Is Sega the Next Atari?

donniebaseball23 writes As CEO of Sega of America in the early 1990s, Tom Kalinske oversaw the company during its glory days, when all eyes in the industry were glued to the titanic struggle for console superiority between the Super Nintendo and Sega Genesis. Times have changed, to put it mildly, and Sega is now a shell of its former self. Where did things go wrong? According to Kalinske, Sega's downfall was failing to partner with Sony on a new platform, and the bad decisions kept piling on from there. Sega's exit from hardware "could have been avoided if they had made the right decisions going back literally 20 years ago. But they seem to have made the wrong decisions for 20 years."

Comments

Question In Headline

[sexconker]

Answer is "no".

SEGA is not "the next Atari". They've been a fucking dead husk for over a decade.

Re:Question In Headline

[Dutch Gun]

I suspect we largely agree on the generalities, but I'd have said "yes". Sega is on life support, but not quite dead. Atari has died, was buried, resurrected like a zombie, and is in the process of dying a second time. Both companies made bad decision after bad decision, causing the collapse of their companies. Sega seems to be following in Atari's footsteps quite handily, the only difference being that Atari had a nice head start on them.

I always wonder what it is about businesses that seem unable to do just about anything to turn themselves around versus more successful ones. Simply the guy at the helm? The corporate culture? A too-entrenched bureaucracy? How does a single company make bad decision after bad decision so persistently?

The article talks about how a brand like Atari can survive in a new home, but what's the point of that? It can be resurrected and slapped onto new products, but unless those new products actually reflect what made the brand successful in the first place, it will eventually wither and die again, just like before. It's a recipe for a short term fix and subsequent fall. If anything, a "new branding" simply indicates a company's lack of confidence in their ability to make their own name a recognized and successful brand.

Re:Question In Headline

[frank_adrian314159]

How does a single company make bad decision after bad decision so persistently?

A conundrum for the ages to be sure, but my humble opinion?

Ahem... A company that makes bad decision after bad decision does not understand the difference between a good decision and a bad decision.

Do I win a prize?

Re:Question In Headline

[The Rizz]

TSR and WoC are dead. Now we all have to negotiate with Hasbro for the rights to D&D.

Not at all true. WotC is owned by Hasbro, but given a high level of autonomy. Hasbro has even moved other product lines they've acquired under WotC's management (Avalon Hill, for example).

Re:Question In Headline

[Dutch Gun]

You should totally write a book. You'll make millions!

It seems like a lot of people in upper management get so caught up in trying to figure out how to extract money for their customers rather than intently focusing on a product that people will willingly part with their money to obtain. Lenovo is a great recent example. Contrast that with Apple, who's customers often display an incredible amount of brand loyalty, despite the premium price of their products.

Not too surprisingly, the top leadership of Sega Japan was largely made up of old men who probably didn't actually play videogames themselves. I don't see how you can make good decisions for a game development company if you don't play videogames yourself, or at the very least, if you don't really listen to people within your company that do. It's pretty obvious that didn't happen enough.

Re:Question In Headline

[hairyfeet]

And moreover partnering with Sony WOULD NOT HAVE SAVED THEM as they had burned their customers over and over AND OVER for the better part of 5 years. Nobody was gonna buy Sega hardware even if they came out with the baddest console in the history of the universe!

The reason Sega died was threefold, 1.- They royally fucked their retail partners on the Saturn by doing a "sneak launch" that left several 800 pound gorillas like Walmart out in the cold. this pissed off those retailers so badly that many of them swore to never carry another piece of Sega hardware, this crippled their retail channel overnight and it never recovered.

2.-The thing that put the first nails in the coffin though was the fact that SOA and SOJ weren't even on speaking terms, with things getting so bad that SOJ would even make announcements that would hamstring SOA! From what I read SOJ was a bunch of elitist pricks with a serious case of NIH so they treated SOA like a red headed stepchild and kept them out of the loop on what they had in the pipe.Depending on how you view 3 this can be seen as justified, though it still crippled the company.

3.- But what ultimately destroyed their sales was the fact that SOA simply refused to let go off the Genesis and launched one failed add-on after another, all of which left the consumer feeling like they got scammed as they spent hundreds of dollars (nearly $700 if they bought a Genesis, Sega-CD, and 32x at launch) and all they got was piss poor support, lousy titles, and in the case of the 32x a device that was dying less than 90 days after launch!

Many blame the fact that the Saturn was really designed to be a 2D gaming monster that had badly supported 3D just bolted on at the last minute but I would argue that by that time they were already dying. I was a HARDCORE Sega fan at the time but after getting burnt on the Sega-CD (I picked up a 32x when they hit $25 with 3 games but we all knew it was a dead system by then) I was just fucking done with the company,after seeing the incredible promise of Sega-CD just thrown away (anybody who says it couldn't be a great system really should play Lunar) I honestly didn't trust the company not to abandon their hardware before enough decent games came out to justify the expense. I avoided the Saturn altogether for the PlayStation, grabbed a Dreamcast when it hit $75 (and the pirates had already cracked it, makes a great NES/Genesis emulator box) and then went PC and never looked back.

At the time I was big into IRC and all I heard from the Sega channels was the same story, guys that got burnt on Sega-CD/32X that refused to give the company another shot, a few picked up Saturn only to see SOA refuse to import the best titles thanks to their pissing contest with SOJ, instead sticking with frankly shitty western games (most guys forget that before the big 3D shooter and RPG craze on PC that western game developers were REALLY piss poor compared to their eastern counterparts. Bad controls, lousy levels, and lame graphics were standard for western made games by and large) and leaving the best titles for the system overseas. By the time the Dreamcast came around? Even the most hardcore fanboys just had had enough, they had a shitload of hardware with little to no decent games and felt ripped off. You have to remember they hyped the shit out of Sega-CD/32X so a LOT of guys (myself included) got taken and when you sank nearly $500 and could count the good games on 2 hands with fingers left over? That is NOT a good sign!

So no Sony could not have saved them, they were already dying by that point. They should have never released the CD/32X or at least committed to giving them 3 years of game support, even if it meant dropping the royalties to nothing just to get devs on board,if they would have done that along with a promise of 3 years on Saturn? Then they might have made it, at least built enough good will to get their fanbase to get on board with Dreamcast which really was a kick ass piece of hardware, but shitty management, too many pieces of worthless hardware, and too much infighting had them dead by 2K and nothing would have saved them at that point.

Re:Question In Headline

[cfalcon]

This is a solid comment. I agree with all of it, but I wish you had emphasized how very ludicrous their hardware marketing was. As a gamer at the time (Nintendo), I was extraordinarily puzzled at the amount of hoops it took to even understand what the various Sega hardware was. It was extremely silly to assume that everyone had infinite space under their TV and tolerance for hardware outlays, CD/32-X were confusing anyway. Expensive hardware addon is always a risky play, because it means that any game made for it is just for the subsection of players that bought your base hardware and then bought your hardware addon, and those hardware addons NEVER seemed to be inexpensive in the first place.

The other reason that it hurt them so bad was the social aspect. If you had decided you weren't going to buy the Genesis (and if you were a kid, that decision was mostly made by asking your parents for a DIFFERENT system to begin with), then you were already committed to not owning a Genesis. If you launch a fresh piece of hardware, you might grab the Nintendo guy for that generation, but if you keep building on the one he already chose, then he's already well into cognitive dissonance land- you would need to dominate the field so hard with technical expertise that no one could ignore you, and that just didn't happen.

Also... I always found their marketing ludicrous. Console wars were always clannish, but Sega couldn't seem to stop insulting Nintendo players with their attitude of "play us and be cool, play them and be drool". "Personally insulting your potential customers based on their current console" definitely looked like it was their strategy for awhile. I never see this come up in any discussion, but it really did feel real at the time.

Re:Question In Headline

[chthon]

In that case they should at least make a good decision every now and then, due to randomness.

I thought that was Nintendo's failure...

[damn_registrars]

Sega's downfall was failing to partner with Sony on a new platform

I thought the first playstation came about when Nintendo decided not to have Sony make a CD drive for their console. Did Sega really have a chance to make the same mistake?

Re:I thought that was Nintendo's failure...

[unrtst]

they all knew sony's penchant for proprietary formats was a bad idea - they just didn't expect them to be so successful.

How are CDROM, DVD, and BD more proprietary than what Nintendo and Sega used at the time?!?!

Re:I thought that was Nintendo's failure...

[MBGMorden]

Dreamcast had some issues that were hard to overcome that weren't just marketing related.

1. The proprietary "GD-ROM" disc format. 1GB of storage space which was a fraction of what PS2 had with DVD's. It also didn't let people play DVD movies at a time when DVD movie players were still expensive.

2. Incredibly easy piracy. Most of the games targeted for GD-ROM's were capable of fitting on a regular CD, and people figured out how to make easily burnable pirated games without even needing a modchip.

#2 was a fluke, but #1 was just a bad decision in general. I honestly think if Dreamcast had shipped with a DVD drive Sega would still be making hardware.

Re:I thought that was Nintendo's failure...

[tepples]

What would be the mistake? Sega had a CD drive, it spun around as good as Sony's unless your an audiophile.

The original PlayStation had a 2x CD-ROM drive. So Sony's drive spun twice as good as the 1x drive in the Sega CD.

Re:I thought that was Nintendo's failure...

[Guspaz]

Sega had problems getting developers for the Dreamcast long before there were any piracy problems. They alienated developers by spitting out new incompatible hardware in a rapidfire format. The 32X was released shortly before the Saturn, and then the Saturn was abandoned early into its lifespan in favour of the Dreamcast. Between 1991 and 1998, Sega had a total of five different and incompatible hardware platforms on the market, six if you include the GameGear.

By the time the Dreamcast rolled around, many developers had had enough of Sega's schizophrenic console strategy, and avoided them.

Here's what happened

[Anonymous Coward]

Sega blew it with the Saturn. That's where it all went wrong. People will say that it started to go wrong with the 32X, but the 32X was never taken seriously, and sold very few units. Yeah, it was stupid, but it wasn't really important, either.

The Saturn, though...basically Sega missed the boat on 3D, and the Playstation didn't. That was the beginning of the end. Then Sega had the Dreamcast, which was a great system hardware-wise, but they failed to get third-parties on board, and they didn't have enough games/momentum by the time the PS2 was announced. If the Dreamcast had come out a year earlier, it would've had a nice pile of games by the time the PS2 arrived, and they would've been in a better position.

Essentially Sega moved too slowly in the mid-to-late 90s. I don't know if you can actually say they did anything *wrong*...they just didn't do a good enough job.

Re:Here's what happened

[jandrese]

By the time the Dreamcast came out, SEGA was already a dead man walking. The 32x and Saturn failures had taught developers that if they developed for SEGA hardware they wouldn't get sales and the platform would be abandoned quickly. The Dreamcast was a perfectly capable box but it was surrounded by the stench of death from SEGA HQ.

Meanwhile Sony was following up their tremendous success on the PS1 with what was hyped up to be a technological tour-de-force with the PS2. Third party developers couldn't wait to sign up and sell a million copies of whatever they put out.

The final nail in the coffin is that SEGA's first party development teams were just kind of bad at their jobs. A problem that exists even today. Sonic titles are just a solid stream of garbage since the end of the Genesis days. Nintendo has a similar problem with third party support on their consoles, but it doesn't matter too much because they put out a handful of really excellent first party titles each year to keep the platform alive. If SEGA had been putting out a killer Sonic game every year they probably could have kept the Dreamcast going and maybe made some headway against the PS2, although the PS2 was such a juggernaut that it would have still had an uphill battle.

Re:Here's what happened

[twistedsymphony]

The final nail in the coffin is that SEGA's first party development teams were just kind of bad at their jobs.

I beg to differ, Segas 1st party titles during the Dreamcast era were at the top of their game and produced titles and franchises that are STILL making them money re-selling on different platforms as many of them have become cult-classics. Crazy Taxi, House of the Dead 2, Jet Set Radio, Panzer Dragoon, Virtual On OT, Space Channel 5, Chu Chu Rocket, Shenmue, etc. Even their flagship driving game Metropolis Street Racer when on to spawn 4 sequels in the Form of Project Gotham Racing and was the Xbox's flagship driving game until Microsoft introduced Forza.

The Sonic games released on the Dreamcast were actually rated fairly well and fairly well received by fans. Most consider them to be the first 3D Sonic titles made by Sega that didn't suck.
Sonic Adventure on GameRankings scores an 86: http://www.gamerankings.com/dr...
Sonic Adventure 2 scores an 89 on MetaCritic: http://www.metacritic.com/game...

Sega isn't Sega anymore, literally

[Kuukai]

In 2004, Sega was merged into Sammy, a gambling/arcade machine company, which then all but renamed itself to Sega. They have totally different business goals from the previous Sega. Any discussion about the direction Sega is going now should be framed in that context. Current Sega is working a different market. Nintendo is doing about as well at arcades as Sega is doing at console hardware. But it is interesting to consider what happened long before the merger with the Dreamcast and how it could have been prevented.

Re:Not the wrong decisions, the wrong direction.

[ganjadude]

they even had a head start, remember sega channel? http://en.wikipedia.org/wiki/S...

Re:Nintendo is next....

[UnknownSoldier]

I wouldn't be so quick to write Nintendo off just yet.

If we look at the 1998 .. 2010 year data from this console profit table

While everyone else was losing money HARD (especially Microsoft), Nintendo was laughing all the way to the bank.

$24,072,504,822

Nintendo doesn't have to worry about the short term for quite a while.

32X launches when Saturn already on the way?!

[Dogtanian]

Additional stupidity; I remembered that by the time the 32X was announced in the UK, the (entirely incompatible) Saturn was already due for launch in the near future. Worse, I recently found out that in Japan, they actually launched at almost the same time.

What was the point of that?! Who was going to buy the 32X knowing that it was a stop gap for something imminent/already here? Granted, the 32X was much cheaper at launch- which was apparently the justification- but anyone with half a brain would have known that it would die when (as all new consoles do) the Saturn came down in price enough that Joe Public would buy it instead of a half-baked piggy in the middle.

(And anyone who realised that should also have realised that the software companies would be thinking the same thing and not likely to waste their time supporting a dead-end console.)

The other problem with the 32X was that Sega had *already* released an "enhanced capabilities" add-on for the Mega Drive/Genesis, i.e. the Mega CD, which you already mentioned. So the 32X was, in effect, the third separate (incompatible) "format" built around the same console.

All that is stuff that should have been obviously stupid at the time; there were other factors that led to Sega's downfall (e.g. Sony playing the PlayStation launch very well) one could argue are easier to spot with hindsight, but those were on top of the obvious stupidity of having the half-baked 32X muddy the waters- and confuse the consumers and retailers- at the time of the Saturn launch.

Meh, it was mostly Sony

[rsilvergun]

and all those videos of the cut scenes from Armored Core getting passed off as gameplay. Hell, there were videos of George Lucas saying the PS2 could render Episode I. I knew tonnes and tonnes of people who bought Sony's hype and didn't get a Dreamcast.

And as someone who's burned discs in 2001 I wouldn't call piracy on the Dreamcast easy. You needed specific burning software, good quality discs and the know how to find isos. You've just taken out 95% of the market for piracy.

On the other hand Sega's Dreamcast marketing was terrible. They had the best looking games of all time and what did they do? Sonic rappin' with NBA Stars... Dear lord, what a mess.

Re:Too many consoles in a short period of time

[ArcadeMan]

The MegaDrive is the same console as the Genesis.