In the early 90’s, Sega was at the height of its popularity. They were the only competitor to truly challenge Nintendo for home console dominance, beating them in Christmas sales from 1992-1994, and holding 55% percent of the market going into 1995. There were few mistakes that Sega could make to falter from the throne, but the seeds were planted in 1992. With the Super Nintendo being released two years after the Sega Genesis, it was clear that the Super Nintendo was more powerful, thus putting Sega behind the eight ball. So to compensate, they released the Sega CD add-on in the fall of 92. The Sega CD had a much faster processor, enhanced graphics and sound, and obviously by the name, used CD-rom technology. A great system in theory, but at the price of $299, it wasn’t a truly new console, making it hard for consumers to support it, rendering it a commercial failure. Then, after the advent of Nintendo’s Super FX chip, combined with the release of the Atari Jaguar, Sega felt like they had to make another move even though the Sega Saturn was in development. So in the fall of 94, they released the Sega 32x, another Genesis add-on that was supposed to be a cost efficient, 32 bit machine launching at $160. The 32x was a minor improvement to the Genesis with enhanced graphics and sound, but not a major enough upgrade to warrant the $160 price point. Again, the loyal Sega fanbase felt slighted and this could be figuratively viewed as Sega’s second strike.
So, despite the failures of the Sega CD and 32x. as mentioned earlier, Sega was still able to go neck and neck with Nintendo. That made the excitement for their new console, the Sega Saturn, go through the roof. In March of 95, Sega of America CEO Tim Kalinske announced that the Sega Saturn would be released on September 2nd of that year on what was to be dubbed as “Saturnday”. The only problem about this “Saturnday” spectacular was the looming release of the Sony Playstation. Both the Saturn and Playstation were released within a few weeks of each other late in 1994 in Japan, and though the Saturn sold more units, the Playstation was quickly gaining momentum. With the Playstation to come out on September 9th in North America, a week after the Saturn, Sega began to get a case of severe hysteria.
On May 11th at their E3 press conference, Sega made a startling announcement. The Sega Saturn was going to be launched much sooner than expected, actually, it was out on store shelves RIGHT NOW! This was all in an effort to try to drive sales for the Saturn, and create a vesting interest before the Playstation launch. This announcement sent shockwaves through the gaming world, stunning consumers, developers, and retailers alike. A number of developers were in the middle of fine-tuning their games for the September launch, and couldn’t release them in May. Also, games that were launched in May, clearly showed signs of incompletion with various bugs and glitches. On the retail side, Sega didn’t have enough units to dole out to all of the retailers that would have received them had the console launched in September. Only Electronics Boutique, Software Etc., Babbages, and Toy ‘R’ Us, actually obtained the Saturn. This left a lot of the other retailers in the dust, including Kay-Bee Toys who decided not to carry the Sega Saturn at all.
Hoping to sell around 600,000 units by the end of the year, Sega’s plans were heavily compromised when Sony announced at their E3 press conference the day after Sega’s, that the Playstation would cost $299, a hundred dollars cheaper than the Saturn. Even with that news, the Saturn still sold fairly well initially, but sales faltered quickly, with the looming Playstation release in tandem with sub par games on the market. Come the Playstation launch day, the Saturn had only sold 80,000 units in five months while the Playstation sold 130,000 units in its first week. Safe to say that the earlier launch didn’t provide any momentum at all. This in turn, caused Sega to lower the price of the Saturn to $299 just to compete with the Playstation, but in the end, it was to no avail, eventually dropping to $249 in March of 96, and to $199 in May when the Playstation dropped to that price. By May, the Playstation had sold about 1.2 million units, while the Saturn had only sold 600,000. In 1998, the Saturn was discontinued in North America, ultimately selling 2 million units. The Playstation was discontinued in 2005 selling 39 million units in North America, completely crushing the Sega Saturn.
The early Saturn launch had after effects on Sega that reverberated for years to come. Tim Kalinske, the Sega of America CEO who guided them to success with the Genesis, resigned in July of 96, believing that Sega of Japan had too much control over the American side of business. New CEO Bernie Stolar pronounced at E3 1997 that the Sega Saturn was not the future of Sega, burning the fans that did or potentially wanted to buy into the console. Eventually, when they released the Sega Dreamcast, as great of a console as it was, the former Sega loyalists, and the various developers and retailers that were spurned by the Saturn, couldn’t help it reach its ultimate potential. In 2001, Sega discontinued the Dreamcast, and subsequently stepped away from the hardware market.
The Playstation paranoia that lead to one of the worst moves in video game history, destroyed the reputation and force of nature that was Sega. A one time contender to the dethrone Nintendo, because of the downward spiral that occurred after the early Sega Saturn launch, Sega is now just another developer and honestly, not a very good one anymore. Who knows how their future would have been if this Saturn move hadn’t been made, but there’s no doubt that it was an obvious mistake in gaming.