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 (67 page)
Authors: Steven Kent
Mattel, the largest toy company in the world, had plenty of room for a tomcat like Kalinske to grow. He began with preschool toys, then was asked to oversee the Barbie line. At the time, Mattel marketed Barbie as a single line of dolls with accessories. Kalinske’s team changed the strategy, breaking the line into several segments such as Malibu Barbie. “When I started on the Barbie business, worldwide, it was $42 million; when I left the company, it was $550 million; today, it’s $1 billion.”
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As Kalinske rose through the ranks of Mattel, his responsibilities expanded and he oversaw several research and development teams. One of those teams formed the nucleus of Mattel Electronics.
I was a VP of marketing at the time, and one of my product development groups developed the first portable games. We introduced them on Father’s Day. Nobody thought it was going to be successful, and, of course, the products were phenomenally successful. Within that same group, they developed the Intellivision technology. But what happened was that because it was clear the electronics business was going to become such a major part of the company, we decided to create a totally separate company. Once we made that decision and staffed it with some new hires and with some e-toy people, I never had anything to do with it again.
—Tom Kalinske
A rising star at Mattel, Kalinske tracked the new electronics division’s meteoric ascent and fall.
I eventually ended up on the board of directors of Mattel Inc., and during that time period the Intellivision company would report its results back in. So I had some involvement at a board level with them and how they were doing. All of a sudden one day the guys from Mattel Electronics said, “Oh my god, the bottom has fallen out. Atari just lost all its money, and we’re losing all this money, and it looks like we’re gonna lose $350 million.”
—Tom Kalinske
Twelve years after he started at Mattel, Kalinske began a three-year stint as president of the company. During this time, he went toe-to-toe with television network executives over advertising sales. “We were spending millions of dollars, and the networks treated us like dirt,” says Kalinske. “They had McDonalds and other big companies, and they acted as if they were doing us a favor by giving us advertising time.”
Mattel came up with an alternative medium for reaching children—a cartoon series and a line of toys called
HeMan and the Masters of the Universe.
The idea was to create a hit cartoon series for non-network television where advertising was more affordable. The idea worked. “
Masters of the Universe
ended up getting a 7.5 rating at a time when the networks’ shows weren’t getting a 7.5 rating. From that point on, the networks were much easier to work with.”
After sixteen years with Mattel, Kalinske went to Matchbox for a short period, then replaced Michael Katz, who had spent the last year trying to find a foothold in the market. In truth, Katz has seldom been given enough credit for his role in Sega’s success. Much attention has been given to the rise in profits under Kalinske, jumping from approximately $100 million in sales in 1990 to over $1 billion by 1993. Much of this success, however, grew out of programs started by Katz.
We started the aggressive advertising campaign “Genesis does what Ninten-don’t.” We concentrated on games that Americans would play…. sports games, specifically, and some other products. And we attempted to develop a mascot character like Mario.
—Michael Katz
Several people who worked under Kalinske when he first joined Sega say that he did not know much about video games but that he was a fast learner. In the early days, marketing executives and engineers had to brief him before meetings with reporters, and some Sega of America employees wondered if he was right for the job. Playing off his Mattel background, some reporters dubbed Kalinske Sega’s “Ken doll” spokesperson, suggesting that he was a good-looking figurehead with little else going for him. The label was grossly inaccurate. According to those who worked with him, Kalinske studied hard and quickly developed an understanding of the industry. He demonstrated the ability to make tough decisions and the willingness to defend his decisions when challenged by the Japanese board of directors of Sega Enterprises. He also surrounded himself with industry-savvy advisers such as Steve Race, an Atari veteran and one of the founders of Worlds of Wonder; Bob Harris, who had helped launch both Master System and Genesis; Paul Rioux, who had worked on Intellivision; and Al Nilsen, who had been JC Penney’s merchandise buyer during the Atari’s heyday.
Tom focused on retail and how to represent the company and third-party relationships. I mean, that was Tom. He made sure that the best people outside of us wanted to work on Genesis.
Shinobu Toyoda was the vice president of licensing, and he was the man behind building the Sonic franchises and licensing in and out. He wanted to go to Hollywood. To this day he works in Los Angeles at our Sega PC offices. He’s the one who wanted to do the Paula Abdul game. He’s the one who would go down to Hollywood and go onto all the sets to get licenses like Batman. He was the one who made sure Sonic was on every bath towel and all of that stuff, and he worked very closely with the Sonic cartoon.
The guy who was most underrated and the guy who doesn’t get a lot of positive press was Paul Riuox. I can tell you from firsthand experience … I got to sit and watch all these guys, and Paul Rioux was the guy who pushed hard to improve the quality when the quality wasn’t there. He was the guy who saw the value of making money in peripherals. He was the “make it happen” guy, the sort of nuts and bolts guy who would be involved in all aspects. He didn’t have the most romantic job, but I assure you, he was a really key part of the success.
You know, it was a real triad, though. If all three of them [hadn’t been] there, I really feel like we wouldn’t have been successful. The chemistry between the three was essential.
—Michael Latham, former director of Omega Group, Sega of America
A student of classic marketing, Kalinske believed in the Gillette school of “giving away the razors to sell the blades.” Above all else, he felt that Sega had to get as many Genesis consoles into consumers’ hands as possible and as quickly as possible. Working with his executive team, Kalinske developed a four-point strategy that he believed could weaken Nintendo’s hold on the market. His plan included dropping the price of Genesis from $189 to $149, with the eventual goal of getting it down to $100; replacing
Altered Beast
, the first bundled game, with a game called
Sonic The Hedgehog
that was under development at the time; assembling a U.S.-based team to create games more suited to American tastes; and adopting strident advertising campaigns that challenged Nintendo head on.
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Kalinske prepared a presentation with these
suggestions and flew to Japan to present them to Nakayama and the board of Sega Enterprises. The board nearly rejected his ideas.
It was like I’d hit them with a bucket of cold water. They asked, “Are you out of your mind? You want to lower the price until we don’t have any profit at all? You want to take out our regular software and put in our best software? You want to take on this company that has 92 percent of the market in an advertising campaign?”
That’s essentially what they told me. I thought, “Well, this is the shortest career anybody ever had. I guess I’d better start looking for something else to do.”
As the other guys got up to leave, Nakayama turned and said, “On the other hand, he was hired to make decisions for the U.S. market, and if that is what he thinks needs to be done, he should go ahead and do it.”
—Tom Kalinske
Kalinske returned to Sega of America with Hayao Nakayama’s approval on all four suggestions. The next step was putting his plan to work.
A large portion of Kalinske’s recovery plans would fall on the shoulders of
Sonic The Hedgehog
,
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a speedy blue rodent in red tennis shoes.
Sonic was the creation of Yuji Naka, a young game designer whose credentials included
Phantasy Star
, a role-playing title generally remembered as the best game ever released for Sega Master System, and
Ghouls ’N Ghosts
for Genesis, a flawless translation of a popular Capcom coin-op game. Of the games released around the launch of Genesis,
Ghouls ’N Ghosts
stands out among the finest.
An exacting and relentless micromanager, Naka was well known for expecting nothing short of perfection from those who worked on his team. Like the programmers who created the games for the Atari 2600, Naka generally preferred to do everything from game layout to the music and even writing the code himself.
Not just programming, everything … the graphics, the pictures. I’m really careful about everything. It’s not exactly the building of the program itself that concerns me, it’s the overall flow of the program. In my mind, working as a producer or director means handling all aspects of a game, including the music, graphics, pictures, and everything.
—Yuji Naka, creator of
Sonic The Hedgehog
Naka’s demanding managerial style sometimes gave way to outbursts. Unlike other creative teams, Naka’s team suffered from heavy turnover as burned-out programmers, designers, and artists looked for less demanding work elsewhere. Mild-mannered in public, Naka was said to be given to emotional flare-ups when under stress. He had already established himself as one of Sega’s most respected console game creators in 1989, when the company-wide call went out to create a new mascot that could compete with Nintendo’s Mario.
Mr. Nakayama expressed the idea to the company that it would be a good thing for Sega to develop a mascot character—one that could be sort of, that could do for Sega what Mickey Mouse does for Disney. As a result of that, numerous artists and designers from the company submitted design ideas and suggestions and sketches for what this character would be. A lot of ideas were considered, like kangaroos and rabbits, and we were kind of thinking along the lines of a jumping, hopping kind of character.
Mr. Oshima [Masato Oshima] was the artist whose character design sketch was accepted. He’s the one who essentially drew the hedgehog. It’s a very stylized hedgehog.
—Roger Hector, former head, Sega Technical Institute
Naka wanted to make a game that was similar to the
Super Mario
Bros.
games, only simpler
.
Mario
games used two buttons, so
Sonic
should use one. Mario collected coins, so Sonic collected rings. The way Naka’s people differentiated Sonic from Mario was by making the hedgehog faster and giving him “attitude.” Mario games were slow and friendly, Sonic games would be fast and
the eponymous groundhog would glare at the camera and tap his foot impatiently if the player did not move quickly enough.
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The Japanese, unbeknownst to us, created a character with
Sonic The Hedgehog.
We, in America, thought Sonic was ridiculous because the hedgehog was a little known animal and it was in blue. We thought it was silly, but to the credit of the game, which was so good, the character became established.I think it was because the game was a good game on its own anyhow. The character could have been anything, but it was a hedgehog that would have died a dismal death had it not been for a very good game.
—Michael Katz
Moreover, Sonic traveled through a surreal world designed to show speed. His two-dimensional side-scrolling environment included loops, steep cliffs, and pinball-esqe bumpers from which he could launch at high speeds. Compared to
Sonic The Hedgehog
, even the fastest racing games of the time seemed slow. Players had to make decisions in advance and react quickly to survive each level of the game. When Sega at last unveiled
Sonic The Hedgehog
, the response was one of astonishment. Magazines praised it as one of the greatest games ever made and proof that Genesis could do more than the
Golden Axe
and
Moonwalker
side-scrollers for which it had become known.
People at Nintendo, however, remained unimpressed.
It was pretty much a typical Nintendo reaction at first. [People said] “Look, they’re trying to copy us with
Super Mario Bros.
and it’s the same kind of a game. They can’t really do anything as good as we do it.” Over time, there was this kind of dawning realization that this was … not such a bad product. It was the same thing with Genesis, in general.—Richard Brudvik-Lindner, former group supervisor and head of Nintendo of America Account Team, Hill and Knowlton
Sonic The Hedgehog
was released in the United States in 1991. As part of Kalinske’s proposed plan, it replaced
Altered Beast
as the game that came bundled with the system. People who had purchased the old package with
Altered Beast
within a few-months grace period were allowed to mail in for a free copy of
Sonic
, in effect giving them an extra game at no charge. The
Sonic
cartridge was also sold separately for those who already owned Genesis.
Sonic
was an immediate hit, and many consumers who had been loyally waiting for Super NES to arrive now decided to purchase Genesis. After struggling for more than a year, Sega was suddenly seeing success. The fiercest competition in the history of video games was about to begin.