Japan execs were upset that Kalinske was allowed to resign w/o taking blame for 32X

[gamevet]

I got my Saturn in May of 1995 and had a Die Hard Gameclub store near where I'd lived. I can say with most certainty, that the small amount of import software available for the Japanese Saturn, certainly made it feel like a console that was rushed to market. I'd bought a couple of the Japanese magazines that came with demo discs that literally had shit for game demos. I remember trading in my entire Sega CD collection, for next to nothing, so I could afford an Action Replay and a $78 copy of Wing Arms, which was the 1st notable game, outside of the initial lineup of games available.

You're again missing the point. The point I'm making is by Fall of 1995 the Saturn no longer would have cost $400. Launching at $299 (same as the PS1) would have been feasible by this point. We also know Saturn dropped to this price around this time anyways thanks to the cheaper motherboard revisions released around this time.

Combining daughter boards into the main board isn't going to save the likes of $100. Sega of America was eating money with that price drop.

[stu]

I think its great that were finally hearing Sega of Japan's side of the story. The Sega of America side has been covered almost to death, so its great to have another perspective. I always personally saw the 32X as a mistake, I remember reading about Saturn and PlayStation in magazines around early 1994 and when they announced 32X I was surprised and didn't really see the point. These translations by Gryson are great.

Another thing to keep in mind is that Sega was constantly coming up with hardware proposals. Al Nilsen said recently that during his time at SOA, SOA's engineers had come up with several rejected proposals for Genesis add-ons prior to the 32X.

Where has Al Neilson said this, I saw part of an interview he did with Sega of America in 2020 to celebrate Sega's 60th anniversary but I didn't hear anything about this. The interview also has Tom Kalinske and Diane Fornasier as well.

[Melf]

This is something I've never fully understood. If SoA loved the 32X so much, why did SoJ get stuck with developing all the software? Chaotix, VRD, etc

I think they were willing to try anything new but quit once they found it wasn't worth the time. They started a multimedia studio that was quickly dropped and didn't embrace FMV as much as SOA did.

[Gryson]

I can say with most certainty, that the small amount of import software available for the Japanese Saturn, certainly made it feel like a console that was rushed to market.

There's no doubt the Saturn was rushed to market in North America.

Here is a breakdown of all of the release date revisions that the Saturn went through in North America (based on what I've read in Japanese newspaper and magazine articles):

1) Late '93 / Early '94: The Saturn was to be released concurrently in Japan and North America by the end of '94 (there was a lot of push-back from SOA over this).
2) Mid '94: The Saturn was to be released in Japan, and the 32X in North America, by the end of '94 (this was the split-market approach). There was no clear date for the Saturn release in North America.
3) ~Start of '95: The Saturn was to be released in North America in the fall of '95 (the realization that the 32X was doomed had begun to sink in).
4) A few months later: The final decision was made to do a limited release in May '95 (the realization that the 32X was doing serious damage to the company had begun to sink in).

The 32X simply messed everything up.

Where has Al Neilson said this, I saw part of an interview he did with Sega of America in 2020 to celebrate Sega's 60th anniversary but I didn't hear anything about this. The interview also has Tom Kalinske and Diane Fornasier as well.

He talks about it at the very beginning of this interview clip:

Q: How was it managing this plethora of systems? I think 32X was after your time.
Al Nilsen: Yes, thankfully. I killed 32X at least four times. I had to leave for them to finally do it. I just hated that product.

Keep in mind that Al Nilsen left SOA in 1993, so he wasn't there for the initial conceptualization of what became the 32X. It's not clear what he's actually referring to. I'm assuming he's referring to similar add-on proposals that he shot down.

[TrekkiesUnite118]

Combining daughter boards into the main board isn't going to save the likes of $100. Sega of America was eating money with that price drop.

It would still lower your manufacturing costs. You only have to make one board instead of the 3+ that were in the VA0 Saturn. You can also see other chips were starting to be consolidated down. This is clear in the CD-ROM block and you can see it with RAM chips being consolidated down. Would it save exactly $100? Who knows. But it clearly made it so they could make that kind of a price drop safely. So I'd say if they were launching in the fall with this revision, they probably would have been able to price match the PS1 at launch. That combined with better software would have made a massive difference.

People forget that the Saturn was only at that $400 price point from May of 1995 to the end of September of 1995. So it was only more expensive than the PS1 for 2-3 weeks. After that point they were price matching the PS1, and in some cases beating the PS1 to certain key price points. They actually hit the $199 price point with the Model 2 in March of 1996, months before the PS1 hit that price. If the price drops were 100% reactionary to match Sony, they wouldn't have been doing major price drops months before Sony did them.

[gamevet]

They were reactionary. Trimming down the amount of board isn’t saving as much money as LSI. I believe the PSOne was using half as many chips as the launch model. SEGA wasn’t able to get the SH2 chips and the VDP chips combined into into two individual chips til late in 1997, when it was estimated that SEGA was no longer taking losses on hardware.

This guy has a good read about the costs of the Saturn.

https://mechafatnick.co.uk/2021/05/1...e-sega-saturn/

[Blades]

They were reactionary. Trimming down the amount of board isn’t saving as much money as LSI. I believe the PSOne was using half as many chips as the launch model. SEGA wasn’t able to get the SH2 chips and the VDP chips combined into into two individual chips til late in 1997, when it was estimated that SEGA was no longer taking losses on hardware.

This guy has a good read about the costs of the Saturn.

https://mechafatnick.co.uk/2021/05/1...e-sega-saturn/

That was a great read.

Yes, the Saturn was just not of the same caliber as the PSX from an EE perspective. Buying the SH2s from Hitachi, supposedly due to the golfing relationship execs from the two company had, was a mistake because neither had the resources to reduce the complexity of these powerful general-purpose RISC processors, while Sony designed their own GTE with a fairly weak CPU that they gave to LSI to further simplify. Expensive at the time memory, which the Saturn had more of but didn't utilize well, was another factor.

By the end of the PSX's lifespan, Sony was actually putting in higher amounts of memory that had the larger capacities disabled because it was so cheap.

But most important was that the Saturn was designed too early. It's essentially a hot-rodded 1993 machine. Everything else could be overcome if not for the hardware design.

[Gryson]

This guy has a good read about the costs of the Saturn.

https://mechafatnick.co.uk/2021/05/1...e-sega-saturn/

Just in case the author of that reads Sega-16, here are a few comments to improve the article:

-Small point, but worth getting right: Bernie Stolar was not the head of Sega of America after Kalinske during the time discussed in the article. That was Shoichiro Irimajiri. Stolar was a VP. Irimajiri was deciding policy, Stolar was working on the software development side of the business.

-This post contains information about third party licensing fees. Sega earned ~$7 royalty per copy sold in North America.

-Big point, which I think is very important for your overall argument: I think you're overlooking some things about Sega's financial reports. Most importantly, the financial report you've posted ('98 annual report) does not include financials for Sega's subsidiaries. It is a financial report of the parent company, Sega Enterprises. It does not directly report on profit / loss or revenue for Sega of America. How does that work? Well, remember that SOA was essentially ordering all product manufacturing through Japan. So, if SOA orders 1 million Saturns from Japan, that is reported as revenue for the parent company. But... what if SOA is unable to sell those Saturns? And what about SOA's massive marketing campaigns? None of that is reported in the annual report.

In fact, via newspaper articles, we know that SOA suffered a monumental loss in fiscal year 1995. Don't quote me on this since I'm going by memory, but I think it was around a $140 million loss. And it continued in 1996. So, even though the parent company Sega Enterprises was reporting a net income of ~$140 million in 1995, the truth was the subsidiaries were way in the red (SOE in addition to SOA). By 1997, SOA was basically bankrupt and had laid off a large percent of its staff. The parent company was having to inject money into SOA to keep it afloat.

So, what happened in 1998? That is when Sega Enterprises "wrote down" the value of SOA to account for all of the losses SOA had suffered over the past several years. Irimajiri, who had just taken over as president of the parent company, was setting the books straight for a fresh start. If you read his comments in the 1998 annual report, he explains all of this.

So why does this matter? SOA was in no position to market the Saturn past 1996. The company was essentially bankrupt. A few paltry game sales were not going to change anything for them. Yes, it sucked for Saturn owners, but there just wasn't much the company could actually do.

Buying the SH2s from Hitachi, supposedly due to the golfing relationship execs from the two company had

Please don't repeat that nonsense from Steven Kent's book, which is one of the most inaccurate accounts of video game history you can read. It's amazing that someone can write an entire book on video game history and not include any sources from or about Japan.

[gamevet]

Yeah, and people still believed that Sega could continue on with the Saturn. It's a great console, but it was never the cheap razor to sell the blades.

It's ironic that Sony would have their own Saturn situation with the PS3. The company's other revenue sources were posting losses and the PS3 was sinking with the company. It took Sony over 3 years before they could finally sell the PS3 at a profit. Lucky for them, they had a much larger coffer of money, to weather the storm.

[axel]

-This post contains information about third party licensing fees. Sega earned ~$7 royalty per copy sold in North America.

...

So why does this matter? SOA was in no position to market the Saturn past 1996. The company was essentially bankrupt. A few paltry game sales were not going to change anything for them. Yes, it sucked for Saturn owners, but there just wasn't much the company could actually do.

Ouch. Didn't realize the royalties were that low. So they'd need an attach rate of 15 games to break even, which is totally unrealistic. Or a little less if people are buying first party titles, but even so the software sales just weren't there.

Yeah, and people still believed that Sega could continue on with the Saturn. It's a great console, but it was never the cheap razor to sell the blades.

It's ironic that Sony would have their own Saturn situation with the PS3. The company's other revenue sources were posting losses and the PS3 was sinking with the company. It took Sony over 3 years before they could finally sell the PS3 at a profit. Lucky for them, they had a much larger coffer of money, to weather the storm.

Same thing with the Gamecube and Wii U, or Xbox in the early years. Companies with big cash reserves can ride out the storm. Sega was in a no-win situation, either keep pushing the Saturn and take bigger and bigger losses, or cut it off early and kill consumer confidence in your brand. It's really too bad they couldn't get more revenue from other sources, like an upgraded Game Gear or selling more PC games for example. Looking at these numbers here it looks like we were lucky to get the Dreamcast at all, a lot of companies would have walked away from the hardware business even sooner.

[Blades]

Please don't repeat that nonsense from Steven Kent's book, which is one of the most inaccurate accounts of video game history you can read. It's amazing that someone can write an entire book on video game history and not include any sources from or about Japan.

It was published in EDGE. Sega continued to use Hitachi for their processors even though Hitachi had little prior experience with microprocessors, suggesting there was a relationship beyond just "manufacturer-buyer."

[Barone]

The SH2s were/are awesome. One of the very few highlights of Saturn's design.

The sound system lacked fundamental decompression support and it was massively underused; I think it would have made a lot more sense if the Saturn were cartridge-based instead.
And it's a good fit for 2D sfx but not for 3D.

The DSP was hard to make anything useful with; hardly used to anything meaningful.

VDP1 was slow, filled with caveats, and wasteful.

The memory architecture is convoluted and slower than the PS1's.

[Gryson]

It was published in EDGE. Sega continued to use Hitachi for their processors even though Hitachi had little prior experience with microprocessors, suggesting there was a relationship beyond just "manufacturer-buyer."

Interesting - so Kent didn't make the silly rumor up after all.

And yes, there was a special relationship between Hitachi and Sega. Sega got priority access to a chip manufacturer that could cater to its needs and give it an incredible discount (remember from the article I translated on the SH2 development that Hitachi was basically selling the chip to Sega at cost)and Hitachi got the publicity of having 15 million of their chips in consumer products. We've heard from Sato on why he chose the SH2, we've heard from the SH2 designers, we don't need rumors that were made up years ago to discredit people.

[gamevet]

I had an idiot on YouTube try to tell me that an RTX 3090 was a bottleneck @1080p, in a video benchmarking two hi end CPUs. I explained to him that the GPU never hit 99% usage, therefore it couldn’t be the bottleneck. His reply was about how the GPU would never hit 99% usage, because of how the 3000 series core design used half of its cores for Ray Tracing and those cores weren’t used for rasterized graphics. He told me I was wrong, because he interviewed 3 guys from Nvidia, for the article he had written for Edge. Either he was a lying POS, or he lacked the understanding of technical subjects. He obviously didn’t know that those cores used for RT, could also perform Cuda Core functions, including FP-32 and FP-64.

I proceeded to showing him a video of the 3090 recalling being a bottleneck with Forza Horizon 5 (the game being discussed) with Bang4BuckPC Gamer running the game in 8k at max settings. The GPU stayed pegged at 99%!throughout the video.

I sure as hell hope that guy wasn’t a writer for Edge. He was embarrassing himself.

[TrekkiesUnite118]

They were reactionary.

Some may have been, others not so much. Again if the price drops were all reactionary we'd see them all happening after Sony made the drop first. But we don't see that. We see some happening in reaction to Sony, but others happen before Sony drops their price. You can especially see this in Japan. In Japan we see it launch at 44,800 Yen, and PS1 at 39,800 Yen. Saturn drops to 34,800 Yen with Virtua Fighter Remix and 29,800 Yen with just the console around June of 1995. We see Sony then drop to 29,800 in July to match. The next big drop we see in Japan is Sega drops the Saturn to 20,000 Yen in March of 1996 with the release of the Model 2. Sony at this time drops to around 24,800 Yen. Later in July of 1996 Sony drops to 19,800 Yen. For the rest of it's life in Japan Saturn remains at 20,000 Yen, though they still continue to reduce costs on the hardware as we can see from other revisions.

So this isn't entirely all Sega reacting to Sony, you see both reacting to each other. If Sega truly couldn't afford to sell the Saturn at these prices I don't think we'd see them making these price cuts before Sony made them. I'm not saying they'd have the same profit margins as Sony, but that they clearly felt they were able to make those price cuts safely.

Trimming down the amount of board isn’t saving as much money as LSI. I believe the PSOne was using half as many chips as the launch model. SEGA wasn’t able to get the SH2 chips and the VDP chips combined into into two individual chips til late in 1997, when it was estimated that SEGA was no longer taking losses on hardware.

Sure, having less chips would lower it more, but the changes from VA0 to VA1 are still pretty dramatic internally. I wouldn't be surprised if it was enough to make that drop to $300 safe to do. And then we see from there Sega continues to make changes to get the cost down to allow them to continue to drop the price. In Japan we see once it hits the 20,000 Yen mark that it just stays there for the rest of it's life. This is probably when the hardware stopped being sold at a loss due to the price not dropping but cost reductions still happening.

This guy has a good read about the costs of the Saturn.

https://mechafatnick.co.uk/2021/05/1...e-sega-saturn/

Yeah I've seen that, and while it does have some good info, there are also some flaws in it. For example for software sales he's using Famitsu charts which don't paint the entire picture, they only show what made the weekly charts. They can show you trends, but they don't say everything. For example he has the attach rate for Saturn at 5:1 using that data, yet we know from Sega's FY98 report that it was higher than that. Sega's own report states they had sold 8.8 Million Saturns and 80 million games. That would give it an attach rate of about 9:1. Considering how bad it performed outside of Japan, we can assume Japan had a high attach rate to bring those numbers up.

That all said, the main point I'm trying to make here is that I think the fear of a $400-$500 Saturn was a bit unwarranted from Sega of America. At least, not enough to warrant them pushing for the 32X idea. If they had simply prepped for a good launch and not done the 32X, they probably could have launched Saturn at around $299-$349 in the fall of 1995 thanks to the cost reductions that had been made up to that point. A good launch at that price would have led to more console sales, and more software sales. Having not done the 32X would have lead to them having a stronger launch line up outside of Japan as well, which would again lead to better first impressions and better sales. Having that momentum and better success outside of Japan would have most likely made the hardware cost issues not as severe as they were.