis, a product that swooped into the North American market in summer of 1989, and promptly stole a majority of the market share from then-uncontested Nintendo. The Genesis was cooler, faster, and prettier than the NES, and thanks to an aggressive marketing campaign, was touted as not only the new system on the block, but the system that was truly geared to older gamers. With a wide variety of sports, action, and arcade titles, next-generation hardware, and the addition of one attitude-laden hedgehog, Sega relegated the NES and Nintendo as a whole to "child's play" status and helped introduce the games industry to a whole new generation. Unfortunately for Sega, gamers are fickle, and tides can shift overnight. Even more unfortunate for Sega, fickle gamers and changing trends in the industry had very little to do with what happened next.
While Sega was riding high on the success of the Genesis, Nintendo was busy playing catch-up by releasing the Super Nintendo, a highly capable 16-bit gaming box. Released well after the Genesis, the Super Nintendo was designed to compete directly with Sega, eliminating the superior graphics and sound the Genesis had over the NES. With a major marketing advantage neutered, Sega was forced to act fast.
Soon after the SNES's debut, Sega upped the ante with the Sega CD, a CD-ROM-based add-on that attached to the Genesis. The Sega CD attachment was a novel approach to the problem of reinvigorating the Sega brand-name without abandoning the Genesis' installed base and alienating customers. It added new and (at the time) exciting capabilities to the Genesis such as Full-Motion Video (FMV) and enhanced sound and graphics, while tapping into the "cool factor" that was riding on the back of CD-ROM technology. Although there was a real danger of splintering the userbase by creating different levels of product, the temptation to rub new technology in Nintendo's face was too much to resist and in October of 1992, North America saw Sega's first step into oblivion.
At first, sales of the add-on exceeded expectations, and Sega assumed they had a hit on their hands. Emboldened by success, they forged a plan to redesign and re-release both the Sega CD and the Genesis console itself, along with revised marketing and branding. The redesigns were intended to cut production costs and streamline the hardware, freeing up resources that allowed Sega to create a second add-on for the Genesis.
This second add-on was known as the 32X. If for some reason, you hear ominous music in the background, feel fortunate, because Sega didn't.
Mistakes Were Made
The Sega 32X was released just at the cusp of the 1994 holiday season. It actually released in North America first, with a Japan release just a few weeks later in December. If this seems a bit unprecedented, it is, and has been referenced by video game historians as one of the quiet little earmarks that signaled the 32X as being a monumentally bad idea. Another of those little earmarks was the fact that the brand spanking new Saturn was being launched at almost the exact same time, only working to confound potential consumers and clog the market with pieces of black plastic. Though the adoption rate for the 32X was at first brisk, many gamers were looking to the upcoming launch of true next-generation systems, and opted to sit it out for the 32X. This combination of a poorly timed launch window and underwhelming customer response helped to scare away many triple-A developers, making quality software on the add-on sparse which only further diluted the 32X's perceived value. This in turn whittled merrily away at Sega's overall brand presence, carving out a steady downward slope that Sega would not recover from.
Part of the problem was in the very fact that Sega marketed the 32X as "the poor man's entry" into the next generation of consoles. The 32X was priced at $150, less than half of the Saturn's launch price of $400. While this made it an attractive option for those unwilling or unable to cough up that much cash for a Saturn (realistically, once you factored in a couple games, an accessory or two, and taxes on all of it, you were creeping ever closer to the $1000 mark), problems cropped up that severely limited even that frugal cross-section. The biggest problem was the fact that the 32X and the upcoming Saturn were entirely incompatible. The two machines occupied completely different ecosystems, meaning even if you spent the $150 to grab a smattering of upgraded graphics, you were still on the hook for $400+ once you decided to move into true next-gen hardware. Another problem that was readily apparent was the egregious lack of software for the peripheral, totaling a measly forty games across all regions. The true slap in the face for 32X owners was the fact that among those forty games, six titles were only playable if you had the 32X and a Sega CD, meaning the more you spent on Sega's monsterous amalgamation of plastic, the less return you saw on your investment.
The overarching sentiment toward the 32X less than a year into its lifecycle was one of malignant disregard. This feeling was shared by both consumers and designers alike, as evidenced by the dearth of quality software and the sharp drop in hardware adoption once the initial furor had died down. If you need one out of the many examples of digitized disappointment the 32X harbored, take the much maligned launch title DOOM 32X. A shoddy port by any measure, the game was plagued with problems, inaccuracies, omissions, and glitches. The game itself was severely scaled down for Sega's peripheral, with a windowed border effectively cutting the game down to a third of the size. Multitudes of graphic and audio assets went entirely missing, and even complete modes, weapons, levels, and secrets were absent from the game. This was largely due to rushed development cycles, resulting in hugely inferior games that failed to tap any of the 32X's capabilities. Everything about the 32X, from the timing of the launch, to the quality of games, to the incredibly short lifespan of the device, all but ensured not only failure of the 32X, but threatened to drag all of Sega down with it. A telling footnote in this regard was the aborted Neptune console, which was intended to be an integrated Genesis/32X combo in a single sleek case. It was developed all the way to the final design phase, but no known prototypes exist as the project was cancelled when the 32X proved to be nonviable. This point in Sega's timeline is significant, not only for the fact that they were prepared to release yet another piece of hardware into a market that was already positively glutted with Sega product, but also because it outlines the lack of communication and foresight that was so prevalent at Sega during the time. To be clear, the Neptune was actually announced as in-development to the public and had print media waiting in the wings for a release date to be nailed down. While Sega stopped just short of dropping another steamer, the money they poured into research and development, materials, and advertisements were all dollars that could have been spent on more soluble products.
A Company Divided
A large part of the problem was that Sega headquarters in Japan and Sega of America were quite at odds with one another. Sega America would make a decision and often, the Japan offices would subvert or outright contradict them. In many cases, the Japanese headquarters would make a global decree without considering the market position of offices in other regions. These business practices did direct harm to the cohesion and integration of the different Sega offices, and the policy being issued by Sega of Japan stifled many actions the US arm was taking to try and dig themselves out of a bad situation. Point in fact, Sega of Japan forced the US branch to launch the Saturn early, despite the fact that the Genesis was still a very popular product, and despite the fact that hardware adoption rates were low (particularly for Sega) as a result of all the add-on junk that was now taking up space on store shelves. The early US launch did even more to damage Sega however, as the retailers who were carrying Sega product had no advance notice of the sudden launch of the Saturn, and lashed out against Sega for blindsiding them. In popular gaming articles of the day, a common joke was to say that Sega surprised the world with the launch of the Saturn, while the rest of the world surprised Sega by not buying it.
While initial sales of the Saturn were brisk--particularly in Japan--worldwide things weren't looking as good. Aside from early adopters, few were even aware the Saturn was available, owing in part to a lack of support from major retailers. To compound matters, after just a few months, Sony's fledgling Playstation console quickly began to overtake Saturn sales, eventually going on to become one of the best selling game consoles of all time. While Sega may have been able to handle being relegated to second place by the surprise upstart Playstation, they couldn't have been prepared for the push to third by Nintendo's kid-friendly N64. When the dust settled in 1998, the Saturn had sold under 10 million units, which wasn't even a third of the N64's sell-through, and less than a tenth of the PS1's massive 100 million-plus take-home numbers. Though there were many reasons the Sega Saturn failed to capture the crown in the fifth-generation console wars, there is little debate on what doomed the console from the beginning, the system architecture. The Saturn was born from a partnership between Sega and Hitachi, with the Saturn featuring twin Hitachi SH-2 processors. Many codehouses found this configuration difficult to program for, and so ports of games to the Saturn were few and far between. Furthermore, many games that did make it to Sega's console were generally less graphically exciting than other versions due to the expense and time involved to create custom libraries. One of the biggest reasons the Playstation was so popular among developers was the very accessible stock graphics libraries they could use when making a game. Anyone in the industry can tell you, the best hardware in the world will be worthless without the software to run on it. Sega was learning this lesson in realtime as the Saturn fought for every last hardware sale it could get.
To be perfectly fair, the Sega Saturn was an extremely capable machine. Whereas the Playstation was a dedicated 3D console, the Saturn had been built to be equally adept with 2D as it was with 3D. This manifested in spectacular fashion on the Saturn in the form of fighting games which were seeing a renaissance in arcades. The general consensus among gamers was that the Saturn was able to offer up near perfect conversions of the popular 2D fighters of the time while the PS1 versions always lost something during the translation. In addition, while the Saturn was very difficult to program for, anyone who actually took the time to learn the ins and outs of the hardware found a very capable and robust machine lurking under the hood. Ports such as Tomb Raider and original games such as Panzer Dragoon used hardware tricks such as transparency that were thought to be impossible on the Saturn. Still, the developers who were willing to take the care to learn how to make games on the Saturn were hard to find, and by and large, the console suffered considerably for it. While the Saturn carried a veritable hit list of Sega arcade games and a solid lineup of original exclusives such as NiGHTS into Dreams and the Shining series of RPG games, many popular console games skipped over the Saturn in lieu of the Playstation and its ease of programming and massive installed base.
The Sega Saturn slipped so far behind in the console race, Sega was forced to restructure their executive teams and announce to the industry that the Saturn was "not their future". With that abrupt announcement--nearly as abrupt as the announcement that brought the Saturn into the world in fact--Sega began work on their next generation console. In many senses of the word, the jumble of hardware that would eventually become the Sega Dreamcast was a last ditch effort to save the company. While Sega tried to learn from their past mistake of making the hardware too complex, their followup attempt to court a platform that was more universal also encountered obstacles. To start, Sega decided to let multiple companies develop prototype hardware for their upcoming console. Considering all the financial baths they had been taking lately, this extra expense could be seen as a sign of denial by the powers that be. Sega Japan chose Japanese tech manufacturer NEC, and Sega America chose 3Dfx, who was based out of California. Unfortunately, through a combination of Sega Japan's obstinance and 3Dfx revealing their partnership with Sega at an IPO announce--causing tension between the two companies--Sega responded by choosing NEC. The extra expense that went into developing vaporware (or in this case, paying someone else to develop vaporware) was again, money that could have been put toward keeping the company afloat, which by now was seeing the compounded effects of losing the fight on the console front and losing out from throwing so many useless add-ons into the market.
Death of a Dream
While the Dreamcast is considered by many to be Sega's finest hour, that opinion was adopted far too late to be of any help. The console was the most well thought out and capable kit available at the time, with the added support of Microsoft and their easy to port DirectX API. The main upshot of this was that PC games would be much easier to port over to the Dreamcast. In addition, a number of baked-in arcade titles were guaranteed thanks to the very Dreamcast-centric Naomi games appearing in arcades at the same time. Some of the most fantastic and ground-breaking games were released on the Dreamcast, including "better than arcade-perfect" translations of Soul Calibur and Virtua Fighter, and true unique gems such as Power Stone and Shenmue. It seemed as though Sega had mostly learned their lessons, with a unified (and add-on free) architecture, a strong 1st- and 2nd-party software lineup, and an early lead on the new console generation. Hardcore gamers and early adopters flocked to the Dreamcast, ready to experience immersive new worlds, next gen-graphics, and one-to-one arcade conversions, and except for the Sega Sports edition, free from the shackles of black plastic.
Then Playstation 2 happened. The coy "Emotion Engine" marketing, additional graphic horsepower, and ready-made DVD support (which Dreamcast didn't have) put the PS2 front and center with living rooms; as you now had your movie box and your video game thingamajiger in one sleek package. Up until then, companies had vastly underestimated a person's resistance to having to change the input on their TV, and with the PS2 able to replace a $200-300 DVD player, Sega's Dreamcast found itself in the role of "kid's toy" much as it had painted competitor Nintendo a few short years ago.
The PS2 built on the PS1's success with backward compatibility, noticeably upgraded graphics, and hugely popular AAA games. This difference in software lineups actually underlined one of the biggest reasons Dreamcast was ultimately abandoned by Sega. At the time, several popular third-party development houses--among them, Square, EA, and Konami--were developing games that were proving extremely popular in the mainstream gaming community. Unfortunately, many of these same houses were doing so exclusively for Sony. Sega was forced to rely on their 1st- and 2nd-party development houses to fill the gaps, which meant not only a meager sports library, but that many of the other games were shooters, RPGs, "concept" games, and other hardcore and niche titles. This kept Dreamcast adoption out of the mainstream and since all of the interested hardcore gamers had already snagged the Dreamcast back when it launched, sales remained stagnant.
As the Playstation 2 launch continued, shortages began to crop up of the new console. Sega, sensing an opportunity, aggressively marketed the Dreamcast, and tried to push units out the door, going so far as to including one free year of their Sega.net online service. Unfortunately, Sony managed to fill the PS2 gap with a redesigned PSOne, and with the massive legacy software library and a market essentially "frozen" waiting on more PS2 units, Sega was still playing second fiddle all the way until they pulled the plug on the Dreamcast in January 2001. The Dreamcast was discontinued that March and is the last dedicated gaming console that Sega has made to date. Many factors that were cited in the death of the Dreamcast included bad timing, waning internal support, stiff competition, and changing tastes within the gaming community. In fact, before the death of the Dreamcast, Sega heads had already discussed abandoning hardware altogether and becoming what they termed a "platform-agnostic" 3rd-party developer.
Ditching the Hardware
Not long after Dreamcast was left behind, Sega did what to many gamers was unthinkable: they began releasing Sega IPs on formerly competing platforms, the first of which was a quiet little port of ChuChu Rocket! over to the Game Boy Advance. Seeing Sega branding has never stopped feeling weird for a generation of gamers who grew up with Sega and Nintendo at each others' throats in the 80's and 90's. Unfortunately (or fortunately, depending on how you feel), the only way for Sega to remain as a brand was to leave the highly volatile hardware market and reinvent themselves, complete with company reorganizations and acquisitions. This was absolutely necessary as Sega was positively bleeding cash by this point in time. One year after the Dreamcast had been discontinued, Sega was reporting 5 straight years of net losses, so much so that their parent company's CEO privately donated nearly $700 million of his own money to the company in an effort to help manage Sega's runaway debt. In addition, several companies including Microsoft discussed mergers and buyouts with Sega, all of whom left the table before a deal could be struck.
Fortunately for Sega, Sonic the Hedgehog was still internationally recognized as a video game icon, and so Sega clumsily exploited Sonic's brand recognition for all it was worth. Game after game began hitting the Sonic legacy over the head with a wet log and by the late 2000's, Sonic had starred in a couple lackluster Olympic-licensed games along with a raft of ham-fisted shovelware. More recent attempts tried to take gamer feedback in mind, and some very playable versions were produced, but as digital-only and mobile app sales began to pick up, Sonic again made the leap and started showing up on IOS and Android. Most recently, this push to mobile and the limitless microtransactions have taken the form of SegaForever, a collection of highly faithful ports of games from throughout the Sega timeline. Each game is a separate app, and so far, all are free to download and play, albeit with ads, though paid versions are available. This near constant reinvention on Sega's part has allowed the company to stay afloat while keeping a finger on the pulse of nostalgia. Strategic side-projects and partnerships have been another pillar that Sega has used to remain viable, leveraging their technological prowess against such opportunities such as providing the 3D holographic technology to Hatsune Miku's live concerts, and acquiring and owning the successful chain of Gameworks arcades.
While the world may not see another Sega-branded home console, Sega the company doesn't seem to be going anywhere any time soon, and the fact that it still exists after so many years of adversity is a testament to the strength and resolve of the company and the folks behind it. It could be argued that lesser companies would have been forced to close their doors in the face of such imposing challenges, and while that assertion could be debated for decades in internet forums, no one will ever accuse Sega's path of being too easy. Still, it seems one of the reasons Sega has hung on so long is more down to gamer love than anything related to business. Particularly in the mid-2000's, when Sega would release a not-great Sonic game, gamers at large would seem to say "C'mon man, I know you can do better than this Sega..." seeming to plead with Sega to return to their ways of old. Generations of gamers who had grown up with Sonic, Vectorman, Toejam & Earl, and others saw the blocky blue logo as a piece of their childhood, and lamented rather than raged as shoddy ports and rehashes of favorite franchises were unleashed by a company seemingly out of touch with what gamers wanted. Luckily, in more recent years, Sega has pushed more fervently toward quality, and has collaborated with several large game studios to create well-known hits such as the Yakuza series, Alien: Isolation, the Total War series, Bayonetta, and more. Considered alongside the aforementioned purist nods to nostalgia, Sega finally seems to have settled into a comfortable position in the games industry where they can keep one foot in their venerated past while maintaining a presence that will pave the way for their future.
I'm still keeping my eyes peeled for a Dreamcast 2.
Cheers/Game on.
Prior to the Sega Genesis, the only company that was capable of navigating the stormy home console market that had been brought on by the crash of '83 was Nintendo. Marketing the Nintendo Entertainment System more as a toy than a video game console, Nintendo was able to single-handedly revitalize a market many manufacturers had abandoned for dead. Once it was clear that consumers were ready for video games, Sega--who was clutching to a tenuous fraction of the market with the Master System--went back to the drawing board. The result was the Sega Genesis, a product that swooped into the North American market in summer of 1989, and promptly stole a majority of the market share from then-uncontested Nintendo. The Genesis was cooler, faster, and prettier than the NES, and thanks to an aggressive marketing campaign, was touted as not only the new system on the block, but the system that was truly geared to older gamers. With a wide variety of sports, action, and arcade titles, next-generation hardware, and the addition of one attitude-laden hedgehog, Sega relegated the NES and Nintendo as a whole to "child's play" status and helped introduce the games industry to a whole new generation. Unfortunately for Sega, gamers are fickle, and tides can shift overnight. Even more unfortunate for Sega, fickle gamers and changing trends in the industry had very little to do with what happened next.
While Sega was riding high on the success of the Genesis, Nintendo was busy playing catch-up by releasing the Super Nintendo, a highly capable 16-bit gaming box. Released well after the Genesis, the Super Nintendo was designed to compete directly with Sega, eliminating the superior graphics and sound the Genesis had over the NES. With a major marketing advantage neutered, Sega was forced to act fast.
Soon after the SNES's debut, Sega upped the ante with the Sega CD, a CD-ROM-based add-on that attached to the Genesis. The Sega CD attachment was a novel approach to the problem of reinvigorating the Sega brand-name without abandoning the Genesis' installed base and alienating customers. It added new and (at the time) exciting capabilities to the Genesis such as Full-Motion Video (FMV) and enhanced sound and graphics, while tapping into the "cool factor" that was riding on the back of CD-ROM technology. Although there was a real danger of splintering the userbase by creating different levels of product, the temptation to rub new technology in Nintendo's face was too much to resist and in October of 1992, North America saw Sega's first step into oblivion.
At first, sales of the add-on exceeded expectations, and Sega assumed they had a hit on their hands. Emboldened by success, they forged a plan to redesign and re-release both the Sega CD and the Genesis console itself, along with revised marketing and branding. The redesigns were intended to cut production costs and streamline the hardware, freeing up resources that allowed Sega to create a second add-on for the Genesis.
This second add-on was known as the 32X. If for some reason, you hear ominous music in the background, feel fortunate, because Sega didn't.
Mistakes Were Made
The Sega 32X was released just at the cusp of the 1994 holiday season. It actually released in North America first, with a Japan release just a few weeks later in December. If this seems a bit unprecedented, it is, and has been referenced by video game historians as one of the quiet little earmarks that signaled the 32X as being a monumentally bad idea. Another of those little earmarks was the fact that the brand spanking new Saturn was being launched at almost the exact same time, only working to confound potential consumers and clog the market with pieces of black plastic. Though the adoption rate for the 32X was at first brisk, many gamers were looking to the upcoming launch of true next-generation systems, and opted to sit it out for the 32X. This combination of a poorly timed launch window and underwhelming customer response helped to scare away many triple-A developers, making quality software on the add-on sparse which only further diluted the 32X's perceived value. This in turn whittled merrily away at Sega's overall brand presence, carving out a steady downward slope that Sega would not recover from.
Part of the problem was in the very fact that Sega marketed the 32X as "the poor man's entry" into the next generation of consoles. The 32X was priced at $150, less than half of the Saturn's launch price of $400. While this made it an attractive option for those unwilling or unable to cough up that much cash for a Saturn (realistically, once you factored in a couple games, an accessory or two, and taxes on all of it, you were creeping ever closer to the $1000 mark), problems cropped up that severely limited even that frugal cross-section. The biggest problem was the fact that the 32X and the upcoming Saturn were entirely incompatible. The two machines occupied completely different ecosystems, meaning even if you spent the $150 to grab a smattering of upgraded graphics, you were still on the hook for $400+ once you decided to move into true next-gen hardware. Another problem that was readily apparent was the egregious lack of software for the peripheral, totaling a measly forty games across all regions. The true slap in the face for 32X owners was the fact that among those forty games, six titles were only playable if you had the 32X and a Sega CD, meaning the more you spent on Sega's monsterous amalgamation of plastic, the less return you saw on your investment.
The overarching sentiment toward the 32X less than a year into its lifecycle was one of malignant disregard. This feeling was shared by both consumers and designers alike, as evidenced by the dearth of quality software and the sharp drop in hardware adoption once the initial furor had died down. If you need one out of the many examples of digitized disappointment the 32X harbored, take the much maligned launch title DOOM 32X. A shoddy port by any measure, the game was plagued with problems, inaccuracies, omissions, and glitches. The game itself was severely scaled down for Sega's peripheral, with a windowed border effectively cutting the game down to a third of the size. Multitudes of graphic and audio assets went entirely missing, and even complete modes, weapons, levels, and secrets were absent from the game. This was largely due to rushed development cycles, resulting in hugely inferior games that failed to tap any of the 32X's capabilities. Everything about the 32X, from the timing of the launch, to the quality of games, to the incredibly short lifespan of the device, all but ensured not only failure of the 32X, but threatened to drag all of Sega down with it. A telling footnote in this regard was the aborted Neptune console, which was intended to be an integrated Genesis/32X combo in a single sleek case. It was developed all the way to the final design phase, but no known prototypes exist as the project was cancelled when the 32X proved to be nonviable. This point in Sega's timeline is significant, not only for the fact that they were prepared to release yet another piece of hardware into a market that was already positively glutted with Sega product, but also because it outlines the lack of communication and foresight that was so prevalent at Sega during the time. To be clear, the Neptune was actually announced as in-development to the public and had print media waiting in the wings for a release date to be nailed down. While Sega stopped just short of dropping another steamer, the money they poured into research and development, materials, and advertisements were all dollars that could have been spent on more soluble products.
A Company Divided
A large part of the problem was that Sega headquarters in Japan and Sega of America were quite at odds with one another. Sega America would make a decision and often, the Japan offices would subvert or outright contradict them. In many cases, the Japanese headquarters would make a global decree without considering the market position of offices in other regions. These business practices did direct harm to the cohesion and integration of the different Sega offices, and the policy being issued by Sega of Japan stifled many actions the US arm was taking to try and dig themselves out of a bad situation. Point in fact, Sega of Japan forced the US branch to launch the Saturn early, despite the fact that the Genesis was still a very popular product, and despite the fact that hardware adoption rates were low (particularly for Sega) as a result of all the add-on junk that was now taking up space on store shelves. The early US launch did even more to damage Sega however, as the retailers who were carrying Sega product had no advance notice of the sudden launch of the Saturn, and lashed out against Sega for blindsiding them. In popular gaming articles of the day, a common joke was to say that Sega surprised the world with the launch of the Saturn, while the rest of the world surprised Sega by not buying it.
While initial sales of the Saturn were brisk--particularly in Japan--worldwide things weren't looking as good. Aside from early adopters, few were even aware the Saturn was available, owing in part to a lack of support from major retailers. To compound matters, after just a few months, Sony's fledgling Playstation console quickly began to overtake Saturn sales, eventually going on to become one of the best selling game consoles of all time. While Sega may have been able to handle being relegated to second place by the surprise upstart Playstation, they couldn't have been prepared for the push to third by Nintendo's kid-friendly N64. When the dust settled in 1998, the Saturn had sold under 10 million units, which wasn't even a third of the N64's sell-through, and less than a tenth of the PS1's massive 100 million-plus take-home numbers. Though there were many reasons the Sega Saturn failed to capture the crown in the fifth-generation console wars, there is little debate on what doomed the console from the beginning, the system architecture. The Saturn was born from a partnership between Sega and Hitachi, with the Saturn featuring twin Hitachi SH-2 processors. Many codehouses found this configuration difficult to program for, and so ports of games to the Saturn were few and far between. Furthermore, many games that did make it to Sega's console were generally less graphically exciting than other versions due to the expense and time involved to create custom libraries. One of the biggest reasons the Playstation was so popular among developers was the very accessible stock graphics libraries they could use when making a game. Anyone in the industry can tell you, the best hardware in the world will be worthless without the software to run on it. Sega was learning this lesson in realtime as the Saturn fought for every last hardware sale it could get.
To be perfectly fair, the Sega Saturn was an extremely capable machine. Whereas the Playstation was a dedicated 3D console, the Saturn had been built to be equally adept with 2D as it was with 3D. This manifested in spectacular fashion on the Saturn in the form of fighting games which were seeing a renaissance in arcades. The general consensus among gamers was that the Saturn was able to offer up near perfect conversions of the popular 2D fighters of the time while the PS1 versions always lost something during the translation. In addition, while the Saturn was very difficult to program for, anyone who actually took the time to learn the ins and outs of the hardware found a very capable and robust machine lurking under the hood. Ports such as Tomb Raider and original games such as Panzer Dragoon used hardware tricks such as transparency that were thought to be impossible on the Saturn. Still, the developers who were willing to take the care to learn how to make games on the Saturn were hard to find, and by and large, the console suffered considerably for it. While the Saturn carried a veritable hit list of Sega arcade games and a solid lineup of original exclusives such as NiGHTS into Dreams and the Shining series of RPG games, many popular console games skipped over the Saturn in lieu of the Playstation and its ease of programming and massive installed base.
The Sega Saturn slipped so far behind in the console race, Sega was forced to restructure their executive teams and announce to the industry that the Saturn was "not their future". With that abrupt announcement--nearly as abrupt as the announcement that brought the Saturn into the world in fact--Sega began work on their next generation console. In many senses of the word, the jumble of hardware that would eventually become the Sega Dreamcast was a last ditch effort to save the company. While Sega tried to learn from their past mistake of making the hardware too complex, their followup attempt to court a platform that was more universal also encountered obstacles. To start, Sega decided to let multiple companies develop prototype hardware for their upcoming console. Considering all the financial baths they had been taking lately, this extra expense could be seen as a sign of denial by the powers that be. Sega Japan chose Japanese tech manufacturer NEC, and Sega America chose 3Dfx, who was based out of California. Unfortunately, through a combination of Sega Japan's obstinance and 3Dfx revealing their partnership with Sega at an IPO announce--causing tension between the two companies--Sega responded by choosing NEC. The extra expense that went into developing vaporware (or in this case, paying someone else to develop vaporware) was again, money that could have been put toward keeping the company afloat, which by now was seeing the compounded effects of losing the fight on the console front and losing out from throwing so many useless add-ons into the market.
Death of a Dream
While the Dreamcast is considered by many to be Sega's finest hour, that opinion was adopted far too late to be of any help. The console was the most well thought out and capable kit available at the time, with the added support of Microsoft and their easy to port DirectX API. The main upshot of this was that PC games would be much easier to port over to the Dreamcast. In addition, a number of baked-in arcade titles were guaranteed thanks to the very Dreamcast-centric Naomi games appearing in arcades at the same time. Some of the most fantastic and ground-breaking games were released on the Dreamcast, including "better than arcade-perfect" translations of Soul Calibur and Virtua Fighter, and true unique gems such as Power Stone and Shenmue. It seemed as though Sega had mostly learned their lessons, with a unified (and add-on free) architecture, a strong 1st- and 2nd-party software lineup, and an early lead on the new console generation. Hardcore gamers and early adopters flocked to the Dreamcast, ready to experience immersive new worlds, next gen-graphics, and one-to-one arcade conversions, and except for the Sega Sports edition, free from the shackles of black plastic.
Then Playstation 2 happened. The coy "Emotion Engine" marketing, additional graphic horsepower, and ready-made DVD support (which Dreamcast didn't have) put the PS2 front and center with living rooms; as you now had your movie box and your video game thingamajiger in one sleek package. Up until then, companies had vastly underestimated a person's resistance to having to change the input on their TV, and with the PS2 able to replace a $200-300 DVD player, Sega's Dreamcast found itself in the role of "kid's toy" much as it had painted competitor Nintendo a few short years ago.
The PS2 built on the PS1's success with backward compatibility, noticeably upgraded graphics, and hugely popular AAA games. This difference in software lineups actually underlined one of the biggest reasons Dreamcast was ultimately abandoned by Sega. At the time, several popular third-party development houses--among them, Square, EA, and Konami--were developing games that were proving extremely popular in the mainstream gaming community. Unfortunately, many of these same houses were doing so exclusively for Sony. Sega was forced to rely on their 1st- and 2nd-party development houses to fill the gaps, which meant not only a meager sports library, but that many of the other games were shooters, RPGs, "concept" games, and other hardcore and niche titles. This kept Dreamcast adoption out of the mainstream and since all of the interested hardcore gamers had already snagged the Dreamcast back when it launched, sales remained stagnant.
As the Playstation 2 launch continued, shortages began to crop up of the new console. Sega, sensing an opportunity, aggressively marketed the Dreamcast, and tried to push units out the door, going so far as to including one free year of their Sega.net online service. Unfortunately, Sony managed to fill the PS2 gap with a redesigned PSOne, and with the massive legacy software library and a market essentially "frozen" waiting on more PS2 units, Sega was still playing second fiddle all the way until they pulled the plug on the Dreamcast in January 2001. The Dreamcast was discontinued that March and is the last dedicated gaming console that Sega has made to date. Many factors that were cited in the death of the Dreamcast included bad timing, waning internal support, stiff competition, and changing tastes within the gaming community. In fact, before the death of the Dreamcast, Sega heads had already discussed abandoning hardware altogether and becoming what they termed a "platform-agnostic" 3rd-party developer.
Ditching the Hardware
Not long after Dreamcast was left behind, Sega did what to many gamers was unthinkable: they began releasing Sega IPs on formerly competing platforms, the first of which was a quiet little port of ChuChu Rocket! over to the Game Boy Advance. Seeing Sega branding has never stopped feeling weird for a generation of gamers who grew up with Sega and Nintendo at each others' throats in the 80's and 90's. Unfortunately (or fortunately, depending on how you feel), the only way for Sega to remain as a brand was to leave the highly volatile hardware market and reinvent themselves, complete with company reorganizations and acquisitions. This was absolutely necessary as Sega was positively bleeding cash by this point in time. One year after the Dreamcast had been discontinued, Sega was reporting 5 straight years of net losses, so much so that their parent company's CEO privately donated nearly $700 million of his own money to the company in an effort to help manage Sega's runaway debt. In addition, several companies including Microsoft discussed mergers and buyouts with Sega, all of whom left the table before a deal could be struck.
Fortunately for Sega, Sonic the Hedgehog was still internationally recognized as a video game icon, and so Sega clumsily exploited Sonic's brand recognition for all it was worth. Game after game began hitting the Sonic legacy over the head with a wet log and by the late 2000's, Sonic had starred in a couple lackluster Olympic-licensed games along with a raft of ham-fisted shovelware. More recent attempts tried to take gamer feedback in mind, and some very playable versions were produced, but as digital-only and mobile app sales began to pick up, Sonic again made the leap and started showing up on IOS and Android. Most recently, this push to mobile and the limitless microtransactions have taken the form of SegaForever, a collection of highly faithful ports of games from throughout the Sega timeline. Each game is a separate app, and so far, all are free to download and play, albeit with ads, though paid versions are available. This near constant reinvention on Sega's part has allowed the company to stay afloat while keeping a finger on the pulse of nostalgia. Strategic side-projects and partnerships have been another pillar that Sega has used to remain viable, leveraging their technological prowess against such opportunities such as providing the 3D holographic technology to Hatsune Miku's live concerts, and acquiring and owning the successful chain of Gameworks arcades.
While the world may not see another Sega-branded home console, Sega the company doesn't seem to be going anywhere any time soon, and the fact that it still exists after so many years of adversity is a testament to the strength and resolve of the company and the folks behind it. It could be argued that lesser companies would have been forced to close their doors in the face of such imposing challenges, and while that assertion could be debated for decades in internet forums, no one will ever accuse Sega's path of being too easy. Still, it seems one of the reasons Sega has hung on so long is more down to gamer love than anything related to business. Particularly in the mid-2000's, when Sega would release a not-great Sonic game, gamers at large would seem to say "C'mon man, I know you can do better than this Sega..." seeming to plead with Sega to return to their ways of old. Generations of gamers who had grown up with Sonic, Vectorman, Toejam & Earl, and others saw the blocky blue logo as a piece of their childhood, and lamented rather than raged as shoddy ports and rehashes of favorite franchises were unleashed by a company seemingly out of touch with what gamers wanted. Luckily, in more recent years, Sega has pushed more fervently toward quality, and has collaborated with several large game studios to create well-known hits such as the Yakuza series, Alien: Isolation, the Total War series, Bayonetta, and more. Considered alongside the aforementioned purist nods to nostalgia, Sega finally seems to have settled into a comfortable position in the games industry where they can keep one foot in their venerated past while maintaining a presence that will pave the way for their future.
I'm still keeping my eyes peeled for a Dreamcast 2.
Cheers/Game on.