It was Christmas morning in the late 90’s and the living room was a war zone of wrapping paper shreds and scattered boxes as I searched relentlessly for my dream gift. As I emptied the last present from my Christmas sack and tore back the festive paper, I was thankful for what I’d received but a little disappointed to discover that the dream gift wasn’t there…
A few moments later, my Mam moved to the back of the room and “discovered” a present behind the settee - ‘oh looks like there’s another one here for you and your brother’. We each grabbed a corner of the paper and tore it open in a frenzy. I couldn’t believe it, there it was in all its glory - a Sony Playstation!
(this isn’t actually a photo of me, but for the sake of the story we’ll pretend it is)
We rushed up the stairs as my Dad took the console from the box and plugged the scart into the back of our 14” CRT TV. But the excitement was too much for him too, as he threw in a copy of Gran Turismo to ‘test it worked’, hogging our new console for the next half hour, as we watched on impatiently, eager for our turn.
But could you blame him? Playstation wasn’t just for kids, it was for adults too, with games and genres to suit all ages. Yet Sony wasn't the first company to create a games console for everyone, before Playstation could run, SEGA had to walk…
With that said, today I’m sharing the story of how a small competitor called SEGA rocked the console wars to steal share from Nintendo, a market leader that held a 95% share of home video games.
This is how a five step battle plan won the first console war
Rewind to the late 80's and kids weren’t asking for Playstation (it didn’t exist yet), Nintendo topped the wish list thanks to their 8-bit Nintendo Entertainment System (NES), and much-loved mascot Super Mario.
But back in Japan, a brand known for arcade machines called SEGA had just launched a new 16-bit games console - the SEGA Mega Drive (or Genesis if you’re in North America).
Mattel toys alumnus, Tom Kalinske, the CEO who revived Barbie and Hot Wheels, and launched Masters of the Universe, was on holiday with his family in Japan when he was tracked down and approached by Hayao Nakayma (the chairman and CEO of SEGA Japan) to run SEGA of America.
Tom accepted the role and jumped on a flight to Japan to present a five-tactic strategy that would steal share from Nintendo and kickstart the first console war.
The challenge he faced - sell one million units. At this time SEGA had only managed to sell 70,000 consoles!
The Battle Plan (Tom’s five-tactic strategy)
Lower the price
Defeat Mario
More sports
Cool for teens
Make fun of Nintendo
1) Lower the price
Tom’s first tactic was simple: by lowering the price of the console to $149.99 and throwing in a free game, SEGA positioned the Mega Drive as an affordable home console that more consumers could enjoy.
2) Defeat Mario
If SEGA were going to stand a chance against Nintendo, they needed their own mascot, one that could rival the loveable plumber Mario.
They honed in on their target market and headed to America. The team were inspired by the Yank’s love of roller coasters, and with their 16-bit technology allowing for intricate loops and turns they’d discovered an interesting, new mechanic to build a game around.
One of SEGA’s game designers stationed himself in Central Park and started to sketch out characters. He stopped passers-by to find out which characters resonated and a little hedgehog was the stand out. They painted him SEGA blue, added red sneakers and landed on the name ‘Sonic’ to represent the speed of light, Sonic could literally move faster than any other game character thanks to the new 16-bit tech.
Sonic the Hedgehog was launched in 1991, and SEGA would go on to sell 44 million copies of the Mega Drive hit. It’s their biggest franchise to date, grossing $6 billion as of 2020.
3) More sports
When consoles first hit our homes in the 70's, the technology was basic, if you wanted to play a sports game you had Pong.
Tom knew that teenagers were into Sports and spotted the gap for a realistic game. This tactic would help bring a different type of player to SEGA.
A small games developer called Electronic Arts was looking for a platform to house a 16-bit sequel to their game John Madden Football (Madden). A real 11-on-11 American Football game made with the iconic sports broadcaster, hall of famer and Super Bowl winning coach. It had the ultimate seal of credibility.
Their paths crossed, the deal was agreed and John Madden Football II was launched in 1991 in full 16-bit glory. They would later expand the selection to include basketball, golf, hockey and football too. Real sports games with officially licensed players and teams.
4) Cool for teens
Nintendo was marketing to kids between the ages of 9-13 years old. But Tom wanted to go after an older audience and target ‘the cool kid’, a slightly rebellious teen with a bit of an attitude.
He believed that if the older brother played SEGA, the younger brother would want to play too.
They used guerrilla tactics and took the Mega Drive to shopping malls, and college campuses. They had a ‘SEGA guy’ in every college who was given a free console and games, the rep would move around different frat houses to get others interested in playing too.
They directly targeted the MTV generation, hosting a world championship called ‘Rock the Rock’, which took place in Hard Rock Cafe’s with the finals at Alcatraz prison.
Even when Nintendo launched their own 16-bit console - the Super Nintendo Entertainment System (SNES), a focus group ran by Sony discovered that teenage boys didn’t like to admit they owned a Nintendo. Nintendo was for kids and they wanted to be associated with a cooler, edgier brand like SEGA.
5) Make fun of Nintendo
This tactic was the icing on the cake. SEGA wanted to prove their console was cooler, more powerful and had a bigger selection of games, by going directly after Nintendo in their ads.
Their ads were bold, aggressive and effective, giving birth to taglines like the classic - ‘Genesis does what Nintendon’t’.
By 1991 Sega was outselling Nintendo 2:1, the battle plan had paid off!
