Console Wars (2015)

PART TWO

SONIC VS. MARIO

16.

ROPE-A-DOPE

“Whenever you’re at war, you must hit the other guy in the mouth as hard as you can with the first punch,” Rioux explained to Kalinske and Toyoda as they plotted Sega’s strategy for the upcoming Consumer Electronics Show. “And if you can’t hit ’em hard, you might as well not even fight. That’s the attitude in real war, and that ought to be our attitude here as well.”

Every year there were two Consumer Electronics Shows (CES): the winter show in Vegas and the summer show in Chicago. In the fragmented, ever-evolving videogame industry, which had more in common with the Wild West than, say, with Silicon Valley or Wall Street, the CES provided one of the few opportunities for all the players to come together. The events tended to be little more than each company pounding its own chest, but they were still a big deal. It was where hype began, reputations were made, and scuffles occasionally took place.

This would be Kalinske’s first CES, and he wanted to come out with guns blazing, especially in light of Sega’s progress (or lack thereof) with Wal-Mart. It had been nearly a month since Sega rented the retail space in Arkansas, and Wal-Mart hadn’t even flinched. Instead of relenting, however, Kalinske doubled down. As per the fantasy he had envisioned with Toyoda, they sent his executive assistant, Deb Hart, down to Bentonville with the mission of bringing Segaville to life. She bought up every available billboard in town, handed out flyers on the streets, and arranged for every seat cushion at the University of Arkansas football team’s final home game of the season to bear Sega’s logo. Hart had done an incredible job, but all of this was becoming a costly gamble. With no results to show thus far, Kalinske was tempted to compensate by making a splash at CES, but he was compelled by the point that Rioux had made. “If we’re being honest with ourselves,” Kalinske said, “we just don’t have the firepower yet to start going at Nintendo. So perhaps a little rope-a-dope is in order?”

Rioux nodded, but Toyoda didn’t understand the reference. So Kalinske explained how in 1974 Muhammad Ali squared off against George Foreman for a title fight in Zaire that had been dubbed “The Rumble in the Jungle.” At the time, Foreman was bigger and stronger and packed a more powerful punch than Ali, who realized his only hope was to find a clever solution. Ali’s plan was to spend the early rounds getting physically abused until finally Foreman tired himself out. For most of the fight, Ali verbally taunted Foreman and then stood in a protective stance, absorbing punch after punch. For four rounds Foreman dominated, but eventually he started to grow tired. When the fifth round began, Ali took advantage of his weakened opponent and demolished him with a series of jabs. Three rounds later, Ali knocked out Foreman, regained the title belt, and went down in history as a tactical genius.

“Ah,” Toyoda said. “Like playing the possum?”

“Exactly,” Kalinske confirmed. “I’m not saying we take a dive, but we want to go at Nintendo right before they launch in America. There’s no point in building momentum now only to lose it. We should tease with Sonic, but show no gameplay, go heavy on Game Gear, and hold back on the rest until this summer.”

Kalinske looked to Toyoda, who nodded, and then to Rioux, whose face always seemed to be made of stone. “Paul?”

“What can I say?” Rioux asked rhetorically, as a grin chiseled across his face. “Float like a butterfly and sting like a bee.”

A few weeks later, Kalinske checked into his room at the Alexis Park Hotel in Las Vegas, where he and about twenty Sega employees were staying for CES. Following the decision to play things close to the vest, he had arrived in Vegas with low expectations. Even so, it didn’t take long for things to spin out of control.

Sega began the week by hosting a preshow sales meeting for retailers where nothing at all seemed to work. Demos didn’t play, art designs got mixed up, and the AV system kept breaking down (not even Nilsen could fix it). Kalinske had known that their strategy for CES would make things challenging, but this felt like amateur hour. He had never experienced anything like this at Mattel, and worst of all, this failure was on his shoulders. If Sega’s people weren’t properly prepared, then it was because he had failed to prepare them. As president and CEO, he would always get more credit than he deserved, and even more so always get more of the blame. That’s just how it worked.

In the face of calamity, he tried to rescue Sega’s reputation at the podium. He didn’t get the overwhelming reaction he was used to, and on one occasion he was even tempted to whip out the demo of Sonic and talk about how things would be changing, as outlined in his “Four-Point Plan.” But as temping as it was to push the big red panic button, he knew that was not really an option.

Following the preshow miscues, the first day of CES didn’t provide much of an improvement. While televisions, stereos, and VCRs were magnificently displayed in the dazzling Las Vegas Convention Center, the videogame companies were treated like second-class citizens and relegated to a tent outside. Inside of it, there were about a hundred different videogame companies who had booths to show off their products. They ranged in size from tiny to Nintendo, who clearly dominated the festivities with an upscale display of games and peripherals that was so large there was enough room to comfortably fit a stage in the middle. By the end of the show, attendees had taken to calling the Nintendo display the “Death Star.”

Because of the decision to hold back on hyping some of their upcoming games until the summer, Sega’s modest booth focused primarily on the Game Gear, a slightly sleeker, Americanized version of the handheld device from Japan. Kalinske, Rioux, and Toyoda all liked putting the spotlight on Game Gear, though each for different reasons. Kalinske figured this would make for a good opportunity to temporarily deemphasize the Genesis but still manage to further define Sega as edgy, unconventional, and technologically advanced. Rioux thought very highly of portable game systems and believed deep down that this business would one day overtake home consoles. And Toyoda knew that the Japan executives loved showing off hardware more than software, so they would be happy to see so much attention paid to Game Gear.

At its core, Game Gear appeared to be an easy sell: it was the color version of Nintendo’s Game Boy. Color TV trounced black-and-white broadcasts, so Game Gear should quickly take its place atop the handheld food chain. While on paper that was true, there were a few hitches to this thinking: Atari’s recently released color handheld, Lynx, had gotten crushed; the battery life on Game Gear was lousy; and their best game for it was an obvious and inferior Tetris ripoff. Beyond Game Gear, Sega’s only other gaudy product was the Joe Montana football game that had been rescued by EA. Although they hadn’t been able to get it ready in time for the Christmas season, it had actually turned out to be a pretty great game and would at least give Sega some momentum heading into the new year (that is, as long as consumers didn’t realize it was basically just a repackaged version of EA’s John Madden Football).

While Sega’s employees put the final touches on their booth, Kalinske excused himself to catch an 8:00 a.m. press conference by Nintendo. Though CES wasn’t yet open to the public, the press conference was heavily attended, partly because the speech would serve as the unofficial kickoff to the show, but primarily because anything Nintendo said or did was a huge deal. As a result, Kalinske had to stand in the back of the room, behind journalists, financial analysts, and Nintendo’s many fans within the electronics industry.

He tried not to admit it to himself, but he missed the whirlwind atmosphere that was so evident in Nintendo’s press conference and which he remembered from his time at Mattel: the thrill of anticipation, the curiosity in the air, and of course the applause, which came quickly and reached thunderous levels when Peter Main, Nintendo of America’s VP of sales and marketing, stepped to the podium. Main, a balding man with bewitching brown eyes and round, Lennon-like spectacles, nonchalantly quieted the crowd and introduced himself. “There are many great things on the horizon that I’m excited to tell you about,” Main said, jumping right in. Like Kalinske, Main was an excellent speaker, but in a very different kind of way. When Kalinske spoke, it was as though he transported audiences into a locker room for a pep talk, and when Main spoke, it was as though he transported audiences into a pub for a quick swig. They were the coach and the bartender.

After touting the Super Famicom’s success in Japan, Main nonchalantly answered the question on everyone’s mind by announcing that Nintendo would release a 16-bit system in America toward the end of the year. He then said that Nintendo had posted another record year in 1990; with 7.2 million Nintendo Entertainment Systems sold and millions of software titles, sales in the United States topped $3.4 billion. Yet despite the staggering figures, Main acknowledged that Nintendo had fallen short of analysts’ expectations. “We weren’t far off the mark,” he explained. “What none of us could forecast back in June was the war in the Gulf, the economic volatility resulting from the current recession, and the combined impact of these two external forces.” Kalinske took a moment to savor the irony in Main’s blaming the conflict in the Middle East for disappointing sales figures, given that journalists had started referring to the Gulf War as the “first Nintendo war” for its videogame-like coverage.

Main nimbly navigated through the financial data and then spoke about Nintendo’s bold plans to increase their already large pop-culture footprint. The company’s after-school cartoon had been so gigantically successfully (with over forty million viewers per week) that Nintendo was already in development to make a big-budget Super Mario Bros. movie, slated for 1992. After Main finished speaking about Nintendo’s unyielding expansion, he segued into answering questions from the audience. One of the first asked if Nintendo was trying to become the next Disney, and if they would soon have their own line of theme parks. Peter Main, who believed that the sky was the limit, didn’t dismiss this possibility. “The value of characters like Mario is very strong,” he said. “And as we go down the road, you’re going to see many applications.”

Kalinske, who couldn’t help imagining his daughters begging him to take them to Nintendoland, had heard enough. He left the press conference and, after giving a pep talk to the Sega employees, spent the rest of the day wheeling and dealing at various booths across the show. When he had a free moment he’d watch visitors roam through Sega’s home base. Each time someone snickered at their underwhelming roster of games, shrugged, or referred to Columns as a “retarded version of Tetris,” Kalinske felt like he’d been punched in the gut. But by the end of the day he was still standing tall and ready to fight—just like Muhammad Ali.

That night, Nintendo relished the role of top gun and threw a glitzy party headlined by a performance from singer Kenny Loggins. After a lavish evening of dancing and drinking, Peter Main once again took the stage to address an eager audience. This time, though, in the comfort of being among colleagues, his words were as smooth, sleek, and casual as the black silk Nintendo jacket he donned for the occasion. Main was joined onstage by Howard Lincoln, who festively wore a spike collar and neon glow sticks around his neck. Celebratory glitter coated the heads of both men. They took turns speaking into the microphone to express gratitude, make jokes, and give away prizes (including a Chevrolet Geo to the winner of Nintendo’s Campus Challenge). Afterward they called up to the stage their boss, Minoru Arakawa, whose fashionably teased hair and oversized fluorescent glasses signified that his typically reserved demeanor was on hold for the evening. As the DJ played the Hollywood Argyles’ hit “Alley Oop,” Main, Lincoln, and Arakawa launched into a song and dance. The roaring applause for these three giddy, gleeful, and uncoordinated middle-aged men was proof of what everyone in the room already believed: Nintendo was invincible.

Meanwhile, down the road, Kalinske took his team out for dinner and drinks at an Italian restaurant in a strip mall near their hotel. Sensing a bit of disappointment amongst the troops, he tried his best to play the role of Mr. Bright Side. He lifted a cheap glass of pinot noir and addressed the two dozen Sega employees squeezed around a pair of large, circular tables in the back of the restaurant. “Ladies and gentlemen of Sega,” Kalinske said, “I want to personally thank everyone for all your hard work. And I don’t just mean for this week, but for all the months of effort that have gone into molding Sega into what we are today.”

“And what are we?” an employee heckled. “Nintendo’s chew toy?”

The room filled with good-natured laughter, Kalinske’s included. “Nah, too ambitious,” he said. “Dogs actually acknowledge their chew toys.” More laughter ensued. “Hey, I will be the first to admit that this wasn’t Sega’s finest hour, but let me tell you, our time is coming. And it’s right around the corner. Six months from now, at summer CES, Nintendo won’t know what hit them.” A flood of applause swept the tables. “On that note, I wanted to inform you all that I managed to catch part of Peter Main’s speech today, and he said two things that got me really excited. The first was that Nintendo had another record year of sales in 1990 but had fallen just short of expectations. Can you believe that? They had a record year, doing over $3 billion in sales, and that wasn’t good enough!” Kalinske went on to explain that Nintendo was a victim of the worst enemy of all: high expectations. This was a burden Sega didn’t have to carry. They were underdogs through and through, and this was their greatest advantage. “We have nothing to lose,” he said. “And that’s how we’re going to win.”

After a chorus of cheers, Nilsen asked about the other thing Main had said.

“Oh, right. The other thing is that Nintendo is planning a big-budget feature-length movie around the Mario Brothers. And everyone knows that when Hollywood gets involved in anything, things get needlessly complicated,” Kalinske said with a smirk. “Anyway, my hand is getting tired of holding this wineglass, which means that I’ve been going on for way too long. So let me just say congratulations to all of us for surviving the Consumer Electronics Show. Cheers!”

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

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

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

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

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

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

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

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

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

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

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

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

“I told you!” Bowen said.

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

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

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

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