Sega re-entering console wars: an awful, terrible possibility

sonic Doing some news work for FileFront, the video game site I sometimes freelance for, I stumbled upon this story.

The article basically sells a rumor that Sega, the creator of the Dreamcast, Sega Genesis, Game Gear, Sonic the Hedgehog and numerous arcade games, is thinking about throwing its hat back in to build home consoles in the next hardware generation.

Which is, of course, a terrible idea. Because Sega is terrible with consoles. In fact, it’s so bad an idea that Sega should be physically restrained from doing so. No one will suffer but you, me, and video gaming at large.

Observe the following history:

Sega made home game machines for about two decades – the last one being the Dreamcast, which it released in 1999. The Sega Genesis, the 16-bit cartridge-based machine that competed with the Super Nintendo, by far was its most successful. It had a lot of the same games as the SNES, a few of its own, but one resounding success – there were games. Lots of games.

Under the Genesis flag, being waved madly by Sonic, Sega at one point snagged 65 percent of the console market. In the 1980s, Sega was developing innovative games and hacking away in Japan. Sega was winning the console fight before 1994.

But that’s also when the horrific crash-and-burn downfall began.

Sega was losing money and market share by 1994, just after it rolled out Sega CD in 1993. A precursor to all future video gaming, Sega CD was an add-on attachment for the Genesis that played CD-based software, and had all the cool accoutrements to go with it – like full-motion video and voice acting. For the first time, these elements could be incorporated into games, taking them to a new, beyond-cartoon-style level. It was Sega’s first attempt of many to out-technology the SNES, which was garnering more and bigger exclusive games, while Genesis lagged behind with sequels to Sonic that weren’t enough to prop up the whole system.

sega's annual losses Despite being, in many ways, a revolution, the Sega CD didn’t take off. It did sell 6 million units here and abroad, which is sort of insane given the size of the gaming industry in 1993, but it was overpriced and had weak support from gaming companies. Which makes sense, given the machine ran a medium that no one was really producing – we’re talking about a time when PC games barely ran on CD. What gaming company was equipped to make CD games in 1993 for one console add-on that no one owned?

Really, Sega should have kicked out a bunch of great games themselves. But they failed to do that. So the Sega CD failed miserably, costing the company a bunch of money.

Despite aggressive, often successful advertising, the Genesis was getting its ass kicked by 1994. Sega’s share of the market had diminished to 34 percent. Profits were on the decline. Sega decided more and more hardware was the answer, and started shoveling boatloads of money into developing new machines.

Sega started shipping other stuff. The 32X was a cartridge add-on that played 32-bit games using the Genesis hardware – basically, the next system generation (the Sony Playstation plays 32-bit games) without the next system. It was released in late 1994.

32xsegacd A stunning failure, I remember 32X having maybe five games, all awful. The real total is upwards of 25 or 30, although I can’t pin down a hard number. The machine was overpriced, retailing at about $160, its games were universally crap, no one was equipped to develop for it, and Sega failed to develop for it itself at launch. Plus, in a brilliant move, Sega was already developing its next software platform, the Sega Saturn – and the potential of that system overshadowed the 32X. Undercutting a current-gen piece of hardware with its next-gen piece of hardware, also known as the shoot-own-foot maneuver, is a mainstay in the Sega repertoire of idiot moves.

Metalhead, a 32X game. The 32X was pretty much a Genesis-killer. Sega had dropped a bunch of money into the 32X and Sega CD without developing decent games for them. The add-ons cost a bunch of money and sold like polished turds. So Sega dropped support for both of them and refocused its attention. It’s this continual refocus that characterizes Sega’s story of failure.

Sony was rolling out the Playstation, a 32-bit CD-based system, right around the same time the Saturn was getting ready to launch. Meantime, Nintendo was developing the N64 way on the outside – it was skipping the entire 32-bit console generation and maintaining development of games for SNES. Sony was an unknown quantity that hadn’t developed hardware (or even really video games) before, and Nintendo wasn’t rolling out new hardware. Sega should have pummeled in 1995.

donkey kong country (As an aside, Nintendo released graphically stunning games like Donkey Kong Country in the face of 32-bit machines, and they sold stunningly well. The SNES was redesigned and re-released in 1997, when Nintendo made its last game for the system – and Nintendo was still shipping SNES consoles in 1999[!]. That’s an eight-year lifespan for a video game console. Because those guys know how to make a decent machine.)

Sega, instead, suffered defeat at the hands of the Playstation, even though the Saturn dropped before Playstation in May 1995. And Sega rolled out some premiere titles, running graphics and speeds previously unseen in a major console, like Virtua Fighter and NiGHTS. But it made mistakes. One of them was the huge price – $399 – and another a stunt born of intense idiocy.

Up until the big yearly E3 gaming conference in May 1995, Sega had been touting a September release date. Then, at its E3 show, Sega yanked the tablecloth out from under the fine china: the September release was a ruse. It was shipping consoles immediately.

It seemed like a great idea at the time, but not even the flowers were still standing after Sega’s announcement.

People don’t like things surprising them when it comes to video game hardware releases. This is especially true for people who own stores and are suddenly expected to carry said hardware. Imagine gamers, suddenly learning about the four-month jump on a 32-bit console, rushing out to Target, Best Buy, Funco Land and Walmart and finding – nothing. Those consoles hadn’t shipped yet, or they hadn’t arrived yet; worse, Walmart had no idea they were coming for another four months. Stores weren’t ready – they didn’t even have clear shelves to put Saturns on. Consumers were pissed, store owners were pissed, developers were pissed. The gimmick failed miserably.

Saturn_sega And just like with the Genesis and its add-ons, Sega failed to procure the third-party support it needed for the Saturn to thrive. Sony was pumping games out of its own studio, 989 – Crash Bandicoot, notably, and Syphon Filter – and working hard to develop third-party support – like in the case of Squaresoft, which developed Final Fantasy VII for Playstation in 1997 and broke all kinds of sales records. Sega, on the other hand, sat on its hands, failed to roll out a new Sonic, and eventually abandoned the Saturn.

Here’s how it happened. Sony was blasting away with an overall better software network. Nintendo threw down with the N64 in 1996 (a year late!), jumping 32-bit and moving on to the more-powerful 64-bit processor (even though it was still publishing on cartridge, which overall held less information and cost more for game companies to develop). Both Sony and Nintendo, to stay competitive, were releasing lower-priced systems and dropping their prices when necessary. The Playstation launched at $299 and N64 at $199, and prices got slashed over the next few years.

Meanwhile, Sega…did nothing.

Through yet more incredibly poor planning, Sega had made the Saturn a big, bulky, irritating machine. Sure, it ran well and was fast – but it was hard to scale down or scale back. Sega was incapable of creating a cheaper Saturn under the laws of physics. They lagged on price cuts and started to lag on sales. Remember, the thing was still a minimum of $100 more than its competitors.

After a while, Sega got around to fixing this – by packaging its three best-selling games, Virtua Cop, Daytona USA and Virtua Fighter 2, with the console. But as with everything in the Sega story, the damage was already done. Saturn sales sucked so hard that by 1997, two years after its launch, Sega was talking about a new system, the 128-bit Katana, at E3. It would later be renamed the Dreamcast.

DreamcastOf course, given its history – two failed add-on systems that preceded the launch of a new console, which preceded the launch of a new console – Sega pissed off a lot of gamers and developers. It kept releasing hardware and expecting people to buy it or produce for it. Then, when those people started to do so, Sega stopped supporting the machine. Most of its hardware from 1994 to 1999 seemed like it was just a placeholder for this Katana/Dreamcast thing. People stopped buying Saturn, because why buy this machine when a better machine’s already on the horizon? Same with developing games for Saturn. Not to mention that when hardware companies announce new systems, the days of the old system are immediately numbered. It makes no fiscal sense to develop games on a doomed, under-established console.

Saturn production ceased in 1998 just about everywhere, although it lasted to 2000 in Japan.

To much fanfare and in what would become the greatest console launch up to that point, Sega squeezed out Dreamcast in North America on Nov. 9, 1999 (9/9/99, if you remember the very cool advertising campaigns).

Dreamcast is definitely one of the best consoles ever. It dropped the world’s first console massively multiplayer online RPG (a game in the vein of World of Warcraft and EverQuest) with Phantasy Star Online. It was the first console with Internet support (using a 56K modem, but hey). It had a sweet controller and a controller-based memory unit with its own screen – which you could take away and play little Tamagotchi-type games on, or use to call football plays during games so no one else could see them. Dreamcast produced several benchmark games that would come to define the future of the industry and change how it was received. It had a new, very cool Sonic game.

Phantasy Star Online In essence, Dreamcast was the console Sega had always been trying to make. It sold 500,000 units in the first week, which was unprecedented up to that time.

Online support meant Sega was doing something no one was doing – even the venerated Playstation 2, which eventually would have a network adapter, but not at its 2000 launch. Seeing as Internet multiplayer has become The Standard of console (and computer) gaming, Dreamcast was years ahead of the curve. Internet multiplayer wouldn’t really ramp up until Microsoft got into console gaming with the Xbox in 2001 and its Xbox Live service in 2002. It wouldn’t happen until we were in a whole new millennium.

But Dreamcast didn’t sell, despite a 15-month jump on the Playstation 2 and Internet connectivity. It had a tiny library of games because Sega had a terrible relationship with developers, having bent them over and screwed them so many times during the past six years.

And gamers, too, were jaded. Think of it – you’d been a Sega supporter since the Genesis in 1991. And every time you handed Sega your money, they snagged it and bit your hand before you could withdraw. Every piece of hardware bought between 1993 and 1998 had been discontinued with barely any games (and even fewer good games), effectively swindling you out of your cash. Meanwhile you could have bought one Super Nintendo and played it for the entire decade. Every other major console on the market enjoyed an average lifespan of about five years – maybe more. Sega’s machines: two years.

Sega had sucked too hard for too long and, facing horrific losses, dropped out of consoles altogether in 2001. They didn’t just stop making Dreamcast – they surrendered the console war. Broken and bloody, Sega nearly put itself out of business with some of the worst business practices ever. Today, Sega is a third-party software producer, making games for their competitors, much in the way the conquered armies would be made slaves by the Romans. Okay, not really, but they have been brutally humiliated.

This is the cautionary tale from hell for the gaming industry. Sega should not be allowed to produce a new console. Once Sega went into straight software development, they started profiting again – how could they not, really, having massively reduced their operating costs by hacking off the rotting limb that was their console department.

But now the company has its confidence back, and that’s bad. After being demolished for a decade, another decade has passed with relative Sega success – and rumor has it, Sega thinks it’s back in the game, so to speak. The company doesn’t remember what a dismal failure it is.

But I remember.

The rumored Sega console will be made more cheaply, with cheaper components, then the other next-gen consoles, so it can have a smaller price tag. Already a bad sign. Having been out of console development for better than 10 years, it’s going to take a Herculean effort for Sega to develop the third-party support any console is going to need to thrive. Also bad. And while Sega is doing okay as a software producer, we’re not seeing any giant-killing going on here – Sega is a moderately successful game developer. Are they going to bring “moderately successful” to bear in creating a strong lineup to push the sales of a console? Because they haven’t yet – ever.

But worst of all, if Sega makes a console, people will buy it. Probably not many people, but enough. People who remember the golden days of the Genesis from their childhoods. People who have some kind of awful nostalgia for Sega and what it could have – should have – been. People who want to be optimistic about a company they always kinda liked (even if Sega didn’t even bother to lube it up before they stuck it in) and think, “I’ll give it a chance – maybe it’ll be great.”

“Maybe” my ass. Sega is still Sega. A new console will fail because Sega doesn’t know what it’s doing when it comes to hardware, and gamers as a community will bear the brunt of that fallout. They’ll shell out money to buy this console and money to buy the games, lose out terribly, and be stuck holding the bag. Again.

I see a new Sega console as being bad for video games as a culture. I’m hoping I won’t have a chance to proclaim, “told you so,” in the near future.

2 thoughts on “Sega re-entering console wars: an awful, terrible possibility

  • August 29, 2010 at 10:53 pm
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    Though Sega does still do hardware for arcade systems so they are not really out of the hardware business, just out of the home console one.

  • December 20, 2010 at 1:28 pm
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    I can understand a majority of the rant given here. But as a long time Sega fan, I did not feel disappointment for the Genesis, or the Dreamcast.

    However they had a lull that affected their stance with companies during the Saturn age and the Dreamcast did not sell enough units or games to justify staying with it.

    Sega was able to meet the status quo with the Dreamcast, however this was not enough to justify continued support for the system. They did the best thing they could as to not disappoint their fan base more, and stopped the continued production of the system.

    Their additions to their systems were to entice companies and players to experience new things, though allot of those productions were rushed and lacked a level of support due to likely unorganized, somewhat desperation to maintain a larger business.

    I have to say, I would look forward to a return from one of the great console developers. There are plenty of opportunities in this industry to develop a great machine, much like the Dreamcast was, in reliability and capabilities. Being “late” back into the game can give them insights on the failings of other competitors and work with the consumer base to develop a better unit for the future.

    The Dreamcast is one of the most reliable systems I have seen to this day, as it’s still working for me set up right next to my PS3.

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