There are a lot of answers to the above question. Some people say it’s because Sega had too much hardware out at any one point (Genesis/Mega Drive; 32X, CD, Saturn for example-that’s a lot of hardware to support all at once). Some say piracy of games on the Dreamcast ultimately buried them. Others say that it was the fact that the Dreamcast didn’t play DVD’s while the PS2 did. Still others blame Sonic and his lack of appearance on the Sega Saturn, saying that even if one major Sonic game appeared on the console (say a Sonic 4 pre the Sonic 4 we all know today) would have helped tremendously but that never happened. There are a lot of answers and frankly there is truth in many of the opinions people have today. But I think the main reason they failed in the home console business is two words, a name: Tom Kalinske.
Hold on, you may say. If you know anything about Sega and business you know that name and know that he was great for Sega and has been great for business around the world (Barbie, Leapster, Sega too, etc). So why would I list him as the main reason why Sega failed? Well it’s not so much HIM that was the problem. In fact, if things had gone differently I think Sega would be very much in the race to this day; Tom knew his stuff and he had a hell of a group working under and with him. I think the problem is that Sega of Japan didn’t listen to him enough or follow his example.
The Japanese branch of Sega didn’t like that the American one was having so much influence with the company and the direction it took at times. They didn’t like being told to do things more like Tom and that their work wasn’t enough; a big deal in the world and culture of Japan. So eventually they started to ignore Tom and what he thought was best for Sega, even with their company on the line. Very, very foolish indeed. There were a wide variety of things that added up that the Japanese branch didn’t agree with, but there are a few points that are very large that definitely influenced the direction that Sega took overall.
- The 32X Genesis extension. Tom didn’t think the device was necessary and wouldn’t sell well and would confuse consumers; in short he didn’t think it should see the light of day in the States. But Sega of Japan didn’t care and pushed it here. And it wasn’t just the worst, it had a few fun games and all that, but the games didn’t look as good as Donkey Kong Country, and that was one of the goals with the 32X. None of the games on it looked nearly as good as the big guys on the SNES and that means it was a defeated goal before it even arrived.
- Sega Saturn in general. There were a few issues with the Saturn, one of the big ones being the jump the Japanese branch wanted to get on Sony in the States. They wanted to surprise the gaming world by releasing the game console much earlier so people could get the 32 bit console before the PSOne came out; thus giving them a time to rack up sales before Sony could in the area. Which is fine and dandy; but there weren’t that many games or companies ready, and they launched it exclusively with select retailers and burned any goodwill they had with others, all things Tom knew would be awful for the company and that it wasn’t a good idea to spring release it. He was right; many stores stay burned from that till the end of Sega in the hardware market. Sony also announced that their upcoming console would be $100 cheaper. Combine that with tons of 3D games and the good word of mouth, plus the burned bridges that Sega hit themselves with, and you have a combination of greatness for Sony and fail for Sega.
- But perhaps the biggest blunder: the Sega PlayStation. Tom was in talks with a man with Sony and they had an idea: a console that was a hybrid of Sega and PlayStation (before the PSOne came out). They would have both of their games on it and split the costs/earnings in ways that benefited both companies. It was a match made in heaven with Sega’s gaming expertise and Sony’s deep pockets, each company truly could have benefited from such a deal. But Sega of Japan scoffed at it, making a point to ask what does Sony know about games? To this day Tom Kalinske believes it’s one of the dumbest decisions made in all of business history, the fact that the Japanese branch turned down the chance to work together. Tom had to let Sony go, wishing them well. And the rest is history, the PSOne sold over 100 million units worldwide. The next console sold over 150 million. Yeah, things went well indeed for Sony. Sega? Not so much, at least in the home hardware business. They are still Arcade giants but still, it could have been a major deal to see this happen.
Sega is getting their feet back; they have some great Sonic games coming, have solid PC and smartphone games, and have that cheeky punk attitude again through their admins and things such as that, especially the Sega admin on Twitter and Facebook. Their Mania game looks incredible and has a great collectors edition that’s worthy of being excited about again. The Mega Drive (Genesis) is being remade again by TecToy for Brazil. Sega still has great arcade success they truly have some great things going for them again. Hopefully Sega keeps it going and learns from the past. Because ignoring Tom nearly killed this company completely.