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Can Sega avoid its past mistakes?

March 4, 1998

Now that the Saturn has been all but abandoned by third parties in the U.S., it's easy to see what went wrong with the Saturn. It was not one major mistake by Sega of America, but a combination of mistakes that added up. We will then see if, based on what Sega is doing now, it's going to repeat the same mistakes or be as successful with the Katana as it was with the Genesis.

The first mistake was actually done by Sega of Japan, Sega ofAmerica's parent company. When they designed the Saturn, they thought the play mechanics of video games were going to stay the way they have been in the past; that is, 2D games would predominate. That's why the Saturn was not really designed to handle 3D games. Only at the last minute, when they saw what Sony was up to with the PlayStation, they decided to add another Hitachi chip so it could handle 3D better. In the end, the Saturn could do decent 3D, but at a price: it was more difficult to program than the PlayStation.

This is exactly the next problem the Saturn had: it was difficult to program compared to the PlayStation. Since it was so easy to program 3D games with lots of lighting effects on Sony's machine, game developers always preferred it, so they made more games for it. Sure, the Saturn could make decent 3D too, but since it required more effort from the developers, many of them didn't bother.

The Saturn's surprise launch also turned out to be very harmful to Sega. First of all, customers and developers were not expecting it, so they couldn't plan either their purchases or their development cycles, respectively. On the other hand, people knew about the PlayStation launch for months, so they were excited about it. This surprise move also pissed many retailers who were kept out of Sega's launch, like Kay Bee Toys, who then proceeded to refuse to carry the Saturn ever since.

Related to the surprise launch was the fact that only a few titles (4 or 5) were available for the Saturn at the time it was released. ThePlayStation, on the other hand, had about 15, which made customers perceive it as a better value.

The Saturn's relatively high price at launch (I say relatively because the $400 of the Saturn was nothing compared with the $700 of the 3DO) also hurt them a lot. It's true that this price included a fair amount of internal RAM that let most gamers save their games without buying any additional memory, but most customers didn't see that. They just saw the $300 price tag. By the time they saw they couldn't save, they already "forgot" that the total cost was starting to add up.

Another mistake from Sega, which I believe was actually its biggest one, was that Sega underestimated its new rival. Sega thought that since Sony was a newcomer to the video game business, it could not compete with them, since they have 15 + years of experience making video games. Sony, however, having more money than Sega, "convinced" many of the best developers into making games for their system, with either a small or permanent window of exclusivity. Sony's existing reputation for quality products didn't hurt either.

All this snowballed into most people thinking the PlayStation was cooler than the Saturn, which meant buying more machines and more games for the system, which in turn meant more developers and retail stores supporting it. The rest is history.

Looking at what Sega is doing now with the Katana, we see that Sega is avoiding most (not all) of its past mistakes. First of all, they are taking 3D gameplay into consideration. The PowerVR chipset, by NEC, that will be used for the Katana will be able to process 1 million polygons per second, with all options (light effects, gourad shading, shadows, etc.) enabled. This is a whole lot better than any current video game system.

Because of the NEC chipset, and because of Sega's alliance with Microsoft (Microsoft will supply one of the Katana's operating systems; Sega will make another one), the next Sega system will be easy to program. Furthermore, it will be easy for developers to release the same game on PCs with the new PowerVR board, the Katana, and the arcades(since they will all use the same chipset, with slightly different configurations), therefore, encouraging them to use that particular architecture.

Furthermore, if there is anything the Katana will NOT have is a surprise launch. Rumors about the system have already been on the Internet and on video game magazines for months. Furthermore, Sega has already "preannounced" that it will be launched in the United States and Europe on September 1999. So people are already excited about it.

Bernie Stellar, Sega of America's president, has also "preannounced" that up to 15 games will be available for the Katana at launch, and that 30 to 40 more games will be available a few months afterwards. That's a good start, and could build a good momentum.

Sega now knows that they have to price its new system right in order for it to succeed. That's why they are shooting for a price of $200 to $250 at launch, which is reasonable.

There are only two details which, in my opinion, have not changed for Sega. First, Sega always insists on being the first one to release anew system. This is actually giving its competitors the opportunity to release, a few months later, a new system more technologically advanced than Sega's own. This didn't seem to hurt Sega much in the 16-bit era, but definitely hurt them against Sony and Nintendo. Another aspect is that, try as it may, Sega does not have as much money as Nintendo or Sony, so it cannot spend as much money in advertisement as either. Some things never change.

In the end, it seems like Sega's Katana will be more supported by developers, retailers, and customers, although you never know until you see the results. I am cautiously optimistic that Sega will be able to play by the new rules of the industry and be more successful than in the past.

Information for this editorial was taken from Next Generation's March 1998 issue and web site.