Console Wars (2015)

PART TWO

SONIC VS. MARIO

17.

SHOWDOWN

It really was quite lovely, this Super Nintendo device. And durable too, thought Olaf Olafsson as his fingers danced atop the machine’s pale gray exterior. Of the hundreds of people who had shown up for the great unveiling of the Super Nintendo at the 1991 summer CES at Chicago’s McCormick Place, it was safe to say that Olafsson was the only one pedantically focused on aesthetics. The rest were there to see the games, the graphics, and the next five years of their lives begin to take shape. That’s why, by eight in the morning, hundreds had already arrived and thousands more were on their way. The wait was finally over.

Having satisfied his curiosity, Olafsson moved through Nintendo’s massive booth. No, “booth” wasn’t the proper word. Their display was more like a towering black fortress that had erupted out of the gray-carpeted floor; at least five times the size and twice the height of any other videogame company’s booth. The height not only enhanced Nintendo’s prominence but also blocked out the sharp halogen lighting above. As a result, the shade, the black color scheme, and the dark floor all served to masterfully highlight the bright, bouncing colors of their videogames.

It struck Olafsson as both odd and impressive that Nintendo had so ably managed to balance the dark with the light. Not just today, but in general. To suit their needs, Nintendo expertly toggled between coming across as a fun-loving toy company and presenting themselves as a gravely serious tech firm. While it was hardly unusual for an organization to wear two faces, it was rare for one to go so long without having to choose one path or another. But then again, there was no competitor out there who could force Nintendo’s hand.

Olafsson checked his watch and realized it was time to go. Nintendo’s press conference would begin shortly, and it was important that he be there. He adjusted his tie and moved against a strong current of smiling faces funneling in. Normally he was immune to such infectious excitement, but the grin on his face revealed that today was a special occasion.

Less than twenty-four hours earlier, Olafsson had given a press conference of his own, in which he announced that Sony would be getting into the hardware business. The journalists were immediately intrigued by the prospect of Sony competing against Nintendo—two giant Japanese firms going head-to-head. He could already imagine the overly dramatic articles that would be published, filled with comparisons to battles between Godzilla and Mothra. But actually it was the opposite: Sony was going into business with Nintendo.

In late 1992, Sony would be releasing the Nintendo PlayStation, which would be a peripheral device that attached to the Super Nintendo and play games on CD. At this time, it was generally understood by both experts and laypeople that CDs would soon become the standard delivery mechanism for all entertainment: music, movies, and videogames. It just made too much sense. A CD could hold ten times as much information as a 16-bit game cartridge at one-tenth of the price. Perhaps there was a whimsical charm to game cartridges, but this was a matter of technological Darwinism. And Sony was thrilled to be evolving with Nintendo.

The alliance was fantastic in so many ways. Working with Nintendo gave Sony clout in the videogame space. The creative relationship would ensure that the PlayStation had top-level games (which was especially key because Sony’s software publisher, Imagesoft, was still struggling on that front). And last but certainly not least, this could be a financial windfall. Not only would Sony make money on each PlayStation sold, but just like Nintendo (and Sega) they would get to play the role of toll collector and collect fees from software companies who wanted to create games for their CD-shaped roads.

Olafsson’s announcement yesterday had created a stir, but not nearly the whirlwind that he anticipated after Nintendo did the same at their press conference. After all, a proclamation from the king carried more weight than one from the noble prince. And as Olafsson took a seat in the front row of the conference room at McCormick Place, he eagerly awaited being handed the keys to the kingdom.

As per usual, Nintendo’s press conference was packed. This one, however, carried an extra flair of excitement and felt like the beginning of a grand new era. Olafsson was unsure who the speaker would be. Typically, that honor would go to the president, in this case Minoru Arakawa, but he didn’t enjoy speaking in public. Instead, Nintendo’s official proclamations were made by either Peter Main or Howard Lincoln. Olafsson was curious how they decided who would speak at which occasion, and he made a mental note to explore this in future meetings.

At 9:00 a.m. Lincoln stepped to the podium. He welcomed the audience, invited them to check out Nintendo’s booth after the speech, and then spoke at length about the Super NES, which would hit stores on August 23, 1991. All systems would come with the groundbreaking new Super Mario World game, while four others would immediately be available for purchase: F-Zero, Pilotwings, Gradius III, and SimCity. Their library would quickly grow, with eighteen games available by Christmas.

Lincoln confirmed that, as with the Super Famicom, there would be no backward compatibility and the 16-bit Super NES couldn’t play 8-bit NES games. Sensing a degree of dissatisfaction, he quickly assured everyone that Nintendo was still very much committed to supporting the 8-bit system. He expected at least forty new 8-bit games in the second half of 1991, though obviously the company’s focus would shift to the more advanced Super Nintendo. Based on the perpetual sold-out situation in Japan, Nintendo had nothing but the highest of expectations. They estimated selling two million units by the end of the year, and already anticipated shortages during the Christmas season. Blah, blah, blah, Olafsson thought. Hand out a memo, smile for the camera, and let’s move on to more important matters. Everyone already knows what you’re about to say: Sony + Nintendo = CD-ROMance.

“Compact discs will play a key role in Nintendo’s vision for the future,” Lincoln finally announced, now ready to reveal the plans for Nintendo’s new CD unit. Olafsson stirred in his seat as the crowning moment inched closer. “And who better to partner with than the company that invented the audio compact disc: Philips Electronics.”

Wait, what? A tremor of shock and confusion swept through the room as journalists raced to take note that Lincoln had said Philips and not Sony. After Lincoln said it again, confirming that his words were not a slip-up, all eyes turned to Olaf Olafsson, who tilted his head and furrowed his brow. Was he shocked, appalled, furious?

In truth, he was none of those things. He was merely plotting his next move.

“Did he just say Philips?” Nilsen whispered to Kalinske as both men stood in the back of the room. “As in not Sony?”

“It would appear that way,” Kalinske whispered back, speaking a little louder than he intended due to the unexpected smile on his face.

Kalinske kept his eyes fixed on Olafsson. He didn’t personally know Sony’s president of electronic publishing, but he was impressed by the man’s reaction, which showed class, tact, and diplomacy. In fact, by the time Lincoln concluded his press conference, Kalinske could have sworn he detected a hint of amusement in Olafsson. He wanted to go over and introduce himself, but realized that it wasn’t the right time. Reporters were swarming around Olafsson, looking for an emotionally charged quote, and Kalinske and Nilsen should have returned to Sega’s booth fifteen minutes ago.

What neither of them knew was that only a few weeks earlier, Arakawa and Lincoln had flown to the Philips world headquarters in Eindhoven, Netherlands, for a meeting with Gaston Bastiaens, head of the Compact Disc Interactive (CD-I) group. The Nintendo executives had traveled there at the behest of Yamauchi, who was growing concerned about an alliance with Sony. He had realized that the deal he signed in 1988 gave Sony the right to control software for a joint CD venture. This detail hadn’t appeared to be a problem back then, when Sony was exclusively a consumer electronics company, makers of televisions, stereos, and music devices like the Walkman and MiniDisc player. But with their acquisition of CBS Records and Columbia/TriStar films and now the creation of an electronic publishing group, they were growing too ambitious for Yamauchi’s tastes. Sony was already the supplier of the key audio chip in Nintendo’s 16-bit console, and he didn’t want to enter any alliance that would grant Sony any additional power.

This change of heart led Nintendo to go behind Sony’s back and sign a deal with Philips. As per their arrangement, Philips would create a CD-ROM drive that hooked up to the Super Nintendo to play games on CD. Additionally, the CD titles that Nintendo created would be compatible with Philips’s CD-I players. Naturally, Nintendo would control the licensing rights to all CD games regardless of which system they wound up being used on. Because Japanese contracts tended to be succinct, with a large reliance on good faith, Yamauchi felt that he could break the contract and ditch Sony without penalty. He also decided not to inform Sony of his side deal with Philips, to ensure that Sony’s humiliation was made public.

Although nearly every journalist was now locked on Olafsson, a reporter from Fortune swam against the current and ambled over to Kalinske and Nilsen in the back of the room. “How about this for a headline?” the reporter asked by way of an introduction. “Sega Execs Crash Nintendo Press Conference: Leave Cowering in Fear.”

“Well, well, well,” Nilsen said. “If it isn’t Nintendo’s biggest fan?”

The reporter blushed. “Nonsense. I worship at the altar of journalistic integrity.”

“Well, what can we help you with?” Kalinske asked.

The reporter looked at Nilsen with a glint of gloat in his eyes. “The Super Nintendo features 32,768 colors, 256 of which can appear on-screen at the same time, eight highly sophisticated sound channels, and a clock rate of 3.58 megahertz. How does Sega plan to compete with this?”

Kalinske raised an eyebrow. “Journalistic integrity, eh?”

“Hey,” the reporter said with a smirk, “these are just the facts.”

“Follow us,” Nilsen said.

The reporter reluctantly followed Kalinske and Nilsen under a golden “Seal of Quality” and into Sega’s booth. Like Nintendo, their color scheme was black on black, but that was all they had in common. Sega’s setup, bathed in sunlight, exuded an elegantly zany joie de vivre. There were bright colors blinking everywhere, upbeat music throughout, and a giant blue hedgehog standing by the entrance to greet guests as they entered. Sega did a good job of positioning themselves as the offbeat alternative to Nintendo’s autocratic reign, but that alone didn’t make their booth spectacular. Any mutt trying to out-bark the top dog would have done the same. What Sega did that no other company would have dared to do was acknowledge that it was a dog-eat-dog world.

At the heart of their booth was a television displaying highlights from Super Mario World. Directly below it was a television showing off Sonic The Hedgehog. In an industry where Nintendo coated the ground in eggshells and cautioned all to walk slowly, Sega was going head-to-head at full speed. The differences between the two games were self-evident: Sonic ran laps around Mario. The Super Nintendo was still three months away from being released, and already it looked extinct.

“Nintendo may have 32,768 colors,” Nilsen said to the now speechless reporter, “but I think it’s safe to say that Mario literally pales in comparison.”

After considering several creative ways to meet Kalinske’s challenge to prove that Sega had the better game, Nilsen had hired a team of researchers and set up play tests around the country, where boys and girls were brought in to play Super Mario World and Sonic The Hedgehog and decide which was the better game. Since Sonic had been kept under wraps and the Super Nintendo had not yet been released, none of those involved in the experiment had had any experience with either game, though of course most already knew of Mario from previous games. And that’s exactly what Nilsen wanted. He specified to the researchers that 90 percent of the subjects should be NES owners and at least 75 percent had to consider one of the Mario titles to be their favorite game. He wanted to stack the deck so that the results of these experiments didn’t merely tell him what he wanted to hear but would prove to Kalinske that, beyond any shadow of a doubt, they had a winner. By the end, 80 percent chose Sonic.

“So what do you think?” Kalinske asked.

“It’s great,” the reporter conceded. “But devil’s advocate: it’s just one game.”

“So young, so naive,” Nilsen said, walking him through the rest of the booth. Sonic was certainly their best game, but it was only one of many. The various displays showed off other titles that would be released later that year, like Mario Lemieux Hockey, ToeJam and Earl, and Quackshot Starring Donald Duck. Sega’s already bountiful library of games appeared even more impressive beside those from Electronic Arts, which had been churning out hit after hit exclusively for Sega. The unusual romance between EA and Sega turned out to be a godsend for both companies; amazingly, Joe Montana Football had not only wound up being a megahit, but was in some weeks even outselling the Madden game it had been derived from.

“But don’t just take my word for it,” Nilsen said, pulling out a brochure called The Nintendo Guide to Choosing a Videogame System. “Listen to my very intelligent competitor, who specifically suggests buying the console that has the most games. So I encourage everyone to take Nintendo’s advice and buy the Sega Genesis.”

Over the next few hours, word began to spread. As Nilsen read passages from Nintendo’s brochure with near-religious conviction, visitors came from across the trade floor to witness Sega’s coronation. They wanted to see the charming blue hedgehog, get a look at the 16-bit system that cost $50 less than the Super NES, and see what else was on the horizon from the company that had stolen at least some of Nintendo’s thunder.

Like a baseball team whose pitcher was throwing a no-hitter, the Sega employees tried not to talk about what they were witnessing, to keep it all business as usual. But they had waited so long for this to happen, never being sure that it actually would, that many were guilty of a private smile, fist pump, or high-five from time to time.

It was Kalinske’s job to act like this was exactly what he had always expected, but even he couldn’t hide the hints of laughter on his face. Feeling good, he walked tall to the reception area at the center of Nintendo’s booth, where he asked to speak with Arakawa. Not to gloat, but to show his opponent that he meant no disrespect. Unfortunately, he was deprived of a friendly all’s-fair-in-love-and-war conversation due to Arakawa’s busy schedule.

“Is he available sometime later today?” Kalinske asked hopefully.

“Um, no, he’s booked solid,” the receptionist said, knowing exactly who he was. “Sorry.”

Kalinske tried for the next day, the day after, two months from now in Seattle. No, sorry, Mr. Arakawa was a very busy man. Kalinske nodded, realizing who and what he was actually up against. He thanked the receptionist and looked around Nintendo’s colossal booth, scanning for Arakawa. He had to be there somewhere, lurking amongst the consumers who had excitedly come out to get their first look the perhaps-not-so-super Super Nintendo.

Eventually Kalinske gave up and walked away. As he moved past Nintendo’s already obsolete monument to itself, he had the wonderful revelation that Sega actually, legitimately, inconceivably stood a fighting chance. Hide behind those consumers while you can, Kalinske thought, because sooner or later I’m going to steal them all.