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Forums - Gaming Discussion - Alternate History: Sega doesn't drop the ball in the 4th to 5th gen transition

shikamaru317 said:
Ka-pi96 said:

Don't you actually need to be holding a ball before you can drop it?

Not sure what you mean. Are you trying to argue that Genesis/Mega Drive was not a success in the west? If so, you're dead wrong. Mega Drive beat SNES in Europe, and in the US Genesis was actually selling more than SNES for much of the generation, largely thanks to the efforts of Tom Kalinske.

Allow me to give you a little history lesson about Sega of America and the man named Tom Kalinske, it'll be a long read but I promise it's worth it, the story is one of the most interesting in Gaming history imo:

Tom Kalinske worked for Mattel toys from 1972 to 1987, during which time he successfully revived the fallen sales of both Barbie and Hot Wheels, turning around the company's fortunes, and they promoted him to CEO from 1985-1987. He then was recruited to be head of Matchbox, the chief rival of Mattel's Hot Wheels; though he was only CEO of Matchbox for 3 years, he successfully turned around a company which was nearly bankrupt when he stepped in, and allowed them to turn a profit for the first time in years.

Meanwhile, while this was happening, Nintendo had a total stranglehold on the US video game market. By the end of 1986, NES had reportedly sold 1.1m units in the US in the US, compared to 250k for Master System and 100k for Atari 7800, despite Sega spending a similar amount on marketing compared to Nintendo, with Master System falling short of Sega's sales expectation of 400-750k units for the year. Things only got worse throughout the generation. The following year, Sega decided to sell the US distribution rights to US toy company Tonka, but they had no clue how to sell a game console either, and by the end of 1988, Nintendo had 83% of the North America marketshare, and the Sega vs Nintendo marketshare was 6% to 94% by the end of 1989. 

So in 1990, Sega's CEO, Hayao Nakayama, decided to hire Tom Kalinske to run Sega of America, after seeing how he turned around the fortunes of both Mattel and Matchbox. Hayao himself flew to Hawaii where Tom was on vacation with his family, and personally asked Tom Kalinske to run Sega of America. Tom flew from Hawaii to Japan with Hayao and was shown Sega Mega Drive and how much better it looked than the 8 bit NES, and was convinced that Sega had a winning product.

So Tom immediately set about creating a strategy for selling Sega Genesis in the US. His battle plan: 1. Sell the console at a loss so you can sell more consoles to people who will be buying games and accessories throughout the generation, allowing you to make more money in the long run. 2. Defeat Mario. 3. Get sports games on Genesis. 4. Market Genesis to teenagers instead of kids. 5. Make fun of Nintendo. He then had a meeting to present that battle plan to the Japanese Board of Directors, and the Japanese board didn't like it all and it turned into an angry argument between Hayao Nakayama and the other members of the board that ended when Nakayama abruptly stood up, knocking over his chair in the process, and went to the door to leave, and Tom thought he was finished with Sega before he really even started. Then Nakayama turned to him and told him that he hired Tom to run Sega of America and he was going to let him run it his way in spite of objections from the rest of the board of directors. 

Tom set about implementing his plan. He slashed the price of Genesis from $189 to 149. Tom worked with Yuji Naka, Hirokazu Yasuhara, and Naoto Ohshima to design Sonic with the western market in mind, who would be the new mascot of Sega to help take down Mario. Tom partnered with EA to get John Madden Football, Joe Montana Football, and other EA Sports franchises on Genesis. Tom marketed Genesis to teens from 13 to 17 and young adults, compared to Nintendo marketing NES and SNES to kids 9-13, with the thinking that little brothers wanted to emulate their big brothers, so if you won over the big brothers with Genesis marketing, little brothers would then see their older brother playing Genesis and want to play it too. They organized demonstrations in malls that let teens try NES/SNES and Genesis side by side; made early use of influencers by sending a free Genesis console and free games to at least one student on most college campuses in the US, so that he could hype up Genesis to others on campus; they organized a big game tournament on MTV which tons of teens watched; they partnered with Michael Jackson who teens loved and watched on MTV. The ads were also focused on teens by making fun of Nintendo, with the infamous "Genesis Does What Nintendon't". 

How successful was Tom's battle plan? Well, when Tom was brought in in 1990, Genesis had apparently only sold about 500,000 units in North America in 1989, half of Sega's goal of selling 1m units in 1989. Tom's plan increased sales to 1m in 1990. Genesis then outsold SNES nearly 2 to 1 Holiday 1991. Genesis outsold SNES 4 consecutive Holiday seasons in the US from 1991-1994, thanks to it's lower price, better marketing, and larger game library. It wasn't until late generation that SNES managed to pull ahead in the US.

Do you want to know what brought Sega down in the end? Jealousy of the success of Genesis/Mega Drive in the US and Europe by the same Japanese Board of Directors who disapproved of Tom's battle plan for Sega of America, they were jealous that Sega America under Tom Kalinske and Sega Europe under Nick Anderson were beating SNES in their markets, while Sega Japan had sold just 3.5m Mega Drives to Nintendo's 17m SNES units in Japan. They made the foolish decision to design Saturn with the Japanese market in mind and and let Genesis die early, resulting in Genesis falling behind SNES in sales the last couple of years of the generation in the US due to not having enough stock to meet demand, which is ultimately what allowed SNES to pass Genesis overall in the US.

Tom argued against Sega of Japan and told them they were making a mistake with the design of the Saturn, told them that nobody could successfully market that console in the US and Europe. They didn't listen to his warning, and he resigned in 1996 as a result. His prediction turned out to be accurate, with Saturn selling just 1.8m units in the US and 1.1m in Europe, compared to 18m Genesis in the US and 8.8m Mega Drive in Europe. Sega Japan's pigheaded belief that focusing on the Japanese market over western markets was the right strategy for Sega moving forward ultimately brought them down, they lost so much money on Saturn in the west that they couldn't afford to sustain Dreamcast even though it was selling well from 1998-2001. 

This.

Basically what Sega needed to do was fire several Japanese executives and/or have Tom Kalinske decide their worldwide strategy for the Saturn.  Kalinske knew both how to win and how to run a profitable business.  The Japanese arm didn't know how to do either.



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Segagaga would be real instead of a dreamcast videogame



The_Liquid_Laser said:
shikamaru317 said:

This.

Basically what Sega needed to do was fire several Japanese executives and/or have Tom Kalinske decide their worldwide strategy for the Saturn.  Kalinske knew both how to win and how to run a profitable business.  The Japanese arm didn't know how to do either.

Agreed. The key to success for Sega would have been letting Tom Kalinske make the big business decisions for Sega instead of the arrogant, jealous Japanese board of directors. I suspect that if Tom Kalinske had been allowed to design the Sega Saturn instead of Sega Japan, things would have been very different. I think Tom could have put together a hardware team that would have designed a console that was cheaper, more developer friendly, and just as powerful as PS1. Using money from late generation Genesis/Mega Drive sales in the US and Europe, he could have put more money into exclusive deals with 3rd party developers to counter some of Sony's hatting at the time.

I think things could have been quite different for Sega if Tom Kalinske had been in charge of Saturn. Final Fantasy 7 might have ended up on Saturn instead of PS1 (Square considered Saturn for FF7 but chose PS1 because it was selling so much better than Saturn in the west). Tomb Raider 1 would have sold better on Saturn and Sony probably wouldn't have been able to hat exclusivity on Tomb Raider 2. Mortal Kombat 4 would have been released on Saturn alongside PS1, N64, and PC (Mortal Kombat 1-3 were big sellers on Genesis/Mega Drive and 4 would have moved Saturn units for sure). Resident Evil 1 and 2 would have sold much better on Saturn (leading to Code Veronica on Dreamcast being Res 3 instead of Nemesis on PS1). New games in popular Genesis franchises in the west like Sonic, Streets of Rage, and Ecco would likely have released on Saturn.

Who knows, with Tom Kalinske in charge instead of Sega Japan, maybe Mark Cerny and the other Sega Technical Institute devs who left Sega to form Crystal Dynamics would never have left in 1992, maybe Mark Cerny would never have formed Universal Interactive in 1994 and helped set up Sony studios like Naughty Dog and Insomniac, maybe Mark would have stayed with Sega Technical Institute and would have been put in charge of a new 3D Sonic for Saturn. 

Last edited by shikamaru317 - on 16 February 2021

shikamaru317 said:
Ka-pi96 said:

Don't you actually need to be holding a ball before you can drop it?

Not sure what you mean. Are you trying to argue that Genesis/Mega Drive was not a success in the west? If so, you're dead wrong. Mega Drive beat SNES in Europe, and in the US Genesis was actually selling more than SNES for much of the generation, largely thanks to the efforts of Tom Kalinske.

Allow me to give you a little history lesson about Sega of America and the man named Tom Kalinske, it'll be a long read but I promise it's worth it, the story is one of the most interesting in Gaming history imo:

Selling more in Europe before Europe was even a relevant market doesn't really mean much.

But it was more a dig at their lack of quality, than lack of success. They never had a good console, or any good games, in the first place.



Ka-pi96 said:
shikamaru317 said:

Not sure what you mean. Are you trying to argue that Genesis/Mega Drive was not a success in the west? If so, you're dead wrong. Mega Drive beat SNES in Europe, and in the US Genesis was actually selling more than SNES for much of the generation, largely thanks to the efforts of Tom Kalinske.

Allow me to give you a little history lesson about Sega of America and the man named Tom Kalinske, it'll be a long read but I promise it's worth it, the story is one of the most interesting in Gaming history imo:

Selling more in Europe before Europe was even a relevant market doesn't really mean much.

But it was more a dig at their lack of quality, than lack of success. They never had a good console, or any good games, in the first place.

Europe was definitely relevant in gen 4. It wasn't as big a market as North America or Japan at the time, but it was still a pretty big market, Mega Drive and SNES sold a combined 16m+ consoles in Europe that gen, compared to about 40m combined in North America and 21m combined in Japan.

I also disagree with you that Genesis/Mega Drive wasn't a good console and didn't have good games. 

Last edited by shikamaru317 - on 16 February 2021

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shikamaru317 said:
Ka-pi96 said:

Selling more in Europe before Europe was even a relevant market doesn't really mean much.

But it was more a dig at their lack of quality, than lack of success. They never had a good console, or any good games, in the first place.

Europe was definitely relevant in gen 4. It wasn't as big a market as North America or Japan at the time, but it was still a pretty big market, Mega Drive and SNES sold a combined 16m+ consoles in Europe that gen, compared to about 40m combined in North America and 21m combined in Japan.

I also disagree with you that Genesis/Mega Drive wasn't a good console and didn't have good games. 

The very next gen had a combined total of 38m+ consoles though, that's not just a slight increase, that's more than doubling. If sales more than double somewhere and either stay at that level, or even increase further, then it seems to me that things were just underperforming there beforehand. TBH Europe is still a weak market today relative to the population when compared to the US and Japan, but it's a lot better than it was in gen 4 and it started to be decent from the 5th gen.

If it's any consolation I'd also say that Nintendo never had a good console or any good games until the N64 either. The "retro" 8/16 bit stuff really isn't for me.

Last edited by Ka-pi96 - on 16 February 2021

Ka-pi96 said:
shikamaru317 said:

Europe was definitely relevant in gen 4. It wasn't as big a market as North America or Japan at the time, but it was still a pretty big market, Mega Drive and SNES sold a combined 16m+ consoles in Europe that gen, compared to about 40m combined in North America and 21m combined in Japan.

I also disagree with you that Genesis/Mega Drive wasn't a good console and didn't have good games. 

The very next gen had a combined total of 38m+ consoles though, that's not just a slight increase, that's more than doubling. If sales more than double somewhere and either stay at that level, or even increase further, then it seems to me that things were just underperforming there beforehand. TBH Europe is still a weak market today relative to the population when compared to the US and Japan, but it's a lot better than it was in gen 4 and it started to be decent from the 5th gen.

If it's any consolation I'd also say that Nintendo never had a good console or any good games until the N64 either. The "retro" 8/16 bit stuff really isn't for me.

Yes, sales did more than double the next gen in Europe, but the North American and Japanese markets also grew the following gen, North America increased from about 41m to 62m, while Japan increased from about 21m to about 33m. The gaming market grew some with each generation pretty much, but it saw a particularly large amount of growth in gen 5 thanks to Sony's strong marketing. 

That's down to personal taste, if you don't like 8 or 16 bit that is fine. Personally I hate 8 bit graphics but enjoyed 16 bit 2D graphics more than early 3D graphics in gen 5. I would argue that both SNES and Genesis/Mega Drive were fine consoles as a result, I would take either one of them over PS1/Saturn/N64. Most 3D graphics were just too ugly for me until gen 6 with Xbox/PS2/Gamecube, I only found a few gen 5 3d games visually appealing, and most of those were on N64. 

Last edited by shikamaru317 - on 16 February 2021

JWeinCom said:

The problem is that add ons just rarely work in gaming. By definition, they just cater to an already existing portion of the existing base. Even if your system is a major success and sells 100 million, you need to sell the add on to half of your base to get it to a decent market.

Meanwhile, you're narrowing your brand as a whole because big titles like Sonic CD are only accessible to a small base. Then you have market confusion, especially when you have the 32X as well. People don't necessarily want to buy a machine if they think they may have to keep upgrading it to play everything. They want to be set. 

I don't fault Sega, because it was a new industry. Sega had a lot of innovative ideas that would be refined successfully by others, but they were sometimes ahead of their time in the wrong way. If Sega had not done either add on, and refocused their efforts into making sure the Saturn had great content they'd have been better off. 

Add-ons just generally aren't a strong idea, unless you're fine with them being a niche product and they're not going to take up too many resources. The Wii-mote could have easily been an add on to the Gamecube (I think it was conceived as such) but Nintendo realized from previous products that it was best to sell it as a complete product. 

I think the goal of add-ons was trying to keep users engaged with unique or better experiences. Maybe even to deter them from other platforms. Sega CD wasn't much of a success, but I do believe it had a solid library with numerous titles that were later ported to other platforms. That was certainly the goal of the 32X, but it seems like horribly designed hardware overall.

Ideas I consider bad from Nintendo were the DSi and New 3DS. The DSi was needed for access to digital games. While the New 3DS was a half assed upgrade that gave access to an underwhelming library. They also locked SNES emulation to New 3DS to drive sales.

Its also worth noting Nintendo played with add-ons for NES. They worked on a CD add-on for SNES. The N64 did get the 64DD in Japan as well. When I look at Sega CD, I consider we got some solid games that Genesis couldn't really duplicate or do so as well.



Recently Completed
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See this is one of things I love about Sega, for all their missteps, their stint as a console maker is one hell of a story. (Or should that be Saga?)



Bet with Liquidlaser: I say PS5 and Xbox Series will sell more than 56 million combined by the end of 2023.

Mr Puggsly said:
JWeinCom said:

The problem is that add ons just rarely work in gaming. By definition, they just cater to an already existing portion of the existing base. Even if your system is a major success and sells 100 million, you need to sell the add on to half of your base to get it to a decent market.

Meanwhile, you're narrowing your brand as a whole because big titles like Sonic CD are only accessible to a small base. Then you have market confusion, especially when you have the 32X as well. People don't necessarily want to buy a machine if they think they may have to keep upgrading it to play everything. They want to be set. 

I don't fault Sega, because it was a new industry. Sega had a lot of innovative ideas that would be refined successfully by others, but they were sometimes ahead of their time in the wrong way. If Sega had not done either add on, and refocused their efforts into making sure the Saturn had great content they'd have been better off. 

Add-ons just generally aren't a strong idea, unless you're fine with them being a niche product and they're not going to take up too many resources. The Wii-mote could have easily been an add on to the Gamecube (I think it was conceived as such) but Nintendo realized from previous products that it was best to sell it as a complete product. 

I think the goal of add-ons was trying to keep users engaged with unique or better experiences. Maybe even to deter them from other platforms. Sega CD wasn't much of a success, but I do believe it had a solid library with numerous titles that were later ported to other platforms. That was certainly the goal of the 32X, but it seems like horribly designed hardware overall.

Ideas I consider bad from Nintendo were the DSi and New 3DS. The DSi was needed for access to digital games. While the New 3DS was a half assed upgrade that gave access to an underwhelming library. They also locked SNES emulation to New 3DS to drive sales.

Its also worth noting Nintendo played with add-ons for NES. They worked on a CD add-on for SNES. The N64 did get the 64DD in Japan as well. When I look at Sega CD, I consider we got some solid games that Genesis couldn't really duplicate or do so as well.

I get what the goal was, but like I said, Sega was a bit ahead of their time. The concept just wasn't ready.

With the DSi and New 3DS, they worked fine because they were replacements for portable hardware, and they had other features that made it more appealing. People are going to replace portables anyway as they get banged up. So they worked as hardware revisions. The exclusive games for them didn't really sell very well.

I'm not arguing that the CD wasn't decent hardware, but it just wasn't a good idea from a marketing point of view.