It was no secret that in the early nineties, the console war between Sega and Nintendo was starting to wane. Nintendo was having incredible success with the NES and Gameboy franchises, while Sega was left with a moderately popular console and general underdog status. Other console developers (such as Panasonic and Sony) were starting to notice a rapidly growing market and set to developing competitors to snare market share away from the Big 2.
The Decline of Sega – A Mega CD/32x Story.
**Note: In PAL territories, the Genesis was known as the Mega Drive. Since I’m an Aussie, indulge me)**
A tale of two houses
Sega at this point, like Nintendo, was divided into two main departments located within its two main markets. Sega of Japan (or SOJ) and Sega of America (SOA). Both markets were granted the capability to develop and market assets for their respective territories, but SOJ was the “Boss” thus effectively controlled what SOA developed. Within this arrangement, SOA was usually stuck with marketing the product to North America, while SOJ got to do the fun stuff – design in-house titles, develop new hardware, and designate the “crap” jobs to SOA.
As a result, communication between the two houses was chilly at best. There were many times that product development information was kept from SOA by its Boss. Launch information was skewed, and release dates for products were always wrong, or misguided. America was a much larger market then Japan, even in 1991, and many of Sega’s failures to become as successful as Nintendo were due to the awful direction of its US department. SOJ resented SOA’s successes, if any, and regarded them as nothing more then an office in the US. SOA regarded themselves as least, if not more, as important as SOJ.
But SOA did the best they had with what they were given, and it was with their own direction that the Genesis was so damn popular in the region. Other issues with production quotas, design and development rights, marketing direction and a complete lack of any cohesion or agreement hampered replicating the sort of co-ordination that Nintendo displayed between its American and Japanese headquarters. There were literally hundreds of active disputes at any given time. It’s no surprise these disputes contributed directly to their downfall.
It was in 1991 that Sega first extended the Mega Drive’s life by developing the Sega CD – a project completely undertaken by SOJ. It sold relatively well in Japan but due to lack of communication, or maybe just a distaste for their Yank counterparts, launch plans for the US weren’t even bothered to be collaborated until a few months later. It was in 1994 though that SOJ granted SOA its first, imporant directive – create a 32-bit console to supersede the Mega Drive (or Genesis). Thus the Mega 32x was born, and so begins the story behind these two ill fated devices.
The first mistake – The Sega CD
Mega CD system specs: (Summarized)
CPU: 12.5-MHz 16-bit Motorola 68000 processor
Storage: 500mb Compact Disc Media
RAM: 6mb System Ram. 128k CD-Rom cache.
Colors: Over 64-128 colours simultaneous colours
Graphics: Custom ASIC processor.
Sound: 8 channel stereo PCM
In early 1991, SOJ announced secret plans for a new, top-secret CD based device that was to compete with the NEC PC Engine, a relatively popular 16-bit console that featured an optional CD drive function. Later that year the “Mega CD” was unveiled at the “Tokyo Toy Show” (now Tokyo Game Show), and shown to be an add-on in the same respect as the PC Engine extra it was designed to compete with.
SOA raised concerns about the peripheral from its early stages. The PC Engine was far from popular in the US for starters. Not only were the titles unsuited to the different market, it was priced at $299, almost double the current price of the Mega Drive or SNES. The SNES, at the point, was still relatively new but fast gaining market share, even with a limited library of titles.
SOA also shared doubts that an add-on, opposed to a new console, would be suitable enough to compete with other offerings from competing developers. SOJ ignored these doubts and released the peripheral in Japan a few months later. The device produced moderate success, selling over 100,000 units, yet was hampered by problems with design and manufacturing. It was when the device launched in North America, Europe and Australia, the success in Japan quickly disintegrated.
The Sega CD released in NA on the 15th of October, 1992, followed well behind by Europe and Australia in April the following year. The console ended up costing around $179 in the US, and over $400AU in Europe and Australia, which was well above previous estimations. Many gamers were disillusioned at forking out almost $200US for a device which barely improved gameplay, graphics or sound above Mega Drive levels. Initial titles were clumsy, slightly improved “upgrades” or “sequels” to previous Mega Drive games, with barely noticeable sound improvements from the new CD media. Sales were pathetic.
Not only that, but games were just not launching as fast as Sega had promised. Barely 100 titles were released for the S-CD over BOTH territories in the 2-3year lifespan of the device. Support from Sega was basically non-existent for the product. The fans that had come to await Sega releases with baited breath, were let down at the “new generation” of titles. Games with FMV (Full Motion Video) such as Night Trap and Power Factory: Featuring C&C Music Factory, that were hyped to high hell, bombed faster then London during WW2.
But within all of the crud, some fantastic titles were able to rise above the dust. The Lunar Star series, Sonic CD and numerous other titles received well deserved kudos, while the former was later re-released in its original form on the PSX. Other titles like Tomcat Alley and Sewer Shark were so bad they ended up gaining cult status. Success, some say, is relative. But honestly stating that the Mega CD was a good idea is false in every sense of the word.
There were problems from the beginning. Expecting gamers to swallow a $200-$400 hit for half a console was the first. Not backing up the release with quality, original in house titles was another. But a serious flaw was developing one product to address multiple issues plaguing Sega – combating two completely different consoles in 2 completely different territories. Was it a PC Engine killer or a SNES slayer? Whatever the case, it ended up doing neither.
If there were any lessons to learn from the numerous mistakes that arose from the ashes of the Mega CD, Sega didn’t learn them. It simply instructed SOA to develop yet a second peripheral to rectify the screw up of the former. Welcome to the 32x.
The killing blow – The Mega 32x
Mega 32x system specs: (Summarized)
CPU: Twin Hitachi (SH2) 32 bit RISC processors running at 23 MHz 40 MIPS
Storage: RAM Based cartridges similar to Mega Drive/Genesis types.
RAM: 3mb system ram.
Colors: 32,768 simultaneous colors
Sound: 12 channels along with the MD/Genesis, 22 with the Mega CD
By 1994, Atari had the 32-bit Jaguar, Panasonic had the 3D0 and Nintendo was in preparations to develop a CD-based media project alongside Phillips. The Mega CD had completely flopped in the US. Sales had almost completely diminished, along with SOA’s support for the product. But SOJ had other plans up its sleeve – to create a brand new console, codenamed “Saturn”- which turned out to be a completely 32-bit CD-based system which aimed to prove it had learnt from its mistakes with the Mega CD.
It was then that SOJ passed on a very unusual request to SOA – develop another add-on to supersede the Mega CD and bring Sega back to the forefront in the United States and Europe. The original plan by SOJ was to combine two 32-bit processors in order to create a 32-bit device to yet again “upgrade” the capabilities of the now aging Mega Drive. SOA suggested a completely new Mega Drive, as opposed to an addon, but SOJ (rightly) rejected this idea citing that consumers were unlikely to buy a new version of the exact same thing.
It’s then interesting to note that confusingly SOJ chose not to advise SOA of the “Saturn” project of its complete existence until the 32x was well into development. Not that it made any difference. SOJ stressed that the products would address separate markets within two territories, the first (32x) to cover those requesting MD longevity, and the other (Saturn) satisfying the “diehard gamer” who waits with baited breath for new systems. It’s no wonder that this caused a hell of a lot of confusion within SOA, with many wondering what the point was in creating similar products to release almost simultaneously.
The 32x was first displayed as a prototype at the Chicago CES Expo in Summer 1994. Anticipation built quickly. With Sega and the media hyping the new addition as a “the SNES killer the Mega CD wasn’t”, the peripheral was released into the US in mid November to much fanfare. The console was an instant success – selling over a million units over the 6 months or so in all territories. That initial burst of favour is where the party ended for Sega, since more pressing issues began to jump up and kill any chance of continued success.
The main being that the 32x was utterly spattered with hundreds of design issues. One being that there were different versions of the Mega Drive/Genesis, which required attaching “spacers” and “adapters” to attach the device to various consoles. A standard 32x included almost 15 different parts within the box alone. Other issues rose regarding the inability to use the device with older televisions, broken or bent clips along with difficulty attaching them to the Mega Drive. Various stop gap solutions were released by Sega, at an additional cost of course. This went down so badly that eventually Sega gave them away for free.
The hailstorm didn’t end there. For the first time titles were region locked to their territories. Importers roared with disgust at their inability to play titles from Japan that didn’t get released in the states. Supply issues, problems with games (Missing levels, glitches, bugs which caused games to freeze or break), Sega’s lack of confidence in the device as well as its rush to release it before Christmas made things even worse. Plus the support promised just wasn’t there – games that were released for the device were few and far between. The situation got so bad that by mid 1995 no-one would touch the damn things.
Another thing happened in 1995 that also drastically affected the viability of 32x success – the launch in North America of the Sega Saturn. The Saturn was essentially the Mega CD and 32x in one, plus it had all of Sega’s might and muster behind it. Gamers started to wonder what the hell was going on. Did they buy the 32x or the Saturn? What was the difference? What would be supported in 2 years time? The answer was obvious, and 32x owners who had bought the device on launch and paid $200 for the privilege, felt enormously cheated. This was reflected in Saturn sales, which were dismal, especially since the PSX launched not too long afterward.
The 32x was eventually pulled off the shelves by 1996. Within about 1.5 years, the peripheral had been panned by almost every gaming magazine and related media resource on the planet. Even Saturday Night Live developed a skit on its failure. To this day, the launch of the 32x has gone down as one of the worst consumer product releases ever, to be followed up later by the launch of the Dreamcast in Europe and Australia. In 1991, Sega had a 65% share of the market. By 1995, that share was below 25%.
Learning from Mistakes
Those 4 years between 1991 and 1994 have been widely credited as the crunch years for Sega’s support in North America. While Sega had gained much respect and dedication from the success of the Genesis/Mega Drive, the way they handled the design, development, and launches of these new devices killed any positive gains. There is no doubt in my mind if Sega had chosen one project and stuck to it, that they would still be making consoles.
Not only that, but communication is paramount to any multi-territory success. The rivalry, distrust and lack of respect between SOJ and SOA contributed to multiple issues regarding how the products were marketed, supplied, manufactured and launched. Securing development contracts for game titles were non-existent and many 3rd party developers made only one or two games at best for these particular systems. I don’t blame them – why would they bother developing for a specific device when within a year there is something better and more powerful to design for?
Price was another thing Sega never seemed to really get the grasp of. Not only did both these peripherals have average price scales over the territories of about US$275, their competitors were always cheaper. Every new console was released with a price tag above cost, and very rarely ever reduced. Sega provided zero confidence in their products, nor did they invest more then a year into quality assurance, R&D, or market polling. They produced products for so called “hardcore gamers”, and basically told everyone else to bugger off.
But the primary issue that I personally think wiped out Sega’s chances of ever succeeding, was in the logic they used while doing all of this. What genius in the higher ranks at Sega decided that there would be multiple, multi million dollar console projects within months of each other? Even in the early nineties it was well known that console don’t make the money, games do. Sega’s problem was simply one of too many ideas, in too little time, spread across too many products. The market simply wasn’t large, or savvy enough to understand Sega’s “vision”.
A metaphorical virus was created within Sega shortly after the 32x was released. That virus quickly spread through both the Saturn and Dreamcast, erecting two more consoles that have both been generally attributed as failures, thus eventually forcing a sick and broke Sega out of the console hardware market altogether. A sad day indeed for many gamers. But a lesson for those companies thinking of replicating a similar situation in the future.
It’s a lesson that many console developers are still yet to learn – that major, costly add-ons just do not work. Their best bet is to concentrate on making the best possible console to begin with, then sitting and focusing on making the most important add-on of all.
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