ROSES ARE RED - THE TORTOISE<br />AND THE HARE - Console Wars (2015)

Console Wars (2015)

PART FIVE

THE TORTOISE
AND THE HARE

58.

ROSES ARE RED

Throughout most of February 1994, New York City was puddled in snow and slush. It made getting around town much more difficult than usual, but the blizzard-like weather wasn’t enough to keep Al Nilsen and Ellen Beth Van Buskirk apart. Since Nilsen had moved to New York for Viacom, and Van Buskirk had moved there as well to work at Sega Channel, they tried to stay in touch and get together for coffee every so often. Not only did these connections confirm to both that this friendship was of the lifelong variety, but whenever they got together it had the strange effect of rekindling that old Sega magic. Alone each of them was a smart, confident, and clever individual, but together they became something else. Over the years it would always be that way, not just with the two of them, but also with Kalinske, Rioux, Toyoda, Fornasier, or any of the others who had unknowingly forged this unbreakable bond. Perhaps that was what made team success such a beautiful thing; the wins and losses were inherently impermanent, but that feeling among those on the roller-coaster ride would somehow sustain forever.

“Remember that time we stayed up at CES all night and created the Core System?” Van Buskirk mused. “And remember how annoyed those Nintendo guys looked the next morning when we came out before them with $99?”

“I’m still not convinced that night followed the normal rules of time,” Nilsen said. “I’ve gone over it in my head several times since, and I’ve come to the conclusion that between two and four a.m., at least eight hours actually passed.”

“Oh,” Van Buskirk added, happily tapping the table, “and remember how strangely talented Diane was when it came to breaking and entering?”

“How could I ever forget? How is she? Have you spoken to her?”

“She’s great. Enjoying life, enjoying work, and enjoying whatever comes in between. Actually, and please don’t repeat this, she and Don are trying to get pregnant.”

“Of course not,” Nilsen said.

“Oh, remember when we all had to pull that Aladdin EPROM heist?”

“Um, I’m sorry to interrupt this trip down memory lane,” Nilsen said, “but I’m going to have to pull you over and check your license.”

“My license to go down memory lane?” Van Buskirk asked.

“Yes,” Nilsen said. “I believe it’s called a nostalgia permit.”

“Oh, sure. And why is it that my license has been revoked?”

“Because you still work for Sega!”

“True. But not really. Sega Channel is different.”

Van Buskirk had expected the transition to be something like being traded in baseball, going from, say, the San Francisco Giants to the New York Mets (definitely not the Yankees; she was forever a woman who despised the designated hitter). But moving from Sega of America to Sega Channel turned out to be more like being traded from the San Francisco baseball Giants to the New York football Giants. It was a completely different sport and not nearly as fulfilling. She still completely believed in the vision of the company—it was a brilliant idea whose time would certainly come—but for the moment the cable operators made it impossible in the present. By June 1994, Sega Channel would have a total of twenty-one companies signed up to carry the service, but the cable companies were so boringly bureaucratic and so disinterested in making the system work well or easy to use that it was going to be a struggle. Van Buskirk was up for the fight, but she missed all of her friends back in California. Well, except for Nilsen.

“How are Beavis and Butt-head?” Van Buskirk asked.

“Oh, you know,” Nilsen replied. “They’re always trying to get me into trouble, but so far I’ve managed to resist their bad influence.”

“Good for you!”

“Thanks, EB! Wait, am I still allowed to call you that?”

“Why not?”

“I don’t have to call you EBVBK?”

One month earlier, on January 15, Ellen Beth Van Buskirk had married Bob Knapp, the man she had met almost a year earlier at Gate 81. Nilsen was there, and so were Rioux, Fornasier, Race, Glen, and Schroeder (the whole gang, except for Kalinske, who had suffered a tennis injury earlier that day). It was a nice little reunion and made for an even more memorable wedding day.

“I told you I wasn’t going to take his name,” Van Buskirk reminded Nilsen. “Otherwise my name would just turn into a tongue twister.”

They had a laugh as they mentioned favorite tongue-twisters and challenged each other to see who could repeat them faster. After racing each other through Sally’s efforts to get into the seashell business, Van Buskirk remembered that she had brought something she wanted to show him. “Have you seen this?” she asked, pulling out a copy of the February 21 issue of Business Week.

“Oh, wow,” Nilsen said, smiling at the issue. On the cover was a drawing full of Sega characters: Sonic, Tails, ToeJam, the race car from Daytona, and a few others. Above them, the name Sega was in bright yellow letters, with a laudatory subtitle: “The $4 Billion Company That Stung Nintendo Is Making a Risky Push into the Exploding World of High-Tech Entertainment.”

“I need to run,” Van Buskirk said, gathering her mittens and preparing to brave the snow. “But you can borrow that if you’d like.”

“Fantastic,” Nilsen said, and bade her farewell. But before heading back to the land of Beavis and Butt-head, he stayed in the coffee shop with the magazine to spend a few more minutes with Sonic and friends.

The story was as wonderful as the cover indicated, but it was something at the very end of the story that caught his attention. After all the pages of gushing about Sega, Sonic, Kalinske, and Nakayama, there was an article written by Neil Gross and Robert D. Hof after a recent interview they had conducted with Nintendo’s Hiroshi Yamauchi. The article itself wasn’t all that interesting, but what was interesting was that although it appeared in Business Weekand would be read by millions, it seemed as if it were written exclusively for Yamauchi’s son-in-law:

After months of being bloodied by Sega Enterprises Ltd. in North America, Nintendo Co. President Hiroshi Yamauchi is taking off the gloves. In a talk with Business Week at his spartan headquarters in Kyoto, Yamauchi revealed a plan to recoup market share. Many details remain vague. But the stern, 66-year-old patriarch of Japan’s biggest game company made one thing clear: He’ll make big change in the way Nintendo manages its U.S. Operations, promotes its products, and develops its game.

His first priority is fixing the disaster in the U.S. market, where Nintendo’s share of the 16-bit market plummeted from 60 percent at the end of 1992 to 37 percent a year later, according to Goldman Sachs & Co. With surprising candor, Yamauchi lays part of the blame on his son-in-law, Nintendo of America Inc. President Minoru Arakawa. When Sega started running comparative ads in 1990, Nintendo failed to respond. In effect, says Yamauchi, Arakawa “allowed Sega to brand our games as children’s toys. It was a serious mistake.”

Yamauchi expects Arakawa to change his style—and hand more responsibility to senior American staffers. “I’m giving him another chance,” says the president. “But even in Japan, if results don’t improve, you can’t stay in a job.” Informed of those comments, Arakawa issued a statement promising that “1994 will be the most aggressive marketing year Nintendo of America has ever seen.”

What stopped Yamauchi from acting sooner is that the U.S. unit did so well under Arakawa’s early stewardship. From 1987 to 1991, Nintendo’s exports in the U.S. grew eightfold. Americans have snapped up over 65 million Nintendo game machines since they went on sale in 1985. But growth has slowed in the past year and profits are falling.

Big words, Nilsen thought as he finished, but he had trouble imaging that Nintendo would actually do anything different. Yamauchi might be upset, but it wasn’t like he was going to fire his son-in-law.

Nilsen was correct, Minoru Arakawa would not be fired, but Yamauchi did end up firing a warning shot at his son-in-law. Days after the interview, Howard Lincoln received a call from Yamauchi and was informed that he was Nintendo of America’s new chairman (making him comanager of NOA with Arakawa). It was just a title, and Lincoln had always been steering the ship right there with Arakawa, but it meant that for the first time in years, Nintendo was willing to change. And that was significant.

A couple of months later, Perrin Kaplan was in San Francisco to visit Silicon Graphics and discuss ways to position Project Reality. She was joined there by Don Varyu, a former news director (he had won the 1988 Edward R. Murrow Award for the best local news operation in the country) who had transitioned into public relations and been working with NOA since 1991. He was a lover of telling stories, a man who knew how to combine big ideas with small anecdotes, and as a result of this passion and talent he had earned Nintendo’s trust and was often involved in the company’s big-picture messaging. He was also usually the one who worked with Peter Main and Howard Lincoln to craft their speeches for press conferences, analysts’ meetings, and the CES shows.

“I’m sure that Perrin already has at least a million golden ideas,” Varyu explained to the guys at SGI, “but I think something we should keep in the back of our minds throughout is the cautionary tale of 3DO.”

The 32-bit 3DO console had only been out for a few months, but it had failed so badly that it already felt like a thing of the past. A large part of the failure was the system’s ridiculous price tag, $699, but another part was that it had been marketed so heavily as the technological answer to everything that nobody thought of it when it came to a specific anything. It was a videogame system, a movie player, and a CD-ROM device, but nobody thought of it as the videogame system, the movie player, or the CD-ROM device. Even more important than taking it as a lesson in the value of specificity, Nintendo interpreted the failure of the 3DO as proof that consumers need more than just technology. For years, Sega had been goading Nintendo into entering a technological arms race, and although they had thus far resisted, there was always that temptation to consider the what-ifs. But after 3DO, Nintendo felt even more confident in their longer-term, higher-quality strategy, particularly when it came to demonstrating patience with Project Reality.

As Kaplan and Varyu started discussing the broad strokes of the messaging behind Nintendo’s new console, a secretary from SGI interrupted them with an urgent message. “Howard needs to speak with you immediately,” she advised Kaplan, who went outside to take the call. Minutes later she returned, looking half astonished, half petrified. “You’re not going to believe what Howard wants to do.”

“Probably not,” Varyu replied. “But now I’m very curious to find out.”

“How do you feel about poetry?” Kaplan asked, still with that peculiar look on her face. “Particularly poems that rhyme.”

“Uh-oh,” Varyu replied, now sporting the same expression as Kaplan.

Earlier that morning, Howard Lincoln had come across a quote from Tom Kalinske in which he claimed to be amazed that Nintendo “would so irresponsibly drag retailers and the entire video game . . . industry through the mud in their efforts to slow down our momentum.” Lincoln was stunned by the quote; it represented exactly how he felt, except about Sega. They were the ones who had caused this whole mess and threatened to ruin the industry with their blatant disregard for integrity. Not only was Kalinske’s quote patently ridiculous, but the timing of it was almost as offensive.

About six weeks earlier, Sega, Nintendo, and the industry’s other major players had come to an agreement to set up a national ratings board, which would later become the Entertainment Software Ratings Board (ESRB). Dr. Arthur Pober would head the effort and work to get the operation up and running by the end of year. To supervise the ratings board and also usher the industry into maturity, Kalinske had played a vital role in creating the Interactive Digital Software Association (IDSA). Accomplishing both of these things in such a short period of time was no small task, but it had the desired effect of impressing Senator Lieberman and the other representatives, so following the second round of hearings in March, the politicians decided to give the videogame industry the autonomy to regulate itself. There was no doubt that Kalinske deserved a significant amount of credit for rallying the industry, but so did Lincoln. Pulling this off required unity, compromise, and string-pulling on the part of both leaders, but they had gotten it done and managed to save their respective companies from the clutches of Congress. Lincoln harbored no illusions that they were now friends, nor did he believe that Sega and Nintendo would ever blissfully hold hands and waltz into the next generation of videogames, but come on . . . for Kalinske to say what he’d said, and to say it so soon? Give me a break.

Lincoln was mad and wanted a way to fire back at Kalinske. In the past that outlet had often been litigation, but here that made no sense. The most efficient and effective response would be to give an interview or issue some kind of press release. But both of these methods felt too tame, too expected, and too unmemorable. Lincoln would say something, and then Kalinske would say something back, and the word count between the two would pile up faster than dead Montagues and Capulets. What Lincoln needed was a way to end the conversation and make sure Nintendo had the final word—and, ideally, have some fun in the process. Over the past couple of years, and particularly the past couple of months, Nintendo had stopped remembering to have fun. That likely had a lot to do with Sega taking a bite out of Nintendo’s market share, but it was time to remember what Nintendo was all about.

When asked what she did for a living, Perrin Kaplan used to say, “I sell joy,” and she’d been 100 percent correct. Nintendo was about wandering through the Mushroom Kingdom and saving the princess. That was what they did for a living, and it was time to bring back the fun. Yamauchi had appointed Lincoln as chairman to start making changes, and there was no better way to demonstrate this new era at Nintendo than by publicly doing something fun.

Kaplan loved this attitude and was with Lincoln every step of the way, except when it came time to demonstrate the fun.

“A poem?” Varyu confirmed.

“Actually,” she revised, “a roses-are-red poem.”

“That’s terrible.”

“Isn’t it?”

“Absolutely.”

“Good, because that’s what I told him.”

“And what did he say?”

“He said I was right.”

Varyu sighed with relief. What an embarrassment that would have been! After a relieved chuckle, he and Kaplan got back to discussing Project Reality. Things were going well until an hour later, when the secretary returned with news that Howard Lincoln was on the line again. This time Varyu went into the hallway with her and stated his case for why this was a terrible idea. Although Lincoln was angry with Kalinske and upset by their reaction, he could see the reason in their logic and thanked both of them for their advice.

Once again, they felt glad to get back to their discussions about how to position Nintendo’s new 64-bit system: sophisticated but accessible, a high-powered machine but one that didn’t look intimidating. Everyone was on the same page and they appeared to be getting somewhere until, for the third time, Howard Lincoln called to discuss poetry.

“It’s still not a good idea,” Kaplan responded in faux exasperation. “And since we last spoke, I think I’ve come up with at least ten more reasons why!”

“Howard, buddy,” Varyu added, “I admire the effort, but you just can’t do it.”

“Well, actually,” Lincoln replied, sounding as calm and calculating as he always did, “I can. I’m the chairman, and I’m doing it.”

The following day Nintendo issued a press release with the poem that the new chairman had written:

Dear Tom,

Roses are red,

violets are blue,

so you had a bad day,

boo hoo hoo hoo.

All my best,

Howard