Thoughts on the History of SEGA, Part 04

Welcome back, friends, to our discussion on the history of SEGA, one of the most influential companies in our hobby. Now, Monday, we covered SEGA’s failed attempts to end Nintendo’s reign as King of Gaming Forever and Ever. Today, we’re going to talk about the company’s success.

Original SEGA Mega Drive

Original SEGA Mega Drive

Anyone going up against Nintendo was going to fight an uphill battle. This was a given. If David Rosen and the rest of the people behind SEGA didn’t know it when they first started peeking into the home-gaming market, they certainly understood it very quickly. Still, they didn’t stop trying, even as it threatened to cost the company everything. It was all worth it when, in Nineteen Eighty-Eight, they came out with the SEGA Mega Drive.

The Mega Drive was very nearly another failure. Super Mario Bros. 3 came out the same week as the Mega Drive in Japan, and it was a smash hit. It surely couldn’t have been the sole factor behind the truly terrible sales of the console that first year, but it must have been at least a major contributing factor. The board room must have been a solemn place to be for that year, too. They certainly couldn’t take another year of this.

Thankfully, forces were working in their favor, even if no one really knew it.

Until this point, Nintendo—like Atari before them—had a vice-like grip on their third-party developers. They had to abide by strict guidelines about what the company would and wouldn’t allow, and, perhaps worse, they couldn’t make games for anyone else. Governmental pressure, however, was starting to force them to change that last bit. Developers started being freer to make games for whomever they chose. This left the American market seeming like the perfect opportunity.

Original SEGA Genesis

Original SEGA Genesis

One year after the Mega Drive was released in Japan, it came to American shores, re-christened the SEGA Genesis and packaged with Altered Beast.

SEGA learned from previous mistakes. The American market, by virtue of being filled with Americans, was truly alien to their usual Japanese market, and their previous attempts at penetrating it was hampered almost as much by their own lack of familiarity as by Nintendo. They knew they needed someone to head SEGA of America—and that person was Michael Katz.

Altered Beast

Altered Beast shipped with the Genesis

He came from gaming—he’d worked with Mattel during the days of the Intellivision, Coleco during that system’s time, and when SEGA found him he was working for Atari. He knew gaming about as well as anyone could, and knew the American market better than SEGA did. One month after the release of the Genesis, he was named President of SEGA of America.

Because SEGA didn’t really understand the American market, Katz was given carte blanche to get the Genesis into gamers’ hands. One of the first things he focused on was setting up a group within SEGA of America to focus on software, specifically sports titles. At this point, Nintendo still had third-party developers all but shackled in their basements; though that tide was turning, it was still in the process, which left the Genesis without immediate third-party support. So, Katz’s development team focused on sports, while the development team in the home offices in Japan worked on the other genres.

Though SEGA officials wanted the console to sell a million units—they would, each morning, chant Hyakumandai, which basically means “one million units”—Katz “only” managed to sell around half that. That “only” was in quotes because he considered it a rather fine tabulation, considering that the Genesis was new, didn’t have a large launch-library, and Nintendo had gamers waiting for the Super N.E.S. The heads at SEGA wanted a lot better, and here were the seeds sown for Katz’s eventual departure.

In ‘Ninety-One the Genesis really took off, in part from the aggressive marketing campaign that slung heaps of mud at Nintendo. Their commercials all touted how wonderfully fantastic and simply terrific the console was while calling the N.E.S. and S.N.E.S. everything but a heaping pile of rotting poop.

First "face" of SEGA

Katz knew that to help that campaign, celebrities would be needed. The first one Katz sought was one that would help their sports titles, Joe Montana, quarterback for the San Fransisco 48ers. His price tag was almost two million dollars, but he was definitely worth every penny. He also started the snowball rolling, and eventually celebrities like prize-fighter Evander Holyfield and the King of Pop himself, Michael Jackson, joined Team SEGA.

The grab for celebrities came from Katz knowing that, in his own words, they “COULD NOT compete with the strength of the Nintendo arcade licenses, so as a defensive move, we decided to get (for awareness) personalities”. Those recognizable names, along with the brazen one-finger-salute to Nintendo, helped the Genesis light a fire in the gaming world.

Sonic the Hedgehog

A plumber's worst enemy?

Allegedly, then-President of Nintendo of America, Minoru Arakawa privately admitted to then-Chairman of Nintendo of America, Howard Lincoln, that that bold marketing was the beginning of SEGA finally toppling Nintendo.

There was one more key to the success of the Genesis—a blue hedgehog.

Katz had managed to get a then-tiny company known as Electronic Arts to develop sports titles, which was one major component of the console’s success, but sports titles alone wouldn’t have been enough to do much more than nudge Nintendo rudely. No, SEGA needed something that would rival Nintendo’s Italian plumber.

Sonic was a creation of the Japanese development team, and Katz has admitted he hated the character. He thought basing a character on a hedgehog would go over like a bag of broccoli with with the six-to-sixteen-years-old target demographic. He’s also admitted that he “under-estimated [sic] the potential” of that little blue speed-demon. It had good, solid game-play, which helped make the title insanely popular.

Everything Katz did, he did to help make the Genesis more than just a console, he made it nearly an adventure—but it wasn’t enough for SEGA. Because it “only” sold half of the targeted one million units, and, looking back at it from a more objective vantage point of looking at history, it seemed like they didn’t understand that it sold that many units because of Katz; without him, I will dare to say that the Genesis would have likely been a complete failure. He wasn’t the only one who made the system popular, but without his efforts, I don’t think anyone else could have. They were all as talented and dedicated as Katz, but he had the initiative to take the opportunities presented, and create them when they didn’t exist.

And—we’ll get to those successors, as well as how they contributed, next time. Until then!


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