Console Wars (2015)





A gust of wind rose from the Ujigawa River and reverberated through the night, rattling between the low-lying mountains of the Higashiyama, Kitayama, and Nishiyama ranges. From there, the breeze whispered its way through the tranquil city of Kyoto, weaving between an ornate contrast of Zen gardens and imperial palaces, before crashing into the impenetrable exterior of an unassuming warehouse.

Inside, oblivious to the persistent thumps of wind, an assembly line of Japanese laborers worked through the night. Together they operated with the coordinated chaos of scurrying ants. The laborers had been given strict orders that not a single second could be spared, and as a result, their routine became religion: unload, assemble, test, package, and ship. Over and over they did this, until every single unit of Nintendo’s new gaming console had been sent out for delivery. And while all of this was going on in Kyoto, similarly stealthy efforts were taking place at other warehouses throughout Japan as part of Nintendo’s master plan: Operation Midnight Shipping.

The clandestine nature of these arrangements had been ordered by Nintendo’s president, Hiroshi Yamauchi. While preparing for the launch of the company’s 16-bit Super Family Computer (Super Famicom), he had uncovered rumors that the Yakuza, Japan’s organized crime syndicate, planned to hijack deliveries. Though the organization typically trafficked in drugs, currency, and women, their sudden interest in electronic goods was not completely surprising. Wherever strong demand existed, the Yakuza took the necessary measures to be ready with supply. And in late 1990, when retailers received word from Nintendo that the 16-bit system would be available later that month, demand soared to incredible heights.

On November 3, Osaka’s famous Hankyu department store announced that it would take reservations for the Super Famicom. A week later, they had to stop accepting preorders due to the sheer number of requests. Most retailers didn’t even last that long before changing gears. Some stores set up lottery systems to determine who would be lucky enough to purchase Nintendo’s new product, while others allowed customers to place preorders only if they agreed to buy other products as well. By the end of it all, 1.5 million people had managed to get their names onto the coveted preorder lists.

However, the majority of these chosen ones would be hugely disappointed. In keeping with their controversial tradition of understocking orders, Nintendo planned to ship only 300,000 units, leaving 80 percent of those with reservations out of luck. If Nintendo had completely had its way, however, they wouldn’t have shipped a single unit. Instead, they would have been content to keep selling their 8-bit products. But Sega’s 16-bit system, Kalinske’s plans for change, and rumblings about a top-secret mascot had forced their hand.

Nevertheless, Nintendo was prepared. They had been working on a 16-bit system of their own since the late eighties, and from a technological standpoint they could have had something ready for market by late 1990. But because they had to move faster than expected, there was one issue that could not be rectified in time: backward compatibility.

When Yamauchi had originally tasked his engineers with building Nintendo’s next-generation system, he made several demands related to price, performance, and graphic capabilities. He also insisted that the new hardware should be able to play the old 8-bit software. This was gravely important, because without that compatibility the millions of Nintendo games already purchased would instantly become obsolete, and the parents who had bought those games would become angry and less likely to want to pay for new products from the company that had made them feel that way. The burden of accomplishing all this fell onto the shoulders of engineering wizard Masayuki Uemura and his sixty-five-person team, dubbed R&D 2, who had been responsible for creating the original 8-bit system and the lockout chip that rejected non-Nintendo games.

Uemura’s Super Famicom dazzled on numerous fronts. The new console could generate 32,768 unique colors (the Genesis had 512) and eight channels of audio (the Genesis had six), and it could retail for 25,000 yen (about $250). Yet despite his best efforts, Uemura was unable to incorporate backward compatibility without greatly increasing the price (by about $75). Yamauchi discussed this issue with his son-in-law, Minoru Arakawa, who harbored plans to soon release a U.S. version of the system. Arakawa pointed out that compact discs had recently begun to replace cassette tapes and vinyl records without causing much of a stir. Perhaps modern consumers were becoming savvy enough to realize that new technology tended to make previous iterations obsolete. They concluded that Nintendo was strong enough to deal with the possible backlash and couldn’t afford to hold off on a 16-bit system any longer.

To placate the possibility of angry parents, they wanted to make sure they had an “it” game for the new endeavor. Naturally, they decided that their new supersystem deserved a new Super Mario Bros. game. This, however, resulted in another problem. Shigeru Miyamoto, the visionary game designer behind the Mario, Zelda, and Donkey Kong franchises, was still in the process of learning the limits, benefits, and nuances of 16-bit technology when he was asked to rush the completion of his new game, Super Mario 4 (later retitled Super Mario World). He was proud of his latest iteration—the new costumes, the clever foes, and the bright, beautiful new worlds—but the perfectionist within him worried that it felt too similar to the previous Mario games. By this point, however, there was no turning back. Nintendo was moving full steam ahead, ready to enter the battle for 16 bits.

Somewhere in Kyoto, another mighty gust of wind roared past a nondescript warehouse, signaling that sooner or later a storm would be coming.

Two days later, Tom Kalinske sat in his office, reviewing the latest screenshots from Sonic The Hedgehog. The game was coming together beautifully, each level more exciting, energetic, and exotic than the last. It wouldn’t be ready for six months, but Kalinske viewed this as a good thing, as Sega could use the time wisely. He and Nilsen had decided that they would not do the expected and hype the hedgehog every step of the way. Instead, they were intent on keeping their secret weapon a secret. There would be no game demos sent out in advance, no early print or television advertisements, and no information given to the press. Then, as the mystery of Sonic spurred curiosity, Sega would “leak” screenshots or character art as the release date approached. Kalinske knew it would be hard to keep Sonic under wraps (especially with Sega of Japan’s habit of revealing confidential information toward the end of financial quarters), but this seemed like the best strategy for unleashing the wonder that was Sonic.

“It’s here,” Toyoda said, poking his head into Kalinske’s office.

Kalinske glanced up, noticing that Toyoda looked distinctly excited and nervous. “What’s here?” he asked.

It,” Toyoda said, nodding. “It’s here.”

Seconds later, Kalinske realized what had arrived. “Bring it to the conference room,” he said, standing up. “I’ll go ahead and gather the troops.”

Toyoda nodded briskly and shuffled off. For a moment Kalinske didn’t move, embracing the anticipation. After the magnitude of the moment fully hit him, he sprang into action and zigzagged through the office to collect everyone who was interested in seeing Nintendo’s Super Famicom. Of the 300,000 consoles that were delivered through Yamauchi’s Operation Midnight Shipping, Sega of Japan had somehow managed to get hold of two of them. They kept one for themselves and sent the other to Sega of America so that Kalinske and company could see the face of their enemy.

Sega had been positioning themselves against the NES, but Kalinske had always known that the real war, the one that mattered, would come once Nintendo released their 16-bit system. He didn’t yet know when that would occur in America, but if history was any indication, Nintendo of America would probably go to market with its 16-bit system a little less than a year after Nintendo’s Japanese parent. If that was Nintendo’s strategy here, then their new console would hit stores in the fall of 1991.

Kalinske very much hoped that was the case, as it would play right into his hands. Not only would it give him at least nine months of lead time to counteract Nintendo’s haymaker, but it would give Sega enough time to properly tease the public about Sonic, build buzz, and then release him from his cage at a time when he could do the most possible damage. Please, Kalinske thought, please be so foolish as to hold off for a year. Give us more time to learn your weaknesses, more time to acquire space on store shelves, and more time to work our way into the minds of consumers. Of course, all this wishful thinking was predicated on Nintendo’s 16-bit system being something Sega could even compete with. Luckily, Kalinske was about to find out once and for all what he was really up against.

“Isn’t this exciting?” Schroeder asked, gathering around the table with the rest of her eager coworkers. “I’ve got butterflies.”

“Let’s not make too big a deal out of this,” Kalinske said, but a moment later he broke into a grin. “Well, now that I’ve got my cautionary-boss moment out of the way, let’s see what we’ve got.”

Almost as if on cue, Toyoda entered the conference room. He was carrying a gray box whose cover featured a colorfully drawn silhouette of the Super Famicom and two controllers.

“Kind of looks like something a kid with chalk might draw at recess,” Nilsen said.

Toyoda opened the box and dutifully laid its contents on the table, prompting the Sega employees to breathlessly lean in like doctors carefully observing a cutting-edge surgery. The lively picture on the cover was a sharp contrast to the dull, boxy system itself.

“It is just me,” Schroeder asked, “or does anyone else think that if this machine could talk, it would ask to be put out of its misery?”

As everyone chuckled, Kalinske picked up one of the two identical controllers. “These are real nice, though,” he said. They were indeed; soft, sleek, and popping with colorful buttons in blue, red, yellow, and green.

“Look, they have a fourth button,” Toyoda said, referring to the fact that the Genesis only had three.

Nilsen took the controller from Kalinske. “Wait,” he said, feeling grooves atop the controller. “I think they’ve hid a couple more buttons up here. They’ve got them hidden everywhere.”

“Who cares?” Kalinske said. “Let’s get past the superficial and fire this up. Al, will you do the honors?”

“Sure thing,” Nilsen said, scooping up the system and bringing it over to the television to hook it up. He was Sega’s resident AV guy, often joking that if the whole marketing thing didn’t work out, he’d always have a job setting up games, movies, and presentations. “We’re all set,” Nilsen said, attaching the last wire. “Just need a game.”

Kalinske handed Nilsen a gray cartridge containing Super Mario World. But just as Nilsen was about to insert it, he paused dramatically.

“What’s wrong?” Kalinske asked. “Another hidden button?”

“No,” Nilsen said, holding up the bottom of the cartridge. “Look. There’s no way any of the old games will work on this new system.”

“Maybe they have some kind of converter,” Kalinske suggested.

“Very possible,” Rioux said. “Like we have for Master System games.”

Nilsen shrugged and inserted the game. “Maybe. But if I had to guess, I’d say that Nintendo just hurt themselves way more than anything we ever could have done to them. Arrogance, after all—” Nilsen cut himself off when the game’s title flashed across the screen.

Sega employees silently watched as Nilsen played through the first level. The first thing that struck everyone was that while Sonic was brilliantly fast, Mario was obliviously slow. Sonic was chaotically determined, Mario was peacefully subdued. But, most important, Sonic was something new and Mario was, strangely and amazingly, just more of the same.

As if proving this point, a bubbly jingle played as 16-bit Mario’s face turned embarrassingly red and he died onscreen. Nilsen had been unable to guide the titular character away from the wrath of a slow but determined turtle wearing a football helmet.

In the wake of the red plumber’s death, Kalinske finally broke the silence. “Hey, Al, do you have any plans for this upcoming weekend?”

“Uh, no. Not yet.” Nilsen said, this time successfully avoiding the charging turtle in the football helmet. “Why?”

“How would you like to go on a date?”

Nilsen paused the game. “With . . . ?”

Kalinske pointed to the Super Famicom. “Nintendo, of course. Take this thing home, play through more of the game, and make sure there are no surprises. If the controllers have hidden buttons, who’s to say that the game doesn’t have a few tricks up its sleeve? What do you say?”

“Sure thing. I’d be happy to put the moves on Mario,” Nilsen said, a smile crinkling across his face. “Just make sure this doesn’t get back to the princess.”