Nintendo Buying Sega? Or Not?

jeffsenter writes "According to this NYTimes article (free reg. req.) Nintendo is actually in talks to buy Sega for about $2B. As you know Sega has been losing money for years and is beaten by the competition from Sony. Rumors of the end of Sega are nothing new. Sega is making money from its arcade business so maybe they will sell to Nintendo and focus on software." But according to a CNNfn story, it isn't happening

Comments

I could never understand..,..

[Cplus]

..,..the game boys dominance of this market. I spent a ridiculous amount of money ordering a Game Gear (SEGA) from Japan when they first came out, thinking it was the next big thing, and it was great, quality games, far superior graphics to the Game Boy. The only bad thing about it was that it seemed like I was the only one to buy the damn thing. Only traded games with one friend..........where's the fun? Where's the head-to-head football?

Maybe NOT Shenmue2....

[DrEldarion]

From www.thegia.com:

Shenmue 2 drops from sight [10.05.00] With troubles plaguing developer AM2 and Sega's webpage mum, the future of Yu Suzuki's second gift looks grim.

When development of Sega's epic Shenmue proved to be too ambitious in scope, producer Yu Suzuki decided to split the project up into multiple chapters: Chapter 1 would come first as Shenmue, Chapters 2, 3, 4, and 5 would follow as Shenmue 2, and the remaining 15 would be developed and released at a later date. But following lackluster Japanese success of the first installment and new happenings within Sega, the future of Shenmue 2 is now in doubt.

For starters, head Shenmue director Keiji Okayasu quit AM2 last month, quickly following the departure of a close colleague. Sega has also failed to make any mention of the game on the release date section of its Japanese webpage, even within the "release date undecided" category. Additionally, all mentions of "Chapter 1" in the Japanese version have been nixed in the U.S., and the game was nowhere to be found at Sega's glitzy CyberClub gathering held earlier in Japan.

When asked to comment, gamers.com reports Shenmue developer AM2 asserted that the game is still in production and "will definitely be released... We will make a formal announcement once we decide the release date." While heartening, even firmer assurance was given in July to fans worried about the future of Mother 3/Earthbound 64. A month later, the game was cancelled.

-- Dr. Eldarion --

Re:Maybe NOT Shenmue2....

[DrEldarion]

Note1: I said 'maybe'. Note2: The game was still in development, but it just seemed to disappear from sight... with it's director gone, they're no doubt having many troubles. Even if it *IS* still going to come out, though, It will probably suffer massive delays like the first one did... ugh. -- Dr. Eldarion --

Logic and Numeric Issues

[TheInternet]

This article seems to be giving completely the wrong impression of Dreamcast sales in the US. Though they don't specify, I suspect at least some of their data is based on Japanese sales, which have been much worse than US sales.

Some comments don't quite make sense:

Despite Dreamcast's advanced technology and record-setting introduction in September 1999 -- it sold 500,000 units in that month alone -- Sony's PlayStation 2 this year broke that record and all but obliterated Dreamcast's lead.

Eh? Sony sold 500,000 PS2s in one day, but haven't sold very many since then. In fact, there has been at least one article I read on how Dreamcast sales have increases dramatically due to PS2 shortages. Following Thanksgiving weekend, Dreamcast sales were up 82%, putting it in second place in the market share game, right behind PlayStation 1. Now all this may change when PS2 production starts to meet demand, but that's no excuse for misleading the public.

PC Data's market share numbers for the week ending Nov 25:

• PSone: 42%
• Dreamcast: 27%
• N64: 26%
• PS2: 6%

As of Nov. 18, Sega's share of the North American market for game consoles had fallen to 17.5 percent

A fine date to choose. Right before Thanksgiving weekend, when sales just exploded. This article was published today, why are they using data that is 40 days old?

It is not clear how much the companies make selling hardware

They usually take a loss. That's pretty common knowledge, I thought.

Overall, Dreamcast is doing very well right now, at least in the US. So it's hard to see how a Nintendo acquisition would make sense. So either there is some sort of weird bias on the part of the authors (which seems unlikely), or they do not realize that they are drastically misrepresenting the situation. I'm no Dreamcast loyalist or anything like that (these things only cost $150, most people can afford one), but I hate to see people get away with causing confusion via inaccurate journalism.

And why would Nintendo want Sega right now? They are already developing Game Cube, and have a very successful business thanks to Pokemon, GameBoy and the occasional epic title like Zelda. It would be a shame if Dreamcast got buried in purely political issues, since it's home to so many fascinatingly original game design ideas (Crazy Taxi, Seaman, Shenmue, Jet Grind Radio, etc).

- Scott

------
Scott Stevenson

Re:Logic and Numeric Issues

[ToLu the Happy Furby]

I agree with a lot of your post; the DC is definitely in much better position than the article gave it credit for, especially compared to the PS2--which, while it has some damned powerful components, is IMO the most over-hyped, worst engineered, poorly planned console in...well, I dunno, but I think it's gonna be a large disappointment for Sony and has next to no chance of PS1-like success much less the monopoly many have predicted.

However, it is a matter of record that Sega is doing very poorly financially right now, and that they are and have been entertaining takeover proposals. An invigorated US Dreamcast market will help buy them time and leverage, but they've already said they don't see themselves coming out with another hardware platform after the technical fumble of Saturn and marketing failure of Dreamcast. I think Sega would rather be a "second-party" developer ala Rare than a straight third-party software house, and thus I can see them agreeing to a Nintendo or MS buyout that will keep their franchise titles well managed and well promoted.

From Nintendo's point of view I think this makes a ton of sense. They are suddenly outgunned in the coming generation, by two consoles which suddenly have the full weight of their corporate giants behind them. The thing is, while Nintendo has the under-12 market pretty sown up, console gaming appears finally poised to become a much more mainstream phenomenon. (Indeed, it's been going in this direction since the Genesis, and the PS1 helped a great deal.) Nintendo is holding the same size piece as always, but the pie is suddenly much larger.

And the thing is, the console business is all based on economies of scale; unless GameCube has a large enough audience to match PS2 and XBox, the good developers won't make games for it...and unless the good developers are making games for it, its audience will be too small. One of the best ways to solve this catch-22 is to buy a few developers so that you are guaranteed a wide range of enticing titles. Nintendo has a few, but they will only attract a narrow demographic; Nintendo's sports games in particular are very weak. Furthermore, by buying a Sega, Nintendo has a good chance of hanging on to today's Mario and Zelda fans when they become the NFL2K1 and Jet Grind Radio etc. fans of tomorrow. They'll stay with Nintendo if Nintendo can supply them with games that keep up with them as they grow up. Otherwise, they'll go to Sony and MS.

Not in the foreseeable future.....

[BRock97]

Interesting, considering the recent talk by the higher ups at Sega.com about its future. For example, the impending release of Phantasy Star Online, which will be huge. Not to mention Crazy Taxi 2, Sonic 2, and the other holy grail, Shemnue 2. Plus, with the ethernet adapter coming out in a week, things are looking mighty rosy. All of this just from Sega. 3rd party folk are also getting ready for a great year. Me thinks all of this is just talk to drive up Sega's stock price in Japan, which could use it.

If they were to die, though, it would be a sad day. Between the BSD development, the SNES emulator available, which is really, REALLY cool but is a tad slow right now, and other possible goodies down the road (Zip drive, oh please Zip drive), I don't think they are available for such a buyout.

All that said, get back to me in a year. It will be the trial of its life time for Sega this year and we will see if Sega can survive. I certainly hope so, but to play devil's advicate, think about Sega becoming a software only shop. Think of the things we could see of X-Box, Gamecube, or PS2. It would be pretty impressive. I would hate to see the Dreamcast die, or future Sega consoles for that matter, but the alternative is not that bad as some people think.

Bryan R.

Re:Although it's not true....

[Fervent]

Miyamoto is in the "Special Thanks" section for Seaman. Apparently he and the Sega designer talked over the game before it was put into production, giving ideas.

Re:Nothing to buy!

[Fervent]

Funny, I've seen two Sonic games in the past year for Dreamcast (Sonic Adventure and Sonic Shuffle), rehashes of Sonic 1 and 2 for NeoGeo Pocket, and Sonic Adventure 2 coming in a few months. It doesn't sound like the franchise is "dying out" to me, especially considering Sonic Adventure is the number one selling game for the Dreamcast at this point.

Re:Waaaaaah

[Fervent]

One "raucous" game vs. more than a dozen on Sega's system. Hmm...

Nintendo quashes report of plan to buy Sega!

[antdude]

I think this CNET news story should answer the question. ;)

Might happen eventually

[jayhawk88]

I think your starting to see rumors like this mainly because Nintendo is nervous about the competition from Sony and Microsoft. Nintendo has been able to get by on the strengths of their titles/characters since the NES/SNES glory days. But Sony and Microsoft have developers lined up around the block (or in Microsofts case, stuffed in their wallet) to develop games for their consoles.

Nintendo needs some meat to their lineup. The N64 sold well, and there were some great games for it, but some new blood is definitely needed. The problem with consoles is that you have a limited time window that you have to get your games into: if you run too late, the cosole is history. Pokemon is probably due to flame out soon. The Zelda line has 2 great N64 games, but there's only so many of those you can put out in a systems lifetime (seems to be about 2). Mario and Donkey Kong will of course have a plethora of "scrollers", racing games, party games, etc...which will make up the core of the title line-up. Rare with the GoldenEye/Perfect Dark types games is a heavy-hitter; but again, there's only so many games they can put out.

Think back to the glory days of NES/SNES. Sure, we all got and played the Marios and the Zeldas, but look at all the other great games from 3rd party developers that kept you playing the deck. Final Fantasies, Chrono Trigger, Tecmo Super Bowl, Street Fighter series, EA sports titles. Slowly but surely, these developers, who were once Nintendo exclusive, have migrated to other consoles. Some still develop for the N64, some don't.

Maybe the hardware mistakes made by the N64 had the most to do with it's "lack of previous success" (you can't really call it a failure). It looks like the Cube is going to have some kick-ass specs, which would cure that problem. Still, Nintendo has lost some big third party developers (EA and Square topping the list), and a purchase of Sega would help them gain back some much needed titles. It will be interesting to see where this goes.

*shudder* Hasn't nintendo died?

[SirStanley]

This is a complete shock to me. Someone who hasn't been paying attention to the console world in years. I thought Nintendo Died? I mean Ultra 64 is horrid. It wasn't fun when it first came out, and the only two decent games they have are zelda and GoldenEye. Sega has this groovin Dreamcast which is an awsome system with awsome game support. Is it me or is nintendo trying to drive everything into the ground? I guess they made alot more money off of Pokemon than I previously thought.

An article from ZDNET

[antdude]

Here.

Re:Cartridge-based games

[SuiteSisterMary]

Actually, every revision of the PS hardware since launch has had new parts; they're only engineered, however, to be smaller, cooler, and require less power. But if you can find a first gen PS, and a last gen PS, pop the covers off and look. The last gen is pretty much empty; that's why they just went ahead and chopped the case by 2/3rds.

News

[Hard_Code]

Reminds me of Jimmy Fallon in Weekend Update, or that Simpsons episode:

Anchor: "Is Nintendo Buying Sega? Or not?"
Anchor: "The answer is no."
Anchor: "Or is it...?"

Although it's not true....

[SuiteSisterMary]

...it would be very sad indeed. Sega is constantly putting out games that are unorthodox, to say the least; Space Channel 5 and Jet Grind Radio are two examples off the top of my head, that Nintendo would never touch; it's all Mario these days for them.

Re:Although it's not true....

[SuiteSisterMary]

They're starting to rethink, mainly because they're getting pasted. Take a look at the entire history of Nintendo games; it's always been about control. The 'seal of approval,' Nintendo manufacturing carts themselves, etc etc. Nintendo generally reserves the rights to refuse publication of any game they don't like. Sure, they might be relaxing the whip a bit, but it's still there. But just for fun, lets take a look at a current roster of games. Zelda; yawn. Perfect Dark; Goldeneye with better textures. Mario Tennis? Please. Pokemon this, that and the other; wow. Hell, here's a perfect example: Dreamcast's "Seaman" versus Nintendo's "Come here, Pikachu!" Same genre (voice controlled games) but wildly different executions, styles, and design philosophies.

Re:Nothing to buy!

[Snowfox]

Sega have let their most valuable franchises die for lack of new titles (Sonic, NiGHTS, etc)

It's even worse, looks like we've got a whole new type of hedgehog around...

I think this was the intended link.

Sonic lives again. :) Is it just me, or has S3 started to remind you of one of those patchwork quilts you sew out of bits of clothing which have worn too thin and useless for anything else?

I'm half-expecting S3 to make the big Atari/Home and Commodore acquisition announcements. I'm eagerly awaiting my new Amiga hardware running TOS 3.5 with ViRGE DirectX 5 3D deceleration and maybe AdLib audio beside, all beautifully orchestrated to support the wonderfully exciting Snork Adventure launch title.* And the scary thing is - it'll work. Like those people with three and four diseases, all holding each other in check, and where if just one thing becomes slightly less horrible they'll topple - it's going to work.

* Sold exclusively at Radio Shack.

Nothing to buy!

[Snowfox]

Buying Sega simply wouldn't make any sense.

Sega have let their most valuable franchises die for lack of new titles (Sonic, NiGHTS, etc). A new title in any of their old main lines wouldn't have the brand appeal it did two years ago.

Sega's biggest strength in recent years has been their arcade work. And while leveraging Sega's arcade division to further Nintendo's placement might have made sense a few years ago, the arcade market is on a decline with redemption machines (the games you get tickets/tokens for playing) fast replacing game machines.

Sega also has a foothold in redemption machines, but that's two steps removed from Nintendo's meat and potatos, and that market too is starting to plateau; probably not a direction the big N wants to grow in.

Re:Nothing to buy!

[HomeySmurf]

Sony is a large and strange company. When you get to the size Sony is, the $2B is not even that much money. It will be very difficult to predict their actions. However, although you are right about arcade machines being Sega's strong place in the market, nowadays these machines are just extensions of the console game market. There aren't any titles in the arcade that aren't marketed on consoles. I know there is sometimes a delay before they go on sale, but it is cerrtainly not a speciality market in the sense that I am sure those enclosures just hold essentially Dreamquests. Part of the problem (and this came up quite a bit with PS2 discussions) is that console systems are hard to code for, and there are no standards. That makes porting games very difficult I imagine (and it certainly seems to not work out too well). It is really impractical for Sega to compete independently when it can't hope to match sales of Play Station games. They were already planning to market some of their titles for the PS2, so maybe it would just be better for them to become part of Sony. In any events, I imagine Sega will become a pure software company before too long. Another thing is that it is probably weird for people here to realize how huge Nintendo really is. My little brothers and all their friends love it. Right now they dominate the kids market. And those kids are growing up. If they can lock these kids into platforms and titles, they have them for years. They already completely dominate the portable game market (Gameboys), and if they can integrate them with cellphones, they will have the future of speciality gaming machines locke up I imagine.

I just can't wait until Crazy Taxi Driver comes out for the Playstation 2 though! :o)

Nintendo = Bad management

[Flarg!]

From what I remember, Nintendo lost a lot of good developers (square,etc.) because they had to have complete control over the content they produced, where as Sega were a lot more free in that regard. This is why Nintendo has so few games compared to Sega (counting the Genesis), and why Sega's games are so much more innovative. I see Sega's role in the future to be the company which comes out every few years to spank the competition and shake things up. It would be a lot less interesting without Sega to kick around.