Sega is nothing. Nintendo President Hiroshi Yamauchi would regret those words – an off-hand remark given to a Japanese journalist – when, four years after its debut, the Sega Mega Drive recorded sales of 7.5 million systems in the US, outselling Nintendo’s Super Nintendo by a factor of 2:1. For Sega’s staff, Yamauchi’s pronouncement acted as a thrown gauntlet. The company’s American CEO, Tom Kalinske, went so far as to pin a copy of the phrase on every door in the Sega offices, a challenge to his staff to prove the venerable businessman wrong.
But in 1988, Yamauchi’s bullish diagnosis made reasonable sense. Nintendo’s Famicom swaggered into its fifth year with a rudely dominant 90 per cent of the video game hardware market share and one machine in every three US homes. Sega’s Master System machine, meanwhile, limped behind, having secured fewer than a quarter of a million sales in Europe, showing an equally poor record in America and Japan. Despite its technical superiority over the Famicom, the lack of third-party support, and arrival of the vastly superior PC Engine, ensured Sega’s hardware ventures throughout the 1980s were ill- timed and ill-fated.
Believing that Sega’s success might lie in porting its arcade hits to the home, CEO Hayou Nakayama took the decision to try the company’s hand at a new console launch, developing a domestic version of Sega’s successful coin-operated technology, the System 16. Codenamed MK-1601, Sega announced a launch slot of autumn 1988, hoping the system could establish dominance in the next generation of video game hardware as the first ‘16-bit’ system.
On 29 October 1988, Sega launched the MK-1601, now renamed the Mega Drive, in Japan for ¥21,000 (£114) alongside four titles, Altered Beast, Super Thunderblade, Space Harrier II (an exclusive sequel to Yu Suzuki’s popular arcade title) and Osomatsu-kun. While the ease with which the system handled the arcade ports caused a small stir in Japan, Nintendo’s dominance prevented Sega from making the financial impact the company wanted.
In a shift of focus, Nakayama decided that the system’s fortunes lay in the West and charged the US wing of the company with a Japanese mandate: ‘Haku Mandai,’ or ‘sell one million consoles.’ Copyright issues with the ‘Mega Drive’ name in the US forced a name change, an inconvenience that nevertheless enabled the American team to spell out their aspiration for the machine, nothing short of a rebirth of Sega: Genesis. The team assumed that gamers who had joined the Nintendo camp with the launch of the NES five years earlier would now be looking for more mature content. The marketing team designed a campaign to paint Nintendo as a family and children’s company, and Sega as a more grown-up offering.
On 14 August 1989, Sega shipped a limited quantity of console to stores in New York and Los Angeles, priced at $199 (£125). Celebrity-endorsed sports titles Arnold Palmer Tournament Golf and Tommy Lasorda Baseball were twinned with arcade behemoths Golden Axe and Altered Beast to reinforce Sega’s positioning of the console as a more mature machine. The approach worked and within one week industry figures put Sega as owning 65 per cent of the market share, growing to 90 per cent by the Christmas period.
However, the Nintendo user base remained greater in the West, and Sega began a campaign, using slogans such as ‘Sega does what Nintendon’t’. In Japan, Sega had all but given up hope of besting Nintendo and now focused all of its energy at beating its rival on foreign soil, now supported by a Mario- beating mascot, Sonic The Hedgehog. While the Mega Drive slid from popularity with the release of a number of ill-advised add-ons, its impact was still significant, moving public perception toward games to send the medium into its cultural adolescence.