Console Wars (2015)





While Sega was preparing for the next level, and Nintendo seemed to finally be adjusting to this one, Sony was trying to decide if they even wanted to be in the game. To figure this out once and for all, Sony held a pivotal management meeting at their Japanese headquarters on June 24, 1992.

From the outset, it was quite clear that Sony’s board of directors wanted nothing to do with developing a console. The R&D costs of creating proprietary hardware were astronomical, and the long development cycles would create an endless money pit. More abstractly, the videogame business was little more than an offshoot of the fad-driven toy industry, and that just did not fit with Sony’s brand. The software, however, was a different matter, and the board was okay with this less risky endeavor. In the same way that Sony’s Columbia Pictures made movies and CBS Records distributed music, Olafsson’s software division would be permitted to keep producing games. In fact, the board had just recently allowed him to work with Sega in this arena. Was software not enough? Why this continued fixation on hardware? If Nintendo were involved, things might be different, but following last year’s public humiliation at the Consumer Electronics Show and some recent failed attempts to test those waters once more, that prospect looked highly unlikely. Given all of these factors, plus the aging board of directors’ you-will-understand-when-you-grow-up sensibility, they believed it was time to put Sony’s PlayStation to rest.

Judging by the many nods of support, this sentiment appeared to be unanimous. These powerful men who once upon a time had shaped Japanese culture, back in the 1960s, ’70s, and ’80s, were now all ominously agreeing like a fleet of bobblehead dolls in the trunk of a car headed off a steep cliff. Needless to say, not everyone agreed with Sony’s elder statesmen, but nobody in that boardroom disagreed with them more than Ken Kutaragi, the father whose baby the board of directors intended to kill.

Ken Kutaragi was one of Sony’s top engineers, a sharply charismatic forty-one-year-old man with a proclivity for aggressively questioning authority. This was a rare quality in Japanese culture, one not generally welcomed at large corporations, but Kutaragi’s defiant spirit had served the company well in the past and was the primary reason that Sony was even considering videogames in the future. Originally they’d had no interest in videogames (not just consoles, but even manufacturing parts for Nintendo), and neither had Kutaragi. He was not a gamer by nature, but his interest in the art form changed in 1988 when watching his daughter play the 8-bit Famicom. It wasn’t so much what he saw on the screen, but the potential he saw for videogames: a way to bring computers out of the office and into the living room. Or more specifically, what he saw as a Sony employee: the mainstream consumer electronics appeal of vast computing power.

Although this revelation changed Kutaragi’s perspective, it had not persuaded most of Sony’s executives, and this frustrated him. But instead of pleading his case to deaf ears, he decided to do something much more proactive. He knew that Nintendo was in the late stages of developing a 16-bit console, and he also knew that they were worried about the sound capabilities of Sega’s soon-to-be-released Mega Drive. Sega had worked with Yamaha to create an advanced audio processor capable of FM synthesis, which led Nintendo to Sony in the hopes of finding something superior. Sony’s executives, however, did not want to gamble on manufacturing videogame components and balked at the opportunity. Or so they thought. Without their knowledge, Kutaragi continued the conversation with Nintendo and developed an audio chip called the SPC700. When Kutaragi revealed his secret project, Nintendo’s designers were thrilled. This was exactly what they had been searching for. Sony’s top executives, however, were much less enthusiastic and wanted Kutaragi fired, which likely would have happened if he had not been protected by Sony’s chairman, Norio Ohga. As angry as the executives were about the defiance, they weren’t angry enough to start a civil war. And those tempers soon softened even more when Sony received a lucrative contract for Kutaragi’s sound chip. Kutaragi had gambled and, amazingly, had won. But more important, his win was really a win for Sony, and this propelled the company to reexamine the videogame industry. If there was this much money to be made with an audio chip, imagine how much could be made with an entire console. This was the logic that had guided Sony into working with Nintendo, first as a supplier for the Super Famicom and then as a partner on the PlayStation. But that logic spontaneously combusted when Nintendo snubbed Sony for Philips.

Now everything was in limbo. That’s why this boardroom was overwhelmed with so much frustration. There had been a brief window when these executives could see the potential in what Kutaragi had shown them, but now they were blind to that promise. And as Kutaragi watched this supposed discussion of possibilities evolve into a monologue of foregone conclusions, he realized he could wait no longer to try to open their eyes.

“Having listened to what everyone is saying,” Kutaragi began, addressing Sony’s board of directors, “I can see three options. First, to continue indefinitely with the traditional, Nintendo-compatible 16-bit game machines. Second, to sell game machines in a format proprietary to Sony. Third, to retreat from the market.” Kutaragi paused for a moment to let it all sink in. “Personally, I believe Sony should choose the second option.”

The board members looked at him with suspicion. Of course he believed they should choose the second option. This was not news; this was how he had always felt.

Kutaragi knew that his words alone would indeed not be enough to change anyone’s mind. That was why he had come prepared with something more than words. Kutaragi looked around the room and smiled with anticipation. As he had done with the Super Nintendo audio chip, he had once again been working in secret, and finally the time had come to reveal what he had been working on.