Blue Phoenix: How Sega Won the War

[Huehuecoyotl]

Sega Prepares 32-Bit Game Machine
from Electronic Gaming Monthly 052, November 1993 [1]​

For much of the last year, Sega has been steaming ahead in developing its new 32-Bit game console. Tom Kalinske, Sega president, has indicated that the new machine will be called ‘Saturn’. Saturn is said to be based on a customized Sega/NEC V810 processor, a chip which clocks at upwards of 20 MHz. [2]

Full specifications are still a couple of weeks away from being revealed, but analysts in Japan who are familiar with NEC’s Ironman project, on which the new chipset is based, state that the Saturn will almost certainly not be backwards compatible with the Genesis or Sega CD. To do this, Sega would have to build a set of 68000 and Z80 chips from the ground up in the Saturn. Since cost is a major factor with any game console, Sega will do everything possible to minimize the amount of chips and circuitry.

Cartridge, disc, or both? Sega will probably opt for CD first in the interest of future proofing, but cart compatibility is not out of the question either. Including a CD drive will probably drive up the Saturn's price relative to past Sega consoles.

Developers in Japan are already worried about the issue of incompatibility, as they are concerned that the existing Sega consoles could become ‘lame ducks’. However, most of these same companies at least seem to be content with the chip architecture provided by NEC, whose home game machines are even more popular than Sega’s in their home country.

As for the U.S., if Sega delays the North American launch of Saturn until mid-1995, it will need to lean even more heavily on the its existing hardware during the all important Christmas 1994 season…

KALINSKE: [...] Which, of course, is what we did. That was a pretty dangerous time for us. With the 32-bit age arriving soon, there was concern about how we’d even keep marketing 16-bit games to our audience in 1994. Development kits for Saturn were already out there by the end of 1993. How do you convince developers to keep supporting your old machines when their shelf life is getting shorter and shorter? The answer to this and to the question of keeping our core audience was simple: keep making quality first-party games.

IGN: Is it true that a 32-bit add-on for the Genesis was considered as a way of filling in that gap?

KALINSKE: Yeah, that’s true… It never got past the planning stage, which was probably a good thing. It’s not that it was a bad machine, conceptually, this 32X. But after a point, all of Sega’s divisions agreed that it would be better to direct all of our 32-bit efforts toward the Saturn, which was seen as the future of our company. The fact that NEC was not even a little interested in supporting the 32X, hardware-wise, definitely had a thing or two to do with that.

IGN: So, enter the Mega Genesis instead.

KALINSKE: Right. The American name was a little nod to the base system’s name internationally, and we devised it as a way of selling the idea that this was a complete and more powerful machine, the definitive Genesis if you will. Abroad, of course, it was the Giga Drive CD. Taking all the same off-the-shelf hardware that was in the Genesis and its CD add-on and putting it in one shell was a whole lot easier than designing a new machine like the 32X would have been. Cheaper, too. As I understand it, the cost of manufacturing the Genesis hardware had become less expensive as time went by, which made it easier to beef up the Mega Genesis’ processing power slightly without breaking the bank. This let us sell the integrated Mega Genesis for less than a Genesis and Sega CD’s combined price. Once it was on the market for the holiday season in ‘93, we definitely noticed an uptick in hardware sales, from players who had never owned a Sega machine and wanted to see what all the fuss was about, and newcomers to video gaming as well. It was a good way for someone to jump on and catch up with all the Genesis and Sega CD titles up to that point.

IGN: Originally, it was conceived as being a portable CD player as well as a console...

KALINSKE: [Laughs.] Can you imagine, carrying around a Genesis like a walkman? Yes, that was an idea that was heard in a few meetings early on, but it would never have been accepted by consumers as anything more than a novelty, and miniaturizing it like that was problematic, too. Sizing it up a little and making it a real home console and not just a gimmick was the right move. The Mega Genesis really ended up being our bridge to the Saturn. [3]

IGN: You weren’t so sure about the Saturn at first, were you?

KALINSKE: No, not when it was first pitched to me. Sega of Japan was pretty eager to shove their Mega Drive, our Genesis, under the rug. It was a smash hit here, but it had barely made a mark back home in Japan. Granted, we got it later, and from our perspective we had only had a few years with it. By the time Saturn was announced, though, the Mega Drive had been on the market for more than five years in Japan, so from their perspective it was a little long in the tooth. I think they definitely had a chip on their shoulder about coming in third place over there, while we grappled for a close second here in North America. In their eyes, the Genesis had failed, no matter that it was selling well overseas. Coming to an accommodation with NEC, who was their close rival in the Japanese market, seemed to mellow them out a little on that. They wouldn’t kill the Genesis until the time was right.

Interview with Tom Kalinske, President of Sega of America, 1990 - 1999
IGN, June 2006​

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[1] - Most of this article’s text is similar to (but heavily modified from) its OTL equivalent in the real issue 052 of EGM.

[2] - This, of course, is the POD. A quiet one, caused in corporate boardrooms back in late 1992, and so we don’t see the butterflies flap until it goes public in ‘93. IOTL, Sega was very close to choosing an NEC chip for the Saturn’s RISC microcontroller. A simpler and cheaper Saturn might very well make all the difference. Ironman was already being shopped around in trade shows as early as 1992, so the time is right. This is only the base that TTL's Saturn will build upon, of course, so it's going to end up quite a bit stronger than the original Ironman, and better at 3D to boot. Sega and NEC will collaborate heavily on the hardware. (And so dies one of the stupidest and coolest consoles of the 1990s, the PC-FX, strangled in its cradle…)

[3] - This is TTL’s version of the CDX/Multi-Mega and Project Neptune. It's launching several months before the CDX did, since the portable CD player features were ditched in development and all progress on 32X was canned and resources more focused accordingly.

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So here I am, getting a start on this idea I've had clinking around in my noggin for a little while. I'm keen to sketch out a history where Sega manages to stumble out of the 1990s in decent shape and survives as a force in the game industry up to the present. As for just how I intend to get it there, well, I'm content in letting that remain a surprise for now. Suffice it to say for the time being that we'll be moving through the tail end of the fourth generation of consoles very quickly and that the Mega Genesis episode we see here will mostly serve to set the stage for the Saturn.

Overall, I'm in this for the fun of it, so I'm sure inaccuracies and implausibilities will crop up from time to time, and I'm not very concerned about that. I welcome discussion, suggestions and additions if anyone feels inspired to contribute them.

I'm also going to make tangents into music, movies and television on occasion, so by all means, don't limit any of that to video games. I'm going to mostly ignore "real-life" developments out of respect to the subforum's limitations on current events and politics.

Special thanks go to @Electric Monk and @Nivek for offering me advice on the premise of the timeline in the early stages as well as to others who have remarked on my idea.

The next post is coming along soon and will step back in time a little to explore the NEC deal in more detail.

 

[Nivek]

(And so dies one of the stupidest and coolest consoles of the 1990s, the PC-FX, strangled in its cradle…)

Yeah the PC-FX was a console launched a little to late sadly, have FX consolited with all the PC-ENGINE add on and be retrocompatible...but that is other TL itself.

Special thanks go to @Electric Monk and @Nivek for offering me advice on the premise of the timeline in the early stages as well as to others who have remarked on my idea.

Thanks nice i was of help for you, some details ended different i would do but still very nice work with it buddy.

 

[Electric Monk]

Excited to see where this goes! I have no idea lol, I helped out on potential Saturn’s, a few deep dives, and a couple future ideas—no idea nor do I wanna know in advance what wound up in the timeline .

Going with NEC is easily the most fascinating in corporate dynamics, a lot of intriguing potential there.

 

[Enigmajones]

Interesting idea, love to see Sega still around.

 

[Nivek]

Excited to see where this goes! I have no idea lol, I helped out on potential Saturn’s, a few deep dives, and a couple future ideas—no idea nor do I wanna know in advance what wound up in the timeline .

Going with NEC is easily the most fascinating in corporate dynamics, a lot of intriguing potential there.

NEC make it far different, ironically they could have worked Hitachi but maybe scrathing everything was for the best

 

[Huehuecoyotl]

NEC make it far different, ironically they could have worked Hitachi but maybe scrathing everything was for the best

That was my read on the situation, too. Hitachi made some great chips at the time and nothing was, in theory, stopping Sega from making a fairly powerful Hiatchi chipset for the Saturn, without also making an overly complicated shoggoth of a machine and scaring away Western developers. (Of course, we know what they actually did...) But in the end I decided getting NEC on-side was a much more interesting consequence.

Anyway, more words.

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Sega to Partner With Tech Giant NEC for Upcoming Game Hardware
from The New York Times, 8 June 1993 [1]​

In news sure to shock video gaming enthusiasts, former rivals Sega Enterprises, Ltd and NEC Corporation have announced that their companies will be collaborating on co-developing a custom processor chip based on one of NEC’s designs. This would seem to be a prelude to utilizing this chip in a new video game system, with rumors from many quarters suggesting a 32-Bit Sega system as its ultimate beneficiary.

Despite Sega’s most prominent rivalry being that with Nintendo, it actually competes closely with NEC in Japan, pitting its Genesis against NEC’s and Hudson Soft’s PC Engine, marketed stateside as the TurboGrafx-16. This announcement comes with the news that the TurboGrafx-16 and TurboDuo will be discontinued in North America effective January 1st, ending their relatively unremarkable lifespan in this market. The PC Engine and PC Engine Duo in Japan will receive continued technical support from Sega and NEC through the end of 1994, but game development will “wind down” effective immediately.

More surprisingly, this news was partnered with the announcement that Hudson Soft Co., Ltd, creator of the Bomberman series and erstwhile collaborator with NEC, would be acquired by Sega. Initial reports suggest that the Hudson brand will continue as a developing team directly under Sega.

Despite all of this, most video game fans are more abuzz regarding the rumors of Sega’s 32-Bit machine, which some say will be named “Saturn”. Nintendo, as of yet, has given no sign of releasing its own successor to the Super Nintendo Entertainment System, leading one analyst in Tokyo to remark that Sega will continue its gains on Nintendo if it beats them to the market with a new game system. “I think it’s going to be the product that’s going to drive the market share,” she said. [2]

YUKAWA: Making a deal with NEC was by no means a certainty at that time. There were many shopfronts to browse, if you will, and Sega was, as always, on the lookout for the best bargain. At first Motorola was on their minds, having made the central processor for the Mega Drive, and later on Hitachi dominated the conversation. Both had their benefits and drawbacks. Motorola, for one, was not a Japanese company, which perhaps made the board reluctant to pin the fortunes of Sega upon them again.

SEGAWORLD: Hideki Sato originally wanted two Hitachi chips for Saturn, didn’t he?

YUKAWA: As I understand it, yes. Sato-san’s original conception of Saturn was meant to be a powerful, if complex machine that was made to bring arcade hits home in full fidelity. But my specialty has always been business and not technology, and the decision to drop Hitachi for NEC was pure business. Although the PC Engine had been a big hit in Japan, it was no secret in the industry that NEC’s time in the sun as part of the video game market was coming to an end. We and Nintendo were moving on to replace the current generation of consoles, and Sony was already in motion to meet us there. What did NEC have planned? Not much at all. Its customers were by and large not clamoring for an upgraded PC Engine or PC Engine Duo. NEC could have lost money making its Tetsujin project into a next-generation PC Engine, or it could have sold the technology to someone else and made money on every machine manufactured with those chips without ever needing to take the risk themselves. We know what they chose, of course.

SEGAWORLD: So Sega was trying to bring those PC Engine fans into its sphere.

YUKAWA: Yes, you could say that. Up to that point, Sega had been the outsider in the Japanese game market, at least outside of the arcades. Coming to this agreement with NEC not only solved the question of how to build Saturn, it also neatly removed one competitor from the market altogether and gave Sega access to the goodwill and resources it had built among gamers and developers in Japan. Being allowed to acquire Hudson and its games as part of the whole situation was just a little bonus. I was only a low-level executive at the time, but having the perspective I did, it was easy to perceive that the board of directors was very pleased with this deal. With the PC Engine sunsetting, it was hoped that customers who had turned out to stores for NEC’s products would turn to Sega. You can imagine the surprise among the members of the board when the Giga Drive CD was released, and for the first time in some years, Sega topped hardware sales for the month!

SEGAWORLD: Even though there wasn’t any NEC hardware in it?

YUKAWA: Even so. They had generously offered a good number of PC Engine CD-ROM games to accompany the launch, along with our own titles and those from other developers. It seemed to many like a PC Engine Duo successor, being a somewhat more powerful machine and having so many Hudson games available for it, and I think it’s safe to say that the NEC fans were curious. I only hope they got their money’s worth! They certainly seem to think they did. And at the end of the day, what was good for them was good for Sega, since for the first time in a long time a sense of ease and relief prevailed in the company.

Interview with Hidekazu Yukawa, former executive at Sega of Japan [3]
Segaworld, April 2009 [4]​

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[1] - NYT in fact published a similar article IOTL in September 1993 regarding the Hitachi chip deal for the Saturn.

[2] - This quote is identical to one found in real life on the Hitachi deal article. In our timeline it’s hilariously sad in retrospect, but here it might just have a ring of truth.

[3] - It’s the man from those commercials!

[4] - A fanmade publication, probably.

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The next update isn't too far off. It will detail a few games available for the Mega Genesis in North America, then provide a little perspective on Nintendo's attitude at the end of the 16-bit era ITTL.

 

[Nivek]

Hudson Soft Co., Ltd, creator of the Bomberman series and

This is a massive butterfly, when not the titan was on the 80's ,hudson did was a big third party, that purchase might have not been cheap ITTL.

Still very nice plus sega already have experience with NEC ( system 32 arcade board and model 1 use NEC chips)

 

[connorCD]

I'm hoping that this timeline actually survives unlike other Sega-related timelines I've seen in the past. Despite it being a rather overused trope in pop culture timelines, I am fascinated with the potential of Sega surviving in the console market, so I hope this goes well with you.

 

[Nivek]

I'm hoping that this timeline actually survives unlike other Sega-related timelines I've seen in the past. Despite it being a rather overused trope in pop culture timelines, I am fascinated with the potential of Sega surviving in the console market, so I hope this goes well with you.

Umm is that a subtle jab to P2S and Sega generation, i take it, but in the later...i think Sega did need the shake up, specially when okawa died

 

[connorCD]

Umm is that a subtle jab to P2S and Sega generation, i take it, but in the later...i think Sega did need the shake up, specially when okawa died

Not really P2S considering that timeline technically still exist in the form of MM, but with Sega Generation, then kinda. I was more talking about timelines like At your service and Beyond the Genesis.

 

[Nivek]

Not really P2S considering that timeline technically still exist in the form of MM, but with Sega Generation, then kinda. I was more talking about timelines like At your service and Beyond the Genesis.

A shame those TL died.... yeah i got it wrong, yeah all those SEGA tl died sadly, and Sega Generation is mostly in hiatus

 

[Huehuecoyotl]

I intend to keep going as long as I have new ideas. I have a basic outline sketched up to the turn of the millennium at the very least, but the long-term idea is to bring this up to the present day.

 

[Nivek]

I intend to keep going as long as I have new ideas. I have a basic outline sketched up to the turn of the millennium at the very least, but the long-term idea is to bring this up to the present day.

Good luck with these, we're here to help buddy

 

[eldandythedoubter]

Is the mega genesis essentially just an all in one combination of the genesis, 32x, and sega cd?

 

[Huehuecoyotl]

Is the mega genesis essentially just an all in one combination of the genesis, 32x, and sega cd?

More of an all-in-one Genesis and CD. It doesn’t have any 32-bit processors like the 32X did and is still just a 16-bit machine, albeit with a little more power under the hood than the baseline Genesis/Mega Drive.

 

[eldandythedoubter]

More of an all-in-one Genesis and CD. It doesn’t have any 32-bit processors like the 32X did and is still just a 16-bit machine, albeit with a little more power under the hood than the baseline Genesis/Mega Drive.

Okay, the reason I asked was because of what could be considered its last gasp for the genesis add ons as a whole, Sega did try to make games that used both the CD unit to run the game and the 32X to upres its presentation.

 

[Huehuecoyotl]

Okay, the reason I asked was because of what could be considered its last gasp for the genesis add ons as a whole, Sega did try to make games that used both the CD unit to run the game and the 32X to upres its presentation.

That they did! I’ve seen a few of these “32X CD” games in shops around here and it’s always good for a laugh.

 

[Nivek]

That they did! I’ve seen a few of these “32X CD” games in shops around here and it’s always good for a laugh.

The Nerd legendary episode...yeah better kill anything 32X, plus is already death, there not hitachi CPU anymore

 

[Huehuecoyotl]

The Nerd legendary episode...yeah better kill anything 32X, plus is already death, there not hitachi CPU anymore

ITTL, NEC basically took one look at the thing, laughed, and said that no, they would not in fact be supplying chips for that. I might be a little overly optimistic in assuming that they'd learned a thing or two from all of the extraneous PC Engine hardware they'd put out over the previous few years and perceived that this would be a waste of time and money, but nevertheless, it's what has happened. And the world breathed a sigh of relief. Or at least a sigh of apathy.

 

[Nivek]

ITTL, NEC basically took one look at the thing, laughed, and said that no, they would not in fact be supplying chips for that. I might be a little overly optimistic in assuming that they'd learned a thing or two from all of the extraneous PC Engine hardware they'd put out over the previous few years and perceived that this would be a waste of time and money, but nevertheless, it's what has happened. And the world breathed a sigh of relief. Or at least a sigh of apathy.

I think SEGA big mistake was the 32X, showed all the internal chaos was in the company and SEGA own clueless about console(old console still sold, specially as legacy and for poor gamers can get those cheap for a while from friends or family)