The Ultimate History of Video Games: From Pong to Pokémon and Beyond—The Story Behind the Craze That Touched Our Lives and Changed the World (87 page)

The final panel to address the hearing consisted of two college professors discussing the results of research tracking the effects of media violence. The first, Dr. L. Rowell Huesmann, a professor of psychology and communications
studies at the University of Michigan, discussed extensive research on media-viewing habits and applied some of the results to game playing. The second, Dr. Diane Levine, a professor of education at Boston-based Wheelock College, discussed cross-marketing efforts between TV studios and toy companies.

In truth, though they were far more dramatic, Senator Brownback’s 1999 hearings did not have the deep impact on the video game industry that Senator Lieberman’s 1993 hearings had. This probably reflected a certain sophistication that Douglas Lowenstein and the IDSA brought to the industry. Under Lowenstein’s direction, the industry presented a unified voice and appeared to be much more anxious to cooperate.

And the Cycle Continues

As Nintendo executive vice president of sales and marketing Peter Main had predicted, much of the success of Nintendo 64 (N64) came at Sega’s expense. With the launch of N64, Sega’s already-low 32-bit sales were cut in half. By August 1997, Nintendo controlled 40 percent of the next-generation console market and Sony controlled 47 percent, leaving Sega with a mere 12 percent. Price cuts and big-name games did not help.

Bernie Stolar, formerly Sony’s vice president of third-party, was president and CEO of Sega of America as Saturn entered its last days. Under his leadership, Sega stopped advertising Saturn on television. Then, on March 14, 1998, Sega announced plans to release three final games in the United States—
The House of the Dead, Shining Force III
, and
Burning Rangers.
After the release of these games, Sega of America discontinued the system.

The damage from Saturn’s failure was extensive. At the time of the discontinuation, Sega had sold 2 million Saturns in the United States. By comparison, Sony had shipped 10.75 million PlayStations into North America.
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Sega would have to absorb a $450 million loss (a 21 percent drop in sales) in 1998. The impact was devastating, but Sega did not bow out of the market for long. Saturn
remained active in Europe and Japan longer than it did in the United States. In the meantime, Sega of America released several games for PCs. Word got out about Sega completing the design of a new system even before the final Saturn games reached store shelves. There were stories about the two systems being developed simultaneously, one in the United States and one in Japan. If these stories were accurate, Sega ended up manufacturing the system that was developed in Japan.

Largely stoked by Sega itself, the rumors continued. First known as “Dural,” a metallic female fighter from the
Virtua Fighter
series, then as “Katana,” a Japanese sword, Sega’s new system was supposed to have a 128-bit processor, a 3D graphics chip from 3Dfx, and a Windows CE operating system. It was said to have a modem, and there were rumors that it would play games on DVDs (digital versatile disks) instead of CD-ROM.

On May 21, 1998, Sega put all the speculation to rest by announcing that “Dreamcast,” the official name of the new 128-bit console, would be released in Japan on November 27. Most of the rumors proved fairly accurate. The final version of Dreamcast featured a Hitachi SH4 CPU and an NEC/VideoLogic PowerVR 3D graphics chip. The original specifications did call for a chip from 3Dfx, but Sega made a last minute change. Dreamcast’s final design included a stereo chip from Yamaha and two operating systems—one from Sega, the other from Microsoft. Rather than a CD-ROM, it utilized a technology called GD-ROM—proprietary double-density CDs that held over a gigabyte of information. Most intriguing of all, however, was that the console included a 56K modem in a modular slot that would allow for updating should Sega choose to release broadband support. According to Sega officials, online gaming would be an essential element in their strategy for Dreamcast.

In Sega’s Tokyo headquarters, a new CEO named Shoichiro Irimajiri hoped to use Dreamcast to reestablish Sega as a dynamic force in games. A former executive at Honda, Irimajiri was an energetic leader with ambitious plans, but before he could get the chance to launch his new system in Japan, Sony stole the spotlight. On March 2, 1999, Sony held a press conference in an enormous Tokyo opera house to announce the details of a “next generation PlayStation” that Sony promised would be released in the year 2000.

Putting on a fascinating show of internal politics, Sony’s retiring chairman Norio Ohga began the meeting by reciting some of PlayStation’s many successes.
Then Ohga made a statement that was meant to send a message to Nobuyuki Idei, who as Sony Electronics president and co-CEO was next in line to be chairman. “I remember when Ken Kutaragi proposed the PlayStation. I was the only one on the board who supported the idea.”

PlayStation, which many Sony executives had viewed as little more than a side trip, had become Sony’s biggest product of the 1990s. With more than 50 million units on the world market, PlayStation accounted for 40 percent of Sony Electronics revenues.

Trying to put a good face on the situation, Idei began his speech by saying, “I always believed in PlayStation.” He then went on to say, “I believe this [the next-generation PlayStation] is something that will surpass a mere game machine.”

Sony Computer Entertainment president Teruhisa Tokunaga came next to discuss the manufacturing partnership Sony had formed with Toshiba. Together, they were spending 20 billion yen (approximately $160 million against Japan’s weakening yen) on the project. Tokunaga finished by describing the quickening pace of PlayStation sales. It had taken his company nearly two years to ship its first 10 million consoles. The next 10 million shipped in only nine months. Then Sony hit the next 10 million in six months, followed with another 10 million shipped six months later. According to Tokunaga, Sony went from 40 million to 50 million consoles shipped worldwide in just four months.

The final speaker of the day was Ken Kutaragi, the engineer turned Sony Computer Entertainment executive who designed the original PlayStation. As he explained the performance specifications of his new console, it became obvious that Sony had created a stripped-down version of a super computer. Sega’s Dreamcast rendered 3 million polygons per second, nearly 10 times as many as the original PlayStation. This sounded impressive until Kutaragi revealed that his next-generation machine could render 60 million raw polygons per second. He conceded, however, that this performance was slowed as you added in effects such as fogging, shading, and curved surfaces. Even with these effects, however, the new console could render more than 16 million polygons per second.

Central to the new console’s performance was an amazing new processor that Kutaragi called the “Emotion Engine.” This processor was the result of brilliant out-of-the-box thinking. The computer industry had always followed a maxim called Moore’s Law, named after Intel executive Gordon
Moore. According to Moore’s Law, the typical high-tech manufacturer would double the speed of its fastest processor every eighteen months. This generally resulted in companies simply doubling the size of their processor. Realizing that doubling everything would make for a very expensive console, the engineers who designed the “next generation” PlayStation decided to isolate the operations that impact gaming and increase them exponentially. While the Emotion Engine was not going to be as fast as a Pentium II for some operations, its graphics processor had 1,000 times more bandwidth than current PC graphics processors at the time and its floating-point calculation performance was rated at 6.2 gigaflops (billion) per second, making it as fast as most super computers.
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Kutaragi’s team had pulled out all the stops. The new console would run games on DVD, a medium that held 8 gigabytes on standard disks and 17 gigabytes on dual-layered disks. While he would not commit to whether the new console would play movies on DVD, the announcement led to widespread speculation that it would. What Kutaragi did confirm, however, was that the new console would be backward-compatible with the original PlayStation, meaning it could play the thousands of games that had been released for the Sony platform worldwide.

The event ended with representatives of Namco, Square Soft, and Polyphony, the outside development house that created Sony’s bestselling
Gran Turismo
, running short demonstrations on a stack of computers set up to emulate the “next-generation” PlayStation.

Sega was caught flat-footed. Judging by the specifications Sony had released, Dreamcast was obsolete before it even launched. In an effort to respond, Bernie Stolar held a telephone press conference in which he addressed Sony’s announcement.

Over the next few months, Sony parceled out small tidbits of information, revealing a master plan that would make its new console the center of entertainment in the home. It was later revealed that the console would indeed play movies. Sony announced plans to release an Ethernet connection, enabling it to handle high-speed connections to the Internet. The entire strategy, later tagged as Sony’s “Trojan Horse,” was to release a moderately priced console that would be the hub of a complete entertainment concept that merged television viewing, movie watching, video game playing, and Internet surfing into one device.