❝Story
Sega standardised the quarter and owned the arcade industry
Before video games existed as a category, Sega was the dominant force in arcades. Its 1960s electromechanical game Periscope set the quarter as the standard price of an arcade play session. Sega both manufactured cabinets and operated its own arcade chains internationally, earning on the hardware it sold and the locations it ran.
- Sega began as Service Games, a merger of arcade makers and distributors
- Periscope was an electromechanical cabinet, pre-dating video games
- Sega set the industry-standard price of one quarter per play
- It ran Family Fun Centers in Japan and Sega Centers in the US, later Time Out arcades
- The arcade industry was larger than home consoles and is now largely forgotten
“but on Periscope, the Sega, very innovative Sega game, they standardized the unit of the quarter as what you pay for an arcade video game…”
“nobody was bigger in the arcade industry than Sega. They were the OGs, they literally standardized the quarter, as you say.”
#arcades#sega#history#periscope
❝Story
Michael Eisner and Barry Diller sat on Sega's board in the 1970s
Sega was acquired in 1969 by Gulf and Western, which also owned Paramount Pictures, and was folded into the Paramount empire. Gulf and Western put its two most talented Paramount executives on Sega's internal board: Michael Eisner and Barry Diller. All of this happened before Atari and before a home console industry existed.
- Sega's first recorded transaction dates to 1969
- The acquirer owned Paramount Pictures, so Sega sat inside a movie studio
- Eisner joined roughly 20 years before he became CEO of Disney
- Diller was on the board long before he created Interactive Corp
- Warner Brothers later copied the model when it acquired Atari
“The company that acquires them is Golf and Western, which is a big oil company.”
“So much so that they take their two most talented Paramount executives and they put them on the internal Sega board within Golf and Western.”
#conglomerates#paramount#board#1970s
❝Story
Virtua Fighter told Sony what the PlayStation should be
Years before Super Mario 64, Sega's arcade Virtua series brought convincing 3D polygonal gameplay to market. Virtua Fighter in 1993 sold more than 40,000 cabinets at over ten thousand dollars each, roughly half a billion dollars of revenue. Sony watched its success and, by its own account, the direction of the PlayStation became instantly clear.
- Virtua Racing, Virtua Cop and Virtua Fighter ran on 3D polygonal technology
- Sega, not Nintendo, shipped the first great consumer 3D games
- Over 40,000 Virtua Fighter cabinets sold at roughly $10,000 each
- Sony credited the game with proving 3D imagery was possible at the right moment
- The arcade edge Sega created became the blueprint for the console that destroyed it
“Sega sells over 40,000 Virtua Fighter cabinets worldwide at a price of like $10,000 plus per cabinet.”
“After Sony witnessed the success of Sega's Virtua Fighter in 1993 in Japanese arcades, the direction of the PlayStation became, quote, instantly clear, and 3D…”
#virtua fighter#3d graphics#playstation#arcades
❝Story
Sony put PlayStations inside arcade cabinets to gut Sega
In September 1994 Sony and Namco announced Tekken, billed as a Virtua Fighter killer, running on Namco's new System 11 arcade board. The board was PlayStation hardware. Rival arcade makers moved their development onto Sony's platform, so the technological bleeding edge in arcades and in the living room became the same machine, and it was not Sega's.
- Namco was Sega's biggest arcade rival and partnered with Sony
- System 11 was effectively PlayStation hardware in an arcade cabinet
- Tekken shipped in arcades first and then on the PlayStation
- Other arcade makers followed, with no home consoles of their own to protect
- The global arcade market fell from about $7 billion to $2 billion by the end of the decade
“So this is just the ultimate knife in Sega's back. They're just basically shipping PlayStations inside of these arcade cabinets.”
“So the PlayStation basically killed Sega's arcade business and their console business.”
#namco#tekken#playstation#arcades#competition
❝Story
The Saturn surprise launch that turned three constituencies against Sega
Sega of Japan ordered Tom Kalinske to abandon the announced September date and launch the Saturn on stage at E3 in May 1995, with the ultimatum that another CEO would do it if he would not. The console shipped with no Sonic title, six games and no retail preparation. Consumers, retailers and developers each drew the obvious conclusion.
- Sega had promoted 2 September 1995 as Saturn Day, then launched four months early
- Kalinske was told to do it or be replaced
- No Sonic game, six titles total and a $399 price at launch
- Retailers had inventory en route and their Q4 planning destroyed; KB Toys dropped Sega
- Third-party developers cancelled Saturn plans after watching the keynotes
“Even though the ecosystem isn't ready, the hardware is ready, so we're shipping it.”
“Sega just completely ruined all of their holiday season planning.”
#sega saturn#e3#launch#retail
❝Story
"299": the four-second speech that killed the Saturn
Hours after Sega's surprise Saturn launch at $399, Sony's keynote set the PlayStation's US date for September. Then Steve Race, recently of Sega of America, walked to the podium with a stack of notes, said the number 299, picked the notes back up and left the stage. The room went silent, then erupted in successive waves of cheering as the implication landed.
- Sony's Olaf Olofson announced a 9 September 1995 US release
- Sega briefly believed it had a four-month head start
- Race had masterminded Genesis marketing before joining Sony
- The one-word price announcement undercut the Saturn by $100 on better hardware
- The hosts call it the greatest moment in video game industry history
“He looks up, he looks at the audience, and he says, 299.”
“This exact moment in the afternoon of May 11th, 1995, is the death of Sega.”
#playstation#pricing#e3#steve race
❝Story
Sega said no to SGI, so Kalinske sent Jim Clark to Nintendo
Tom Kalinske wanted Sega's next console powered by Silicon Graphics and pitched a partnership with Jim Clark to Sega of Japan. Japan refused, saying only that the chip was too big. Kalinske, half out the door, looked up Howard Lincoln's number and told Clark to call Nintendo of America. The result was the SGI-based Nintendo 64.
- Kalinske saw the potential of SGI's cutting-edge chips for a next-gen console
- Sega of Japan rejected it with the explanation that the chip was too big
- The refusal coincided with Sony's assault on Sega's arcade business
- Kalinske personally redirected Clark to Nintendo of America
- The N64's architecture came from SGI as a direct consequence
“It was actually Tom Kalinski, the CEO of Sega America, who wanted to do the partnership with SGI.”
“looks up Howard Lincoln's phone number, and says, you should call Nintendo of America”
#sgi#jim clark#nintendo 64#partnerships
❝Story
The chairman who wiped out Sega's debt as he was dying
Isao Okawa, chairman of CSK and later of Sega, had personally lent the company 500 million dollars in 1999. In 2001, near the end of his life, he forgave those debts and returned 695 million dollars of Sega and CSK stock. That transfer was the bridge that let Sega exit hardware and survive as a games publisher.
- Okawa built personal wealth through the CSK-backed Sega buyout
- He lent Sega roughly $500 million in 1999
- In 2001 he forgave the debt and returned $695 million in stock
- Console R&D on Saturn and Dreamcast had drained Sega's cash reserves
- The gift funded the transition to a pure software business
“He actually forgave Sega's debts to him ahead of his death and returned 695 million dollars worth of Sega and CSK stock”
#okawa#csk#restructuring#finance
❝Story
Selfie photo booths bought Sega a few extra years
As the PlayStation drained arcade gaming, Sega partnered with Japanese developer Atlus on Purikura photo booths, an early ancestor of the selfie. They used the same locations and distribution as arcades and generated over a billion dollars of revenue in the late 1990s, booked inside the arcade division. Unlike arcade technology, none of it was defensible.
- The core arcade gaming experience was gutted by the PlayStation
- Purikura booths shared arcade distribution and locations
- They produced over $1 billion in late-1990s revenue for Sega
- The revenue was reported inside the arcade business division
- Fad plus easy competition meant no durable advantage
“So the photo booths in the late 90s make over a billion dollars in revenue that Sega plugs into their quote unquote arcade business division.”
“But unlike cutting edge technology in the arcade video game business, there's nothing defensible about this. It's a one-time cash grab.”
#purikura#arcades#japan#revenue
❝Story
Sonic's designer: Felix the Cat's head on Mickey Mouse's body
Asked years later how he arrived at a blue hedgehog, co-creator Naoto Ohshima gave a one-line answer: he put Felix the Cat on the body of Mickey Mouse. The hosts checked the reference images and found the resemblance obvious once pointed out, right down to the eyes and head shape.
- The design was an explicit mashup of two classic cartoon characters
- Felix the Cat supplied the eyes and head shape
- Mickey Mouse supplied the body proportions
- Blue colouring and sneakers completed the character
- The hosts cut this anecdote from the Nintendo episodes for time
“And uh his answer, he just says, Well, I put Felix the Cat on the body of Mickey Mouse.”
#sonic#character design#trivia