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Retroinspection: Mega Drive

The following article was originally published in issue #27 of Retro Gamer Magazine and the author has graciously allowed us to reprint it here (click on the thumbnails for bigger pictures). Sega-16 provided screen shots and interview segments for the piece, and we’re darn proud to have been cited as a source by such a great magazine!

The Mega Drive was Sega’s first successful console. Some argue it was also their last, hailing a Bellerophon-styled rise and fall. It represents so many things, to so many people, for so many reasons. John Szczepaniak tries to capture some essence of what it all meant.

Nintendo’s fate has often been intertwined with the Mega Drive system. They’ve long had a history of benefiting from Sega in one form or another, often due to the direct competitive challenge they posed. The SNES would have been nothing without the MD; the reverse is also true. It was the MD which forced Nintendo’s hand into updating their aged NES hardware, and it was also the MD which changed the market forever, cutting a trail towards the situation today. It is undeniably one of the most important pieces of hardware in gaming history. So it should have come as no surprise to find MD games would support Nintendo’s soon-to-be-released Wii system. In a moment of irony, it must be noted that Sega had already dabbled in downloadable MD games with The Sega Channel, making their announcement quite apt. The decision was obvious. Later Sega systems would prove difficult, technically, and also the MD was far more successful than the Master System. As will be shown, the MD can be credited for many things; a magical high Sega never again reached.

The Japanese debut was October 29th, 1988. The widespread American release was just less than a year later in 1989, while the UK had to wait roughly another year before it arrived in November 1990. To fully understand the importance of the Mega Drive’s launch, you need to know what the international climate was like during the decadent 1980s.

Sega had already entered the console fray previously, with the successive releases of it’s SG-1000 Mark I, II, and III systems in Japan (1981-1985); the 3rd model of which was redesigned as the Master System for occidental countries. To be bluntly honest, despite it being technically superior to the Famicom/NES, it was a commercial failure that never gained more than a 5% market share. Only in Brazil was it able to officially eclipse Nintendo’s 8-bit hardware. Throughout the mid-to-late 1980s Japan ‘s console market was controlled almost entirely by the Famicom, which was popular beyond description. America was gripped by the NES, again with near total market dominance. The NES was also available in Europe and the UK; though Britannia was more enamoured with 8-bit micros than high priced consoles.

In 1987 Hudson Soft and NEC jointly released the PC-Engine against the Famicom, two years later redesigning and releasing it in America as the TurboGrafx-16. When Sega decided to position its MD as a third competitor, the odds must have seemed impossibly high. According to David Sheff, Hiroshi Yamauchi dismissed Sega as not being a threat. Yamauchi was more concerned with NEC which was investing roughly $3.7 billion into R&D, an amount greater than Nintendo’s then annual sales. Sega meanwhile was only a $700 million company, and one founded by an American. As an underdog scrapping against NEC for second place, Sega and its MD was underestimated; viewed by the industry itself as the weakest of the two.

Retro Gamer spoke with Mr. Nagumo, the Team Manager of SOJ CS Product PR, and asked many, many questions, few of which were answered. When asked if, due to the impossible odds stacked against them, Sega had considered becoming a developer for either the Famicom or PC-Engine, his answer was blunt. “No, we didn’t.”

Even so, Sega staff were curious about the Famicom. In two separate interviews (GameWeek and TNL) Yuji Naka admitted to making Famicom games run on the MD. His comments, amalgamated, were, Oh my. [laughs] How do you people know about that one? Well yeah, actually I did. I once made a Famicom emulator for the Mega Drive. It was something fun to amuse myself with at the time. I couldn’t play every game with it. But it was fun to call people over and show them Mario running around on a Mega Drive.”

Origins of Genesis

Sega’s main source of profit during the 1980s were its hugely popular arcade games, like Yu Suzuki’s Space Harrier and Hang On. To beat the competition the head of Sega, Hayao Nakayama, decided to create the first true arcade home system. He worked in secret with Hideki Sato, modifying Sega’s System-16 hardware – the same hardware that powered arcade versions of Shinobi and Altered Beast. This would have allowed superior visuals and audio, leagues ahead of the competition. It would also allow for easier, more accurate arcade ports (which gamers would be familiar with), and therefore plenty of games.

The new console had to be scaled down from the System-16, in terms of processor speed and available on-screen colours, but Hideki Sato planned ahead and included some extras. It was backwards-compatible with the Master System (using the Power Base Converter), and it was also designed with the future potential to use a mouse, keyboard, 2-inch floppy disk drive, modem, graphics tablet, and printer. He even considered the possibility of someday attaching a CD drive.

Beep!, a multiformat Japanese mag, first announced the system in June 1988 alongside an early prototype drawing, tentatively calling it the Sega Mark V (following on from previous names). The internal project meanwhile was called Mk-1601, but Sega wanted something stronger for the launch. It went through 300 different proposals, before finally settling on Mega Drive.

Disappointingly the Japanese launch was very understated. Their penchant for lengthy, mind-boggling queuing in Akihabara had been forgotten; there were no such queues for the MD! Supply and publicity had been well organised, but the machine was overshadowed by Super Mario Bros. 3, released just one week earlier. Luckilly magazines like Famitsu and Beep! gave it positive coverage, and so a small but loyal following began. Reportedly 400,000 units were shipped in the first year.

Despite the low uptake in Japan, Sega went on to pursue highly risky and quite odd endeavours; bad for profits, great for collectors. Along with a gaming modem (see boxout), Sega created an online banking system for Nagoya Bank. The result was the Mega Anser (sic), complete with modem, numerical keypad, and grossly overpriced “Mega Printer.” Sega also adapted the MD for arcade use, despite it already being based on the System-16 architecture. The results were the System C-2 board, and also the timed MegaTech and then MegaPlay systems; roughly, these three had a combined total of 80 games developed. Japan also received the rarest version of Tetris ever, and some sublime exclusive RPGs like Rent-a-Hero and King Colossus (both fan-translated).

But Japan was never what the Mega Drive was about. Success lay in the USA and Europe. Sega had the fight of its life ahead, and it would take not only gutsy determination to succeed, but also a damned excellent roster of games, and luck. Sega clearly had just enough of these, since it nearly conquered the industry.

Globally Gamed

To bolster the inside information available to Retro Gamer, Ken Horowitz of kindly donated interviews he conducted with industry figures. One such individual was Michael Katz, former head of Sega’s American branch, who presided over the Genesis’ initial sales year. Katz explained the early days. “I arrived one month after Genesis’ launched. The company was small (under 50 people). They had gone through 2-3 Presidents (Gene Lipkin, Bruce Lowery) in the Master System days. Dave Rosen – Vice Chairman of Sega (and original founder), was overseeing the running of the company. I reported to him and Nakayama in Japan. Sega was basically a distribution company in the US. Hardware and software development came from Japan. I initially had to deal with keeping employees happy, determining the quality of the staff and getting into the job of building the Sega VS Nintendo juggernaut.” Arriving after the American launch, Katz wasn’t aware of the details surrounding the name change from Mega Drive to Genesis. Consensus states it was due to a trademark dispute. The facts are blurred, but point possibly to a U.S. manufacturer of storage devices called Mega Drive Systems Inc.

We also questioned Katz ourselves, and he revealed a fascinating anecdote from before the Genesis launch. “I will tell you that Atari was offered the Genesis (when I was President of Atari Games Division) and Jack Tramiel turned it down. It would have gotten Atari back in the game with a 16-Bit system. I attended the meeting at Atari, when Dave Rosen (Sega Chairman) visited us (Jack and I) and made the offer. Jack thought the deal was too expensive, and he was more interested in the Atari ST computer project.”

The system filtering into America and Europe raises an important question for importers. Why the deplorable need for regional lockout? Katz admitted he had no control over it in America, “Lockout decisions were made in Japan. The Sega Japan International VP handled international sales and marketing.” Never knowing when to quit, Retro Gamer pushed Japan’s PR man into a corner until he commented. As Nagumo puts it, “We implemented the security regionally to prevent game software being imported due to gaps of sales time between regions.” Wiping the sweat from his brow, we jovially comment that thankfully it wasn’t successful. Enterprising young hackers soon bypassed the security with special contraptions, and later, easy methods for modifying the hardware were devised.

Underground importing certainly didn’t harm international sales. The MD is officially Sega’s highest selling system. International figures are estimated to be between 30-35 million units, of which only 10% is attributed to Japan. Sega was so determined to achieve those higher sales abroad, they demanded the American branch chant the Japanese word “HYAKUMANDAI” (that’s “one-million” in British parlance), in order to encourage sales. Katz elaborated: “The ‘1 million units’ chant was representative of a goal set by Sega Japan. Did they just pluck the number out of thin air? I don’t know. I think they thought that, if we sold a million units in the first year, that would make a big statement. They disregarded Nintendo’s position and the fact that all key retailers would have to come on board immediately to hit the number, and also the need for a substantial software library from the get-go.” Despite the daily chanting, sales only reached halfway. Katz went on. “We sold about 500K units, which I considered damn good because Genesis was new, didn’t have a large software library initially, and the Nintendo franchise was hard to crack.”

In America it seemed Nintendo was unstoppable, and that was indeed their intention. They used some very unorthodox methods for maintaining superiority. Stores were bullied into not carrying Sega products, and developers were forced to sign strict licensing agreements stating they’d only develop for Nintendo. But everyone loves seeing a tyrant usurped and a colossus fall, and so various developers began thinking of the MD as a serious, more profitable alternative. Popular companies like Namco changed allegiance, while EA reverse-engineered the system before developing high quality exclusives. This all helped make Sega a tempting alternative for consumers.

But as Katz explained, Sega wasn’t too pleased with EA.

Sega was unhappy about EA reverse-engineering Genesis. We were in the process of giving EA/Trip a sweetheart’ deal, then we needed a Joe Montana game in a hurry (the game being developed for us by Media Genic was way behind schedule), so I asked Trip for a back up Madden football game. He gave us one and that assured him a low/royalty free deal on Genesis software. The first Montana game being a Madden back up’ from EA is a little known fact.

The MD’s huge success of course came with the arrival of Sonic The Hedgehog, a phenomenal mascot that endures to this day. But the question that has to be pondered, is what if Sonic had not been a hit and never had the success that it did? When asked, Nagumo playfully hinted at the possibility that Sega had other titles, besides Sonic, with which to take on Nintendo and Mario. “We had the marketing and promotion strategies using various titles at that time. Sonic was one of them that led to a big hit.” Katz saw things differently. When asked about SOA’s initial dislike of the Sonic character:

I certainly underestimated the potential of Sonic. Thank God there was good and sustained gameplay (critical in any game success). I know that I thought it was nuts, when we were going for targeted and widespread awareness in everything we did, for the Japanese to develop a game based on a type of character… a hedgehog… that no kid in the American 6-16 year-old demographic would have any familiarity with. We knew we needed a great character action game to put in the line up. We were hoping for a Donkey Kong-type hit. When Sonic was so hot, it was decided to bundle it with Genesis (just as ColecoVision was bundled with Donkey Kong in 1981). If Sega didn’t have Sonic, Genesis sales would probably have been less, but it’s hard to say. I don’t know if Sega Japan had a back up; I think not. Sega Japan was responsible for developing the character action genre. We were responsible in the US for developing sports games.

Despite his great effort and the success he achieved in those early years, Katz was replaced by Tom Kalinske in 1990. Most agree that any successes were a result of combined team efforts, but that Katz is often unfairly overlooked in favour of his successor. In past interviews, Kalinske explained how Sonic became the pack-in title.

After my first month as CEO, I told Mr. Nakayama, You have to get rid of Altered Beast, the title that’s bundled with Genesis. It sounds like devil worship. We have to get the price down to $149, and we have to develop more American software.’ The board spoke for two hours in Japanese and I was just sitting there, not understanding a word. Finally Mr. Nakayama said, ‘no one here agrees with anything you’ve said.’ I thought mine was going to be the shortest career in the business. But as I was walking out, he said, ‘but I hired you to make the decisions for Europe and the Americas, so go ahead and do it.’

Sega eventually annihilated the TurboGrafx-16, and it was doing well against the NES, but the sleeping giant had awakened, and in 1990 Nintendo launched the SNES. The ultimate grudge match began, which even today, is fresh in peoples’ hearts and minds. Nintendo had on their side Japanese stalwarts Square and Enix, which made Sega’s conquest of Japan nigh-on impossible, but they had already proven themselves to be hip and cool in the West, and this is where they succeeded. Sega was out earlier, priced cheaply, and provided both what people wanted, and what their rivals weren’t supplying.

Everyone deep down knew the MD couldn’t outperform the SNES, it was the underdog in terms of graphical and audio power (it had a faster processor though). Developers had to work harder to get great results. This extra effort, and dare it be said, love, that went into the games, was very apparent…  when they came up a graphical trick, or something unique, it showed. The Genesis had more mature software and was also advertised on adult TV like Saturday Night Live, further cementing it’s reputation as “doing what Nintendon’t.” But the big tipping of scales was Mortal Kombat. Sega’s version had blood and included all arcade fatalities; Nintendo’s version didn’t. The atmosphere at the time was electric, and Mortal Kombat was a deciding factor for many people’s purchases.

By 1992 Sega had 55% control of the market (up from around 8%), and by 1993 they had more than quadrupled their net worth (up to $3.6 billion). They had reached their peak. But over the coming years they became like lepers, withering as their valuable bits fell off. The golden era ended, but if you look with the right kind of eyes, you can almost see the high water mark, where that glorious wave broke, and finally rolled back.

If forced to summarize why the MD is such a bloody fantastic slab of black plastic, it’s because it’s all things to all gamers. It appealed to hardcore elitist collectors, since it was great to import for. Plenty of action games (like Alien Soldier, and the explosively magnificent Ranger X), with sturdy boxes protecting beautiful Japanese cover-art. When SNES owning friends had updates of Konami classics like Contra and Castlevania, MD owners were blessed with their own exclusive updates. They were no mere ports, but were designed from scratch, taking into account the hardware’s limitations. And they were all the better because of this. There was no relying on vast colours or a custom Sony music chip, the gameplay had to be strong.

Importantly, it tapped in the mass market and appealed to families with low incomes. In impoverished areas in the USA it was popular among Black and Hispanic youth, who enjoyed the affordable easy-to-play arcade thrills provided. Children were also catered to, with both licensed and new IP (Quackshot and Toejam & Earl). When the kids were tranquilised and asleep in bed, parents could indulge in a plethora of sports titles (Madden etc.), violent brawlers (Cyborg Justice), or cerebral games like Ecco.

It was a system where much of the atmosphere and allure was born not only of the hardware and games, but the magazines, playground arguments, climate, and politics of the time. One of the most notable American magazines covering the system was GameFan, which, despite being multiformat, loved the Genesis. Its founder Dave Halverson understood, appreciated, and helped generate a lot buzz for Treasure too. GameFan praised their games, rightfully hyped up Gunstar Heroes to encourage sales, and were one of the very first English language magazines to conduct an interview with Treasure. Of course, not every multiformat magazine had quite the same views, which is why Edge infamously only gave Gunstar Heroes a half-page 6 out of 10 review. If you were an MD fan back in the early 1990s, Halverson’s GameFan was the magazine you wanted to be reading!

We’ve not even yet mentioned subjects like the VR headset, Menacer Gun, Activator peripheral, Virtua Racing‘s 3D graphics, pirate flash carts, Brazilian rock band Megadriver, Boris Vallejo, or the million-and-one related subjects. But it doesn’t matter. Experiencing the system will tell you more than these words ever could.

Special Thanks:

Many special thanks to , the best unofficial Mega Drive site online, for donating interview segments and images. Visit them for the full interviews! Thanks also to for images, Michael Katz for answering additional questions, and Sega’s PR departments!

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