Console Wars (2020) Movie Script
1
Console Wars
[static crackling]
[bright tone]
[bright tone]
[ominous notes]
[dramatic music]
[static crackling]
[static crackling]
- So my partner Bill and I
- So my partner Bill and I
are going to play
ping-pong for you.
Here we go.
The demo represents some
of the recent developments
The demo represents some
of the recent developments
in the new business of
audience participation in TV.
Watch me take him out
in a minute.
Watch me take him out
in a minute.
Ah, didn't do it.
Ah, I did it this time.
Ah, I did it this time.
We would like
to convince you
that there is indeed a market
that there is indeed a market
in which money can be made
in the near future.
- It was like magic.
- It was like magic.
You could make something
happen on the screen.
You could make something
happen on the screen.
You know,
having grown up with all
You know,
having grown up with all
of this preprogrammed stuff
on the television screen,
you'd never been able
to change that.
- America's most incredible
video game.
- America's most incredible
video game.
- Suddenly,
with this little controller,
you could actually control
something on the screen.
- You control the players
- You control the players
as if you were
coaching your own team.
- It was just unbelievable,
magical.
[blipping]
- There is a new addiction
in America:
- There is a new addiction
in America:
Nintendo video games.
- How many of you own
a Nintendo?
- Joining us from
the company's inner sanctum,
Nintendo game master
Howard Phillips.
Nintendo game master
Howard Phillips.
- This one's got
about 12 times the memory.
The graphics are--
graphics are much better.
Oh.
Oh.
[bright electronic music]
Got it.
[upbeat music]
- People, animals, wizards,
spells,
- People, animals, wizards,
spells,
you see this spread out
over different worlds.
- Nintendo Gameplay,
David speaking.
- Nintendo Gameplay,
David speaking.
How may I help you?
- It's not just stick figures
anymore.
There's much more involved
in playing the game,
There's much more involved
in playing the game,
a better use of colors,
better use of music.
[blipping]
- He is a computerized Italian
swashbuckling adventurer,
- He is a computerized Italian
swashbuckling adventurer,
as Mario is clearly
number one.
[applause]
[applause]
- Not only for this
coming Christmas
but for an entire
new generation.
[video game blipping]
[crowd cheering]
[video game blipping]
[crowd cheering]
- The "Mario Bros."
game cartridge is so hot,
- The "Mario Bros."
game cartridge is so hot,
it is impossible
to find in stores.
- I've done seven stores a day
for three weeks now.
- I've done seven stores a day
for three weeks now.
I cannot find it.
- Can you do something?
My kid wants it.
His friend has it,
and they're not friends anymore
His friend has it,
and they're not friends anymore
'cause he doesn't have it.
- Nintendo's only been around
for three years
but will ring up mind-boggling
sales of $1.7 billion
but will ring up mind-boggling
sales of $1.7 billion
by Christmas.
[blipping]
[blipping]
- We were
the video game industry.
- We can't underestimate
the value
of 60 million players.
- Tetris!
- Tetris!
- Nobody could conceive
of how Nintendo,
with so many great games,
with 95% or more
of the marketplace,
with 95% or more
of the marketplace,
could ever get toppled.
- The last
"Super Mario Bros. 2"
was just sold.
- My eight-year-old
would kill for one.
- My eight-year-old
would kill for one.
- [laughs]
- Nintendo!
- Yeah!
[children screaming]
[children screaming]
- Nintendo! Nintendo!
- Nintendo!
[all scream]
- Nintendo!
[all scream]
- Today Nintendo controls
the home video game market.
- Let's play Nintendo!
- Let's play Nintendo!
- Anybody would have found
that to be a Herculean task,
to try and unseat Nintendo.
to try and unseat Nintendo.
All the other companies
were always trying,
but, you know,
they had maybe one game
or one thing going on,
whereas Nintendo
just had everything.
whereas Nintendo
just had everything.
We're gonna be here forever.
But then it changed.
But then it changed.
[blipping]
[blipping]
[Howard Jones'
"Things Can Only Get Better"]
- We're not scared
to lose it all
Security thrown
through the wall
Security thrown
through the wall
Future dreams
- When I first came to America
was with
the Mitsubishi Corporation.
What I really felt here
in the States
What I really felt here
in the States
was people really have
the opportunity
of making
American dream happen.
of making
American dream happen.
That spirit of sort of
entrepreneurship,
I really fell in love
with that.
I really fell in love
with that.
After working for Mitsubishi
for three years,
Japan headquarters said,
"You must come back,"
Japan headquarters said,
"You must come back,"
but I wanted to stay
in America.
So secretly, I sent my rsum
to an American sort of
So secretly, I sent my rsum
to an American sort of
recruiting firm,
recruiting firm,
and I had a call
at the company called Sega.
I had no idea what it was,
but they are looking
for someone
but they are looking
for someone
to launch their new video game
business in the States.
to launch their new video game
business in the States.
[daunting music]
- And so it was,
late in the 20th century,
terminal boredom
swept the countryside.
terminal boredom
swept the countryside.
The maker looked down and was
not pleased by what he saw.
[explosion booms]
[explosion booms]
And so it was
he brought forth...
[echoing]
Genesis.
[echoing]
Genesis.
[cheerful music]
[car horns honk]
[seal squeaks]
- The moment I started to work
for Sega of America,
- The moment I started to work
for Sega of America,
I started to commute to Sega
San Francisco headquarter
I started to commute to Sega
San Francisco headquarter
because my family
actually lived in Texas,
and I stayed always
in Comfort Suites.
and I stayed always
in Comfort Suites.
This small hotel room
became my home away from home.
I checked in there in,
I think, October of '89,
I checked in there in,
I think, October of '89,
and by the way, I haven't
checked out ever since.
- 800-521-2--
- 800-521-2--
- I don't think
many people knew.
I mean, I'm still shocked
that he still stays there,
personally, but I lived there
for about a year and a half
when I first started at Sega.
when I first started at Sega.
- Hi, welcome to Sega.
- It was hard to build
an organization from scratch
- It was hard to build
an organization from scratch
and launch a major video game
system in the United States.
There's so many hurdles
to get into the business
There's so many hurdles
to get into the business
with all the retailers.
You know, they just
won't buy from anybody.
You have to prove yourself.
You have to prove yourself.
- The challenges we had
in those days
were the very strong
presence of Nintendo.
were the very strong
presence of Nintendo.
- Let's play Nintendo!
-"Nintendo Power" magazine
goes out
-"Nintendo Power" magazine
goes out
bimonthly to players
all around the country.
Right now, it's about
1.7 million.
Right now, it's about
1.7 million.
On a weekly average,
we get about
140,000 phone calls in here.
- The key
is in the hidden town.
- The key
is in the hidden town.
You have to cast a spell
at the dead end.
- Ah.
- "Nintendo Power."
- Another Nintendo game!
- Another Nintendo game!
- And parents are now faced
with portable Nintendo.
all: We are Nintendo.
all: We are Nintendo.
- Say what you want
about Nintendo,
but they were pretty cocky
about their position
but they were pretty cocky
about their position
and felt assured that
we wouldn't have much success.
- Nintendo's a very,
very strong company,
- Nintendo's a very,
very strong company,
and so far, its competition
hasn't been more
than a blip on the screen.
- This is the Sega Genesis.
- This is the Sega Genesis.
This is their next-generation
video game machine.
- The first year,
the expectation was to sell
- The first year,
the expectation was to sell
1 million units
of Sega Genesis,
but sales was not that great.
but sales was not that great.
- We were struggling
at the time, no doubt about it.
- We were struggling
at the time, no doubt about it.
- The president at that time
held a weekly lineup meeting,
and he always somehow seemed
to forget
and he always somehow seemed
to forget
about what we discussed
previous week.
So it repeated and repeated
and repeated and so forth.
So it repeated and repeated
and repeated and so forth.
- [yawns]
[bright tones]
[bright tones]
- So we were stuck between
a rock and a hard place.
- We needed someone to turn
the tide around.
- We needed someone to turn
the tide around.
So Sega brought in
Tom Kalinske,
the prince of toy business.
the prince of toy business.
[upbeat rock music]
- When I was about
to graduate, I got a job
- When I was about
to graduate, I got a job
with J. Walter Thompson
in New York City.
We were given the assignment
to develop
a new children's vitamin,
and we developed
Flintstones Vitamins.
and we developed
Flintstones Vitamins.
- Yabba-dabba-doo!
Yabba-dabba-doo!
- Oh, great idea, Fred.
- Within six months,
it was the number one vitamin
- Within six months,
it was the number one vitamin
in the United States.
- Yabba-dabba-doo!
- But shortly thereafter,
- But shortly thereafter,
the Senate had a subcommittee
on children's advertising.
- Super Sugar Crisp is coated
with super sugar
- Super Sugar Crisp is coated
with super sugar
to make it taste so sweet.
- The feeling at the time
was that
children's sugared cereal
advertising
children's sugared cereal
advertising
and somehow children's vitamins
advertising was bad.
- They're great!
- They're great!
- And the next thing I know,
Senator Margaret Chase Smith
looks at me and says,
"So, Mr. Kalinske,
you think selling drugs
to children is a good idea?"
you think selling drugs
to children is a good idea?"
And so I read a letter
that a mom had actually
written to me that talked
about how grateful she was
written to me that talked
about how grateful she was
because we're selling a vitamin
that the children
actually want to take,
and I said,
actually want to take,
and I said,
"By the way, I have 5,000
more letters like that.
Would you like me to read
some more of them to you?"
And she said, "No,
Mr. Kalinske, that's enough."
And she said, "No,
Mr. Kalinske, that's enough."
Well, the Mattel guys
were there,
and the next thing I know,
they flew me out,
and I was offered a job.
and I was offered a job.
- You can tell it's Mattel.
It's swell.
- Ruth Handler founded Mattel.
- Ruth Handler founded Mattel.
She came into my office,
and she said,
"Tom, the retailers say
it's over for Barbie.
"Forget about Barbie.
"Forget about Barbie.
"Let's get on
to something else.
What do you think about that?"
And I said, "Ruth,
that's the dumbest thing
And I said, "Ruth,
that's the dumbest thing
"I have ever heard.
Barbie will be around
long after you and I are gone."
And she said,
"That's what I wanted to hear!
And she said,
"That's what I wanted to hear!
You're now in charge
of the Barbie business."
Barbie could be anything
that a little girl
wanted her to be.
that a little girl
wanted her to be.
- Barbie's taking
her driver's test.
- I love her long hair.
- Is there room in Barbie's
dream pool for me?
- Is there room in Barbie's
dream pool for me?
- Oh, Daddy.
[laughter]
[exciting music]
- And the business
just took off.
It grew like crazy.
And then we created a series
of different product lines
And then we created a series
of different product lines
that would appeal
to young boys.
And out of this research came
this very muscular character.
And out of this research came
this very muscular character.
- [grunts]
- I have the power!
- [grunts]
- I have the power!
- And it became
a pretty good hit.
So I got promoted to CEO.
[relaxing music]
[relaxing music]
In 1990, I took a vacation
with Karen and the kids...
And literally kind of
lying on the beach...
[birds squawking]
[birds squawking]
And all of a sudden,
this guy appears.
It was Hayao Nakayama,
CEO of Sega Japan.
It was Hayao Nakayama,
CEO of Sega Japan.
And I said,
"What are you doing here?"
He said,
"I'm looking for you."
He said, "Well, I want you
to come to Japan with me
He said, "Well, I want you
to come to Japan with me
because we've got
this great 16-bit technology."
- Sega.
- "We want you to run Sega
- Sega.
- "We want you to run Sega
and take on Nintendo."
And I argued with him.
I didn't really want to go,
I didn't really want to go,
but my daughter Ashley said,
"This man came all the way
from Japan to find you.
"You have to go back with him
"You have to go back with him
to see what
he's talking about."
- It's your destiny.
- After a long discussion
with family,
- After a long discussion
with family,
I did go to Japan.
[airplane engine roaring]
[airplane engine roaring]
[dynamic music]
And I must say,
I was very, very impressed
by what 16-bit technology was
I was very, very impressed
by what 16-bit technology was
compared to what
I had known as 8-bit Nintendo.
[blipping]
[blipping]
And I thought, "This really is
revolutionary,"
but at the same time, I was
somewhat fearful of Nintendo.
but at the same time, I was
somewhat fearful of Nintendo.
[ominous music]
- The men sitting in this room
control the American
video game industry.
control the American
video game industry.
- The NES continues to have
a unit sales projection
through December
of 2 million units.
through December
of 2 million units.
- Nintendo was extremely
arrogant as a company.
- To marketing
vice president Peter Main,
- To marketing
vice president Peter Main,
selling Nintendo is easy.
- They come, they try,
they like, and they buy,
- They come, they try,
they like, and they buy,
and it's a fun business.
[blipping]
- Especially fun
if there's no competition.
- Especially fun
if there's no competition.
- Nintendo threatened
the leading software companies
that if they developed
for any other system,
that if they developed
for any other system,
they would not give them
approval of games on the NES.
- They were able to,
one by one,
- They were able to,
one by one,
contact all major retailers
and intimidate them
contact all major retailers
and intimidate them
or induce them not
to handle Tengen product.
- It was like blackmail.
- No, I don't think so.
No. Sorry.
We were adamant
that this was a legal tactic.
We were adamant
that this was a legal tactic.
- Retailers were the same way.
Retailers were afraid
to carry any other system.
Retailers were afraid
to carry any other system.
- The retailers didn't like us,
okay?
We were not liked.
I don't think
we were ever liked,
I don't think
we were ever liked,
but we were respected.
[gavel banging]
- They were anxious
to sue just about anybody
- They were anxious
to sue just about anybody
that got in their way
of doing business.
- Please, just go away.
We established the rule
We established the rule
that Nintendo was not gonna
get pushed around.
- We were extremely on top
of execution,
- We were extremely on top
of execution,
willing to put resources
where they needed to be
at the right time.
- What Nintendo was doing
was monopolistic
and was wrong.
- Nintendo acts like
a unchained
- Nintendo acts like
a unchained
800-pound gorilla
swinging its way
through America's toy stores.
through America's toy stores.
[dramatic music]
- Save you!
- Help me! Ah!
- Federal and state officials
charge today
that Nintendo threatened
to cut off
that Nintendo threatened
to cut off
supplies of its video games
if retailers charged less
than Nintendo wanted.
if retailers charged less
than Nintendo wanted.
- As a law violator,
a lawbreaker,
you did wrong
to your loyal customers.
you did wrong
to your loyal customers.
- Nintendo!
Oh, man!
- Our relationship
with our customers
- Our relationship
with our customers
is our number one priority,
and that's the reason
that we reached this
comprehensive settlement
today.
comprehensive settlement
today.
I think we had
to pay $5 million.
All of the rest of the penalty
was in the form of coupons
All of the rest of the penalty
was in the form of coupons
that we would give out,
allowing people
to buy more Nintendo games,
allowing people
to buy more Nintendo games,
which was pretty slick,
if you think about it.
- Do you see that price
coming down in the future?
- Do you see that price
coming down in the future?
- I was asked
on the witness stand,
"Do you consider yourself
to be an aggressive
person, Mr. Main?"
to be an aggressive
person, Mr. Main?"
I said, "I'm in marketing.
"It's about growing
market share.
"And whatever gets
in your way,
"you try and work around it
or over it or past it.
"you try and work around it
or over it or past it.
Is that what you mean?"
He said, "That's what I mean."
I said, "That's what we do."
He said, "That's what I mean."
I said, "That's what we do."
[tense music]
- I found something
a lot more scary than cocaine.
- I found something
a lot more scary than cocaine.
It's called Nintendo.
[laughter]
[video games blipping]
- Nintendo was so powerful,
- Nintendo was so powerful,
they had a 95% share
of the market.
It was a dominant position
It was a dominant position
not like which I've ever seen
in my business career,
so the idea of taking on
this giant, Nintendo,
so the idea of taking on
this giant, Nintendo,
that everybody said
is too powerful, too big,
it's an impossible task,
that just appealed to me.
it's an impossible task,
that just appealed to me.
[dramatic music]
I knew that Japanese companies
tended to tightly control
I knew that Japanese companies
tended to tightly control
their operations
outside of Japan,
so before I accepted,
I told Nakayama I needed
so before I accepted,
I told Nakayama I needed
to do things my way,
the American way.
to do things my way,
the American way.
He told me he agreed with me
and he understood that.
So I decided
to take this role on.
So I decided
to take this role on.
[car horn honking]
Sega of America
was a small building,
Sega of America
was a small building,
and there was no real lobby.
People could wander in and out
very easily, not well lit.
People could wander in and out
very easily, not well lit.
It was so different
than what I was used to
at Mattel.
than what I was used to
at Mattel.
It was initially a shock
to the system.
- The day Tom, you know,
came to Sega
- The day Tom, you know,
came to Sega
was a very crucial time.
Tom was someone who can really
grow the company big.
Tom was someone who can really
grow the company big.
- Shinobu mentioned to me
that Tom was coming,
and I said, "Great," you know.
and I said, "Great," you know.
"It's all uphill from here."
- There were executives
at other companies
that were pretty dismissive
that were pretty dismissive
of my coming into
the video game industry
and really having any impact.
and really having any impact.
They thought I was
just another toy guy.
They thought all I knew how
to do was market Barbie dolls
and Hot Wheels cars.
and Hot Wheels cars.
There were even analogies to,
"Oh, here comes Ken
"to save the Sega--
the video game company,
"to save the Sega--
the video game company,
and, boy,
that's not gonna work."
So personally,
that was at stake for me,
and none of us really knew
if this thing with Sega
and none of us really knew
if this thing with Sega
was gonna be a success or not.
I didn't even initially move
my family up to San Francisco.
I didn't even initially move
my family up to San Francisco.
I stayed in a Comfort Inn
very close
to the Sega offices.
very close
to the Sega offices.
It happened to be a place
that Shinobu Toyoda
was also staying at.
- Hi, Tom.
- Tom started staying
at the Comfort Inn,
- Tom started staying
at the Comfort Inn,
and then Tom and I decided
that we would, you know, get,
like, a two-bedroom suite
someplace
for about the same price.
someplace
for about the same price.
- Paul was a great roommate.
We were both baseball fans.
So we'd go back
to the apartment.
We'd have pizza
and drink beer
We'd have pizza
and drink beer
and got up early
and went to Sega.
- [belches]
[uplifting music]
[uplifting music]
I knew Paul Rioux
for a long, long time.
I knew him at Mattel.
So we did discuss
his experience in Vietnam.
So we did discuss
his experience in Vietnam.
- I've had the mustache
since I was,
like--I got out of Vietnam.
like--I got out of Vietnam.
That's why I wanted to get out,
so I could grow a mustache.
- I knew he had gone
through battle.
[gunfire]
[gunfire]
He'd had explosions occur
near his head,
where he lost part
of the hearing in one ear.
where he lost part
of the hearing in one ear.
To Paul, being in business
was very similar to combat.
He wanted to crush the enemy.
He wanted to crush the enemy.
[descending notes]
- You gotta be
ready to fight...
similar in business.
similar in business.
It's not as life-threatening
in the business world,
but sometimes it may be.
- She-Ra,
Princess of Power
- I always felt that one
of my strengths
- I always felt that one
of my strengths
is coming up
with unique strategies
that either make
companies successful
and either work or don't.
and either work or don't.
And it seemed to me
that Nintendo
was selling games designed
for a very young audience.
for a very young audience.
So I saw an opportunity
to go after
the teenage
and college audience,
and let's leave Nintendo
with the kids.
and let's leave Nintendo
with the kids.
[dramatic music]
[dramatic music]
So I worked with Paul
and Shinobu
on putting together a plan
on how we were gonna
take on Nintendo.
on how we were gonna
take on Nintendo.
- Tom and I went
to Sega Japan headquarter,
where there is a big room
called Decision Room,
where there is a big room
called Decision Room,
full of executives
and managers...
full of executives
and managers...
and Nakayama-san
sitting in the center.
- I'm not one to just go
into a business
- I'm not one to just go
into a business
where I think
I'm gonna be second place.
I had studied the market
and had a strategy
I had studied the market
and had a strategy
for what I thought
we needed to do.
First, I wanted to do more
American licenses from TV shows
First, I wanted to do more
American licenses from TV shows
and movies
in the United States...
- [screams]
- Because Japan didn't
understand those licenses.
- Because Japan didn't
understand those licenses.
- Montana, touchdown!
- And I didn't think
the development
could occur in Japan.
could occur in Japan.
Then I said, "We've gotta
lower the price of Genesis."
- We wanted to make it very
competitive against Nintendo.
- We wanted to make it very
competitive against Nintendo.
- And I wanted us
to take on Mario,
- And I wanted us
to take on Mario,
and so I wanted
our best character
to be included
with the hardware.
- Nakayama's face turned
very white, and he said,
- Nakayama's face turned
very white, and he said,
"What, crazy?
That's our lifeblood.
"What, crazy?
That's our lifeblood.
Give it free?"
And Tom told Nakayama-san,
"By the way,
in addition to this"...
"By the way,
in addition to this"...
- I wanted to take Nintendo on
directly in advertising
and make fun of them.
and make fun of them.
- Of course, there was a fear
that Nintendo may sue us
or somehow try to stop that.
or somehow try to stop that.
- After my presentation,
they all talked in Japanese.
- After my presentation,
they all talked in Japanese.
Shinobu would try to translate
in my ear,
but I could tell this
was not going over well.
but I could tell this
was not going over well.
And I thought, "Well,
that's the shortest career
anybody ever had
with a company."
- Nakayama-san got so mad,
his face turning very pale.
- Nakayama-san got so mad,
his face turning very pale.
- Nakayama said,
"Well, nobody agrees with
anything that you've said."
"Well, nobody agrees with
anything that you've said."
- He literally stood up
from chair and almost,
- He literally stood up
from chair and almost,
like, kicking the chair.
I really don't remember
physically did he
kick the chair or not,
but he quickly walked
to the door.
but he quickly walked
to the door.
[blipping]
[blipping]
- But he turned at the door,
and he said,
"When I brought you on board,
I said you could make
"the decisions for the company
in the United States,
"the decisions for the company
in the United States,
and therefore go ahead
and do what you just proposed."
and therefore go ahead
and do what you just proposed."
[crowd cheering]
[victorious music]
[victorious music]
[bells jingling]
- For the third year in a row,
it's on the top
of everyone's Christmas list.
it's on the top
of everyone's Christmas list.
- What do you want
for Christmas?
- Nintendo.
- There were competitors,
- There were competitors,
home video game companies
that were in the business,
and certainly one
of the companies was Sega.
One of the things
that we always did
was have our game people
play their games.
was have our game people
play their games.
[upbeat electronic music]
The feedback was uniformly,
"Great graphics,
The feedback was uniformly,
"Great graphics,
but the games are lousy."
As long as we were
hearing that...
As long as we were
hearing that...
we weren't too concerned.
- Welcome to the Fight Palace.
- Welcome to the Fight Palace.
[eerie electronic music]
- The title that was packed
into the Genesis
was "Altered Beast."
- [roars]
- [roars]
- Not a particularly good game
in my opinion,
but it also sounded
like devil worship
for half of the United States,
for half of the United States,
where that would be
just unacceptable.
And we needed something
to compete with Mario.
And we needed something
to compete with Mario.
[dynamic music]
- So there was company-wide
efforts to come up
with something new.
with something new.
Yuji Naka,
our genius programmer,
came up with algorithm
to move object very fast,
came up with algorithm
to move object very fast,
and he needed a character
to move fast.
- [speaking Japanese]
- [speaking Japanese]
- So he asked
the art designer,
Naoto Ohshima, to come up
Naoto Ohshima, to come up
with some sort of characters.
- [speaking Japanese]
- It was Al Nilsen,
our director of marketing,
our director of marketing,
who had to pick
the characters.
- First game I have here
is "Michael Jackson's
Moonwalker,"
which was actually designed
by Michael himself.
which was actually designed
by Michael himself.
- Al was one of the very
first employees hired
to launch Sega Genesis.
He was the game guru,
marketer, PR, everything.
He was the game guru,
marketer, PR, everything.
- Al's the best gamer
I've ever seen.
- He was like a big kid
- He was like a big kid
who played video games
all the time.
- Shinobu came into my office
and explained
about this contest
and explained
about this contest
that Sega Japan had had
to develop our Mario.
that Sega Japan had had
to develop our Mario.
He says,
"Nakayama has chosen you.
"They're happy
with two finalists,
and they want you to choose."
and they want you to choose."
The first one was Eggs.
"Okay, let's see
what the other one is."
"Okay, let's see
what the other one is."
"A hedgehog?
What in the world
is a hedgehog?"
What in the world
is a hedgehog?"
And there was this rock band.
- He also had a girlfriend
named Madonna,
- He also had a girlfriend
named Madonna,
who was very voluptuous.
[wolf whistle]
- So I've got Eggs
and a hedgehog...
- So I've got Eggs
and a hedgehog...
so I chose Sonic the Hedgehog.
I said, "You gotta
get rid of the rock band,
and you gotta
get rid of Madonna."
- We said, of course,
"No, no, no.
- We said, of course,
"No, no, no.
we can't use
the name Madonna for this."
- But there were
some other tweaks
to the way he looked...
Just to go
and round off his edges.
- The folks in Japan
didn't like that
because it was their creation
and didn't want
anyone to touch.
- It went all the way up
- It went all the way up
inside of the Japan culture
to Nakayama,
and he eventually said, "No,
do what the U.S. wants done."
and he eventually said, "No,
do what the U.S. wants done."
[dramatic music]
- Six months later,
I'm at Sega Japan.
We walk over to a screen,
and here's this guy Sonic.
We walk over to a screen,
and here's this guy Sonic.
[captivating music]
Never seen a video game
move that fast...
Never seen a video game
move that fast...
and look at these
vibrant colors.
After my visit, I went back,
and I said,
After my visit, I went back,
and I said,
"Sega Japan created something
that we can go
"and put up against Mario.
This can be
our number one game."
This can be
our number one game."
[blipping]
[blipping]
- "It's gonna be
the best game Sega ever did."
Coming from Al, that was,
like, you know,
"Hey, we got a runner."
"Hey, we got a runner."
[blipping]
- That changed the mood
and tide,
so to speak,
of the company immediately.
so to speak,
of the company immediately.
And the rest is history,
and, uh...yeah.
and, uh...yeah.
[applause]
- Let's play Nintendo!
- Let's play Nintendo!
[cheers and applause]
- It is the video game craze,
- It is the video game craze,
the Nintendo craze,
but this year, Nintendo
may be up against
some serious competition.
may be up against
some serious competition.
- You get better graphics,
more levels of play,
better animation on the screen,
longer games,
better animation on the screen,
longer games,
just more fun to play.
- Nintendo, however,
does not plan
to relinquish any ground.
to relinquish any ground.
- Introducing the next
generation from Nintendo.
- Almost as soon as the NES was
launched in the United States,
- Almost as soon as the NES was
launched in the United States,
Nintendo was working
on the Super NES.
- What do you do
after you've made a fortune
- What do you do
after you've made a fortune
selling American kids
on a product
that drives
their parents crazy?
You declare it obsolete,
of course, and introduce
You declare it obsolete,
of course, and introduce
a new and improved version
next month.
- Nintendo wants a generation
of video freaks
to forsake the gear
they've already spent
to forsake the gear
they've already spent
several hundred dollars on
for this, Super Nintendo.
for this, Super Nintendo.
[dramatic music]
- So we arranged
with Sega Japan
to go and pick up
one of the new systems for us.
to go and pick up
one of the new systems for us.
And we all got together
in Tom's office,
took it out of the box,
took it out of the box,
hooked it up to the TV,
hit the on switch,
and we were ready to see
what they had in store for us.
and we were ready to see
what they had in store for us.
[blipping]
- We had a Mario launch game.
I knew instantly
we had a winner.
I knew instantly
we had a winner.
That game was that good.
- "Are you sure?"
- "Are you sure?"
This didn't look like 16-bit.
It kind of looked 12-bit,
if I want to coin a phrase.
It kind of looked 12-bit,
if I want to coin a phrase.
It just wasn't taking it
to the next level.
It just wasn't taking it
to the next level.
I was like,
"Yeah, we're okay.
I was like,
"Yeah, we're okay.
"We've got this guy named
Sonic in our back pocket.
This could go and be
very, very interesting."
This could go and be
very, very interesting."
So I came up with an idea.
- Ah, push it
- Ask not what machines
can do for you.
- Ask not what machines
can do for you.
Ask what you can do
for machines.
- The Consumer Electronics Show
is a twice-a-year extravaganza.
- The Consumer Electronics Show
is a twice-a-year extravaganza.
More than 140,000 products
are now on display.
Hundreds of companies
are taking part,
Hundreds of companies
are taking part,
and more than a third of
the industry's annual business
is done right there.
- But this time,
it's for the ducks.
- Wait.
- Uh-oh.
- Whenever you're at war,
- Whenever you're at war,
you always hit the guy
in the mouth
as hard as you can.
If you can't hit him hard,
you might as well
not even fight.
you might as well
not even fight.
That's the attitude
in real war,
and it's the attitude
in business.
You've gotta be prepared
to take on
You've gotta be prepared
to take on
the competition and win.
- Ow, dig it
- Ow, dig it
- Do you think
the technology exists
that these'll shrink even more?
that these'll shrink even more?
- I don't know how much
smaller they can get.
You know what the problem
with them getting smaller
is holding them steady,
because if it's lightweight,
it tends to move.
because if it's lightweight,
it tends to move.
- Salt-N-Pepa,
Salt-N-Pepa
- Nintendo had some new games
and accessories on display
and accessories on display
inside the enormous
Nintendo pavilion.
[women scream]
Nintendo now has
the lion's share
Nintendo now has
the lion's share
of the $5 billion
video game market.
Sega of America
will offer two new games,
one featuring a hedgehog.
one featuring a hedgehog.
- Normally before a big launch
of a--of a major title,
you would start getting
early press.
you would start getting
early press.
We didn't do any of that.
We waited until
the very, very last minute
to surprise Nintendo.
to surprise Nintendo.
- Show the guys
that we know
- Ta-da.
[laughs]
- I don't know
what I'm doing
- I don't know
what I'm doing
- I can't believe it.
Mario, jeez.
- I'm a nice guy, and I felt
that the nicest thing
- I'm a nice guy, and I felt
that the nicest thing
that I could go
and do for Nintendo
was to introduce Super NES
to America for them.
was to introduce Super NES
to America for them.
I see this reporter.
His opening words were,
"Super Nintendo
has 32,768 colors.
"Super Nintendo
has 32,768 colors.
"You only have 512.
What are you gonna do
about it?"
What are you gonna do
about it?"
We walk over to where we had
the two monitors stacked
one on top of each other,
and I said to him,
"Which one has more colors?"
and I said to him,
"Which one has more colors?"
- Push it
Push, push, push,
push it, push it
Push, push, push,
push it, push it
Push it
- He just turned around
and walked out of the booth.
- Push it, push it,
push it
- Push it, push it,
push it
Push it, push it, push it
- And it's like, "Hmm.
"What can we do with this?
"What can we do with this?
"Let's do what we did at CES
but this time a mall tour
going around the country."
but this time a mall tour
going around the country."
[children shouting]
- Here's the challenge.
Super Nintendo, brand-new
competitor of ours, 16 bits.
Super Nintendo, brand-new
competitor of ours, 16 bits.
We challenge them.
We think
we're better than them,
but it's up to you to decide.
but it's up to you to decide.
[upbeat music]
- Our small initial team
was very good,
but it was clear to me
we needed help.
but it was clear to me
we needed help.
- The American marketplace
is a very vibrant marketplace
for the video game industry.
is a very vibrant marketplace
for the video game industry.
- We were one of the first
video game companies
to have senior women
in the management ranks.
And Ellen Beth Van Buskirk
And Ellen Beth Van Buskirk
was a very special find
for us.
- You have the 8-bit segments.
- You have the 8-bit segments.
I spent my entire summer
going from mall to mall
to mall to mall to introduce
Sonic the Hedgehog.
to mall to mall to introduce
Sonic the Hedgehog.
And on occasion,
I would don the Sonic
the Hedgehog character uniform.
I would don the Sonic
the Hedgehog character uniform.
You could project
that the little kids
were gonna pet me.
were gonna pet me.
They were gonna
wanna be hugged.
"Oh, Sonic,"
kisses and hugs and sweetness.
But the teenage boys responded
to me quite differently.
But the teenage boys responded
to me quite differently.
They kind of wanted to do
high-fiving, fist pumping,
They kind of wanted to do
high-fiving, fist pumping,
and I kind of got pushed around
a little bit.
- I think Genesis is gonna win
all the way.
- I think Genesis is gonna win
all the way.
- They wanted
something different.
They wanted attitude.
They wanted sass.
They didn't want hugs.
- For Christmas, I'm gonna
ask my mom for a Sega Genesis
- For Christmas, I'm gonna
ask my mom for a Sega Genesis
because it's way better
than Nintendo.
- Mario was
a very slow-moving,
- Mario was
a very slow-moving,
left-to-right scroll game,
and Sonic was hip
and fast and cool.
- Sega Genesis is way better
- Sega Genesis is way better
because Nintendo
is kind of slow.
- When Sonic
was first released,
everybody kind of scratched
their head and said,
everybody kind of scratched
their head and said,
"A hedge-what?"
- You know, was it impressive
that he could roll really fast?
I don't know.
You know, for me,
I didn't probably have
the reaction time
to deal with it.
- But for a lot of people,
they found it really fun
- But for a lot of people,
they found it really fun
and liked the fast action,
using that pachinko mechanic
of lots of
"ba-ding-a-ding-a-ding,"
very fun to kind of get
that going and keep it going.
very fun to kind of get
that going and keep it going.
And Sonic is a character.
He had that little bit
of edgy kind of wiseness
He had that little bit
of edgy kind of wiseness
that Mario--you know, Mario--
"hoo-hoo"--never had.
- It wasn't empirical science
when you say,
- It wasn't empirical science
when you say,
"Which one
do you like better?"
Doot, doot, doot,
doot, doot, doot.
[imitates whoosh]
[imitates whoosh]
- In speed of action,
we looked better;
graphics, we looked better.
[blipping]
They had never experienced
anything like it.
They had never experienced
anything like it.
- I don't think
Sonic the Hedgehog
was a masterpiece or something,
was a masterpiece or something,
but it gave them
additional momentum.
- By then, I knew
we had a winner,
- By then, I knew
we had a winner,
but we needed to find a way
to get in
the major retailers.
- Wal-Mart's one of those
- Wal-Mart's one of those
- Wal-Mart wouldn't agree
to carry Sega products.
- The only thing...
- Hotter than Nintendo games...
- The only thing...
- Hotter than Nintendo games...
- Is Wal-Mart's price.
- Wal-Mart was making a lot
of money from Nintendo,
and they did not need
any unknown second supplier.
and they did not need
any unknown second supplier.
- And Wal-Mart just refused
because of this pressure
- And Wal-Mart just refused
because of this pressure
that Nintendo put on them.
- We were fanatics
about retail space, okay?
- We were fanatics
about retail space, okay?
[funky music]
That became a thing
we leveraged.
"Hey, you're really doing well
with the product, Mr. Retailer,
"Hey, you're really doing well
with the product, Mr. Retailer,
"but guess how much better
you could be if you had 20,
30, 40 feet
of Nintendo product."
30, 40 feet
of Nintendo product."
- And "Super Mario World"
is included.
- Okay, okay,
we'll get it for him.
- Okay, okay,
we'll get it for him.
- So we developed a strategy
on how to change this.
- So we developed a strategy
on how to change this.
[blipping]
- I came up with an idea
of opening a Sega Game Store
- I came up with an idea
of opening a Sega Game Store
right in front of Wal-Mart
headquarter in Arkansas.
- We rented a store
in a shopping mall
- We rented a store
in a shopping mall
literally as close
to Wal-Mart headquarters
in Bentonville
as you could get,
in Bentonville
as you could get,
and we put as many
TVs and Sega Genesis
in there as we could
and a big sign out front
in there as we could
and a big sign out front
that said,
"Come play Sega Genesis."
- Free of charge.
- Free of charge.
- We had lines of teenagers
out the door.
- The store became very popular
for Wal-Mart employees.
- The store became very popular
for Wal-Mart employees.
- We bought every billboard
leading in and out
of Bentonville
with Sega advertising.
of Bentonville
with Sega advertising.
We bought
the football cushions
at the University of Arkansas
football stadium.
at the University of Arkansas
football stadium.
After a while, a senior VP
of Wal-Mart called me up,
After a while, a senior VP
of Wal-Mart called me up,
and he said, "Tom, stop it.
We'll give you a four-foot
section in Wal-Mart stores."
We'll give you a four-foot
section in Wal-Mart stores."
Because Wal-Mart
is such a powerful retailer,
all the other retailers
gave us more space
all the other retailers
gave us more space
and were less afraid
of Nintendo punishment.
[upbeat music]
[upbeat music]
That changed the business
dramatically.
- As the company started
to grow very fast,
- As the company started
to grow very fast,
we brought in people
from much bigger company
because we are aiming to be
a bigger company.
because we are aiming to be
a bigger company.
[exciting music]
- Sega was such
a distant player.
It wasn't like
they were second.
It wasn't like
they were second.
It was like they were 14th.
They were that far down.
Nintendo was so dominant.
- "Nintendo Power."
Nintendo was so dominant.
- "Nintendo Power."
- So I got a call from Tom,
from Tom Kalinske.
He needed some help
doing marketing,
He needed some help
doing marketing,
and he asked if I would do it.
- Mario!
- It was not dissimilar
to what I did at Reebok,
- It was not dissimilar
to what I did at Reebok,
which was trying to unseat
a category leader.
- No-no-nobody.
- Part of the reason
of going to Reebok
- Part of the reason
of going to Reebok
was the challenge
of slaying the beast of Nike.
- Impossible.
- And we came up
with this idea
called the Reebok Pump.
called the Reebok Pump.
It was totally
a marketing gimmick.
It made your foot a lot hotter.
It made your foot a lot hotter.
It didn't really give you
any more support.
But at the end of the day,
it was one of those things
But at the end of the day,
it was one of those things
that just caught
the consumer psyche.
- Steve Race, the first thing
we heard about
- Steve Race, the first thing
we heard about
is his wild
TV commercial at Reebok.
- One guy is wearing Nikes.
- One guy is wearing Nikes.
The other guy
is wearing Reebok.
They both jump off
this bridge.
[dynamic music]
[dynamic music]
Commercial ran once.
Commercial ran once.
- Steve Race was a terrorist
for A-type personalities.
If he was a college course,
he'd be Trouble and Difficulty.
If he was a college course,
he'd be Trouble and Difficulty.
- I remember Steve
and I playing tennis.
- I remember Steve
and I playing tennis.
He had a mean serve.
I think he was aiming
for my head most of the time.
- Sega had a bad reputation.
- Sega had a bad reputation.
[telephone rings]
I just didn't wanna be
the puppet that would be pulled
I just didn't wanna be
the puppet that would be pulled
by a puppet master
7,000 miles away.
I didn't know
who the puppet master was.
Obviously, it turned out
to be Nakayama-san.
[ominous music]
[ominous music]
Nakayama was the head of SOJ,
and he really was
the patriarch
and the prime mover
in all of Sega.
and the prime mover
in all of Sega.
Nothing went out without
Nakayama's approval
and endorsement.
- Nakayama-san was very
difficult for many people.
- Nakayama-san was very
difficult for many people.
If you do not deliver,
he was brutal.
If you do not deliver,
he was brutal.
- We'd all be on alert
that he was coming in,
and there was this presence,
almost of evil,
that came into the office.
almost of evil,
that came into the office.
- He had very long hair
that he kind of wound
around the top of his head.
that he kind of wound
around the top of his head.
- We had all these ways
that we thought
Nakayama might meet
his demise,
and one of those was that
his hair would get caught
and one of those was that
his hair would get caught
in the rotor blades
of a helicopter
and pull him around
in a very Gatsby-esque death.
and pull him around
in a very Gatsby-esque death.
- [grunts]
[yelling]
- To me, Hayao Nakayama
was a cartoon character,
- To me, Hayao Nakayama
was a cartoon character,
and I loved talking about him.
I mean, we all did, you know?
He had weird hair,
He had weird hair,
he had a weird sensibility,
and he carried
a very big stick.
[upbeat music]
[upbeat music]
The Japanese-U.S. relationship
is kind of confusing.
It really kind of starts
with an American serviceman,
It really kind of starts
with an American serviceman,
David Rosen,
in Japan during the war
David Rosen,
in Japan during the war
and then coming home
and saying,
"Hey, there's
an opportunity me
to sell arcade games
from Japan into the U.S."
to sell arcade games
from Japan into the U.S."
We called each other
SOJ and SOA,
We called each other
SOJ and SOA,
Sega of Japan
and Sega of America.
- I don't think
anyone in Japan thought
taking Nintendo on directly
was a good idea,
taking Nintendo on directly
was a good idea,
but it was something
I felt we needed to do.
[upbeat rock music]
[upbeat rock music]
- [screams]
- [screams]
- [screams]
- People hate advertising
in general.
You know, if I go to a party
and I say I'm a filmmaker,
You know, if I go to a party
and I say I'm a filmmaker,
they go,
"Oh, what films did you make?"
And they think of,
like, really good films.
And you say,
"Oh, I'm an author,"
they think of a good book
that they've read lately.
they think of a good book
that they've read lately.
And if you say
you're in advertising,
they think of the shittiest ad
they've seen in months.
- Oh, yeah!
- Snap into a Slim Jim!
- Oh, yeah!
- Snap into a Slim Jim!
- Sizzler.
- We had four agencies
pitching to us, big names,
and Goodby was a small group.
and Goodby was a small group.
Jeff was the lead.
- We, at the time, had just had
- We, at the time, had just had
one of our
original partners leave,
and Rich and I were left here
and were kind of like,
"We gotta win this, you know?"
Good morning.
Thanks for having us here.
The pitch to Sega
was probably one
of the most elaborate pitches
we've ever done.
of the most elaborate pitches
we've ever done.
We had every person
in the company become an expert
in every game
you could play on the Genesis.
in every game
you could play on the Genesis.
So everybody came out
with these beautiful
athletic jackets,
and we put a sound system
in there
and we put a sound system
in there
that we rented
from the Grateful Dead.
We definitely went overboard.
Eh, lighten up.
Eh, lighten up.
The agencies
we were up against
were really the best agencies
in the country,
and I really thought
they'd think of something
to beat us with.
to beat us with.
- This work is the best work
we have ever done
as a company.
I can't wait to produce it.
So I hope you like it.
I can't wait to produce it.
So I hope you like it.
- This is your brain.
This is your brain
on Nintendo.
This is your brain
on Nintendo.
And this is your brain
on Sega.
[heavy rock music]
[singer screaming]
[singer screaming]
- Whoo!
- Ooh!
- What a ride.
- What a ride.
[light applause]
- And it worked.
- They overwhelmed us
with their pitch.
- They overwhelmed us
with their pitch.
- We did
the first commercials,
and one of them was about
this guy who started off
in a very straight
kind of outfit...
in a very straight
kind of outfit...
- And then transformed
into a really cool guy...
- Welcome to the next level!
- Welcome to the next level!
- Playing Sega Genesis.
[angelic music]
- Welcome to the next level.
- Welcome to the next level.
- I thought
"Welcome to the next level"
was a great line
because it rewarded you
for playing the thing well.
It promised that
there was depth to the games.
It promised that
there was depth to the games.
You got better
and could get up higher.
- On the Sega Genesis.
- It was also saying
to the competition
- It was also saying
to the competition
that "you're not
the next level.
You're behind."
I thought that was
absolutely brilliant.
I thought that was
absolutely brilliant.
[soft music]
- But I don't think
it would have worked
without the Sega Scream.
The Sega Scream was what really
drove the thing in the end.
The Sega Scream was what really
drove the thing in the end.
[rock music]
- [screams]
Sega!
- There was something
about the way
- There was something
about the way
the guy did it...
- Sega!
- That was just really funny.
- Sega!
- It was slightly Japanese.
- Sega!
- Just absolutely--
- Sega!
- Just absolutely--
you couldn't get it
out of your head.
- Sega! Sega! Sega!
Sega! Sega!
- Sega!
- Sega! Sega!
[captivating music]
[captivating music]
- I would go pick up
my daughters at school,
and when they saw me,
they'd say, "Sega!"
- Sega!
- Sega!
- Sega!
- We kind of owned
something that Nintendo
didn't have.
something that Nintendo
didn't have.
They were kind of scrubbed
and clean
and Disney-ish and so on,
and we wanted it to be kind of
uncool to be a Nintendo kid.
and we wanted it to be kind of
uncool to be a Nintendo kid.
That was
our explicit intention.
- Sega!
Sega!
- The advertising was
extremely competitive.
- The advertising was
extremely competitive.
I mean, we made a lot of fun
of Nintendo.
I mean, we made a lot of fun
of Nintendo.
- Look, a cat massager.
[cat meows]
Spread cheese snacks.
Use them to tenderize meat.
- Team Sega represented
the antiestablishment team.
- Team Sega represented
the antiestablishment team.
Nintendo was the Soviet Union,
and Sega were the guys
that were throwing
Molotov cocktails.
that were throwing
Molotov cocktails.
- Hey!
[cat meows]
You still don't have
a Sega CD?
- Huh?
- What are you waiting for,
Nintendo to make one?
Show him.
Nintendo to make one?
Show him.
- Whoa!
- Whoa, color.
- Whoa, color.
- And you just try not
to respond
to those kinds of things.
- Sega!
- Treat them as though
they're--you know,
- Treat them as though
they're--you know,
they're doing that
because they're desperate.
We kicked off each launch
with a three-pronged attack,
including...
I joined in March of 1992.
I joined in March of 1992.
"Nintendo Power" coverage,
and online...
When I first arrived,
there was still sort of a--
I wouldn't say a dismissive
attitude but a feeling that,
I wouldn't say a dismissive
attitude but a feeling that,
"You know what?
This is really not serious."
That quickly changed.
- The Sega Genesis
has blast processing.
- The Sega Genesis
has blast processing.
Super Nintendo doesn't.
[curious music]
So what's blast processing do?
- This "blast processing"
thing,
- This "blast processing"
thing,
it was a total fabrication
of advertising people.
- I like the one when they said
the blast processing.
- I like the one when they said
the blast processing.
- Kids would come into
focus groups, and they'd go,
"Yeah, I know that Nintendo
has 16-bit,
"Yeah, I know that Nintendo
has 16-bit,
but Sega has blast processing."
It was crazy.
- And what if you don't
have blast processing?
- And they have a little truck
for Nintendo.
- And they have a little truck
for Nintendo.
- I would have loved to have
seen the faces
of the Nintendo people
when that thing ran.
of the Nintendo people
when that thing ran.
I would just love it.
- "Blast processing,"
as though it was
technology-related,
was kind of vaporware,
but it was catchy,
was kind of vaporware,
but it was catchy,
and it worked.
- Their advertising
was very effective.
- Their advertising
was very effective.
It tended to make it uncool
to play Nintendo.
- Which is fine, really,
- Which is fine, really,
if you don't mind
being sucked dry.
[mosquito squeaks]
- You gotta give them credit.
- Sega!
- You gotta give them credit.
- Sega!
- I think Kalinske
did a great job.
- Sega!
- Sega!
- What Sega has been doing
to make these ads,
- What Sega has been doing
to make these ads,
they should just keep on
doing more of it
because these ads are great.
- All the kids thought
it was cool.
- All the kids thought
it was cool.
- Sega has the coolest ads,
the best games.
- And as a result,
the company was cool.
- Nintendo's like,
"Where have they been?"
- Nintendo's like,
"Where have they been?"
- You saw it on TV shows.
People were picking up
the popularity of Sega.
People were picking up
the popularity of Sega.
- I'm going to Todd's.
He has Genesis.
- She doesn't even have Sega.
She's such a troglodyte.
- She doesn't even have Sega.
She's such a troglodyte.
- Hell hath no fury
like a woman scorned for Sega.
- I mean, we were becoming
as popular or more popular
than Nintendo.
as popular or more popular
than Nintendo.
[air whistles]
- To Sega,
we say congratulations
for bringing us
the 16-bit Game of the Year,
for bringing us
the 16-bit Game of the Year,
Sonic the Hedgehog.
- I got a call the other day
that an 18-year-old was saying
- I got a call the other day
that an 18-year-old was saying
that Sonic the Hedgehog
made him forget about girls.
So I consider that
a great achievement.
So I consider that
a great achievement.
[techno music]
- When the very first
Sonic game came
- When the very first
Sonic game came
to be released
and became very successful,
obviously, we wanted
to create a sequel.
obviously, we wanted
to create a sequel.
- And part and parcel
with making that successful
was, "How are we gonna
launch it?
was, "How are we gonna
launch it?
How are we going
to support it?"
- We started looking at
what else we could go and do.
- "Ha! Let's do something
like the movies.
Let's do a world
distribution date."
- We were going to make
the game available
- We were going to make
the game available
at every retail outlet
on the same day.
I know this sounds silly today,
but it was hard to do.
I know this sounds silly today,
but it was hard to do.
- "We'll do it on a Tuesday...
- "We'll do it on a Tuesday...
Sonic Two-sday."
[cameras shutters snapping]
- Last Christmas, the world
felt its first Sonic boom
- Last Christmas, the world
felt its first Sonic boom
when "Sonic the Hedgehog 1"
became the most popular
video game of 1991.
became the most popular
video game of 1991.
[bluesy rock music]
- Writing for Tom
was always great.
- Writing for Tom
was always great.
I don't know what it was.
He has a natural sense
about what it will take
to draw in the audience.
He's charismatic,
and he knows it and uses it.
He's charismatic,
and he knows it and uses it.
I'll say he uses it for good
rather than for evil.
I'll say he uses it for good
rather than for evil.
- We believe "Sonic 2" will be
America's hottest video game
this Christmas, and...
both: We project to sell
more than 2 million copies...
both: We project to sell
more than 2 million copies...
- In the United States
between now and Christmas.
- We have Tom speaking,
and then I have Joey Lawrence
- We have Tom speaking,
and then I have Joey Lawrence
running out
from behind the curtain.
[crowd cheering]
[cameras shutters snapping]
[crowd cheering]
[cameras shutters snapping]
You know, we could never afford
the big Hollywood names.
- Dustin Diamond,
come on up here.
- Dustin Diamond,
come on up here.
[crowd cheering]
- But we could afford
teen idols.
- And if you thought
the first one was good,
- And if you thought
the first one was good,
wait till you see
the second one.
- You know,
"Sonic 2" is great.
It's better than the first one.
You have great graphics.
It's better than the first one.
You have great graphics.
Sonic has a new friend
called Tails,
a fox, two tails, cool.
[cameras shutters snapping]
[cameras shutters snapping]
[blipping]
- Sonic Two-sday was so big.
- Sonic Two-sday was so big.
It was a bodacious idea.
- Oh, it's great,
and it's great
because it's two-player,
you know?
because it's two-player,
you know?
So you get to play
with more than just yourself.
[video game blipping]
- But she's--but this is
the exact same board,
and we're playing here
together,
and we're playing here
together,
but she's in a different part
of the board than I am.
So it's something never seen
before, really.
It's great.
It's great.
- We launched in Japan,
Australia, Europe,
all over the world.
- [speaking French]
- [speaking French]
"Sonic 2" is super.
- Pretty good.
- It's brilliant.
- Never, ever been done
before.
- Never, ever been done
before.
- It's comparable
to the launch
of Madonna's "Sex" book,
you know, Sonic Two-sday.
- I'm right below you.
[whistles, applause]
[whistles, applause]
- It was an amazing hit.
- Sega!
[high-pitched squeal]
[car horns honking]
[high-pitched squeal]
[car horns honking]
[coins clinking]
[frantic music]
- Oh!
- Oh!
- When Genesis succeeded
so much
here in America, in Japan,
it did not
necessarily do great.
it did not
necessarily do great.
So that way,
I think Sega of America
became the valuable core
of entire Sega business.
became the valuable core
of entire Sega business.
[upbeat rock music]
- Sega was able to make a dent
in the U.S.,
and it kept us on our toes
because we were
in a real battle.
- As we grew,
as we added more people,
- As we grew,
as we added more people,
Nintendo was in our target.
It became a kind of
"Spy vs. Spy."
Whatever Nintendo would do,
we would try to do better.
Whatever Nintendo would do,
we would try to do better.
- With the Sega Menacer
in my hands,
I'm not afraid of enemy tanks.
- Sega!
- Sega!
[ceremonious music]
- At one point, I was told
there was a dartboard
in Nintendo's office
with my face on it.
in Nintendo's office
with my face on it.
- When we went
to analyst meetings,
it would be Tom Kalinske
and Peter Main.
it would be Tom Kalinske
and Peter Main.
- Well, Peter and I
didn't get along very well.
- A lot of yelling and
screaming at various events.
- A lot of yelling and
screaming at various events.
- I remember getting up
to speak
at one of those meetings,
when I said,
"Boy, following Peter Main
"Boy, following Peter Main
is like following
Dr. Kevorkian."
- It erupted into
a bit of an interesting
- It erupted into
a bit of an interesting
after-three-glasses-of-wine
conversation
that carried on
down Fifth Avenue
in a raging snowstorm.
in a raging snowstorm.
Thank goodness third-party
intervention happened.
[dramatic music]
[dramatic music]
- As '93 started,
there was a big game coming...
- As '93 started,
there was a big game coming...
and it's gonna be available
not just for Super NES
but also for Sega Genesis.
but also for Sega Genesis.
- Mortal Kombat!
[crowd shouting]
[crowd shouting]
- Mortal Kombat!
- "Mortal Kombat"
was a huge coup for us.
For once, we get a big title.
For once, we get a big title.
- Ahh!
- We had "Mortal Kombat"
in its original version
- We had "Mortal Kombat"
in its original version
with all the possibility
for gore and, you know,
chopping people's heads off
and stabbing them
chopping people's heads off
and stabbing them
and what have you.
- There has been so much
violence swallowed into my soul
- There has been so much
violence swallowed into my soul
over the years;
nothing was new.
I mean, consider Roadrunner.
[tense music]
[tense music]
- "Mortal Kombat" went
into a graphic violence area
that Nintendo hadn't allowed
on their consoles.
that Nintendo hadn't allowed
on their consoles.
- We had long discussions
about whether
we should allow the blood.
we should allow the blood.
[Scorpion moaning]
I ultimately decided
that we would not.
I ultimately decided
that we would not.
- Fight!
- The Nintendo version
showed green gore.
[Sub-Zero grunting]
[Sub-Zero grunting]
Well, what human being
has green gore in them?
- I was expecting
we might actually get
some positive feedback
from parents that say,
some positive feedback
from parents that say,
you know, "Bless you.
"You kept the violence
out of this game."
And on the contrary,
I got lots of letters
from parents
I got lots of letters
from parents
criticizing Nintendo
for censoring the game,
and we got our clocks cleaned.
and we got our clocks cleaned.
- [grunts]
- Ahh!
- Tom wins!
- We outsold them five to one.
- Tom wins!
- We outsold them five to one.
[The Chemical Brothers'
"Block Rockin' Beats"]
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- Sega, Sega, Sega!
- All right, a Sega Genesis!
- Sega!
- It's a Sega!
- Sega!
- It's a Sega!
- Sega!
- Whoa!
- [laughing excitedly]
- No way!
- No way!
- Back with another one
of those block-rockin' beats
- Back with another one
of those block-rockin' beats
- I mean,
we dethroned Nintendo.
- Fight!
- Fight!
- "Mortal Kombat"
on Sega Genesis
is the best video game ever.
- Urkel wins!
- Urkel wins!
- I think "Donkey Kong"
is the best game ever.
- "Donkey Kong" sucks.
- You know something?
You suck.
- You know something?
You suck.
[man screams]
- The most complimentary thing
I can say about Nintendo
- The most complimentary thing
I can say about Nintendo
was the fact that they...
reinvented video games.
was the fact that they...
reinvented video games.
- Thank you, Peter.
- They had to create,
out of nothing, an industry.
- They had to create,
out of nothing, an industry.
They not only did that;
they did it well.
[serene music]
[serene music]
- Good afternoon. Nintendo.
Nintendo. please hold.
Thank you. May I help you?
Thank you. May I help you?
- My path to Nintendo
was not so purposeful.
It was just kind of pure luck.
It was just kind of pure luck.
I was at a time in my life
where I was really searching
for something great
and fun to work on,
for something great
and fun to work on,
and it was a place
that was meant--meant for me.
- You always had
to spell Nintendo
back in the early '80s.
Nin-ten-do.
back in the early '80s.
Nin-ten-do.
- I would get on airplanes,
and you'd start talking
to somebody,
and you'd give them
a business card,
and they'd say,
"What's a Nine-tendo?"
and they'd say,
"What's a Nine-tendo?"
- People, when I told them
I was working for Nintendo,
they said, "Huh?
What a--you know, what is that?
Is that a dry laundry?"
What a--you know, what is that?
Is that a dry laundry?"
- For most
of its 99-year history,
Nintendo made board games
and playing cards,
Nintendo made board games
and playing cards,
traditional products
for a traditional way of life.
- Nintendo
was some obscure company
- Nintendo
was some obscure company
that just had
these random helicopter games
and another kind of wannabe
shooter game,
and another kind of wannabe
shooter game,
so it was really nothing
from an arcade game standpoint.
But then Mr. Miyamoto
came along.
But then Mr. Miyamoto
came along.
- Mr. Miyamoto was the original
developer of Donkey Kong
- Mr. Miyamoto was the original
developer of Donkey Kong
and the creator of Mario
as the character chasing him
up the construction site.
as the character chasing him
up the construction site.
- Whereas I was just
a guy at Nintendo,
Miyamoto is the guy,
the master,
Miyamoto is the guy,
the master,
and would go on to design some
of the best games at Nintendo.
and would go on to design some
of the best games at Nintendo.
When "Donkey Kong" first
came in, it was really cool
because you had
this little guy
because you had
this little guy
who you could push up
on the thing,
and he'd climb up ladders.
You'd go up
and, doink, make a mistake.
One of the barrels
would get you.
One of the barrels
would get you.
You'd say, "Oops.
I can do better,"
and then you'd immediately
start playing again.
I mean, just, like,
it was unbelievable.
I mean, just, like,
it was unbelievable.
- We sold
over $100 million worth
of "Donkey Kong"
coin-operated video games
in less than one year,
in less than one year,
and this is a company
that had 30 employees.
- Nintendo of America.
- We'd get shipments
from Japan,
and I wouldn't know
what they were.
Then one of the days,
I open the box,
and there was
this little thing in it.
and there was
this little thing in it.
- [speaking Japanese]
- I thought, "This is cool.
This is great.
- I thought, "This is cool.
This is great.
"Let's, like,
give it to everybody.
Let's bring it over, sell it."
Well, Mr. Arakawa said, "Hmm,
we need to think about this."
Well, Mr. Arakawa said, "Hmm,
we need to think about this."
This thing was really risky,
and it could fail.
This thing was really risky,
and it could fail.
So I started to get exposed
to the fact that there was
this thing called the debacle
of the Atari 2600
this thing called the debacle
of the Atari 2600
and that there was this thing
called the "E.T." cartridge.
- "E.T." video game?
Wow.
- "E.T." video game?
Wow.
[rock music]
[rock music]
- The game was so bad,
so unplayable,
millions of copies
went unsold.
- It is a legendary landfill,
a tomb
where an entire industry
was buried.
Thousands of copies
of one of the epic flops
Thousands of copies
of one of the epic flops
in video gaming history
laid to rest in a New Mexico
city's garbage dump.
laid to rest in a New Mexico
city's garbage dump.
- The video game industry
is now becoming
- The video game industry
is now becoming
very much like Hula-Hoops:
there still may be
a lot of people
fooling around with them,
a lot of people
fooling around with them,
but profits are getting
to be quite negligible.
- Video game cartridges
as Atari.
- Given the collapse of Atari,
the idea
of actually introducing
the idea
of actually introducing
a home video game system
in the United States
was very risky.
- I was, "the original
salesperson" at Nintendo.
- I was, "the original
salesperson" at Nintendo.
I had family members say,
"You're out of your mind.
You have kids.
"You're out of your mind.
You have kids.
"How are you gonna
support your family
when this thing dies
in six months?"
As far as appetite
for video games,
As far as appetite
for video games,
there was none.
- Video games:
play them for fun,
but invest in them
at your own risk.
but invest in them
at your own risk.
- But we still had
really great games,
and that's when
Mr. Arakawa said,
"We should do this."
"We should do this."
- We ultimately
made the decision
to introduce the NES
to New York,
the epicenter
of the toy industry.
the epicenter
of the toy industry.
[crowd cheering]
- Our pitch was very simple.
- You're playing with power!
- You're playing with power!
- This is not
just a video game.
It's an entertainment system.
- It didn't make you think
about your Atari.
- It didn't make you think
about your Atari.
- Will your family be
the first to witness
the birth of the incredible
Nintendo Entertainment System,
the birth of the incredible
Nintendo Entertainment System,
the first to play with R.O.B,
the extraordinary video robot?
- Parents could say,
"Oh, it's got this light gun,
- Parents could say,
"Oh, it's got this light gun,
which is totally new.
Look, it's magical."
- We sent a number
of Nintendo employees
- We sent a number
of Nintendo employees
to Hackensack, New Jersey,
where we had this warehouse
that was infested with rats.
where we had this warehouse
that was infested with rats.
- I couldn't go to the bathroom
in the warehouse
because it was that not-nice.
There was a huge hurricane
that year,
and the warehouse flooded,
and some barrels
start floating around
the parking lot,
start floating around
the parking lot,
and they have, like,
toxic waste symbols on them.
- For the three months,
we did nothing
- For the three months,
we did nothing
but get up in the morning
and give demos to kids
and let kids play while
we talked to their parents.
and let kids play while
we talked to their parents.
- Parents were saying,
you know,
"What is this Nintendo thing?"
- People would show up
with cameras and microphones
- People would show up
with cameras and microphones
and notepads and say...
- "What are you,
on drugs or something?
"Are you guys crazy?
No one wants to look
at a video game now."
No one wants to look
at a video game now."
- I remember
this woman walked up to me
and said, you know,
"What is this?"
and I said,
"Oh, it's Nintendo,"
and she said, "Nintendo?"
and I said, "Yeah,"
and she said, "Nintendo?"
and I said, "Yeah,"
and she goes,
"I hope you fail."
- We left that research session
- We left that research session
feeling a little unsure
of ourselves.
- We had to go out and get rid
of the doubt on so many levels.
- We had to go out and get rid
of the doubt on so many levels.
We're at war, guys.
We gotta make believers
out of the world
We gotta make believers
out of the world
that this is for real,
this can happen,
this can grow.
- The word Nintendo means,
"Work hard,
- The word Nintendo means,
"Work hard,
and the fates
will smile on you."
I like that idea
that if we all just put forth
I like that idea
that if we all just put forth
our best efforts,
then we'd be successful.
- The buyer of video games
at Toys "R" Us
was the ultimate skeptic,
and his name was Hal.
was the ultimate skeptic,
and his name was Hal.
When I came in
with a video game, he said,
"Forget it.
I don't want you to call me.
"Forget it.
I don't want you to call me.
"I don't want you
to contact me.
If I see it starting to sell,
you'll hear from me."
If I see it starting to sell,
you'll hear from me."
- The day before the NES
was supposed to launch,
commercials were on air.
commercials were on air.
We all went to the warehouse
and opened champagne
and literally loaded the truck
to take it to FAO Schwarz.
and literally loaded the truck
to take it to FAO Schwarz.
We went, and we stood outside
the window of FAO Schwarz
We went, and we stood outside
the window of FAO Schwarz
and watched someone
make the first purchase.
The person bought,
like, every game.
- All of a sudden,
the phone rings.
- All of a sudden,
the phone rings.
"Hey, how come
you didn't call me?"
I said, "Well, Hal, you didn't
think it was gonna sell,
and I didn't want
to bother you."
"The thing's blowing out
the stores.
"The thing's blowing out
the stores.
"Get up here now.
Today's Saturday,
and I'm ready
to backup order immediately."
- It may be the most addictive
toy in history.
- It may be the most addictive
toy in history.
- The product started
selling like hotcakes.
- This is as big or bigger
than anything
the toy industry has ever seen.
than anything
the toy industry has ever seen.
- "We're excited
about the possibilities
for this new thing called
Nintendo, whatever that is."
for this new thing called
Nintendo, whatever that is."
- When Nintendo
entered the game,
the video game market
was a losing proposition.
Nintendo says
it brought it back
Nintendo says
it brought it back
with better-quality games
and graphics.
- We decided if we could make
a video game system
with quality games
that we would be successful.
with quality games
that we would be successful.
We took that gamble,
and now I think
it's appropriate for us
to reap the rewards
of that gamble.
to reap the rewards
of that gamble.
That is capitalism.
- If the NES had not been
successfully launched
- If the NES had not been
successfully launched
in New York,
I think it's fair to say
there would not have been
a home video game business.
there would not have been
a home video game business.
- Suddenly, who knew what game
was gonna come out?
- Suddenly, who knew what game
was gonna come out?
Instead of Christmas happening
once a year, it's like,
suddenly Christmas happened
just all year long.
suddenly Christmas happened
just all year long.
- What the hell are you?
- What are you?
- I'm Batman.
- I'm from the future.
- Whoa!
- Whoa!
all: Cowabunga!
- You know,
I remember at the time
seeing Sega at every trade show
and seeing the Sega people,
seeing Sega at every trade show
and seeing the Sega people,
and they were trying so hard
to be successful,
and they were trying so hard
to be successful,
but Nintendo was the only game
in town
until Tom came along.
until Tom came along.
[dramatic music]
- When Tom Kalinske
joined Sega,
- When Tom Kalinske
joined Sega,
we knew his background.
We knew he was
a very fine marketer.
He was a worthy competitor.
He was a worthy competitor.
- When Tom showed up,
it was a little bit
of a message to Nintendo
that the game was changing.
of a message to Nintendo
that the game was changing.
- Tom Kalinske's
a very smart marketing guy
feeding the retailer,
"Yeah, tell me more,
tell me more, tell me more."
"Yeah, tell me more,
tell me more, tell me more."
- I always thought
of Tom Kalinske as, like,
the character
in "The Music Man,"
come into town,
come into town,
drum up a lot of sales,
get them all excited,
and when you look
kind of behind the scenes,
there wasn't quite as much
there as you would expect.
there wasn't quite as much
there as you would expect.
- Sega was kind of
chipping away at our business,
- Sega was kind of
chipping away at our business,
and in particular, they were
going after the harder edge
that Nintendo wouldn't do.
- Something down there
sucked their brains out!
- Something down there
sucked their brains out!
- But we weren't going to chase
the other guys.
That was never a part
of Nintendo's strategy,
That was never a part
of Nintendo's strategy,
to follow the other guys
or try and do
what they were doing.
Instead it was to do what we do
but just do it better.
Instead it was to do what we do
but just do it better.
- I have to admit,
I was not always in favor
of that strategy.
[thunder booming]
[thunder booming]
Having been at Nintendo
for a while, I was young,
Having been at Nintendo
for a while, I was young,
and I still believed
that a lot of my thoughts
were the right way to go,
and they weren't taken,
and maybe, you know,
and they weren't taken,
and maybe, you know,
burned some bridges
along the way.
- All of a sudden, Bill
started smoking cigarettes
and driving sports cars.
started smoking cigarettes
and driving sports cars.
You know, he'd just kind of,
like, turned to the dark side.
Once Bill got out of Nintendo,
he was--he was Bad Bill.
[moody music]
[moody music]
- The Sega Genesis was doing
extremely well,
and so it made sense
for me to switch teams.
and so it made sense
for me to switch teams.
- When he left,
I think Nintendo
felt a sense of--of betrayal.
- He went to work for Tom,
and hey, that's life.
- It was easy for me,
but I think it was difficult
for the Sega people
to accept me.
- We were giving him
a hard time about that,
- We were giving him
a hard time about that,
perhaps
he wasn't true-blue Sega,
and he says, "You know
what I think of Nintendo?"
and he pointed
toward Seattle,
and he pointed
toward Seattle,
dropped his pants,
and mooned Nintendo.
- Tom always said
that it's easy to be
a number two company
challenged to be number one.
a number two company
challenged to be number one.
Once we become
the number one company,
that is the real challenge
starts.
that is the real challenge
starts.
- Video games have become
a $4 billion-a-year business.
There is a growing concern
on Capitol Hill
that parents who buy
some of those games
that parents who buy
some of those games
may not realize just how much
violence they're getting.
- Games so violent, bloody,
- Games so violent, bloody,
and gruesome that parents
and politicians have had it.
- Violent, sexual games
available to youngsters.
- Violent, sexual games
available to youngsters.
- The best thing about games
is violence,
realistic things like blood.
- He scores--oh!
- You know what, Mike?
- He scores--oh!
- You know what, Mike?
You can make their heads
bleed on this game.
- Make somebody's head bleed.
- There it is, Mikey.
Check it out.
His head's bleeding.
- These are not harmless toys.
They can indeed cause
great emotional
and other damage to a child.
and other damage to a child.
- They're just out
for making money,
and they're not worrying
about the kids' well-being.
and they're not worrying
about the kids' well-being.
- Along with that huge success
came the criticism.
I did not expect the U.S.
Congress to get involved.
I did not expect the U.S.
Congress to get involved.
[gavel banging]
- Like the Grinch
who stole Christmas,
- Like the Grinch
who stole Christmas,
these violent video games
threaten to rob
this particular holiday season
of a spirit of goodwill.
this particular holiday season
of a spirit of goodwill.
These games teach a child
to enjoy inflicting torture.
These games teach a child
to enjoy inflicting torture.
- They were threatening
the industry
with severe censorship,
so there was a lot at stake.
with severe censorship,
so there was a lot at stake.
- It was largely political.
"We're gonna restrict
your children
"from being exposed
to these violent video games,
and we're going to make
the world safe for democracy."
and we're going to make
the world safe for democracy."
It was total nonsense,
total bullshit.
It's business and politics
meeting in
the worst way possible.
meeting in
the worst way possible.
- What you're about to see
are scenes
from the most violent
new video games,
from the most violent
new video games,
"Mortal Kombat."
Blood splatters
from the contestants' heads,
and a player wins
the so-called death sequence
and a player wins
the so-called death sequence
pulling off the head
of the opponent
with spinal cord attached.
with spinal cord attached.
I find this segment
deeply offensive
and believe that it simply
should be taken off the market.
and believe that it simply
should be taken off the market.
Let me now call to the table
Howard Lincoln,
senior vice president
of Nintendo,
senior vice president
of Nintendo,
and Bill White, senior
vice president of Sega.
- I'd never been in Congress
before.
Of course, it's always
a little bit intimidating
Of course, it's always
a little bit intimidating
when the senators
sit ten feet above you
and you're down on a little
table in front of them.
and you're down on a little
table in front of them.
- We debated a lot
about who should go,
and we decided that Bill White
was absolutely perfect.
and we decided that Bill White
was absolutely perfect.
Instead of having the senators
address me and address Howard,
have them address Howard
and another guy
have them address Howard
and another guy
who used to work for Nintendo.
- We knew that it also
would irritate
- We knew that it also
would irritate
the hell out of Howard.
- To meet our game guidelines,
we have removed the blood
and death sequences
we have removed the blood
and death sequences
present in "Mortal Kombat."
We did this knowing
that we would lose money
by sanitizing "Mortal Kombat,"
but sanitize it we did.
by sanitizing "Mortal Kombat,"
but sanitize it we did.
- Howard Lincoln
was pontificating about
- Howard Lincoln
was pontificating about
how Nintendo never would do
anything as horrible
as what Sega had done
with "Mortal Kombat."
as what Sega had done
with "Mortal Kombat."
All of a sudden, Bill White
whips out this gun
that they used
in a hunting game.
that they used
in a hunting game.
- Senator, I may also point out
that Nintendo produces
product
for a rapid-fire machine gun.
product
for a rapid-fire machine gun.
- This is a thing that--
it's called the Super Scope.
- This is a thing that--
it's called the Super Scope.
I think that this game
is a target sh--this device
is for target shooting
and whatnot.
is for target shooting
and whatnot.
- To me, that looks like a--
looks like a weapon.
It looks like an assault weapon
of some kind.
- I was starting to get a
little bit agitated with Bill.
- I was starting to get a
little bit agitated with Bill.
He had worked for us,
and he knew what was going on,
so I felt it was necessary
to make our position
so I felt it was necessary
to make our position
very clear, which I did.
And it seemed to go over
quite well.
And it seemed to go over
quite well.
I can't sit here
and allow you to be told
I can't sit here
and allow you to be told
that somehow
the video game business
has been transformed today
from children to adults.
has been transformed today
from children to adults.
Small children bought this
at Toys "R" Us,
and he knows that
as well as I do.
We've got to get
further into this.
We've got to get
further into this.
- Well, thank you.
Thanks for your forthrightness.
Thanks for assuming
responsibility.
Thanks for assuming
responsibility.
I appreciate--I believe you've
shown some leadership here.
You've been a damn sight better
than the competition.
You've been a damn sight better
than the competition.
- People were worried about
video games being like drugs,
we were forcing them
on kids.
we were forcing them
on kids.
They would become
addicted to them.
They would ignore
their studies.
And that turned out to be true.
And that turned out to be true.
No, it didn't.
It wasn't true.
It was the opposite, actually.
I think that the kids that
became video game aficionados
I think that the kids that
became video game aficionados
in many ways
had better imaginations
and a better time
with the world in some ways.
and a better time
with the world in some ways.
- After the Senate hearings,
Kalinske came out
with some comment.
Kalinske came out
with some comment.
- What I had said
was that Nintendo
started these hearings
started these hearings
by sending the senators
videotapes of our video games.
by sending the senators
videotapes of our video games.
- We thought Nintendo
had planted this,
and it was convenient
that Senator Lieberman
actually was getting
reelected that year.
actually was getting
reelected that year.
- I found that to be
absolutely incredible.
This is the guy
that sucks us into this.
This is the guy
that sucks us into this.
I was trying to figure out
a way to, in effect,
say, "Buzz off,"
say, "Buzz off,"
so I decided to write a poem,
so I decided to write a poem,
"Roses are red,
violets are blue.
So you had a bad day,
boo hoo hoo."
So you had a bad day,
boo hoo hoo."
- [laughs]
- Come on.
- Come on.
- I think it sent a message
to Sega
that we were gonna continue
to fight them.
that we were gonna continue
to fight them.
[energetic drum music]
- Every year
at about this time,
the sharpest of
the cutting-edge electronics
the sharpest of
the cutting-edge electronics
are unveiled,
and, oh, the places you'll go.
[applause]
[applause]
- Hey.
- Hey.
- How you doing?
- What a sight for sore eyes.
Come and sit down for a minute.
Come and sit down for a minute.
- All right.
- We just decided to come out
here on a little hunting trip.
As a matter of fact,
As a matter of fact,
there's some
of those little suckers again!
- Hey.
- Hey.
[applause]
- Peter, a lot of people think
that Nintendo
and this whole business
is going right down the river.
- Yeah, Nintendo
had a bad year.
- Yeah, Nintendo
had a bad year.
Sales dropped.
Profits dropped.
But the future's
gotta be bright.
- There was a feeling like,
"You know what?
- There was a feeling like,
"You know what?
"This is a maturing industry.
We need to start acting
that way a little bit more".
From now on,
we'll see no repeats
From now on,
we'll see no repeats
of the "Mortal Kombat"
incident.
"Mortal Kombat 2"
will be the same
whether it's on our platform
or on anyone else's.
whether it's on our platform
or on anyone else's.
- All right.
- Yeah.
- We as a company
had to make a decision.
Were we gonna waver
from the Mario roots?
Were we gonna waver
from the Mario roots?
This was very tough for us.
- The contents may be new,
but the sales formula
hasn't changed at all.
but the sales formula
hasn't changed at all.
We did modify our approach but
without sacrificing standard.
- If kids want video games
to help them define
- If kids want video games
to help them define
their image,
then we're gonna do just that.
The music comes from two
of the hottest grunge groups
out there, the Butthole Surfers
and Sweaty Nipples.
out there, the Butthole Surfers
and Sweaty Nipples.
[laughter and applause]
[laughter and applause]
So live it large, run it free,
and play it loud.
- [belches]
[rock music]
- [belches]
[rock music]
- Play it loud!
- Play it loud!
- And I mean, they--
they kind of got it.
They started to see
what the consumer wanted.
They started to see
what the consumer wanted.
Hey, bravo for that.
Was it iterative of Sega?
Mm, yeah, it was,
and we were complimented.
Mm, yeah, it was,
and we were complimented.
- Sega!
- [belches]
- We now needed to shift again
- We now needed to shift again
and try to figure out, how do
we manage against a company
that's starting to awaken?
that's starting to awaken?
- Sega is the current leader
but only by a slight margin.
In an effort
to keep their edge,
Sega demonstrated the latest
in player interface,
Sega demonstrated the latest
in player interface,
the Activator.
[bell dings]
- Ugh.
- We had this strategy
to use technology.
- We had this strategy
to use technology.
- Not just thinking
one step ahead
but two and three steps ahead.
- You look to the right,
and you see the attacker
- You look to the right,
and you see the attacker
coming in on the right;
you look above you,
and you could see the airplanes
coming above you.
- Welcome to Sega Channel.
- Welcome to Sega Channel.
It's cable,
but you don't watch it.
You play it!
- We see the Internet
and online gaming
- We see the Internet
and online gaming
as one of the big revolutions
in this business.
- They were kind of
just throwing things
- They were kind of
just throwing things
against the wall
to see what would work.
- I didn't want us to become
like Nintendo
and let somebody pass us by,
and let somebody pass us by,
and so having
the next great hardware system
was really critical.
- The next big battle
in the video game wars
- The next big battle
in the video game wars
is about to begin
as manufacturers
try to get people
to trash their old systems
try to get people
to trash their old systems
and trade up to new ones.
- I often get to introduce
our money editor, John Stehr,
- I often get to introduce
our money editor, John Stehr,
but right now,
for the first time ever,
I am going to become
John Stehr.
- It's our way
of introducing you
- It's our way
of introducing you
to the machine
behind today's movie magic.
- [screams]
- It's been a year
of digital distortion.
- It's been a year
of digital distortion.
Artists reanimated
John Kennedy...
- I gotta pee.
- And put Brandon Lee
- I gotta pee.
- And put Brandon Lee
into scenes
shot after his death.
One brand of computer made
all these movies possible,
One brand of computer made
all these movies possible,
the blisteringly fast
computers of Silicon Graphics.
- I got a call from Jim Clark,
- I got a call from Jim Clark,
who was chairman
of Silicon Graphics.
Said, "Hey, we've come up
with a new chipset
"that we think is perfect
for a video game system.
You wanna come over here
and take a look at it?"
[Spin Doctors' "Two Princes"]
[Spin Doctors' "Two Princes"]
We called Nakayama,
explained the situation,
We called Nakayama,
explained the situation,
and said, "You gotta send
a hardware team out."
Nakayama even came himself.
We had a good meeting
at Silicon Graphics.
They showed off
these amazing graphics.
They showed off
these amazing graphics.
- That's what I said now
- They went back to Japan,
and the response to us was,
- They went back to Japan,
and the response to us was,
"No, that's not good enough."
They thought there'd be
too much wasted silicon,
so that was
the excuse they gave.
so that was
the excuse they gave.
- Yeah, yeah
- This was the first time
that a major strategy
- This was the first time
that a major strategy
that I believed in had been
overridden by Nakayama.
- It was a surprise to me.
- It was a surprise to me.
It was a surprise to Tom,
a surprise to everybody
that this happened.
[suspenseful music]
[suspenseful music]
- Initially, I thought
it was honest differences
in hardware architecture,
in hardware architecture,
but I began to see
that there was this jealousy
that was developing
between Sega Japan
that was developing
between Sega Japan
and Sega of America.
You could imagine every week,
your CEOs walking in
You could imagine every week,
your CEOs walking in
and saying,
"How come you're not as good
as those guys in America?"
And they started looking
for ways
where they could disagree
with us
and perhaps, to some degree,
undermine us.
and perhaps, to some degree,
undermine us.
I explained the situation
to Jim Clark, and he said,
I explained the situation
to Jim Clark, and he said,
"Well, what should I do now?"
and I said,
"Well, there's this other
video game company in Seattle.
Maybe you should go
take a visit to them."
Maybe you should go
take a visit to them."
[applause]
- It's a pleasure to be here
this morning.
There's a lot of talk today
about new technology
There's a lot of talk today
about new technology
soon replacing
16-bit video games,
soon replacing
16-bit video games,
but ultimately, only hit games
will bring you customers.
- The Super Nintendo was doing
well and making good money,
- The Super Nintendo was doing
well and making good money,
and so we kept
reminding ourselves,
"It's not about the technology.
It's about the fun
that you deliver."
It's about the fun
that you deliver."
- Here's an old friend
of mine.
This, of course,
is Donkey Kong,
the star of Nintendo's
1981 arcade hit.
the star of Nintendo's
1981 arcade hit.
Well, ladies and gentlemen,
my friendly gorilla is back
Well, ladies and gentlemen,
my friendly gorilla is back
in his new Nintendo game,
"Donkey Kong Country."
[relaxed drum music]
[relaxed drum music]
- Since its release, Nintendo
- Since its release, Nintendo
has sold more
than 6 million copies.
[Tarzan yell]
[Tarzan yell]
- "Donkey Kong Country"
was a critical game for us
to sustain
the momentum of Super NES
to sustain
the momentum of Super NES
in the battle with Sega
and push it right over the top.
in the battle with Sega
and push it right over the top.
- But while we were going
through the battles with Sega,
another competitor
was behind us,
another competitor
was behind us,
and he's preparing
to enter the marketplace.
- Mommy. Mommy. Mommy!
- It's only a movie,
- It's only a movie,
except on a Sony
big-screen TV.
- Oh, good, something romantic.
- Oh, good, something romantic.
- Sony was just desperate
to get into
the video game business.
to get into
the video game business.
- We support the content,
the formats
that we think
the consumer's going to like.
- Olaf Olafsson arrived
in my office one day,
- Olaf Olafsson arrived
in my office one day,
and we started talking about
ways we might work together.
- Sony and Sega
secretly agreed to come up
- Sony and Sega
secretly agreed to come up
with a common hardware unit.
- But we'll each make
our independent profit
off of the software.
We were a much better software
developer than Sony was,
We were a much better software
developer than Sony was,
and so I thought,
"Boy, this is a win for us."
[dramatic music]
[dramatic music]
- Consumer electronics giants
Sony and Sega
are teaming up
on the video games,
putting Sony music
and movie software
putting Sony music
and movie software
behind the video game maker.
- Everybody involved thought
the marriage would happen.
- Everybody involved thought
the marriage would happen.
- Unfortunately, Sega Japan
just couldn't agree
- Unfortunately, Sega Japan
just couldn't agree
with the Sony engineers
on specifications.
I was really upset
I was really upset
and felt like they
didn't try hard enough.
- People were coming
to our door to say,
"Hey, we want to be part of
what you're doing here."
"Hey, we want to be part of
what you're doing here."
For whatever reason,
Sega of Japan
didn't want to play.
Sega of Japan
didn't want to play.
- Kalinske did a good job
of protecting us,
and it wasn't easy.
- He was a bit
like the sin eater.
- He was a bit
like the sin eater.
He was eating all the sins
for the entire SOA group.
- He would tell me what was
going on over there,
- He would tell me what was
going on over there,
but I didn't really
internalize it
'cause I didn't have to
go there and get yelled at
like he did
and scared like he did.
like he did
and scared like he did.
- Once the decision was made
not to do joint hardware
with Sony,
not to do joint hardware
with Sony,
I knew that things
were different now.
- Nintendo, together
with Silicon Graphics,
- Nintendo, together
with Silicon Graphics,
have entered into a worldwide
joint development
have entered into a worldwide
joint development
and license agreement
under which our companies
will develop
this new and unique product.
this new and unique product.
It will feature a new,
true 64-bit
multimedia engine chipset.
true 64-bit
multimedia engine chipset.
- That freaked them out at Sega
because there was
nothing to do about it.
because there was
nothing to do about it.
They just could not get up
to a 64-bit machine right away.
- At that time, the strings
were being pulled by Japan.
We had very limited
degrees of freedom.
We had very limited
degrees of freedom.
Our ideas were
typically ignored
or not responded to,
more often than not,
or not responded to,
more often than not,
and I just wasn't looking
for that intellectually.
And then I got approached
by an executive search firm
And then I got approached
by an executive search firm
looking for someone to run
the Sony PlayStation.
- PlayStation.
- And I said, "Well,
"here's another
interesting challenge.
"here's another
interesting challenge.
I can just undo
what I just did at Sega."
- I was a little bit surprised
that they went for Steve.
- I was a little bit surprised
that they went for Steve.
- I was done,
and I just wanted to move on
and didn't want to stay
at Sega any longer.
and didn't want to stay
at Sega any longer.
- Sony wanted to really
stick it in our eye
at this point,
and clearly, Steve
was delighted to do that.
and clearly, Steve
was delighted to do that.
- My former wife
used to always tell me
that there's no chance that
I'll ever get a broken heart
that there's no chance that
I'll ever get a broken heart
'cause I don't have one.
To me, it's just a decision
that one makes about business.
You can't be
terribly emotional.
You have to be willing to cut
off your hand to save the arm.
[Jax yells]
[Jax yells]
- Sony was really
a scary competitor.
It was kind of like,
the show business people
It was kind of like,
the show business people
were gonna come
into this thing,
and their sound and graphics
were gonna be way
above what we could do.
were gonna be way
above what we could do.
There was a lot of fear around
the Sega halls about that.
There was a lot of fear around
the Sega halls about that.
Kalinske was coming back
from Japan
having nervous breakdowns
about what was coming up.
We had no product at the time.
- At that point,
Nintendo was on the wane.
- The biggest problem
that we have with Nintendo 64
- The biggest problem
that we have with Nintendo 64
is to try to figure out
how to make great software
real-time 3-D.
how to make great software
real-time 3-D.
- We were teasing the retailer
for, like, two years.
- We were teasing the retailer
for, like, two years.
We were showing them
these great graphics,
but from a sales perspective,
it was a killer.
- When Nintendo announced
64-bit system,
Nakayama felt that we got
to make it 64 too.
Nakayama felt that we got
to make it 64 too.
[serene music playing]
- Introducing...
- Sega Saturn.
- Introducing...
- Sega Saturn.
- Sega Saturn was
32-bit machine to start with.
It was too late
to redesign the machine,
It was too late
to redesign the machine,
and we ended up
putting two 32-bit chips.
and we ended up
putting two 32-bit chips.
That made the programming
challenging and complex.
- The software
looked like shit.
Not until three months
before launch did we find out
that the software was not
gonna be there to support it.
that the software was not
gonna be there to support it.
- Not only did
we not have enough software.
We didn't even
have enough hardware,
so we had to limit
so we had to limit
the retail distributors
who carried it,
and we cut out
Target and Wal-Mart,
and we cut out
Target and Wal-Mart,
and these guys
were furious with us.
I expressed
all this to Nakayama,
I expressed
all this to Nakayama,
and he disagreed with me.
He was afraid that Sony
was gonna steal our thunder,
He was afraid that Sony
was gonna steal our thunder,
so he wanted an immediate
launch of Saturn at E3.
so he wanted an immediate
launch of Saturn at E3.
- When giants
in the video game industry
square off against each other
at a major trade show,
square off against each other
at a major trade show,
people pay attention.
With $10 billion on the line,
With $10 billion on the line,
it's all about
which expensive toys
consumers will pay
to play with.
- This is no game; this is
a multibillion-dollar gamble
- This is no game; this is
a multibillion-dollar gamble
for a lot of entertainment
companies.
To borrow from a couple
of their more popular titles,
To borrow from a couple
of their more popular titles,
they're locked
in "Mortal Kombat."
For the losers,
it could spell "Doom."
- Without the right games,
we're delaying the launch
of Nintendo Ultra 64.
we're delaying the launch
of Nintendo Ultra 64.
- We feel it's more important
to make
a good first impression,
have the absolute best possible
software when we launch.
- So you're willing to wait
till '96?
- So you're willing to wait
till '96?
- Yeah, we're gonna wait.
- Product launched in Japan.
We sold 100,000 units
on the first day,
We sold 100,000 units
on the first day,
300,000 units
in the first month.
We're approaching
a million units sold in Japan.
We just need to replicate that
in the United States.
We just need to replicate that
in the United States.
- No question in my mind,
there are gonna be casualties,
and there are gonna be
casualties soon.
[suspenseful music]
[suspenseful music]
- Tom and I were both
staying at the same hotel,
- Tom and I were both
staying at the same hotel,
and they had taken over
the lobby
and the swimming pool,
and they had these large
inflatable balloons
and they had these large
inflatable balloons
of some of their iconic
characters like Sonic.
Somehow those blow-up balloons
wound up
Somehow those blow-up balloons
wound up
in the bottom of the pool.
- He had them deflated,
stuck pins in them
or something.
stuck pins in them
or something.
- After Sonic was found dead
in the bottom of the pool,
Tom came to me and said,
"Steve, can you cut it out?"
Tom came to me and said,
"Steve, can you cut it out?"
and I said, "Tom, no.
There's no way
we're gonna cut it out."
- Clearly they were trying
to out-Sega Sega.
- Clearly they were trying
to out-Sega Sega.
- You know, if you're
planning to buy
- You know, if you're
planning to buy
a new video game machine
this year,
you better start saving
for one now.
Some supersophisticated
new systems
are about to hit the market,
and they are pricey.
are about to hit the market,
and they are pricey.
- Sega rushed Saturn
on the market,
and it sells for around $399,
and it sells for around $399,
and don't expect that price
to come down anytime soon.
- I wish that we could say
we were gonna see prices
come down,
we were gonna see prices
come down,
because I think
it would help my business
and we'd sell a lot more units.
- I'm gonna talk to my parents
about this one.
I like this one a lot.
I like this one a lot.
- You better tell them
it's $399.
- Up next,
the Sony PlayStation.
- I'm going to ask
Sony Computer Entertainment
- I'm going to ask
Sony Computer Entertainment
president of America,
Steve Race, to join me
for a brief presentation.
Steve Race, to join me
for a brief presentation.
[applause]
[cheers and applause]
[cheers and applause]
[desolate music]
- I was sitting
right in front of him.
- I was sitting
right in front of him.
It was Tom and I
and Shinobu, and...
we were just
sitting there watching.
- [screams]
Sony PlayStation!
Sony PlayStation!
[cheers and applause]
- What is that?
What is that?
- What is that?
What is that?
- It's an enormous parade,
including 16 balloons.
- Yeah!
- All right.
- Yeah!
- All right.
- It was a cold and windy day
this Thanksgiving,
and some of the new balloons
didn't fare terribly well.
and some of the new balloons
didn't fare terribly well.
Sonic the Hedgehog
hit a utility pole
around 58th Street
and Broadway.
around 58th Street
and Broadway.
- Oh!
Oh!
- Sonic wounded
an off-duty police officer
- Sonic wounded
an off-duty police officer
and caused minor injuries
to a young woman
and a ten-year-old girl.
Sonic the Hedgehog
didn't finish the parade.
[warm music]
[warm music]
- The success of Sega
of America
- The success of Sega
of America
really is American dream.
- All right.
- Yeah.
- Americans like challenges,
- Americans like challenges,
so I think, overall,
battle against Nintendo
was perfect
for the spirit of Americans
was perfect
for the spirit of Americans
to fight David and Goliath
sort of battle.
So I think I'm very proud
to be part of,
you know,
whole Sega phenomenon.
you know,
whole Sega phenomenon.
- 19 more shopping days
until Christmas,
and the heat is on for parents
all over the country
and the heat is on for parents
all over the country
from kids who simply have to
have this year's hottest toys.
- It's no longer Sega.
Now I'm into Nintendo.
- It's no longer Sega.
Now I'm into Nintendo.
- Nephew wants one,
my son wants one.
- Oh, that's a--that's
a lot of systems.
- Oh, that's a--that's
a lot of systems.
- Go!
- Nintendo's top execs traded
suits and ties for helmets
- Nintendo's top execs traded
suits and ties for helmets
and racing togs today.
- Here comes another finisher!
- Here comes another finisher!
It's Howard Lincoln,
Howard Lincoln,
ladies and gentlemen!
- An incredible race,
an incredible effort.
- An incredible race,
an incredible effort.
What's with the
come-from-behind strategy here?
- Well, at first I thought his
go-kart was faster than mine.
- Well, at first I thought his
go-kart was faster than mine.
But then I found
when I kept crashing into him,
he started moving a little bit
to the right side,
and I was able to get by him.
and I was able to get by him.
- Hey, plumber boy,
mustache man,
- Hey, plumber boy,
mustache man,
your worst nightmare
has arrived.
Pack up your stuff.
[applause]
- In my life, I've been
very fortunate to have worked
with great, wonderful people,
with great, wonderful people,
and my proudest
business accomplishment
was seeing all those people
all doing so well,
was seeing all those people
all doing so well,
all of you who I worked with,
that I owe this--this honor to.
all of you who I worked with,
that I owe this--this honor to.
- Sega!
- Sega.
- Sega!
- Sega.
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- You know very well
Who you are
Don't let 'em
hold you down
Don't let 'em
hold you down
Reach for the stars
You had a goal
- I understand.
- [chuckles darkly]
- But not that many
'Cause you're the only one
I'll give you
good and plenty
I'll give you
good and plenty
- Super Nintendo,
Sega Genesis
When I was dead broke, man,
I couldn't picture this
When I was dead broke, man,
I couldn't picture this
[blipping]
- We would like
to convince you
that there is indeed a market
in which one money--
that there is indeed a market
in which one money--
money can be made
in the near future.
[dramatic music]
[dramatic music]
[dramatic electronic music]
[dramatic electronic music]
Console Wars
[static crackling]
[bright tone]
[bright tone]
[ominous notes]
[dramatic music]
[static crackling]
[static crackling]
- So my partner Bill and I
- So my partner Bill and I
are going to play
ping-pong for you.
Here we go.
The demo represents some
of the recent developments
The demo represents some
of the recent developments
in the new business of
audience participation in TV.
Watch me take him out
in a minute.
Watch me take him out
in a minute.
Ah, didn't do it.
Ah, I did it this time.
Ah, I did it this time.
We would like
to convince you
that there is indeed a market
that there is indeed a market
in which money can be made
in the near future.
- It was like magic.
- It was like magic.
You could make something
happen on the screen.
You could make something
happen on the screen.
You know,
having grown up with all
You know,
having grown up with all
of this preprogrammed stuff
on the television screen,
you'd never been able
to change that.
- America's most incredible
video game.
- America's most incredible
video game.
- Suddenly,
with this little controller,
you could actually control
something on the screen.
- You control the players
- You control the players
as if you were
coaching your own team.
- It was just unbelievable,
magical.
[blipping]
- There is a new addiction
in America:
- There is a new addiction
in America:
Nintendo video games.
- How many of you own
a Nintendo?
- Joining us from
the company's inner sanctum,
Nintendo game master
Howard Phillips.
Nintendo game master
Howard Phillips.
- This one's got
about 12 times the memory.
The graphics are--
graphics are much better.
Oh.
Oh.
[bright electronic music]
Got it.
[upbeat music]
- People, animals, wizards,
spells,
- People, animals, wizards,
spells,
you see this spread out
over different worlds.
- Nintendo Gameplay,
David speaking.
- Nintendo Gameplay,
David speaking.
How may I help you?
- It's not just stick figures
anymore.
There's much more involved
in playing the game,
There's much more involved
in playing the game,
a better use of colors,
better use of music.
[blipping]
- He is a computerized Italian
swashbuckling adventurer,
- He is a computerized Italian
swashbuckling adventurer,
as Mario is clearly
number one.
[applause]
[applause]
- Not only for this
coming Christmas
but for an entire
new generation.
[video game blipping]
[crowd cheering]
[video game blipping]
[crowd cheering]
- The "Mario Bros."
game cartridge is so hot,
- The "Mario Bros."
game cartridge is so hot,
it is impossible
to find in stores.
- I've done seven stores a day
for three weeks now.
- I've done seven stores a day
for three weeks now.
I cannot find it.
- Can you do something?
My kid wants it.
His friend has it,
and they're not friends anymore
His friend has it,
and they're not friends anymore
'cause he doesn't have it.
- Nintendo's only been around
for three years
but will ring up mind-boggling
sales of $1.7 billion
but will ring up mind-boggling
sales of $1.7 billion
by Christmas.
[blipping]
[blipping]
- We were
the video game industry.
- We can't underestimate
the value
of 60 million players.
- Tetris!
- Tetris!
- Nobody could conceive
of how Nintendo,
with so many great games,
with 95% or more
of the marketplace,
with 95% or more
of the marketplace,
could ever get toppled.
- The last
"Super Mario Bros. 2"
was just sold.
- My eight-year-old
would kill for one.
- My eight-year-old
would kill for one.
- [laughs]
- Nintendo!
- Yeah!
[children screaming]
[children screaming]
- Nintendo! Nintendo!
- Nintendo!
[all scream]
- Nintendo!
[all scream]
- Today Nintendo controls
the home video game market.
- Let's play Nintendo!
- Let's play Nintendo!
- Anybody would have found
that to be a Herculean task,
to try and unseat Nintendo.
to try and unseat Nintendo.
All the other companies
were always trying,
but, you know,
they had maybe one game
or one thing going on,
whereas Nintendo
just had everything.
whereas Nintendo
just had everything.
We're gonna be here forever.
But then it changed.
But then it changed.
[blipping]
[blipping]
[Howard Jones'
"Things Can Only Get Better"]
- We're not scared
to lose it all
Security thrown
through the wall
Security thrown
through the wall
Future dreams
- When I first came to America
was with
the Mitsubishi Corporation.
What I really felt here
in the States
What I really felt here
in the States
was people really have
the opportunity
of making
American dream happen.
of making
American dream happen.
That spirit of sort of
entrepreneurship,
I really fell in love
with that.
I really fell in love
with that.
After working for Mitsubishi
for three years,
Japan headquarters said,
"You must come back,"
Japan headquarters said,
"You must come back,"
but I wanted to stay
in America.
So secretly, I sent my rsum
to an American sort of
So secretly, I sent my rsum
to an American sort of
recruiting firm,
recruiting firm,
and I had a call
at the company called Sega.
I had no idea what it was,
but they are looking
for someone
but they are looking
for someone
to launch their new video game
business in the States.
to launch their new video game
business in the States.
[daunting music]
- And so it was,
late in the 20th century,
terminal boredom
swept the countryside.
terminal boredom
swept the countryside.
The maker looked down and was
not pleased by what he saw.
[explosion booms]
[explosion booms]
And so it was
he brought forth...
[echoing]
Genesis.
[echoing]
Genesis.
[cheerful music]
[car horns honk]
[seal squeaks]
- The moment I started to work
for Sega of America,
- The moment I started to work
for Sega of America,
I started to commute to Sega
San Francisco headquarter
I started to commute to Sega
San Francisco headquarter
because my family
actually lived in Texas,
and I stayed always
in Comfort Suites.
and I stayed always
in Comfort Suites.
This small hotel room
became my home away from home.
I checked in there in,
I think, October of '89,
I checked in there in,
I think, October of '89,
and by the way, I haven't
checked out ever since.
- 800-521-2--
- 800-521-2--
- I don't think
many people knew.
I mean, I'm still shocked
that he still stays there,
personally, but I lived there
for about a year and a half
when I first started at Sega.
when I first started at Sega.
- Hi, welcome to Sega.
- It was hard to build
an organization from scratch
- It was hard to build
an organization from scratch
and launch a major video game
system in the United States.
There's so many hurdles
to get into the business
There's so many hurdles
to get into the business
with all the retailers.
You know, they just
won't buy from anybody.
You have to prove yourself.
You have to prove yourself.
- The challenges we had
in those days
were the very strong
presence of Nintendo.
were the very strong
presence of Nintendo.
- Let's play Nintendo!
-"Nintendo Power" magazine
goes out
-"Nintendo Power" magazine
goes out
bimonthly to players
all around the country.
Right now, it's about
1.7 million.
Right now, it's about
1.7 million.
On a weekly average,
we get about
140,000 phone calls in here.
- The key
is in the hidden town.
- The key
is in the hidden town.
You have to cast a spell
at the dead end.
- Ah.
- "Nintendo Power."
- Another Nintendo game!
- Another Nintendo game!
- And parents are now faced
with portable Nintendo.
all: We are Nintendo.
all: We are Nintendo.
- Say what you want
about Nintendo,
but they were pretty cocky
about their position
but they were pretty cocky
about their position
and felt assured that
we wouldn't have much success.
- Nintendo's a very,
very strong company,
- Nintendo's a very,
very strong company,
and so far, its competition
hasn't been more
than a blip on the screen.
- This is the Sega Genesis.
- This is the Sega Genesis.
This is their next-generation
video game machine.
- The first year,
the expectation was to sell
- The first year,
the expectation was to sell
1 million units
of Sega Genesis,
but sales was not that great.
but sales was not that great.
- We were struggling
at the time, no doubt about it.
- We were struggling
at the time, no doubt about it.
- The president at that time
held a weekly lineup meeting,
and he always somehow seemed
to forget
and he always somehow seemed
to forget
about what we discussed
previous week.
So it repeated and repeated
and repeated and so forth.
So it repeated and repeated
and repeated and so forth.
- [yawns]
[bright tones]
[bright tones]
- So we were stuck between
a rock and a hard place.
- We needed someone to turn
the tide around.
- We needed someone to turn
the tide around.
So Sega brought in
Tom Kalinske,
the prince of toy business.
the prince of toy business.
[upbeat rock music]
- When I was about
to graduate, I got a job
- When I was about
to graduate, I got a job
with J. Walter Thompson
in New York City.
We were given the assignment
to develop
a new children's vitamin,
and we developed
Flintstones Vitamins.
and we developed
Flintstones Vitamins.
- Yabba-dabba-doo!
Yabba-dabba-doo!
- Oh, great idea, Fred.
- Within six months,
it was the number one vitamin
- Within six months,
it was the number one vitamin
in the United States.
- Yabba-dabba-doo!
- But shortly thereafter,
- But shortly thereafter,
the Senate had a subcommittee
on children's advertising.
- Super Sugar Crisp is coated
with super sugar
- Super Sugar Crisp is coated
with super sugar
to make it taste so sweet.
- The feeling at the time
was that
children's sugared cereal
advertising
children's sugared cereal
advertising
and somehow children's vitamins
advertising was bad.
- They're great!
- They're great!
- And the next thing I know,
Senator Margaret Chase Smith
looks at me and says,
"So, Mr. Kalinske,
you think selling drugs
to children is a good idea?"
you think selling drugs
to children is a good idea?"
And so I read a letter
that a mom had actually
written to me that talked
about how grateful she was
written to me that talked
about how grateful she was
because we're selling a vitamin
that the children
actually want to take,
and I said,
actually want to take,
and I said,
"By the way, I have 5,000
more letters like that.
Would you like me to read
some more of them to you?"
And she said, "No,
Mr. Kalinske, that's enough."
And she said, "No,
Mr. Kalinske, that's enough."
Well, the Mattel guys
were there,
and the next thing I know,
they flew me out,
and I was offered a job.
and I was offered a job.
- You can tell it's Mattel.
It's swell.
- Ruth Handler founded Mattel.
- Ruth Handler founded Mattel.
She came into my office,
and she said,
"Tom, the retailers say
it's over for Barbie.
"Forget about Barbie.
"Forget about Barbie.
"Let's get on
to something else.
What do you think about that?"
And I said, "Ruth,
that's the dumbest thing
And I said, "Ruth,
that's the dumbest thing
"I have ever heard.
Barbie will be around
long after you and I are gone."
And she said,
"That's what I wanted to hear!
And she said,
"That's what I wanted to hear!
You're now in charge
of the Barbie business."
Barbie could be anything
that a little girl
wanted her to be.
that a little girl
wanted her to be.
- Barbie's taking
her driver's test.
- I love her long hair.
- Is there room in Barbie's
dream pool for me?
- Is there room in Barbie's
dream pool for me?
- Oh, Daddy.
[laughter]
[exciting music]
- And the business
just took off.
It grew like crazy.
And then we created a series
of different product lines
And then we created a series
of different product lines
that would appeal
to young boys.
And out of this research came
this very muscular character.
And out of this research came
this very muscular character.
- [grunts]
- I have the power!
- [grunts]
- I have the power!
- And it became
a pretty good hit.
So I got promoted to CEO.
[relaxing music]
[relaxing music]
In 1990, I took a vacation
with Karen and the kids...
And literally kind of
lying on the beach...
[birds squawking]
[birds squawking]
And all of a sudden,
this guy appears.
It was Hayao Nakayama,
CEO of Sega Japan.
It was Hayao Nakayama,
CEO of Sega Japan.
And I said,
"What are you doing here?"
He said,
"I'm looking for you."
He said, "Well, I want you
to come to Japan with me
He said, "Well, I want you
to come to Japan with me
because we've got
this great 16-bit technology."
- Sega.
- "We want you to run Sega
- Sega.
- "We want you to run Sega
and take on Nintendo."
And I argued with him.
I didn't really want to go,
I didn't really want to go,
but my daughter Ashley said,
"This man came all the way
from Japan to find you.
"You have to go back with him
"You have to go back with him
to see what
he's talking about."
- It's your destiny.
- After a long discussion
with family,
- After a long discussion
with family,
I did go to Japan.
[airplane engine roaring]
[airplane engine roaring]
[dynamic music]
And I must say,
I was very, very impressed
by what 16-bit technology was
I was very, very impressed
by what 16-bit technology was
compared to what
I had known as 8-bit Nintendo.
[blipping]
[blipping]
And I thought, "This really is
revolutionary,"
but at the same time, I was
somewhat fearful of Nintendo.
but at the same time, I was
somewhat fearful of Nintendo.
[ominous music]
- The men sitting in this room
control the American
video game industry.
control the American
video game industry.
- The NES continues to have
a unit sales projection
through December
of 2 million units.
through December
of 2 million units.
- Nintendo was extremely
arrogant as a company.
- To marketing
vice president Peter Main,
- To marketing
vice president Peter Main,
selling Nintendo is easy.
- They come, they try,
they like, and they buy,
- They come, they try,
they like, and they buy,
and it's a fun business.
[blipping]
- Especially fun
if there's no competition.
- Especially fun
if there's no competition.
- Nintendo threatened
the leading software companies
that if they developed
for any other system,
that if they developed
for any other system,
they would not give them
approval of games on the NES.
- They were able to,
one by one,
- They were able to,
one by one,
contact all major retailers
and intimidate them
contact all major retailers
and intimidate them
or induce them not
to handle Tengen product.
- It was like blackmail.
- No, I don't think so.
No. Sorry.
We were adamant
that this was a legal tactic.
We were adamant
that this was a legal tactic.
- Retailers were the same way.
Retailers were afraid
to carry any other system.
Retailers were afraid
to carry any other system.
- The retailers didn't like us,
okay?
We were not liked.
I don't think
we were ever liked,
I don't think
we were ever liked,
but we were respected.
[gavel banging]
- They were anxious
to sue just about anybody
- They were anxious
to sue just about anybody
that got in their way
of doing business.
- Please, just go away.
We established the rule
We established the rule
that Nintendo was not gonna
get pushed around.
- We were extremely on top
of execution,
- We were extremely on top
of execution,
willing to put resources
where they needed to be
at the right time.
- What Nintendo was doing
was monopolistic
and was wrong.
- Nintendo acts like
a unchained
- Nintendo acts like
a unchained
800-pound gorilla
swinging its way
through America's toy stores.
through America's toy stores.
[dramatic music]
- Save you!
- Help me! Ah!
- Federal and state officials
charge today
that Nintendo threatened
to cut off
that Nintendo threatened
to cut off
supplies of its video games
if retailers charged less
than Nintendo wanted.
if retailers charged less
than Nintendo wanted.
- As a law violator,
a lawbreaker,
you did wrong
to your loyal customers.
you did wrong
to your loyal customers.
- Nintendo!
Oh, man!
- Our relationship
with our customers
- Our relationship
with our customers
is our number one priority,
and that's the reason
that we reached this
comprehensive settlement
today.
comprehensive settlement
today.
I think we had
to pay $5 million.
All of the rest of the penalty
was in the form of coupons
All of the rest of the penalty
was in the form of coupons
that we would give out,
allowing people
to buy more Nintendo games,
allowing people
to buy more Nintendo games,
which was pretty slick,
if you think about it.
- Do you see that price
coming down in the future?
- Do you see that price
coming down in the future?
- I was asked
on the witness stand,
"Do you consider yourself
to be an aggressive
person, Mr. Main?"
to be an aggressive
person, Mr. Main?"
I said, "I'm in marketing.
"It's about growing
market share.
"And whatever gets
in your way,
"you try and work around it
or over it or past it.
"you try and work around it
or over it or past it.
Is that what you mean?"
He said, "That's what I mean."
I said, "That's what we do."
He said, "That's what I mean."
I said, "That's what we do."
[tense music]
- I found something
a lot more scary than cocaine.
- I found something
a lot more scary than cocaine.
It's called Nintendo.
[laughter]
[video games blipping]
- Nintendo was so powerful,
- Nintendo was so powerful,
they had a 95% share
of the market.
It was a dominant position
It was a dominant position
not like which I've ever seen
in my business career,
so the idea of taking on
this giant, Nintendo,
so the idea of taking on
this giant, Nintendo,
that everybody said
is too powerful, too big,
it's an impossible task,
that just appealed to me.
it's an impossible task,
that just appealed to me.
[dramatic music]
I knew that Japanese companies
tended to tightly control
I knew that Japanese companies
tended to tightly control
their operations
outside of Japan,
so before I accepted,
I told Nakayama I needed
so before I accepted,
I told Nakayama I needed
to do things my way,
the American way.
to do things my way,
the American way.
He told me he agreed with me
and he understood that.
So I decided
to take this role on.
So I decided
to take this role on.
[car horn honking]
Sega of America
was a small building,
Sega of America
was a small building,
and there was no real lobby.
People could wander in and out
very easily, not well lit.
People could wander in and out
very easily, not well lit.
It was so different
than what I was used to
at Mattel.
than what I was used to
at Mattel.
It was initially a shock
to the system.
- The day Tom, you know,
came to Sega
- The day Tom, you know,
came to Sega
was a very crucial time.
Tom was someone who can really
grow the company big.
Tom was someone who can really
grow the company big.
- Shinobu mentioned to me
that Tom was coming,
and I said, "Great," you know.
and I said, "Great," you know.
"It's all uphill from here."
- There were executives
at other companies
that were pretty dismissive
that were pretty dismissive
of my coming into
the video game industry
and really having any impact.
and really having any impact.
They thought I was
just another toy guy.
They thought all I knew how
to do was market Barbie dolls
and Hot Wheels cars.
and Hot Wheels cars.
There were even analogies to,
"Oh, here comes Ken
"to save the Sega--
the video game company,
"to save the Sega--
the video game company,
and, boy,
that's not gonna work."
So personally,
that was at stake for me,
and none of us really knew
if this thing with Sega
and none of us really knew
if this thing with Sega
was gonna be a success or not.
I didn't even initially move
my family up to San Francisco.
I didn't even initially move
my family up to San Francisco.
I stayed in a Comfort Inn
very close
to the Sega offices.
very close
to the Sega offices.
It happened to be a place
that Shinobu Toyoda
was also staying at.
- Hi, Tom.
- Tom started staying
at the Comfort Inn,
- Tom started staying
at the Comfort Inn,
and then Tom and I decided
that we would, you know, get,
like, a two-bedroom suite
someplace
for about the same price.
someplace
for about the same price.
- Paul was a great roommate.
We were both baseball fans.
So we'd go back
to the apartment.
We'd have pizza
and drink beer
We'd have pizza
and drink beer
and got up early
and went to Sega.
- [belches]
[uplifting music]
[uplifting music]
I knew Paul Rioux
for a long, long time.
I knew him at Mattel.
So we did discuss
his experience in Vietnam.
So we did discuss
his experience in Vietnam.
- I've had the mustache
since I was,
like--I got out of Vietnam.
like--I got out of Vietnam.
That's why I wanted to get out,
so I could grow a mustache.
- I knew he had gone
through battle.
[gunfire]
[gunfire]
He'd had explosions occur
near his head,
where he lost part
of the hearing in one ear.
where he lost part
of the hearing in one ear.
To Paul, being in business
was very similar to combat.
He wanted to crush the enemy.
He wanted to crush the enemy.
[descending notes]
- You gotta be
ready to fight...
similar in business.
similar in business.
It's not as life-threatening
in the business world,
but sometimes it may be.
- She-Ra,
Princess of Power
- I always felt that one
of my strengths
- I always felt that one
of my strengths
is coming up
with unique strategies
that either make
companies successful
and either work or don't.
and either work or don't.
And it seemed to me
that Nintendo
was selling games designed
for a very young audience.
for a very young audience.
So I saw an opportunity
to go after
the teenage
and college audience,
and let's leave Nintendo
with the kids.
and let's leave Nintendo
with the kids.
[dramatic music]
[dramatic music]
So I worked with Paul
and Shinobu
on putting together a plan
on how we were gonna
take on Nintendo.
on how we were gonna
take on Nintendo.
- Tom and I went
to Sega Japan headquarter,
where there is a big room
called Decision Room,
where there is a big room
called Decision Room,
full of executives
and managers...
full of executives
and managers...
and Nakayama-san
sitting in the center.
- I'm not one to just go
into a business
- I'm not one to just go
into a business
where I think
I'm gonna be second place.
I had studied the market
and had a strategy
I had studied the market
and had a strategy
for what I thought
we needed to do.
First, I wanted to do more
American licenses from TV shows
First, I wanted to do more
American licenses from TV shows
and movies
in the United States...
- [screams]
- Because Japan didn't
understand those licenses.
- Because Japan didn't
understand those licenses.
- Montana, touchdown!
- And I didn't think
the development
could occur in Japan.
could occur in Japan.
Then I said, "We've gotta
lower the price of Genesis."
- We wanted to make it very
competitive against Nintendo.
- We wanted to make it very
competitive against Nintendo.
- And I wanted us
to take on Mario,
- And I wanted us
to take on Mario,
and so I wanted
our best character
to be included
with the hardware.
- Nakayama's face turned
very white, and he said,
- Nakayama's face turned
very white, and he said,
"What, crazy?
That's our lifeblood.
"What, crazy?
That's our lifeblood.
Give it free?"
And Tom told Nakayama-san,
"By the way,
in addition to this"...
"By the way,
in addition to this"...
- I wanted to take Nintendo on
directly in advertising
and make fun of them.
and make fun of them.
- Of course, there was a fear
that Nintendo may sue us
or somehow try to stop that.
or somehow try to stop that.
- After my presentation,
they all talked in Japanese.
- After my presentation,
they all talked in Japanese.
Shinobu would try to translate
in my ear,
but I could tell this
was not going over well.
but I could tell this
was not going over well.
And I thought, "Well,
that's the shortest career
anybody ever had
with a company."
- Nakayama-san got so mad,
his face turning very pale.
- Nakayama-san got so mad,
his face turning very pale.
- Nakayama said,
"Well, nobody agrees with
anything that you've said."
"Well, nobody agrees with
anything that you've said."
- He literally stood up
from chair and almost,
- He literally stood up
from chair and almost,
like, kicking the chair.
I really don't remember
physically did he
kick the chair or not,
but he quickly walked
to the door.
but he quickly walked
to the door.
[blipping]
[blipping]
- But he turned at the door,
and he said,
"When I brought you on board,
I said you could make
"the decisions for the company
in the United States,
"the decisions for the company
in the United States,
and therefore go ahead
and do what you just proposed."
and therefore go ahead
and do what you just proposed."
[crowd cheering]
[victorious music]
[victorious music]
[bells jingling]
- For the third year in a row,
it's on the top
of everyone's Christmas list.
it's on the top
of everyone's Christmas list.
- What do you want
for Christmas?
- Nintendo.
- There were competitors,
- There were competitors,
home video game companies
that were in the business,
and certainly one
of the companies was Sega.
One of the things
that we always did
was have our game people
play their games.
was have our game people
play their games.
[upbeat electronic music]
The feedback was uniformly,
"Great graphics,
The feedback was uniformly,
"Great graphics,
but the games are lousy."
As long as we were
hearing that...
As long as we were
hearing that...
we weren't too concerned.
- Welcome to the Fight Palace.
- Welcome to the Fight Palace.
[eerie electronic music]
- The title that was packed
into the Genesis
was "Altered Beast."
- [roars]
- [roars]
- Not a particularly good game
in my opinion,
but it also sounded
like devil worship
for half of the United States,
for half of the United States,
where that would be
just unacceptable.
And we needed something
to compete with Mario.
And we needed something
to compete with Mario.
[dynamic music]
- So there was company-wide
efforts to come up
with something new.
with something new.
Yuji Naka,
our genius programmer,
came up with algorithm
to move object very fast,
came up with algorithm
to move object very fast,
and he needed a character
to move fast.
- [speaking Japanese]
- [speaking Japanese]
- So he asked
the art designer,
Naoto Ohshima, to come up
Naoto Ohshima, to come up
with some sort of characters.
- [speaking Japanese]
- It was Al Nilsen,
our director of marketing,
our director of marketing,
who had to pick
the characters.
- First game I have here
is "Michael Jackson's
Moonwalker,"
which was actually designed
by Michael himself.
which was actually designed
by Michael himself.
- Al was one of the very
first employees hired
to launch Sega Genesis.
He was the game guru,
marketer, PR, everything.
He was the game guru,
marketer, PR, everything.
- Al's the best gamer
I've ever seen.
- He was like a big kid
- He was like a big kid
who played video games
all the time.
- Shinobu came into my office
and explained
about this contest
and explained
about this contest
that Sega Japan had had
to develop our Mario.
that Sega Japan had had
to develop our Mario.
He says,
"Nakayama has chosen you.
"They're happy
with two finalists,
and they want you to choose."
and they want you to choose."
The first one was Eggs.
"Okay, let's see
what the other one is."
"Okay, let's see
what the other one is."
"A hedgehog?
What in the world
is a hedgehog?"
What in the world
is a hedgehog?"
And there was this rock band.
- He also had a girlfriend
named Madonna,
- He also had a girlfriend
named Madonna,
who was very voluptuous.
[wolf whistle]
- So I've got Eggs
and a hedgehog...
- So I've got Eggs
and a hedgehog...
so I chose Sonic the Hedgehog.
I said, "You gotta
get rid of the rock band,
and you gotta
get rid of Madonna."
- We said, of course,
"No, no, no.
- We said, of course,
"No, no, no.
we can't use
the name Madonna for this."
- But there were
some other tweaks
to the way he looked...
Just to go
and round off his edges.
- The folks in Japan
didn't like that
because it was their creation
and didn't want
anyone to touch.
- It went all the way up
- It went all the way up
inside of the Japan culture
to Nakayama,
and he eventually said, "No,
do what the U.S. wants done."
and he eventually said, "No,
do what the U.S. wants done."
[dramatic music]
- Six months later,
I'm at Sega Japan.
We walk over to a screen,
and here's this guy Sonic.
We walk over to a screen,
and here's this guy Sonic.
[captivating music]
Never seen a video game
move that fast...
Never seen a video game
move that fast...
and look at these
vibrant colors.
After my visit, I went back,
and I said,
After my visit, I went back,
and I said,
"Sega Japan created something
that we can go
"and put up against Mario.
This can be
our number one game."
This can be
our number one game."
[blipping]
[blipping]
- "It's gonna be
the best game Sega ever did."
Coming from Al, that was,
like, you know,
"Hey, we got a runner."
"Hey, we got a runner."
[blipping]
- That changed the mood
and tide,
so to speak,
of the company immediately.
so to speak,
of the company immediately.
And the rest is history,
and, uh...yeah.
and, uh...yeah.
[applause]
- Let's play Nintendo!
- Let's play Nintendo!
[cheers and applause]
- It is the video game craze,
- It is the video game craze,
the Nintendo craze,
but this year, Nintendo
may be up against
some serious competition.
may be up against
some serious competition.
- You get better graphics,
more levels of play,
better animation on the screen,
longer games,
better animation on the screen,
longer games,
just more fun to play.
- Nintendo, however,
does not plan
to relinquish any ground.
to relinquish any ground.
- Introducing the next
generation from Nintendo.
- Almost as soon as the NES was
launched in the United States,
- Almost as soon as the NES was
launched in the United States,
Nintendo was working
on the Super NES.
- What do you do
after you've made a fortune
- What do you do
after you've made a fortune
selling American kids
on a product
that drives
their parents crazy?
You declare it obsolete,
of course, and introduce
You declare it obsolete,
of course, and introduce
a new and improved version
next month.
- Nintendo wants a generation
of video freaks
to forsake the gear
they've already spent
to forsake the gear
they've already spent
several hundred dollars on
for this, Super Nintendo.
for this, Super Nintendo.
[dramatic music]
- So we arranged
with Sega Japan
to go and pick up
one of the new systems for us.
to go and pick up
one of the new systems for us.
And we all got together
in Tom's office,
took it out of the box,
took it out of the box,
hooked it up to the TV,
hit the on switch,
and we were ready to see
what they had in store for us.
and we were ready to see
what they had in store for us.
[blipping]
- We had a Mario launch game.
I knew instantly
we had a winner.
I knew instantly
we had a winner.
That game was that good.
- "Are you sure?"
- "Are you sure?"
This didn't look like 16-bit.
It kind of looked 12-bit,
if I want to coin a phrase.
It kind of looked 12-bit,
if I want to coin a phrase.
It just wasn't taking it
to the next level.
It just wasn't taking it
to the next level.
I was like,
"Yeah, we're okay.
I was like,
"Yeah, we're okay.
"We've got this guy named
Sonic in our back pocket.
This could go and be
very, very interesting."
This could go and be
very, very interesting."
So I came up with an idea.
- Ah, push it
- Ask not what machines
can do for you.
- Ask not what machines
can do for you.
Ask what you can do
for machines.
- The Consumer Electronics Show
is a twice-a-year extravaganza.
- The Consumer Electronics Show
is a twice-a-year extravaganza.
More than 140,000 products
are now on display.
Hundreds of companies
are taking part,
Hundreds of companies
are taking part,
and more than a third of
the industry's annual business
is done right there.
- But this time,
it's for the ducks.
- Wait.
- Uh-oh.
- Whenever you're at war,
- Whenever you're at war,
you always hit the guy
in the mouth
as hard as you can.
If you can't hit him hard,
you might as well
not even fight.
you might as well
not even fight.
That's the attitude
in real war,
and it's the attitude
in business.
You've gotta be prepared
to take on
You've gotta be prepared
to take on
the competition and win.
- Ow, dig it
- Ow, dig it
- Do you think
the technology exists
that these'll shrink even more?
that these'll shrink even more?
- I don't know how much
smaller they can get.
You know what the problem
with them getting smaller
is holding them steady,
because if it's lightweight,
it tends to move.
because if it's lightweight,
it tends to move.
- Salt-N-Pepa,
Salt-N-Pepa
- Nintendo had some new games
and accessories on display
and accessories on display
inside the enormous
Nintendo pavilion.
[women scream]
Nintendo now has
the lion's share
Nintendo now has
the lion's share
of the $5 billion
video game market.
Sega of America
will offer two new games,
one featuring a hedgehog.
one featuring a hedgehog.
- Normally before a big launch
of a--of a major title,
you would start getting
early press.
you would start getting
early press.
We didn't do any of that.
We waited until
the very, very last minute
to surprise Nintendo.
to surprise Nintendo.
- Show the guys
that we know
- Ta-da.
[laughs]
- I don't know
what I'm doing
- I don't know
what I'm doing
- I can't believe it.
Mario, jeez.
- I'm a nice guy, and I felt
that the nicest thing
- I'm a nice guy, and I felt
that the nicest thing
that I could go
and do for Nintendo
was to introduce Super NES
to America for them.
was to introduce Super NES
to America for them.
I see this reporter.
His opening words were,
"Super Nintendo
has 32,768 colors.
"Super Nintendo
has 32,768 colors.
"You only have 512.
What are you gonna do
about it?"
What are you gonna do
about it?"
We walk over to where we had
the two monitors stacked
one on top of each other,
and I said to him,
"Which one has more colors?"
and I said to him,
"Which one has more colors?"
- Push it
Push, push, push,
push it, push it
Push, push, push,
push it, push it
Push it
- He just turned around
and walked out of the booth.
- Push it, push it,
push it
- Push it, push it,
push it
Push it, push it, push it
- And it's like, "Hmm.
"What can we do with this?
"What can we do with this?
"Let's do what we did at CES
but this time a mall tour
going around the country."
but this time a mall tour
going around the country."
[children shouting]
- Here's the challenge.
Super Nintendo, brand-new
competitor of ours, 16 bits.
Super Nintendo, brand-new
competitor of ours, 16 bits.
We challenge them.
We think
we're better than them,
but it's up to you to decide.
but it's up to you to decide.
[upbeat music]
- Our small initial team
was very good,
but it was clear to me
we needed help.
but it was clear to me
we needed help.
- The American marketplace
is a very vibrant marketplace
for the video game industry.
is a very vibrant marketplace
for the video game industry.
- We were one of the first
video game companies
to have senior women
in the management ranks.
And Ellen Beth Van Buskirk
And Ellen Beth Van Buskirk
was a very special find
for us.
- You have the 8-bit segments.
- You have the 8-bit segments.
I spent my entire summer
going from mall to mall
to mall to mall to introduce
Sonic the Hedgehog.
to mall to mall to introduce
Sonic the Hedgehog.
And on occasion,
I would don the Sonic
the Hedgehog character uniform.
I would don the Sonic
the Hedgehog character uniform.
You could project
that the little kids
were gonna pet me.
were gonna pet me.
They were gonna
wanna be hugged.
"Oh, Sonic,"
kisses and hugs and sweetness.
But the teenage boys responded
to me quite differently.
But the teenage boys responded
to me quite differently.
They kind of wanted to do
high-fiving, fist pumping,
They kind of wanted to do
high-fiving, fist pumping,
and I kind of got pushed around
a little bit.
- I think Genesis is gonna win
all the way.
- I think Genesis is gonna win
all the way.
- They wanted
something different.
They wanted attitude.
They wanted sass.
They didn't want hugs.
- For Christmas, I'm gonna
ask my mom for a Sega Genesis
- For Christmas, I'm gonna
ask my mom for a Sega Genesis
because it's way better
than Nintendo.
- Mario was
a very slow-moving,
- Mario was
a very slow-moving,
left-to-right scroll game,
and Sonic was hip
and fast and cool.
- Sega Genesis is way better
- Sega Genesis is way better
because Nintendo
is kind of slow.
- When Sonic
was first released,
everybody kind of scratched
their head and said,
everybody kind of scratched
their head and said,
"A hedge-what?"
- You know, was it impressive
that he could roll really fast?
I don't know.
You know, for me,
I didn't probably have
the reaction time
to deal with it.
- But for a lot of people,
they found it really fun
- But for a lot of people,
they found it really fun
and liked the fast action,
using that pachinko mechanic
of lots of
"ba-ding-a-ding-a-ding,"
very fun to kind of get
that going and keep it going.
very fun to kind of get
that going and keep it going.
And Sonic is a character.
He had that little bit
of edgy kind of wiseness
He had that little bit
of edgy kind of wiseness
that Mario--you know, Mario--
"hoo-hoo"--never had.
- It wasn't empirical science
when you say,
- It wasn't empirical science
when you say,
"Which one
do you like better?"
Doot, doot, doot,
doot, doot, doot.
[imitates whoosh]
[imitates whoosh]
- In speed of action,
we looked better;
graphics, we looked better.
[blipping]
They had never experienced
anything like it.
They had never experienced
anything like it.
- I don't think
Sonic the Hedgehog
was a masterpiece or something,
was a masterpiece or something,
but it gave them
additional momentum.
- By then, I knew
we had a winner,
- By then, I knew
we had a winner,
but we needed to find a way
to get in
the major retailers.
- Wal-Mart's one of those
- Wal-Mart's one of those
- Wal-Mart wouldn't agree
to carry Sega products.
- The only thing...
- Hotter than Nintendo games...
- The only thing...
- Hotter than Nintendo games...
- Is Wal-Mart's price.
- Wal-Mart was making a lot
of money from Nintendo,
and they did not need
any unknown second supplier.
and they did not need
any unknown second supplier.
- And Wal-Mart just refused
because of this pressure
- And Wal-Mart just refused
because of this pressure
that Nintendo put on them.
- We were fanatics
about retail space, okay?
- We were fanatics
about retail space, okay?
[funky music]
That became a thing
we leveraged.
"Hey, you're really doing well
with the product, Mr. Retailer,
"Hey, you're really doing well
with the product, Mr. Retailer,
"but guess how much better
you could be if you had 20,
30, 40 feet
of Nintendo product."
30, 40 feet
of Nintendo product."
- And "Super Mario World"
is included.
- Okay, okay,
we'll get it for him.
- Okay, okay,
we'll get it for him.
- So we developed a strategy
on how to change this.
- So we developed a strategy
on how to change this.
[blipping]
- I came up with an idea
of opening a Sega Game Store
- I came up with an idea
of opening a Sega Game Store
right in front of Wal-Mart
headquarter in Arkansas.
- We rented a store
in a shopping mall
- We rented a store
in a shopping mall
literally as close
to Wal-Mart headquarters
in Bentonville
as you could get,
in Bentonville
as you could get,
and we put as many
TVs and Sega Genesis
in there as we could
and a big sign out front
in there as we could
and a big sign out front
that said,
"Come play Sega Genesis."
- Free of charge.
- Free of charge.
- We had lines of teenagers
out the door.
- The store became very popular
for Wal-Mart employees.
- The store became very popular
for Wal-Mart employees.
- We bought every billboard
leading in and out
of Bentonville
with Sega advertising.
of Bentonville
with Sega advertising.
We bought
the football cushions
at the University of Arkansas
football stadium.
at the University of Arkansas
football stadium.
After a while, a senior VP
of Wal-Mart called me up,
After a while, a senior VP
of Wal-Mart called me up,
and he said, "Tom, stop it.
We'll give you a four-foot
section in Wal-Mart stores."
We'll give you a four-foot
section in Wal-Mart stores."
Because Wal-Mart
is such a powerful retailer,
all the other retailers
gave us more space
all the other retailers
gave us more space
and were less afraid
of Nintendo punishment.
[upbeat music]
[upbeat music]
That changed the business
dramatically.
- As the company started
to grow very fast,
- As the company started
to grow very fast,
we brought in people
from much bigger company
because we are aiming to be
a bigger company.
because we are aiming to be
a bigger company.
[exciting music]
- Sega was such
a distant player.
It wasn't like
they were second.
It wasn't like
they were second.
It was like they were 14th.
They were that far down.
Nintendo was so dominant.
- "Nintendo Power."
Nintendo was so dominant.
- "Nintendo Power."
- So I got a call from Tom,
from Tom Kalinske.
He needed some help
doing marketing,
He needed some help
doing marketing,
and he asked if I would do it.
- Mario!
- It was not dissimilar
to what I did at Reebok,
- It was not dissimilar
to what I did at Reebok,
which was trying to unseat
a category leader.
- No-no-nobody.
- Part of the reason
of going to Reebok
- Part of the reason
of going to Reebok
was the challenge
of slaying the beast of Nike.
- Impossible.
- And we came up
with this idea
called the Reebok Pump.
called the Reebok Pump.
It was totally
a marketing gimmick.
It made your foot a lot hotter.
It made your foot a lot hotter.
It didn't really give you
any more support.
But at the end of the day,
it was one of those things
But at the end of the day,
it was one of those things
that just caught
the consumer psyche.
- Steve Race, the first thing
we heard about
- Steve Race, the first thing
we heard about
is his wild
TV commercial at Reebok.
- One guy is wearing Nikes.
- One guy is wearing Nikes.
The other guy
is wearing Reebok.
They both jump off
this bridge.
[dynamic music]
[dynamic music]
Commercial ran once.
Commercial ran once.
- Steve Race was a terrorist
for A-type personalities.
If he was a college course,
he'd be Trouble and Difficulty.
If he was a college course,
he'd be Trouble and Difficulty.
- I remember Steve
and I playing tennis.
- I remember Steve
and I playing tennis.
He had a mean serve.
I think he was aiming
for my head most of the time.
- Sega had a bad reputation.
- Sega had a bad reputation.
[telephone rings]
I just didn't wanna be
the puppet that would be pulled
I just didn't wanna be
the puppet that would be pulled
by a puppet master
7,000 miles away.
I didn't know
who the puppet master was.
Obviously, it turned out
to be Nakayama-san.
[ominous music]
[ominous music]
Nakayama was the head of SOJ,
and he really was
the patriarch
and the prime mover
in all of Sega.
and the prime mover
in all of Sega.
Nothing went out without
Nakayama's approval
and endorsement.
- Nakayama-san was very
difficult for many people.
- Nakayama-san was very
difficult for many people.
If you do not deliver,
he was brutal.
If you do not deliver,
he was brutal.
- We'd all be on alert
that he was coming in,
and there was this presence,
almost of evil,
that came into the office.
almost of evil,
that came into the office.
- He had very long hair
that he kind of wound
around the top of his head.
that he kind of wound
around the top of his head.
- We had all these ways
that we thought
Nakayama might meet
his demise,
and one of those was that
his hair would get caught
and one of those was that
his hair would get caught
in the rotor blades
of a helicopter
and pull him around
in a very Gatsby-esque death.
and pull him around
in a very Gatsby-esque death.
- [grunts]
[yelling]
- To me, Hayao Nakayama
was a cartoon character,
- To me, Hayao Nakayama
was a cartoon character,
and I loved talking about him.
I mean, we all did, you know?
He had weird hair,
He had weird hair,
he had a weird sensibility,
and he carried
a very big stick.
[upbeat music]
[upbeat music]
The Japanese-U.S. relationship
is kind of confusing.
It really kind of starts
with an American serviceman,
It really kind of starts
with an American serviceman,
David Rosen,
in Japan during the war
David Rosen,
in Japan during the war
and then coming home
and saying,
"Hey, there's
an opportunity me
to sell arcade games
from Japan into the U.S."
to sell arcade games
from Japan into the U.S."
We called each other
SOJ and SOA,
We called each other
SOJ and SOA,
Sega of Japan
and Sega of America.
- I don't think
anyone in Japan thought
taking Nintendo on directly
was a good idea,
taking Nintendo on directly
was a good idea,
but it was something
I felt we needed to do.
[upbeat rock music]
[upbeat rock music]
- [screams]
- [screams]
- [screams]
- People hate advertising
in general.
You know, if I go to a party
and I say I'm a filmmaker,
You know, if I go to a party
and I say I'm a filmmaker,
they go,
"Oh, what films did you make?"
And they think of,
like, really good films.
And you say,
"Oh, I'm an author,"
they think of a good book
that they've read lately.
they think of a good book
that they've read lately.
And if you say
you're in advertising,
they think of the shittiest ad
they've seen in months.
- Oh, yeah!
- Snap into a Slim Jim!
- Oh, yeah!
- Snap into a Slim Jim!
- Sizzler.
- We had four agencies
pitching to us, big names,
and Goodby was a small group.
and Goodby was a small group.
Jeff was the lead.
- We, at the time, had just had
- We, at the time, had just had
one of our
original partners leave,
and Rich and I were left here
and were kind of like,
"We gotta win this, you know?"
Good morning.
Thanks for having us here.
The pitch to Sega
was probably one
of the most elaborate pitches
we've ever done.
of the most elaborate pitches
we've ever done.
We had every person
in the company become an expert
in every game
you could play on the Genesis.
in every game
you could play on the Genesis.
So everybody came out
with these beautiful
athletic jackets,
and we put a sound system
in there
and we put a sound system
in there
that we rented
from the Grateful Dead.
We definitely went overboard.
Eh, lighten up.
Eh, lighten up.
The agencies
we were up against
were really the best agencies
in the country,
and I really thought
they'd think of something
to beat us with.
to beat us with.
- This work is the best work
we have ever done
as a company.
I can't wait to produce it.
So I hope you like it.
I can't wait to produce it.
So I hope you like it.
- This is your brain.
This is your brain
on Nintendo.
This is your brain
on Nintendo.
And this is your brain
on Sega.
[heavy rock music]
[singer screaming]
[singer screaming]
- Whoo!
- Ooh!
- What a ride.
- What a ride.
[light applause]
- And it worked.
- They overwhelmed us
with their pitch.
- They overwhelmed us
with their pitch.
- We did
the first commercials,
and one of them was about
this guy who started off
in a very straight
kind of outfit...
in a very straight
kind of outfit...
- And then transformed
into a really cool guy...
- Welcome to the next level!
- Welcome to the next level!
- Playing Sega Genesis.
[angelic music]
- Welcome to the next level.
- Welcome to the next level.
- I thought
"Welcome to the next level"
was a great line
because it rewarded you
for playing the thing well.
It promised that
there was depth to the games.
It promised that
there was depth to the games.
You got better
and could get up higher.
- On the Sega Genesis.
- It was also saying
to the competition
- It was also saying
to the competition
that "you're not
the next level.
You're behind."
I thought that was
absolutely brilliant.
I thought that was
absolutely brilliant.
[soft music]
- But I don't think
it would have worked
without the Sega Scream.
The Sega Scream was what really
drove the thing in the end.
The Sega Scream was what really
drove the thing in the end.
[rock music]
- [screams]
Sega!
- There was something
about the way
- There was something
about the way
the guy did it...
- Sega!
- That was just really funny.
- Sega!
- It was slightly Japanese.
- Sega!
- Just absolutely--
- Sega!
- Just absolutely--
you couldn't get it
out of your head.
- Sega! Sega! Sega!
Sega! Sega!
- Sega!
- Sega! Sega!
[captivating music]
[captivating music]
- I would go pick up
my daughters at school,
and when they saw me,
they'd say, "Sega!"
- Sega!
- Sega!
- Sega!
- We kind of owned
something that Nintendo
didn't have.
something that Nintendo
didn't have.
They were kind of scrubbed
and clean
and Disney-ish and so on,
and we wanted it to be kind of
uncool to be a Nintendo kid.
and we wanted it to be kind of
uncool to be a Nintendo kid.
That was
our explicit intention.
- Sega!
Sega!
- The advertising was
extremely competitive.
- The advertising was
extremely competitive.
I mean, we made a lot of fun
of Nintendo.
I mean, we made a lot of fun
of Nintendo.
- Look, a cat massager.
[cat meows]
Spread cheese snacks.
Use them to tenderize meat.
- Team Sega represented
the antiestablishment team.
- Team Sega represented
the antiestablishment team.
Nintendo was the Soviet Union,
and Sega were the guys
that were throwing
Molotov cocktails.
that were throwing
Molotov cocktails.
- Hey!
[cat meows]
You still don't have
a Sega CD?
- Huh?
- What are you waiting for,
Nintendo to make one?
Show him.
Nintendo to make one?
Show him.
- Whoa!
- Whoa, color.
- Whoa, color.
- And you just try not
to respond
to those kinds of things.
- Sega!
- Treat them as though
they're--you know,
- Treat them as though
they're--you know,
they're doing that
because they're desperate.
We kicked off each launch
with a three-pronged attack,
including...
I joined in March of 1992.
I joined in March of 1992.
"Nintendo Power" coverage,
and online...
When I first arrived,
there was still sort of a--
I wouldn't say a dismissive
attitude but a feeling that,
I wouldn't say a dismissive
attitude but a feeling that,
"You know what?
This is really not serious."
That quickly changed.
- The Sega Genesis
has blast processing.
- The Sega Genesis
has blast processing.
Super Nintendo doesn't.
[curious music]
So what's blast processing do?
- This "blast processing"
thing,
- This "blast processing"
thing,
it was a total fabrication
of advertising people.
- I like the one when they said
the blast processing.
- I like the one when they said
the blast processing.
- Kids would come into
focus groups, and they'd go,
"Yeah, I know that Nintendo
has 16-bit,
"Yeah, I know that Nintendo
has 16-bit,
but Sega has blast processing."
It was crazy.
- And what if you don't
have blast processing?
- And they have a little truck
for Nintendo.
- And they have a little truck
for Nintendo.
- I would have loved to have
seen the faces
of the Nintendo people
when that thing ran.
of the Nintendo people
when that thing ran.
I would just love it.
- "Blast processing,"
as though it was
technology-related,
was kind of vaporware,
but it was catchy,
was kind of vaporware,
but it was catchy,
and it worked.
- Their advertising
was very effective.
- Their advertising
was very effective.
It tended to make it uncool
to play Nintendo.
- Which is fine, really,
- Which is fine, really,
if you don't mind
being sucked dry.
[mosquito squeaks]
- You gotta give them credit.
- Sega!
- You gotta give them credit.
- Sega!
- I think Kalinske
did a great job.
- Sega!
- Sega!
- What Sega has been doing
to make these ads,
- What Sega has been doing
to make these ads,
they should just keep on
doing more of it
because these ads are great.
- All the kids thought
it was cool.
- All the kids thought
it was cool.
- Sega has the coolest ads,
the best games.
- And as a result,
the company was cool.
- Nintendo's like,
"Where have they been?"
- Nintendo's like,
"Where have they been?"
- You saw it on TV shows.
People were picking up
the popularity of Sega.
People were picking up
the popularity of Sega.
- I'm going to Todd's.
He has Genesis.
- She doesn't even have Sega.
She's such a troglodyte.
- She doesn't even have Sega.
She's such a troglodyte.
- Hell hath no fury
like a woman scorned for Sega.
- I mean, we were becoming
as popular or more popular
than Nintendo.
as popular or more popular
than Nintendo.
[air whistles]
- To Sega,
we say congratulations
for bringing us
the 16-bit Game of the Year,
for bringing us
the 16-bit Game of the Year,
Sonic the Hedgehog.
- I got a call the other day
that an 18-year-old was saying
- I got a call the other day
that an 18-year-old was saying
that Sonic the Hedgehog
made him forget about girls.
So I consider that
a great achievement.
So I consider that
a great achievement.
[techno music]
- When the very first
Sonic game came
- When the very first
Sonic game came
to be released
and became very successful,
obviously, we wanted
to create a sequel.
obviously, we wanted
to create a sequel.
- And part and parcel
with making that successful
was, "How are we gonna
launch it?
was, "How are we gonna
launch it?
How are we going
to support it?"
- We started looking at
what else we could go and do.
- "Ha! Let's do something
like the movies.
Let's do a world
distribution date."
- We were going to make
the game available
- We were going to make
the game available
at every retail outlet
on the same day.
I know this sounds silly today,
but it was hard to do.
I know this sounds silly today,
but it was hard to do.
- "We'll do it on a Tuesday...
- "We'll do it on a Tuesday...
Sonic Two-sday."
[cameras shutters snapping]
- Last Christmas, the world
felt its first Sonic boom
- Last Christmas, the world
felt its first Sonic boom
when "Sonic the Hedgehog 1"
became the most popular
video game of 1991.
became the most popular
video game of 1991.
[bluesy rock music]
- Writing for Tom
was always great.
- Writing for Tom
was always great.
I don't know what it was.
He has a natural sense
about what it will take
to draw in the audience.
He's charismatic,
and he knows it and uses it.
He's charismatic,
and he knows it and uses it.
I'll say he uses it for good
rather than for evil.
I'll say he uses it for good
rather than for evil.
- We believe "Sonic 2" will be
America's hottest video game
this Christmas, and...
both: We project to sell
more than 2 million copies...
both: We project to sell
more than 2 million copies...
- In the United States
between now and Christmas.
- We have Tom speaking,
and then I have Joey Lawrence
- We have Tom speaking,
and then I have Joey Lawrence
running out
from behind the curtain.
[crowd cheering]
[cameras shutters snapping]
[crowd cheering]
[cameras shutters snapping]
You know, we could never afford
the big Hollywood names.
- Dustin Diamond,
come on up here.
- Dustin Diamond,
come on up here.
[crowd cheering]
- But we could afford
teen idols.
- And if you thought
the first one was good,
- And if you thought
the first one was good,
wait till you see
the second one.
- You know,
"Sonic 2" is great.
It's better than the first one.
You have great graphics.
It's better than the first one.
You have great graphics.
Sonic has a new friend
called Tails,
a fox, two tails, cool.
[cameras shutters snapping]
[cameras shutters snapping]
[blipping]
- Sonic Two-sday was so big.
- Sonic Two-sday was so big.
It was a bodacious idea.
- Oh, it's great,
and it's great
because it's two-player,
you know?
because it's two-player,
you know?
So you get to play
with more than just yourself.
[video game blipping]
- But she's--but this is
the exact same board,
and we're playing here
together,
and we're playing here
together,
but she's in a different part
of the board than I am.
So it's something never seen
before, really.
It's great.
It's great.
- We launched in Japan,
Australia, Europe,
all over the world.
- [speaking French]
- [speaking French]
"Sonic 2" is super.
- Pretty good.
- It's brilliant.
- Never, ever been done
before.
- Never, ever been done
before.
- It's comparable
to the launch
of Madonna's "Sex" book,
you know, Sonic Two-sday.
- I'm right below you.
[whistles, applause]
[whistles, applause]
- It was an amazing hit.
- Sega!
[high-pitched squeal]
[car horns honking]
[high-pitched squeal]
[car horns honking]
[coins clinking]
[frantic music]
- Oh!
- Oh!
- When Genesis succeeded
so much
here in America, in Japan,
it did not
necessarily do great.
it did not
necessarily do great.
So that way,
I think Sega of America
became the valuable core
of entire Sega business.
became the valuable core
of entire Sega business.
[upbeat rock music]
- Sega was able to make a dent
in the U.S.,
and it kept us on our toes
because we were
in a real battle.
- As we grew,
as we added more people,
- As we grew,
as we added more people,
Nintendo was in our target.
It became a kind of
"Spy vs. Spy."
Whatever Nintendo would do,
we would try to do better.
Whatever Nintendo would do,
we would try to do better.
- With the Sega Menacer
in my hands,
I'm not afraid of enemy tanks.
- Sega!
- Sega!
[ceremonious music]
- At one point, I was told
there was a dartboard
in Nintendo's office
with my face on it.
in Nintendo's office
with my face on it.
- When we went
to analyst meetings,
it would be Tom Kalinske
and Peter Main.
it would be Tom Kalinske
and Peter Main.
- Well, Peter and I
didn't get along very well.
- A lot of yelling and
screaming at various events.
- A lot of yelling and
screaming at various events.
- I remember getting up
to speak
at one of those meetings,
when I said,
"Boy, following Peter Main
"Boy, following Peter Main
is like following
Dr. Kevorkian."
- It erupted into
a bit of an interesting
- It erupted into
a bit of an interesting
after-three-glasses-of-wine
conversation
that carried on
down Fifth Avenue
in a raging snowstorm.
in a raging snowstorm.
Thank goodness third-party
intervention happened.
[dramatic music]
[dramatic music]
- As '93 started,
there was a big game coming...
- As '93 started,
there was a big game coming...
and it's gonna be available
not just for Super NES
but also for Sega Genesis.
but also for Sega Genesis.
- Mortal Kombat!
[crowd shouting]
[crowd shouting]
- Mortal Kombat!
- "Mortal Kombat"
was a huge coup for us.
For once, we get a big title.
For once, we get a big title.
- Ahh!
- We had "Mortal Kombat"
in its original version
- We had "Mortal Kombat"
in its original version
with all the possibility
for gore and, you know,
chopping people's heads off
and stabbing them
chopping people's heads off
and stabbing them
and what have you.
- There has been so much
violence swallowed into my soul
- There has been so much
violence swallowed into my soul
over the years;
nothing was new.
I mean, consider Roadrunner.
[tense music]
[tense music]
- "Mortal Kombat" went
into a graphic violence area
that Nintendo hadn't allowed
on their consoles.
that Nintendo hadn't allowed
on their consoles.
- We had long discussions
about whether
we should allow the blood.
we should allow the blood.
[Scorpion moaning]
I ultimately decided
that we would not.
I ultimately decided
that we would not.
- Fight!
- The Nintendo version
showed green gore.
[Sub-Zero grunting]
[Sub-Zero grunting]
Well, what human being
has green gore in them?
- I was expecting
we might actually get
some positive feedback
from parents that say,
some positive feedback
from parents that say,
you know, "Bless you.
"You kept the violence
out of this game."
And on the contrary,
I got lots of letters
from parents
I got lots of letters
from parents
criticizing Nintendo
for censoring the game,
and we got our clocks cleaned.
and we got our clocks cleaned.
- [grunts]
- Ahh!
- Tom wins!
- We outsold them five to one.
- Tom wins!
- We outsold them five to one.
[The Chemical Brothers'
"Block Rockin' Beats"]
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- Sega, Sega, Sega!
- All right, a Sega Genesis!
- Sega!
- It's a Sega!
- Sega!
- It's a Sega!
- Sega!
- Whoa!
- [laughing excitedly]
- No way!
- No way!
- Back with another one
of those block-rockin' beats
- Back with another one
of those block-rockin' beats
- I mean,
we dethroned Nintendo.
- Fight!
- Fight!
- "Mortal Kombat"
on Sega Genesis
is the best video game ever.
- Urkel wins!
- Urkel wins!
- I think "Donkey Kong"
is the best game ever.
- "Donkey Kong" sucks.
- You know something?
You suck.
- You know something?
You suck.
[man screams]
- The most complimentary thing
I can say about Nintendo
- The most complimentary thing
I can say about Nintendo
was the fact that they...
reinvented video games.
was the fact that they...
reinvented video games.
- Thank you, Peter.
- They had to create,
out of nothing, an industry.
- They had to create,
out of nothing, an industry.
They not only did that;
they did it well.
[serene music]
[serene music]
- Good afternoon. Nintendo.
Nintendo. please hold.
Thank you. May I help you?
Thank you. May I help you?
- My path to Nintendo
was not so purposeful.
It was just kind of pure luck.
It was just kind of pure luck.
I was at a time in my life
where I was really searching
for something great
and fun to work on,
for something great
and fun to work on,
and it was a place
that was meant--meant for me.
- You always had
to spell Nintendo
back in the early '80s.
Nin-ten-do.
back in the early '80s.
Nin-ten-do.
- I would get on airplanes,
and you'd start talking
to somebody,
and you'd give them
a business card,
and they'd say,
"What's a Nine-tendo?"
and they'd say,
"What's a Nine-tendo?"
- People, when I told them
I was working for Nintendo,
they said, "Huh?
What a--you know, what is that?
Is that a dry laundry?"
What a--you know, what is that?
Is that a dry laundry?"
- For most
of its 99-year history,
Nintendo made board games
and playing cards,
Nintendo made board games
and playing cards,
traditional products
for a traditional way of life.
- Nintendo
was some obscure company
- Nintendo
was some obscure company
that just had
these random helicopter games
and another kind of wannabe
shooter game,
and another kind of wannabe
shooter game,
so it was really nothing
from an arcade game standpoint.
But then Mr. Miyamoto
came along.
But then Mr. Miyamoto
came along.
- Mr. Miyamoto was the original
developer of Donkey Kong
- Mr. Miyamoto was the original
developer of Donkey Kong
and the creator of Mario
as the character chasing him
up the construction site.
as the character chasing him
up the construction site.
- Whereas I was just
a guy at Nintendo,
Miyamoto is the guy,
the master,
Miyamoto is the guy,
the master,
and would go on to design some
of the best games at Nintendo.
and would go on to design some
of the best games at Nintendo.
When "Donkey Kong" first
came in, it was really cool
because you had
this little guy
because you had
this little guy
who you could push up
on the thing,
and he'd climb up ladders.
You'd go up
and, doink, make a mistake.
One of the barrels
would get you.
One of the barrels
would get you.
You'd say, "Oops.
I can do better,"
and then you'd immediately
start playing again.
I mean, just, like,
it was unbelievable.
I mean, just, like,
it was unbelievable.
- We sold
over $100 million worth
of "Donkey Kong"
coin-operated video games
in less than one year,
in less than one year,
and this is a company
that had 30 employees.
- Nintendo of America.
- We'd get shipments
from Japan,
and I wouldn't know
what they were.
Then one of the days,
I open the box,
and there was
this little thing in it.
and there was
this little thing in it.
- [speaking Japanese]
- I thought, "This is cool.
This is great.
- I thought, "This is cool.
This is great.
"Let's, like,
give it to everybody.
Let's bring it over, sell it."
Well, Mr. Arakawa said, "Hmm,
we need to think about this."
Well, Mr. Arakawa said, "Hmm,
we need to think about this."
This thing was really risky,
and it could fail.
This thing was really risky,
and it could fail.
So I started to get exposed
to the fact that there was
this thing called the debacle
of the Atari 2600
this thing called the debacle
of the Atari 2600
and that there was this thing
called the "E.T." cartridge.
- "E.T." video game?
Wow.
- "E.T." video game?
Wow.
[rock music]
[rock music]
- The game was so bad,
so unplayable,
millions of copies
went unsold.
- It is a legendary landfill,
a tomb
where an entire industry
was buried.
Thousands of copies
of one of the epic flops
Thousands of copies
of one of the epic flops
in video gaming history
laid to rest in a New Mexico
city's garbage dump.
laid to rest in a New Mexico
city's garbage dump.
- The video game industry
is now becoming
- The video game industry
is now becoming
very much like Hula-Hoops:
there still may be
a lot of people
fooling around with them,
a lot of people
fooling around with them,
but profits are getting
to be quite negligible.
- Video game cartridges
as Atari.
- Given the collapse of Atari,
the idea
of actually introducing
the idea
of actually introducing
a home video game system
in the United States
was very risky.
- I was, "the original
salesperson" at Nintendo.
- I was, "the original
salesperson" at Nintendo.
I had family members say,
"You're out of your mind.
You have kids.
"You're out of your mind.
You have kids.
"How are you gonna
support your family
when this thing dies
in six months?"
As far as appetite
for video games,
As far as appetite
for video games,
there was none.
- Video games:
play them for fun,
but invest in them
at your own risk.
but invest in them
at your own risk.
- But we still had
really great games,
and that's when
Mr. Arakawa said,
"We should do this."
"We should do this."
- We ultimately
made the decision
to introduce the NES
to New York,
the epicenter
of the toy industry.
the epicenter
of the toy industry.
[crowd cheering]
- Our pitch was very simple.
- You're playing with power!
- You're playing with power!
- This is not
just a video game.
It's an entertainment system.
- It didn't make you think
about your Atari.
- It didn't make you think
about your Atari.
- Will your family be
the first to witness
the birth of the incredible
Nintendo Entertainment System,
the birth of the incredible
Nintendo Entertainment System,
the first to play with R.O.B,
the extraordinary video robot?
- Parents could say,
"Oh, it's got this light gun,
- Parents could say,
"Oh, it's got this light gun,
which is totally new.
Look, it's magical."
- We sent a number
of Nintendo employees
- We sent a number
of Nintendo employees
to Hackensack, New Jersey,
where we had this warehouse
that was infested with rats.
where we had this warehouse
that was infested with rats.
- I couldn't go to the bathroom
in the warehouse
because it was that not-nice.
There was a huge hurricane
that year,
and the warehouse flooded,
and some barrels
start floating around
the parking lot,
start floating around
the parking lot,
and they have, like,
toxic waste symbols on them.
- For the three months,
we did nothing
- For the three months,
we did nothing
but get up in the morning
and give demos to kids
and let kids play while
we talked to their parents.
and let kids play while
we talked to their parents.
- Parents were saying,
you know,
"What is this Nintendo thing?"
- People would show up
with cameras and microphones
- People would show up
with cameras and microphones
and notepads and say...
- "What are you,
on drugs or something?
"Are you guys crazy?
No one wants to look
at a video game now."
No one wants to look
at a video game now."
- I remember
this woman walked up to me
and said, you know,
"What is this?"
and I said,
"Oh, it's Nintendo,"
and she said, "Nintendo?"
and I said, "Yeah,"
and she said, "Nintendo?"
and I said, "Yeah,"
and she goes,
"I hope you fail."
- We left that research session
- We left that research session
feeling a little unsure
of ourselves.
- We had to go out and get rid
of the doubt on so many levels.
- We had to go out and get rid
of the doubt on so many levels.
We're at war, guys.
We gotta make believers
out of the world
We gotta make believers
out of the world
that this is for real,
this can happen,
this can grow.
- The word Nintendo means,
"Work hard,
- The word Nintendo means,
"Work hard,
and the fates
will smile on you."
I like that idea
that if we all just put forth
I like that idea
that if we all just put forth
our best efforts,
then we'd be successful.
- The buyer of video games
at Toys "R" Us
was the ultimate skeptic,
and his name was Hal.
was the ultimate skeptic,
and his name was Hal.
When I came in
with a video game, he said,
"Forget it.
I don't want you to call me.
"Forget it.
I don't want you to call me.
"I don't want you
to contact me.
If I see it starting to sell,
you'll hear from me."
If I see it starting to sell,
you'll hear from me."
- The day before the NES
was supposed to launch,
commercials were on air.
commercials were on air.
We all went to the warehouse
and opened champagne
and literally loaded the truck
to take it to FAO Schwarz.
and literally loaded the truck
to take it to FAO Schwarz.
We went, and we stood outside
the window of FAO Schwarz
We went, and we stood outside
the window of FAO Schwarz
and watched someone
make the first purchase.
The person bought,
like, every game.
- All of a sudden,
the phone rings.
- All of a sudden,
the phone rings.
"Hey, how come
you didn't call me?"
I said, "Well, Hal, you didn't
think it was gonna sell,
and I didn't want
to bother you."
"The thing's blowing out
the stores.
"The thing's blowing out
the stores.
"Get up here now.
Today's Saturday,
and I'm ready
to backup order immediately."
- It may be the most addictive
toy in history.
- It may be the most addictive
toy in history.
- The product started
selling like hotcakes.
- This is as big or bigger
than anything
the toy industry has ever seen.
than anything
the toy industry has ever seen.
- "We're excited
about the possibilities
for this new thing called
Nintendo, whatever that is."
for this new thing called
Nintendo, whatever that is."
- When Nintendo
entered the game,
the video game market
was a losing proposition.
Nintendo says
it brought it back
Nintendo says
it brought it back
with better-quality games
and graphics.
- We decided if we could make
a video game system
with quality games
that we would be successful.
with quality games
that we would be successful.
We took that gamble,
and now I think
it's appropriate for us
to reap the rewards
of that gamble.
to reap the rewards
of that gamble.
That is capitalism.
- If the NES had not been
successfully launched
- If the NES had not been
successfully launched
in New York,
I think it's fair to say
there would not have been
a home video game business.
there would not have been
a home video game business.
- Suddenly, who knew what game
was gonna come out?
- Suddenly, who knew what game
was gonna come out?
Instead of Christmas happening
once a year, it's like,
suddenly Christmas happened
just all year long.
suddenly Christmas happened
just all year long.
- What the hell are you?
- What are you?
- I'm Batman.
- I'm from the future.
- Whoa!
- Whoa!
all: Cowabunga!
- You know,
I remember at the time
seeing Sega at every trade show
and seeing the Sega people,
seeing Sega at every trade show
and seeing the Sega people,
and they were trying so hard
to be successful,
and they were trying so hard
to be successful,
but Nintendo was the only game
in town
until Tom came along.
until Tom came along.
[dramatic music]
- When Tom Kalinske
joined Sega,
- When Tom Kalinske
joined Sega,
we knew his background.
We knew he was
a very fine marketer.
He was a worthy competitor.
He was a worthy competitor.
- When Tom showed up,
it was a little bit
of a message to Nintendo
that the game was changing.
of a message to Nintendo
that the game was changing.
- Tom Kalinske's
a very smart marketing guy
feeding the retailer,
"Yeah, tell me more,
tell me more, tell me more."
"Yeah, tell me more,
tell me more, tell me more."
- I always thought
of Tom Kalinske as, like,
the character
in "The Music Man,"
come into town,
come into town,
drum up a lot of sales,
get them all excited,
and when you look
kind of behind the scenes,
there wasn't quite as much
there as you would expect.
there wasn't quite as much
there as you would expect.
- Sega was kind of
chipping away at our business,
- Sega was kind of
chipping away at our business,
and in particular, they were
going after the harder edge
that Nintendo wouldn't do.
- Something down there
sucked their brains out!
- Something down there
sucked their brains out!
- But we weren't going to chase
the other guys.
That was never a part
of Nintendo's strategy,
That was never a part
of Nintendo's strategy,
to follow the other guys
or try and do
what they were doing.
Instead it was to do what we do
but just do it better.
Instead it was to do what we do
but just do it better.
- I have to admit,
I was not always in favor
of that strategy.
[thunder booming]
[thunder booming]
Having been at Nintendo
for a while, I was young,
Having been at Nintendo
for a while, I was young,
and I still believed
that a lot of my thoughts
were the right way to go,
and they weren't taken,
and maybe, you know,
and they weren't taken,
and maybe, you know,
burned some bridges
along the way.
- All of a sudden, Bill
started smoking cigarettes
and driving sports cars.
started smoking cigarettes
and driving sports cars.
You know, he'd just kind of,
like, turned to the dark side.
Once Bill got out of Nintendo,
he was--he was Bad Bill.
[moody music]
[moody music]
- The Sega Genesis was doing
extremely well,
and so it made sense
for me to switch teams.
and so it made sense
for me to switch teams.
- When he left,
I think Nintendo
felt a sense of--of betrayal.
- He went to work for Tom,
and hey, that's life.
- It was easy for me,
but I think it was difficult
for the Sega people
to accept me.
- We were giving him
a hard time about that,
- We were giving him
a hard time about that,
perhaps
he wasn't true-blue Sega,
and he says, "You know
what I think of Nintendo?"
and he pointed
toward Seattle,
and he pointed
toward Seattle,
dropped his pants,
and mooned Nintendo.
- Tom always said
that it's easy to be
a number two company
challenged to be number one.
a number two company
challenged to be number one.
Once we become
the number one company,
that is the real challenge
starts.
that is the real challenge
starts.
- Video games have become
a $4 billion-a-year business.
There is a growing concern
on Capitol Hill
that parents who buy
some of those games
that parents who buy
some of those games
may not realize just how much
violence they're getting.
- Games so violent, bloody,
- Games so violent, bloody,
and gruesome that parents
and politicians have had it.
- Violent, sexual games
available to youngsters.
- Violent, sexual games
available to youngsters.
- The best thing about games
is violence,
realistic things like blood.
- He scores--oh!
- You know what, Mike?
- He scores--oh!
- You know what, Mike?
You can make their heads
bleed on this game.
- Make somebody's head bleed.
- There it is, Mikey.
Check it out.
His head's bleeding.
- These are not harmless toys.
They can indeed cause
great emotional
and other damage to a child.
and other damage to a child.
- They're just out
for making money,
and they're not worrying
about the kids' well-being.
and they're not worrying
about the kids' well-being.
- Along with that huge success
came the criticism.
I did not expect the U.S.
Congress to get involved.
I did not expect the U.S.
Congress to get involved.
[gavel banging]
- Like the Grinch
who stole Christmas,
- Like the Grinch
who stole Christmas,
these violent video games
threaten to rob
this particular holiday season
of a spirit of goodwill.
this particular holiday season
of a spirit of goodwill.
These games teach a child
to enjoy inflicting torture.
These games teach a child
to enjoy inflicting torture.
- They were threatening
the industry
with severe censorship,
so there was a lot at stake.
with severe censorship,
so there was a lot at stake.
- It was largely political.
"We're gonna restrict
your children
"from being exposed
to these violent video games,
and we're going to make
the world safe for democracy."
and we're going to make
the world safe for democracy."
It was total nonsense,
total bullshit.
It's business and politics
meeting in
the worst way possible.
meeting in
the worst way possible.
- What you're about to see
are scenes
from the most violent
new video games,
from the most violent
new video games,
"Mortal Kombat."
Blood splatters
from the contestants' heads,
and a player wins
the so-called death sequence
and a player wins
the so-called death sequence
pulling off the head
of the opponent
with spinal cord attached.
with spinal cord attached.
I find this segment
deeply offensive
and believe that it simply
should be taken off the market.
and believe that it simply
should be taken off the market.
Let me now call to the table
Howard Lincoln,
senior vice president
of Nintendo,
senior vice president
of Nintendo,
and Bill White, senior
vice president of Sega.
- I'd never been in Congress
before.
Of course, it's always
a little bit intimidating
Of course, it's always
a little bit intimidating
when the senators
sit ten feet above you
and you're down on a little
table in front of them.
and you're down on a little
table in front of them.
- We debated a lot
about who should go,
and we decided that Bill White
was absolutely perfect.
and we decided that Bill White
was absolutely perfect.
Instead of having the senators
address me and address Howard,
have them address Howard
and another guy
have them address Howard
and another guy
who used to work for Nintendo.
- We knew that it also
would irritate
- We knew that it also
would irritate
the hell out of Howard.
- To meet our game guidelines,
we have removed the blood
and death sequences
we have removed the blood
and death sequences
present in "Mortal Kombat."
We did this knowing
that we would lose money
by sanitizing "Mortal Kombat,"
but sanitize it we did.
by sanitizing "Mortal Kombat,"
but sanitize it we did.
- Howard Lincoln
was pontificating about
- Howard Lincoln
was pontificating about
how Nintendo never would do
anything as horrible
as what Sega had done
with "Mortal Kombat."
as what Sega had done
with "Mortal Kombat."
All of a sudden, Bill White
whips out this gun
that they used
in a hunting game.
that they used
in a hunting game.
- Senator, I may also point out
that Nintendo produces
product
for a rapid-fire machine gun.
product
for a rapid-fire machine gun.
- This is a thing that--
it's called the Super Scope.
- This is a thing that--
it's called the Super Scope.
I think that this game
is a target sh--this device
is for target shooting
and whatnot.
is for target shooting
and whatnot.
- To me, that looks like a--
looks like a weapon.
It looks like an assault weapon
of some kind.
- I was starting to get a
little bit agitated with Bill.
- I was starting to get a
little bit agitated with Bill.
He had worked for us,
and he knew what was going on,
so I felt it was necessary
to make our position
so I felt it was necessary
to make our position
very clear, which I did.
And it seemed to go over
quite well.
And it seemed to go over
quite well.
I can't sit here
and allow you to be told
I can't sit here
and allow you to be told
that somehow
the video game business
has been transformed today
from children to adults.
has been transformed today
from children to adults.
Small children bought this
at Toys "R" Us,
and he knows that
as well as I do.
We've got to get
further into this.
We've got to get
further into this.
- Well, thank you.
Thanks for your forthrightness.
Thanks for assuming
responsibility.
Thanks for assuming
responsibility.
I appreciate--I believe you've
shown some leadership here.
You've been a damn sight better
than the competition.
You've been a damn sight better
than the competition.
- People were worried about
video games being like drugs,
we were forcing them
on kids.
we were forcing them
on kids.
They would become
addicted to them.
They would ignore
their studies.
And that turned out to be true.
And that turned out to be true.
No, it didn't.
It wasn't true.
It was the opposite, actually.
I think that the kids that
became video game aficionados
I think that the kids that
became video game aficionados
in many ways
had better imaginations
and a better time
with the world in some ways.
and a better time
with the world in some ways.
- After the Senate hearings,
Kalinske came out
with some comment.
Kalinske came out
with some comment.
- What I had said
was that Nintendo
started these hearings
started these hearings
by sending the senators
videotapes of our video games.
by sending the senators
videotapes of our video games.
- We thought Nintendo
had planted this,
and it was convenient
that Senator Lieberman
actually was getting
reelected that year.
actually was getting
reelected that year.
- I found that to be
absolutely incredible.
This is the guy
that sucks us into this.
This is the guy
that sucks us into this.
I was trying to figure out
a way to, in effect,
say, "Buzz off,"
say, "Buzz off,"
so I decided to write a poem,
so I decided to write a poem,
"Roses are red,
violets are blue.
So you had a bad day,
boo hoo hoo."
So you had a bad day,
boo hoo hoo."
- [laughs]
- Come on.
- Come on.
- I think it sent a message
to Sega
that we were gonna continue
to fight them.
that we were gonna continue
to fight them.
[energetic drum music]
- Every year
at about this time,
the sharpest of
the cutting-edge electronics
the sharpest of
the cutting-edge electronics
are unveiled,
and, oh, the places you'll go.
[applause]
[applause]
- Hey.
- Hey.
- How you doing?
- What a sight for sore eyes.
Come and sit down for a minute.
Come and sit down for a minute.
- All right.
- We just decided to come out
here on a little hunting trip.
As a matter of fact,
As a matter of fact,
there's some
of those little suckers again!
- Hey.
- Hey.
[applause]
- Peter, a lot of people think
that Nintendo
and this whole business
is going right down the river.
- Yeah, Nintendo
had a bad year.
- Yeah, Nintendo
had a bad year.
Sales dropped.
Profits dropped.
But the future's
gotta be bright.
- There was a feeling like,
"You know what?
- There was a feeling like,
"You know what?
"This is a maturing industry.
We need to start acting
that way a little bit more".
From now on,
we'll see no repeats
From now on,
we'll see no repeats
of the "Mortal Kombat"
incident.
"Mortal Kombat 2"
will be the same
whether it's on our platform
or on anyone else's.
whether it's on our platform
or on anyone else's.
- All right.
- Yeah.
- We as a company
had to make a decision.
Were we gonna waver
from the Mario roots?
Were we gonna waver
from the Mario roots?
This was very tough for us.
- The contents may be new,
but the sales formula
hasn't changed at all.
but the sales formula
hasn't changed at all.
We did modify our approach but
without sacrificing standard.
- If kids want video games
to help them define
- If kids want video games
to help them define
their image,
then we're gonna do just that.
The music comes from two
of the hottest grunge groups
out there, the Butthole Surfers
and Sweaty Nipples.
out there, the Butthole Surfers
and Sweaty Nipples.
[laughter and applause]
[laughter and applause]
So live it large, run it free,
and play it loud.
- [belches]
[rock music]
- [belches]
[rock music]
- Play it loud!
- Play it loud!
- And I mean, they--
they kind of got it.
They started to see
what the consumer wanted.
They started to see
what the consumer wanted.
Hey, bravo for that.
Was it iterative of Sega?
Mm, yeah, it was,
and we were complimented.
Mm, yeah, it was,
and we were complimented.
- Sega!
- [belches]
- We now needed to shift again
- We now needed to shift again
and try to figure out, how do
we manage against a company
that's starting to awaken?
that's starting to awaken?
- Sega is the current leader
but only by a slight margin.
In an effort
to keep their edge,
Sega demonstrated the latest
in player interface,
Sega demonstrated the latest
in player interface,
the Activator.
[bell dings]
- Ugh.
- We had this strategy
to use technology.
- We had this strategy
to use technology.
- Not just thinking
one step ahead
but two and three steps ahead.
- You look to the right,
and you see the attacker
- You look to the right,
and you see the attacker
coming in on the right;
you look above you,
and you could see the airplanes
coming above you.
- Welcome to Sega Channel.
- Welcome to Sega Channel.
It's cable,
but you don't watch it.
You play it!
- We see the Internet
and online gaming
- We see the Internet
and online gaming
as one of the big revolutions
in this business.
- They were kind of
just throwing things
- They were kind of
just throwing things
against the wall
to see what would work.
- I didn't want us to become
like Nintendo
and let somebody pass us by,
and let somebody pass us by,
and so having
the next great hardware system
was really critical.
- The next big battle
in the video game wars
- The next big battle
in the video game wars
is about to begin
as manufacturers
try to get people
to trash their old systems
try to get people
to trash their old systems
and trade up to new ones.
- I often get to introduce
our money editor, John Stehr,
- I often get to introduce
our money editor, John Stehr,
but right now,
for the first time ever,
I am going to become
John Stehr.
- It's our way
of introducing you
- It's our way
of introducing you
to the machine
behind today's movie magic.
- [screams]
- It's been a year
of digital distortion.
- It's been a year
of digital distortion.
Artists reanimated
John Kennedy...
- I gotta pee.
- And put Brandon Lee
- I gotta pee.
- And put Brandon Lee
into scenes
shot after his death.
One brand of computer made
all these movies possible,
One brand of computer made
all these movies possible,
the blisteringly fast
computers of Silicon Graphics.
- I got a call from Jim Clark,
- I got a call from Jim Clark,
who was chairman
of Silicon Graphics.
Said, "Hey, we've come up
with a new chipset
"that we think is perfect
for a video game system.
You wanna come over here
and take a look at it?"
[Spin Doctors' "Two Princes"]
[Spin Doctors' "Two Princes"]
We called Nakayama,
explained the situation,
We called Nakayama,
explained the situation,
and said, "You gotta send
a hardware team out."
Nakayama even came himself.
We had a good meeting
at Silicon Graphics.
They showed off
these amazing graphics.
They showed off
these amazing graphics.
- That's what I said now
- They went back to Japan,
and the response to us was,
- They went back to Japan,
and the response to us was,
"No, that's not good enough."
They thought there'd be
too much wasted silicon,
so that was
the excuse they gave.
so that was
the excuse they gave.
- Yeah, yeah
- This was the first time
that a major strategy
- This was the first time
that a major strategy
that I believed in had been
overridden by Nakayama.
- It was a surprise to me.
- It was a surprise to me.
It was a surprise to Tom,
a surprise to everybody
that this happened.
[suspenseful music]
[suspenseful music]
- Initially, I thought
it was honest differences
in hardware architecture,
in hardware architecture,
but I began to see
that there was this jealousy
that was developing
between Sega Japan
that was developing
between Sega Japan
and Sega of America.
You could imagine every week,
your CEOs walking in
You could imagine every week,
your CEOs walking in
and saying,
"How come you're not as good
as those guys in America?"
And they started looking
for ways
where they could disagree
with us
and perhaps, to some degree,
undermine us.
and perhaps, to some degree,
undermine us.
I explained the situation
to Jim Clark, and he said,
I explained the situation
to Jim Clark, and he said,
"Well, what should I do now?"
and I said,
"Well, there's this other
video game company in Seattle.
Maybe you should go
take a visit to them."
Maybe you should go
take a visit to them."
[applause]
- It's a pleasure to be here
this morning.
There's a lot of talk today
about new technology
There's a lot of talk today
about new technology
soon replacing
16-bit video games,
soon replacing
16-bit video games,
but ultimately, only hit games
will bring you customers.
- The Super Nintendo was doing
well and making good money,
- The Super Nintendo was doing
well and making good money,
and so we kept
reminding ourselves,
"It's not about the technology.
It's about the fun
that you deliver."
It's about the fun
that you deliver."
- Here's an old friend
of mine.
This, of course,
is Donkey Kong,
the star of Nintendo's
1981 arcade hit.
the star of Nintendo's
1981 arcade hit.
Well, ladies and gentlemen,
my friendly gorilla is back
Well, ladies and gentlemen,
my friendly gorilla is back
in his new Nintendo game,
"Donkey Kong Country."
[relaxed drum music]
[relaxed drum music]
- Since its release, Nintendo
- Since its release, Nintendo
has sold more
than 6 million copies.
[Tarzan yell]
[Tarzan yell]
- "Donkey Kong Country"
was a critical game for us
to sustain
the momentum of Super NES
to sustain
the momentum of Super NES
in the battle with Sega
and push it right over the top.
in the battle with Sega
and push it right over the top.
- But while we were going
through the battles with Sega,
another competitor
was behind us,
another competitor
was behind us,
and he's preparing
to enter the marketplace.
- Mommy. Mommy. Mommy!
- It's only a movie,
- It's only a movie,
except on a Sony
big-screen TV.
- Oh, good, something romantic.
- Oh, good, something romantic.
- Sony was just desperate
to get into
the video game business.
to get into
the video game business.
- We support the content,
the formats
that we think
the consumer's going to like.
- Olaf Olafsson arrived
in my office one day,
- Olaf Olafsson arrived
in my office one day,
and we started talking about
ways we might work together.
- Sony and Sega
secretly agreed to come up
- Sony and Sega
secretly agreed to come up
with a common hardware unit.
- But we'll each make
our independent profit
off of the software.
We were a much better software
developer than Sony was,
We were a much better software
developer than Sony was,
and so I thought,
"Boy, this is a win for us."
[dramatic music]
[dramatic music]
- Consumer electronics giants
Sony and Sega
are teaming up
on the video games,
putting Sony music
and movie software
putting Sony music
and movie software
behind the video game maker.
- Everybody involved thought
the marriage would happen.
- Everybody involved thought
the marriage would happen.
- Unfortunately, Sega Japan
just couldn't agree
- Unfortunately, Sega Japan
just couldn't agree
with the Sony engineers
on specifications.
I was really upset
I was really upset
and felt like they
didn't try hard enough.
- People were coming
to our door to say,
"Hey, we want to be part of
what you're doing here."
"Hey, we want to be part of
what you're doing here."
For whatever reason,
Sega of Japan
didn't want to play.
Sega of Japan
didn't want to play.
- Kalinske did a good job
of protecting us,
and it wasn't easy.
- He was a bit
like the sin eater.
- He was a bit
like the sin eater.
He was eating all the sins
for the entire SOA group.
- He would tell me what was
going on over there,
- He would tell me what was
going on over there,
but I didn't really
internalize it
'cause I didn't have to
go there and get yelled at
like he did
and scared like he did.
like he did
and scared like he did.
- Once the decision was made
not to do joint hardware
with Sony,
not to do joint hardware
with Sony,
I knew that things
were different now.
- Nintendo, together
with Silicon Graphics,
- Nintendo, together
with Silicon Graphics,
have entered into a worldwide
joint development
have entered into a worldwide
joint development
and license agreement
under which our companies
will develop
this new and unique product.
this new and unique product.
It will feature a new,
true 64-bit
multimedia engine chipset.
true 64-bit
multimedia engine chipset.
- That freaked them out at Sega
because there was
nothing to do about it.
because there was
nothing to do about it.
They just could not get up
to a 64-bit machine right away.
- At that time, the strings
were being pulled by Japan.
We had very limited
degrees of freedom.
We had very limited
degrees of freedom.
Our ideas were
typically ignored
or not responded to,
more often than not,
or not responded to,
more often than not,
and I just wasn't looking
for that intellectually.
And then I got approached
by an executive search firm
And then I got approached
by an executive search firm
looking for someone to run
the Sony PlayStation.
- PlayStation.
- And I said, "Well,
"here's another
interesting challenge.
"here's another
interesting challenge.
I can just undo
what I just did at Sega."
- I was a little bit surprised
that they went for Steve.
- I was a little bit surprised
that they went for Steve.
- I was done,
and I just wanted to move on
and didn't want to stay
at Sega any longer.
and didn't want to stay
at Sega any longer.
- Sony wanted to really
stick it in our eye
at this point,
and clearly, Steve
was delighted to do that.
and clearly, Steve
was delighted to do that.
- My former wife
used to always tell me
that there's no chance that
I'll ever get a broken heart
that there's no chance that
I'll ever get a broken heart
'cause I don't have one.
To me, it's just a decision
that one makes about business.
You can't be
terribly emotional.
You have to be willing to cut
off your hand to save the arm.
[Jax yells]
[Jax yells]
- Sony was really
a scary competitor.
It was kind of like,
the show business people
It was kind of like,
the show business people
were gonna come
into this thing,
and their sound and graphics
were gonna be way
above what we could do.
were gonna be way
above what we could do.
There was a lot of fear around
the Sega halls about that.
There was a lot of fear around
the Sega halls about that.
Kalinske was coming back
from Japan
having nervous breakdowns
about what was coming up.
We had no product at the time.
- At that point,
Nintendo was on the wane.
- The biggest problem
that we have with Nintendo 64
- The biggest problem
that we have with Nintendo 64
is to try to figure out
how to make great software
real-time 3-D.
how to make great software
real-time 3-D.
- We were teasing the retailer
for, like, two years.
- We were teasing the retailer
for, like, two years.
We were showing them
these great graphics,
but from a sales perspective,
it was a killer.
- When Nintendo announced
64-bit system,
Nakayama felt that we got
to make it 64 too.
Nakayama felt that we got
to make it 64 too.
[serene music playing]
- Introducing...
- Sega Saturn.
- Introducing...
- Sega Saturn.
- Sega Saturn was
32-bit machine to start with.
It was too late
to redesign the machine,
It was too late
to redesign the machine,
and we ended up
putting two 32-bit chips.
and we ended up
putting two 32-bit chips.
That made the programming
challenging and complex.
- The software
looked like shit.
Not until three months
before launch did we find out
that the software was not
gonna be there to support it.
that the software was not
gonna be there to support it.
- Not only did
we not have enough software.
We didn't even
have enough hardware,
so we had to limit
so we had to limit
the retail distributors
who carried it,
and we cut out
Target and Wal-Mart,
and we cut out
Target and Wal-Mart,
and these guys
were furious with us.
I expressed
all this to Nakayama,
I expressed
all this to Nakayama,
and he disagreed with me.
He was afraid that Sony
was gonna steal our thunder,
He was afraid that Sony
was gonna steal our thunder,
so he wanted an immediate
launch of Saturn at E3.
so he wanted an immediate
launch of Saturn at E3.
- When giants
in the video game industry
square off against each other
at a major trade show,
square off against each other
at a major trade show,
people pay attention.
With $10 billion on the line,
With $10 billion on the line,
it's all about
which expensive toys
consumers will pay
to play with.
- This is no game; this is
a multibillion-dollar gamble
- This is no game; this is
a multibillion-dollar gamble
for a lot of entertainment
companies.
To borrow from a couple
of their more popular titles,
To borrow from a couple
of their more popular titles,
they're locked
in "Mortal Kombat."
For the losers,
it could spell "Doom."
- Without the right games,
we're delaying the launch
of Nintendo Ultra 64.
we're delaying the launch
of Nintendo Ultra 64.
- We feel it's more important
to make
a good first impression,
have the absolute best possible
software when we launch.
- So you're willing to wait
till '96?
- So you're willing to wait
till '96?
- Yeah, we're gonna wait.
- Product launched in Japan.
We sold 100,000 units
on the first day,
We sold 100,000 units
on the first day,
300,000 units
in the first month.
We're approaching
a million units sold in Japan.
We just need to replicate that
in the United States.
We just need to replicate that
in the United States.
- No question in my mind,
there are gonna be casualties,
and there are gonna be
casualties soon.
[suspenseful music]
[suspenseful music]
- Tom and I were both
staying at the same hotel,
- Tom and I were both
staying at the same hotel,
and they had taken over
the lobby
and the swimming pool,
and they had these large
inflatable balloons
and they had these large
inflatable balloons
of some of their iconic
characters like Sonic.
Somehow those blow-up balloons
wound up
Somehow those blow-up balloons
wound up
in the bottom of the pool.
- He had them deflated,
stuck pins in them
or something.
stuck pins in them
or something.
- After Sonic was found dead
in the bottom of the pool,
Tom came to me and said,
"Steve, can you cut it out?"
Tom came to me and said,
"Steve, can you cut it out?"
and I said, "Tom, no.
There's no way
we're gonna cut it out."
- Clearly they were trying
to out-Sega Sega.
- Clearly they were trying
to out-Sega Sega.
- You know, if you're
planning to buy
- You know, if you're
planning to buy
a new video game machine
this year,
you better start saving
for one now.
Some supersophisticated
new systems
are about to hit the market,
and they are pricey.
are about to hit the market,
and they are pricey.
- Sega rushed Saturn
on the market,
and it sells for around $399,
and it sells for around $399,
and don't expect that price
to come down anytime soon.
- I wish that we could say
we were gonna see prices
come down,
we were gonna see prices
come down,
because I think
it would help my business
and we'd sell a lot more units.
- I'm gonna talk to my parents
about this one.
I like this one a lot.
I like this one a lot.
- You better tell them
it's $399.
- Up next,
the Sony PlayStation.
- I'm going to ask
Sony Computer Entertainment
- I'm going to ask
Sony Computer Entertainment
president of America,
Steve Race, to join me
for a brief presentation.
Steve Race, to join me
for a brief presentation.
[applause]
[cheers and applause]
[cheers and applause]
[desolate music]
- I was sitting
right in front of him.
- I was sitting
right in front of him.
It was Tom and I
and Shinobu, and...
we were just
sitting there watching.
- [screams]
Sony PlayStation!
Sony PlayStation!
[cheers and applause]
- What is that?
What is that?
- What is that?
What is that?
- It's an enormous parade,
including 16 balloons.
- Yeah!
- All right.
- Yeah!
- All right.
- It was a cold and windy day
this Thanksgiving,
and some of the new balloons
didn't fare terribly well.
and some of the new balloons
didn't fare terribly well.
Sonic the Hedgehog
hit a utility pole
around 58th Street
and Broadway.
around 58th Street
and Broadway.
- Oh!
Oh!
- Sonic wounded
an off-duty police officer
- Sonic wounded
an off-duty police officer
and caused minor injuries
to a young woman
and a ten-year-old girl.
Sonic the Hedgehog
didn't finish the parade.
[warm music]
[warm music]
- The success of Sega
of America
- The success of Sega
of America
really is American dream.
- All right.
- Yeah.
- Americans like challenges,
- Americans like challenges,
so I think, overall,
battle against Nintendo
was perfect
for the spirit of Americans
was perfect
for the spirit of Americans
to fight David and Goliath
sort of battle.
So I think I'm very proud
to be part of,
you know,
whole Sega phenomenon.
you know,
whole Sega phenomenon.
- 19 more shopping days
until Christmas,
and the heat is on for parents
all over the country
and the heat is on for parents
all over the country
from kids who simply have to
have this year's hottest toys.
- It's no longer Sega.
Now I'm into Nintendo.
- It's no longer Sega.
Now I'm into Nintendo.
- Nephew wants one,
my son wants one.
- Oh, that's a--that's
a lot of systems.
- Oh, that's a--that's
a lot of systems.
- Go!
- Nintendo's top execs traded
suits and ties for helmets
- Nintendo's top execs traded
suits and ties for helmets
and racing togs today.
- Here comes another finisher!
- Here comes another finisher!
It's Howard Lincoln,
Howard Lincoln,
ladies and gentlemen!
- An incredible race,
an incredible effort.
- An incredible race,
an incredible effort.
What's with the
come-from-behind strategy here?
- Well, at first I thought his
go-kart was faster than mine.
- Well, at first I thought his
go-kart was faster than mine.
But then I found
when I kept crashing into him,
he started moving a little bit
to the right side,
and I was able to get by him.
and I was able to get by him.
- Hey, plumber boy,
mustache man,
- Hey, plumber boy,
mustache man,
your worst nightmare
has arrived.
Pack up your stuff.
[applause]
- In my life, I've been
very fortunate to have worked
with great, wonderful people,
with great, wonderful people,
and my proudest
business accomplishment
was seeing all those people
all doing so well,
was seeing all those people
all doing so well,
all of you who I worked with,
that I owe this--this honor to.
all of you who I worked with,
that I owe this--this honor to.
- Sega!
- Sega.
- Sega!
- Sega.
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- Sega!
- You know very well
Who you are
Don't let 'em
hold you down
Don't let 'em
hold you down
Reach for the stars
You had a goal
- I understand.
- [chuckles darkly]
- But not that many
'Cause you're the only one
I'll give you
good and plenty
I'll give you
good and plenty
- Super Nintendo,
Sega Genesis
When I was dead broke, man,
I couldn't picture this
When I was dead broke, man,
I couldn't picture this
[blipping]
- We would like
to convince you
that there is indeed a market
in which one money--
that there is indeed a market
in which one money--
money can be made
in the near future.
[dramatic music]
[dramatic music]
[dramatic electronic music]
[dramatic electronic music]