Console Wars (2015)





What the heck was wrong with Sega of Japan?

Seriously, what was it about those guys? Was it that they compulsively marched to the beat of their own drum? Or, like a petulant child, did they just like banging on drums and then smiling at the cacophony? There was something going on there, something ominously bizarre, but Tom Kalinske couldn’t put his finger on it, and right now he didn’t have the time to sleuth around and solve the mystery. It was November 24, 1992, Sonic 2sday had finally arrived, and like Santa Claus on Christmas, he needed to stay jolly in order to bring good around the world. And there was no better place to spread this message of joy than from the place that most resembled Santa’s workshop south of the North Pole: the mammoth Toys “R” Us in the heart of New York City’s bustling Herald Square.

Sega had taken over the back corner of Toys “R” Us to host what looked and felt like a political rally for Sonic The Hedgehog. Sonic himself was there to greet incoming fans, friends, and journalists, as was his huggable new sidekick Tails, on hand to complement but never overshadow the hedgehog. Both characters patrolled the perimeter of this rally, ushering guests toward a small stage where MTV’s Adam Curry emceed the event. Standing behind a podium with a Hollywood-worthy poster for Sonic 2, and in front of a thirty-foot “2 Fast! 2 Cool! 2 Day!” banner, Curry revved up the crowd for this groundbreaking occasion. After building up momentum for Generation X’s first unofficial holiday, he welcomed Sega’s nonhedgehog man of the hour. “And now to tell you more about all the exciting details is Sega of America’s president and CEO, Tom Kalinske!”

As Kalinske walked onto the stage, the applause finally drove out of his mind any further musings about Sega of Japan. “Thanks, Adam,” Kalinske said, taking his place. “This is a very exciting day for all of us at Sega. Today we celebrate the official launch of Sonic The Hedgehog 2.”

Shinobu Toyoda tried to pay attention to Tom’s every word, but he was too overcome with pride. So when his boss said, “In the last three years the videogame business has grown by 60 percent to become a $4-billion-a-year industry,” what Toyoda heard was, We did it! And when his boss said, “The reasons for this growth are largely due to Sega developing new technologies and games that make playing more exciting and more fun” what Toyoda heard was, Can you believe that we did it?

A little over one year ago, Yuji Naka had quit working for Sega, but Toyoda had found a way to keep Sonic’s creator happy, and that created a feeling of pride that he did not think would ever fully go away. To the outside world, convincing Naka that Sega of America was completely different from Sega of Japan may have appeared like nothing more than linguistic camouflage, but it really was much more than that. For many years, SOA was treated like little more than SOJ’s errand boy. Although this dynamic may have spewed some unnecessary condescension, it wasn’t all that far from the truth. SOJ created the concepts, the characters, and the games, and all SOA had to do was market and sell them. Okay, maybe marketing and selling to the 250 million people in the United States was not such a small thing, but it was more of a task than a tactical decision. This balance of power began to shift, however, when Tom Kalinske took over. It wasn’t solely because of Sega of America’s new CEO, although Nakayama’s trust in his prestige went a long way; it also had to do with a confluence of people, plans, and pop culture. But most important, what Kalinske and his team did actually worked, and it worked in a way that it didn’t in Japan.

Those at Sega of Japan watching this play out were likely quick to call their American counterparts “power-hungry.” Although that may have been true to some extent, as humans tend not to prefer subservience, a better term to describe those at Sega of America would be “success-hungry.” Tom Kalinske did not take pride in lording it over SOJ’s executives, nor did Al Nilsen earn his self-esteem by telling Japan’s marketing team what they were doing wrong. In fact, both quite literally went the extra mile to avoid those things; Kalinske traveled to Japan every month or two (unlike his predecessor, who only once went) and Nilsen often traveled with him, as well as constantly faxing over extensive marketing strategies (a kindness that was rarely, if ever, reciprocated).

Although one could identify a small spectrum of possible motives for their behavior (kindness, respect, or just covering their asses), what made both men, as well as the rest of their SOA colleagues, always go that extra mile with SOJ was their hunger for success. In 1990 they had had a taste, in 1991 they started a food fight, and by November 1992 they were addicted. What had once seemed like a long shot was now actually working, and that only made them want to work harder because they couldn’t bear the thought of losing this feeling. That’s why Sega of America had fought so hard over seemingly petty details regarding Sonic (1990), that’s why they had been so meticulous in their attacks on the Super Nintendo (1991), and that’s why they had started developing their own games in the United States (1992). SOA was SOJ’s errand boy no more, and that’s why Shinobu Toyoda had been able to persuade Yuji Naka to come to San Francisco and work with Mark Cerny and his team at the Sega Technical Institute.

The cross-cultural development of Sonic 2 left a collaborative imprint on the sequel that would help position this title as the videogame world’s first true blockbuster. If creators from such different nations were both pleased with this game, then surely that universal appeal would translate to many of the countries between America and Asia. From the very first demo, Toyoda had no doubt about the quality of this joint effort, but he did harbor concerns about the pace of Naka’s quest for perfection. If Sega of America was serious about declaring a Sonic holiday in November, then Toyoda needed to ensure that the game’s development didn’t spill into December, January, or February. This concern was part of the reason that SOA’s executives had been so willing to green-light Nilsen’s latest so-crazy-it-might-actually-work plan; by selecting a Tuesday in November and then creating a media circus around that date, Naka would realize this was more than just an air-quote “deadline.” And if Naka hadn’t fully understood what was at stake, Toyoda hammered home the point in June when he personally delivered airline tickets to everyone on Naka’s Sonic Team. They would all be traveling to New York for Sonic 2sday, so if they didn’t want to endure the greatest embarrassment of their lives, then they had better make sure the game was done on time. And it was, which made Toyoda smirk with pride while respectfully nodding as Kalinske spoke at Toys “R” Us.

“Today we have received word,” Kalinske continued, “that Sonic 2 is already off to an incredibly fast start. The game has been on store shelves in the United Kingdom less than a day and already it’s sold eight hundred thousand units.”

The process of coordinating this global launch had brought Sega of America and Sega of Europe (SOE) closer than ever. SOE embraced SOA’s win-or-go-home attitude and set up several launch events in major cities across Europe, highlighted by a pair of media-pleasers in the United Kingdom. First, a fleet of London’s famous double-decker buses were outfitted with Mega Drive systems and spent the day traveling to schools around the city. Next, Sonic hot-air balloons were released throughout the day. These events, like those that Sega of America had arranged over the years, were designed as low-cost ways to attract an audience of more than just gamers, and each was also cleverly choreographed with an eye toward presenting media stories that would write themselves (i.e., “Sonic Balloons Invade Britain!”). Although SOA tended to emphasize speed, technology, and alternative thinking, and SOE’s marketing typically focused on positioning Sega as Europe’s luxury videogame brand (the Aston Martin to Nintendo’s Vauxhall), Sonic 2sday proved that they had more in common than they originally thought, and by working together they could be more than the sum of their parts.

“And I have just spoken to our folks in Japan,” Kalinske said next, conscious not to grit his teeth as he cheered Sonic 2sday’s success in Asia. But it was a little hard to sport a smile, because for some reason Sega of Japan had decided that Sonic 2sday should not be on that Tuesday, as it was in every other country in the world. “Sonic is causing an equal frenzy in that country,” Kalinske explained, “where the game has been available since Saturday.”

Kalinske may have been forced to smile, but Nilsen couldn’t help but roll his eyes. A few weeks earlier, Sega of Japan had decided that they would prefer to release Sonic 2 on Saturday, November 21. For someone trying to coordinate the world’s first global launch, this sudden change of heart was frustrating, but more frustrating was the reason, or rather the lack thereof. After three years of working at SOA, Nilsen had come to expect a certain level of veiled capriciousness from SOJ (he often found out about their real marketing and product development plans by poking through the shipment of Japanese videogames that Shinobu Toyoda received each week), but to do this with Sonic 2sday, and to do it so close to the big day . . . that felt almost malicious. Someone driven by power might have threatened to dismantle Sonic 2sday everywhere if Japan did not conform, but since Nilsen and his SOA colleagues were instead driven by success, they ignored SOJ’s odd decision and focused on finding a way to make it fit into the larger narrative. Returning to the blockbuster analogy, they chose to spin Japan’s Saturday launch as an exclusive sneak preview.

For Kalinske, peddling this version of the truth to the media was no problem, but selling it to his employees was another story. That was the disheartening part, to have to look them in the eye and optimistically explain how this was actually a good thing. Sure, it would have been a lot easier to share in his employees’ collective groan, but the problem with managing that way is that although the bad news is easier to swallow, it also inherently lingers longer. That’s why Kalinske always walked around the office with a smile, saving the frowns for his own time.

“We developed Sonic 2 to be the fastest videogame in the world as well as the coolest,” Kalinske continued. “Sonic has a new attitude, a new friend, and a whole set of new maneuvers. But rather than me tell you how gnarly they are, I’ve invited some pretty famous Sonic experts with us today who are anxious to give you their review of Sonic 2 and to describe the game features in greater detail. First up, from the NBC-TV sitcom Saved by the Bell, is Dustin Diamond. Dustin, come on up here.”

Dustin Diamond ran onstage energetically, and when the moment was right, Kalinske stepped aside and let the geeky television star enjoy the limelight.

In slow motion, Dustin Diamond’s smile disappears, he stops waving to the crowd, and then he runs backward off the stage as Tom Kalinske moves back to the podium.

“Keep rewinding for a few seconds,” Ellen Van Buskirk said as she, Brenda Lynch, and a film editor reviewed footage of the presentation from a small news van parked in Herald Square. “I want to go back to when Tom starts talking about Japan.”

“Less than a day and already it’s sold eight hundred thousand units,” Kalinske said on the video when the editor cued up the spot. “And I have just spoken to our folks in Japan. Sonic is causing an equal frenzy in that country.”

“All right, stop it there,” Van Buskirk said, pausing the tape. “Do we want to use that as the lead-in for Dai’s speech?”

As requested, the film crew hired in Japan had given Lynch and Van Buskirk a lot of B-roll featuring excited kids buying Sonic 2. In addition to capturing that frenzy, they had also wanted some sound bites, which they received in the form of an interview with SOJ’s Dai Sakurai at a special in-store videogame competition.

“It’s a good idea,” Lynch said, “but I don’t think we need it. As soon as Dai opens his mouth, it’s clear that we’re not in Kansas anymore, and, all things being equal, I’d rather come in on the Sonic ring sound playing over Japanese teens shouting.”

“Good point,” Van Buskirk said. “All right, scratch that. Let’s go back to Dustin Diamond playing the game and then get some stuff with the rest of the celebrities.”

Lynch and Van Buskirk were racing to finish what they believed to be the cornerstone of Sonic 2sday: the international video news release (VNR). After the rally ended, they had only thirty minutes to cut together the VNR before it would be beamed via two satellites to every television newsroom in the United States. Outside of the United States, it would also be sent to every television news outlet in Europe, North Africa, and the Middle East via the Brightstar satellite, as well as to all of Asia through the Pan Am satellite.

Because time was very much of the essence, they had crafted an overview of what the video should look like weeks in advance. This twenty-six-point outline included things like “Opening scene of banners and window displays outside Toys ‘R’ Us at Herald Square” (#3 on the list), “Sound bite in English and then Japanese of a senior Sega executive talking about the excitement” (#14), and “Zoom out from London scene setter of the double-decker bus crossing the Thames with Parliament in the background” (#22). Throughout the day, Lynch and Van Buskirk had been filling in most of their blanks with the footage they’d been receiving from around the world, but the whole VNR hinged on Tom Kalinske’s keynote speech at Toys “R” Us in New York, and it was almost time to send his words around the globe.

“How’s it going?” Al Nilsen asked, poking his head into the van.

“Fast,” Lynch said as they scrolled through footage of Diamond playing Sonic 2.

“That’s an understatement,” Van Buskirk added, pointing to the screen.

“Good,” Nilsen said, squeezing into the van. It was barely big enough for three, and certainly not big enough for a fourth of Nilsen’s size, but in times of great stress the Sega team worked as one, and under such circumstances things like time, space, and physics momentarily seemed not to matter very much. “What do you have left?”

“Number five,” Lynch said.

“Fast and furious action of the teen stars playing games,” Van Buskirk clarified.

Building off the relationships forged at the Sega Star Kid Challenge television event, Sega had continued to work closely with many of Hollywood’s youngest stars. In addition to Dustin Diamond, the New York event featured a handful of other teen celebrities, including Joey Lawrence (Blossom), Jonathan Taylor Thomas (Home Improvement), and Michael Cade (California Dreams). Getting these stars to show up was easy—it was about maintaining a relationship and paying their appearance fee—but getting them to show up and not look foolish playing videogames . . . well, that was a different story. To teach them how to expertly play Sonic 2 (or at least figure out which ones were better off just watching from the sidelines), Sega had hosted what amounted to a videogame tutoring session the day before. Luckily, like most members of their generation, many of them were able to quickly learn how to play the game. A practice session may seem trivial, but it was important to Sega that these young celebrities give the impression that they really did love videogames and weren’t just heartthrobs for hire.

“With Sega’s Blast Processing capabilities,” Diamond said while playing the game beside Kalinske onstage, “the galaxy’s most famous blue dude with attitude has all-new worlds, zones, music, and maneuvers, like the corkscrew, spin-dash, Sonic shield, and an unreal blue tube roller coaster run for head-on, gold-ring-chasing fun.”

“Make sure you start with the Blast Processing,” Lynch instructed the editor.

“And let’s mix that with some Joey Lawrence and call it a day!” Van Buskirk said. “At least until the West Coast feed.”

In addition to the rally at Herald Square, Sega was also holding a similar event at the Toys “R” Us in Burbank, California. This West Coast event would be almost identical to the one in New York, except in Burbank the keynote speech would be delivered by Ed Volkwein, would be emceed by Power 106 FM’s George McFly, and would include a different roster of teen celebrities headlined by Saved by the Bell’s Mario Lopez. But that wasn’t for another few hours; all that mattered right now was New York.

As Nilsen watched, applauded, and then approved the final video, Van Buskirk’s mind took a short respite from traveling at a million miles per hour. Wow, she thought. Just wow. And like everyone else at Sega of America, she enjoyed a brief but exhilarating we-did-it moment before getting back to work and preparing for the next Next Level.

All this talk of the Next Level was becoming a self-fulfilling prophecy. From a pure marketing standpoint, Bill White admired this very much, but from the standpoint of a vice president in Nintendo’s marketing department, he was much less enthusiastic. For years Nintendo had been foolishly allowing Sega to steal slivers of the market, but now they’d done more than that; they’d managed to steal Christmas. Well, not Christmas exactly—that was still a few weeks away—but they’d stolen something much more important than the anniversary of an immaculate conception and miraculous birth. Sega had stolen the Christmas shopping season.

For the past five years, Nintendo had been marking its holiday territory with something called the North Pole Poll. What they did was hire the Gallup Organization, famous for their political polling data, and pay them to independently conduct a telephone survey of children around the country ages seven to sixteen and ask about what they wanted for Christmas. Every year the poll had been conducted, the most coveted item was always a videogame system. And 1992 was no different, with 63 percent of kids starting off their Christmas lists with a plea for the newest videogame system. What kind of videogame system? Ha—well, the survey didn’t say, because in previous years the answer had been obvious, and this year Nintendo was too afraid to ask. So instead of having Gallup ask the kids whether they preferred Sega or Nintendo, a separate survey of the country’s retailers (the ones Nintendo was closest with) was conducted, and lo and behold, it forecasted that the Super Nintendo Entertainment System would be this year’s hottest seller. And what’s this? Amazingly, those same retailers forecasted that the best-selling game would be Street Fighter II!

Sham or not, it didn’t really matter. The purpose of the North Pole Poll (and this year’s unsubstantiated survey of retailers) was to get the story repeated over and over on the air (along with the words “survey commissioned by Nintendo” and, ideally, some photos of the SNES) until it became a self-fulfilling prophecy. That had always been how it worked, but this year Sega had crashed the party.

On November 27, results of the North Pole Poll went out to every media outlet around the country and, like every year before, most ran the story. But this year, when the anchors talked about how every kid wanted Santa to bring them a new videogame system, they used clips from the video news release that Sega had made for the new Sonic game. “Sixty-three percent of responding children said they really want a videogame system for the holidays,” they said over footage of Sonic hot-air balloons. “Fifty-four percent want a portable videogame system” was the statistic that went out over shots of teen celebrities playing Sega. And “Forty-three percent want videogames” was delivered over Tom Kalinske giving a speech at Toys “R” Us.

The timing of Sonic 2sday was no accident, and the way that Sega got that video played all around the globe . . . White would have called it brilliant if it weren’t so damn infuriating. There was a time when Nintendo could have crushed the competition, but Arakawa had wanted to avoid stooping to that level. Well, now that both companies were virtually tied for market share, meeting Sega at their level would no longer entail stooping. This was certainly not what Bill White wanted for the holidays, but if this was what it took for Arakawa to wake up and start fighting back, then maybe the North Pole Poll debacle was a Christmas miracle after all.

A fairy-tale future seemed to lie ahead for Nintendo’s competitor, but beneath Sega’s many mattresses of success was a nagging pea-shaped question.