Many of us think of the '90s as the golden age of video games. The Super Nintendo and Sega Genesis / Mega Drive were brimming with a huge variety of games. But when Sony's PlayStation hit in 1995, it was an indication of another huge shake-up in the video game industry — though even then, there was something more concerning happening behind the scenes.
In a newly translated article from the Japanese newspaper Nikkei Sangyo Shimbun dated February 29 1996 (translated by Gryson from Mega Drive Shock), it's revealed that there was a huge decline in 16-bit sales in the year 1995, with one industry expert even saying “It’s almost like a return of the 1982 Atari Shock".
The article itself largely covers Sega, who in 1994 launched the ill-fated Sega Saturn in Japan, and its rapid expansion led to the company having to revise its home console business.But things weren't rosy for Nintendo and many of the big Japanese companies. The huge growth and success of the previous years meant that many companies were holding on to large amounts of unsold inventory. Nintendo, Capcom, Sega, and Konami all reported losses between 1994 and 1996:
Sega has not been the only company to suffer. One large software company stated, “There is not a single company that has been able to turn a profit in the European market.”
In the fiscal period ending in March 1995, Konami took an extraordinary loss of ¥11.6 billion due to clearing out unsold inventory. During the same period, Capcom took a loss of ¥7.5 billion after writing down the value of its American subsidiary, and in the mid-year period ending in September 1995, Nintendo also took a loss of ¥9.8 billion after doing the same with its American subsidiary. This fiscal year, Sega is taking an extraordinary loss of ¥26 billion due to the downsizing of its American and European subsidiaries and due to the disposal of unsold inventory.
The article also reports on the rivalry between Nintendo and Sega. Sega, who were often chasing Nintendo and the SNES' tail in Europe and North America, were competing via aggressive marketing and "large-scale mass production", whole Nintendo "conventionalized the practice of including multiple free games as pack-ins with the purchase of a console". The consoles were selling, but the games were not.
When asked to comment on why he thought the North American market was declining, Nintendo president at the time — Hiroshi Yamauchi — is quoted saying "The market has been flooded with low-quality software". Nintendo was struggling to get the N64 out on time and rushed the Virtual Boy to market in 1995, which didn't exactly set the world on fire.
With the PlayStation's huge success and the jump to 32-bit, the article states "Consumers in North America who want to buy 16-bit games are rapidly disappearing", and that's despite some huge releases like Donkey Kong Country 2: Diddy's Kong Quest, Chrono Trigger, and Super Mario World 2: Yoshi's Island releasing for the SNES in the West.
So we were pretty close to seeing a repeat of the Atari video game crash in the '80s. Thank goodness that didn't happen! And thank you to Gryson for translating the article which reveals a pretty important note in video game history. You can read the whole piece, which covers Sega's decline in much more detail, down below.
[source mdshock.com]
Comments 37
I was all about the handhelds in the 90s, so this area kind of passed me by. Sure I had a 64 and a gc but not a huge amount of software for either of them outside the core Nintendo titles.
Everyone wanted to try 32bit, although the 16bit graphics were much more lovingly designed. 20 years later, many of the players have remembered the beautiful 16bit time and play the timeless classics again. A proof of the excellent quality of the games of the 90s. Pixelart never gets old for me.
What compared to the amount of shovelware nowadays? Ha
‘94–‘96 were some sweet years in gaming
Fascinating read, thanks. A really good snapshot of the changes at the time.
1) The late 16-but era did see a lot of bad games released to a market smaller than the current one, at full price. A £40 cart in 1994 is equivalent to about £70 now, which is a lot to pay for something like Shaq Fu.
2) Sega of America were especially bad for this. 20 games a year and so much dross.
3) It’s easy to see why Konami, Capcom and co rejected the N64. They didn’t want to find themselves stuck with warehouses of expensive cartridges again.
4. It’s also easy to see why Playstation was so attractive. The market wanted new tech, the PlayStation was powerful but also very easy to develop for which kept costs down. They used CDs instead of cartridges which kept costs down. They offered very generous licensing terms. They were very flexible and quick in turning around orders as they made the CDs themselves and took away the need to place huge orders of expensive cartridges. The industry flocked to them which led to such an impressive library.
I think at the time it didn't help that there were so many systems on the market. Sega themselves were still making games at on point for six different ones around '94 in various parts of the world. Not only that but you had all of these different next-gen systems coming out that were both expensive compared to older stuff and no one knew what to get. Even the original PlayStation took a while to start building momentum as the first couple of years it was still an unknown. So I can see why there was concern and it was also the reason companies like Commodore and Atari went bust in a flooded market.
I do recall when I had a Magicom/Magicdrive back in the 90s, I had access to hundreds of titles (I don't do that any more) and people reminisce about the amazing SNES and MD libraries, believe me a vast majority of it, mainly third party, was crap on both. For every iconic title there were 15-20 where you'd feel burnt if you'd spent your cash on them.
@electrolite77 Great points. Sega themselves knew that the mess they'd caused for themselves (outside Japan, anyway) by releasing the Mega CD, 32X and Saturn in quick succession was dangerous and longer term it became clear that it had fatally damaged them.
Meanwhile, Sony concentrated on building a single platform which wasn't extremely powerful but was a long-term investment in terms of the effort and money put into attracting developers and giving it a marketable image.
I think an awareness of the different fates of their 90s rivals might have influenced Nintendo into seemingly taking the PlayStation strategy with the Switch.
I often used to bring my NES or my SNES around my friend's house after school back in the day as he didn't have either. I was also one of the lucky young lads who had both Sega and Nintendo systems thanks to my generous parents. I'm glad I was oblivious to this because to me those days really were Golden.
I hate being an adult sometimes
@NinChocolate They certainly were.
The last year or two of a console are always rough, and when the competition (Sony, with the PSX) makes the leap to 3D games first, that's a big market shift. (Especially in the eternally "Next big thing"-chasing gaming market)
It's easy to forget nowadays with the more incremental visual improvements between console generations, but the leaps in graphical quality from 8-bit to 16-bit and from sprites to (By today's standards, terribly aged, but back then amazing) 3D graphics were quite astonishing...
@Rosalinho Nintendo didn't use the PlayStation strategy with the Switch, all they did was just merge their handheld and home console into one. Nintendo was never fascinated by using disc media either and the only reason they used disc media starting with GameCube was cause the industry force them to.
By merging their two divisions into one with the Switch, they now had a reason to use cartridge/game cards again as using those are more reliable for the handheld nature of the Switch as disc was never a reliable media on the go as evidence by the PSP and portable CD player. Also as game cards evolved with faster speed, more storage, and becomes cheaper to produce, it prompted Nintendo to finally leave disc media in the dusk. Nintendo also did not choose the power spec route for the Switch cause their games were not made with such an expensive requirement in mind.
Also thanks to the rise of digital distribution, that fear of warehouse with too many leftover stocks are a none issue as most games and shovelware nowadays are digital only and some started out as digital release before they got the physical treatment. This is a good strategy as to prevent warehouse overflow and is also the reason why a lot of physical games are going the limited release route with pre-order limits so to not end up like the crash of 83 where warehouse overflow and leftover stocks became an issue.
What compared to the amount of shovelware nowadays?
@Bunkerneath That's some of the old Hiroshi Yamauchi arrogance on display there. At that point, some of Nintendo's management had acquired a certain comfort with things as they were (due to their string of successes), although the late '90s would demonstrate the hubris of their approach. That story would repeat itself in the decades to come.
@electrolite77 makes some fair points, but all those factors cannot excuse the mistakes NCL made, or explain away the decline as it affected Nintendo, specifically. 1994-1996 - a time of maturity and astonishing creativity for 16-bit games - produced many good titles that other platform holders would and do envy.
@MysticX You also had to realize sprite based games are more expensive and time consuming to make than 3D polygonal games. As with 3D polygonal games, game designers does all the design, animations, and CGi work through a software on a PC before wrapping the project for final coding to console whereas with a sprite based 2D or 3D game the game designer had to design everything by hands and then transfer that into pixel counts and then upload it to software on PC to do the rest. If it's a 3D sprite based game, the procedure takes even longer as they had to find ways to upscale, rotate, and transfer that to software then use tricks to manipulate it so to give an allusion of 3D when it got the treatment to console.
This is why 3D games are more difficult to produced for the Sega Saturn compare to the PlayStation as with Saturn 3D games takes the sprite route whereas on PS1 they just use a PC to easily produced a full 3D polygonal game with less hassle. This is also why in some games such as Virtua Fighter 2 there are less characters whereas in games like Tekken had more characters despite both are polygonal games. VF2 had less characters cause Sega knew porting the game to console won't be easy but for Tekken porting it to PS1 is a none issue as the Tekken arcade game used similar hardware to the PS1 that makes the 3D implementation very smooth.
This also explains why 2D wrestling games like WWF Raw and Wrestlefest had a roster of just 13 good looking wrestlers or less whereas later 3D polygonal wrestling games like WCW/nWo: World Tour and WWF No Mercy had like a roster of over 50 ugly wrestlers, they're ugly but you get a lot of them so more contents for your dollars. The changes from sprites to polygons makes all the differences both in time, task, and quality.
The only thing is through the polygonal route games does tend to look ugly whereas if done right sprite based 3D games could be quite fantastic but not every game designer or studio had the time and money to invest in such a feat at the time unlike today where they could easily used Kickstarter to do it.
@electrolite77
All those reasons you give for playstations success are the reasons I say they ruined the games industry, after they came along the industry started to care what games looked like and forgot to concentrate on making them good.
@Serpenterror Re-texturing models has always been a nice graphics shortcut, and back in the time when all game characters looked like they were constructed from shoe-boxes, just slapping a new face and/or outfit texture on a single model and calling it an additional character was easy.
What also (In retrospect) makes the 16-bit to 32-bit leap such a stark contrast is that we went from the apex of sprite-based graphics to the infancy of 3D-graphics, and once you're over the shock of seeing 3D graphics, that's quite a contrast, indeed.
@electrolite77 Yeap but all them strategy only works for them in the console space, it didn't help Sony much in their handheld division. Disc based media doesn't work well on the go which is why the PSP didn't do that well in the long run. This is why Sony made the PS Vita cartridge/game card based as that media works better on the go but going that route also means Sony had to pay a third party company to produced the cartridges as Sony does not produced those themselves unlike their disc manufacture which was done in-house.
With PS Vita not selling well and Sony losing money on the game cards themselves they just out right killed the PS Vita altogether. It's not that Sony doesn't like handhelds, it's just that going the portable route they are basically doing what Nintendo and Sega were doing and that is a risky move to them and makes them lose money.
@Serpenterror What you said about Saturn 3D graphics being sprite based isn't correct. The Saturn does render polygons, but it renders quadrilaterals, not triangles, and this incompatibility with most other 3D mesh systems and the tools that generated them was the cause of developers' difficulties.
@dew12333
That would only really make sense if there were no terrible games before November 1994 (there were) and if there were no good games released after that date (there are thousands).
@Serpenterror
I agree. Sony never really grasped handheld gaming because they didn’t take a lot of those lessons forward. Both their handheld systems were good but grossly mishandled e.g. they tried to make home systems on the go but didn’t give them enough buttons to properly play PS1 games. You had proprietary media and memory Cards. Pitching PSP halfway between PS1 and PS2, then designing Vita halfway between PS2 and PS3, meant development was more expensive than for DS/3DS.
PSP came out in the middle of their worst spell of arrogance and mismanagement. Vita was a brilliant system but they just let it wither on the vine. As a big fan of the system that was hugely annoying. They’re very good at home systems but not handhelds.
@CANOEberry
I’m certainly not looking to make excuses for Nintendos mistakes, or dispute the quality of their own software in the SNES late period. But they totally messed up the move to the generation after that. I guess because they’d eventually seen Sega off by slowly but steadily filling their cartridge systems library with great games hey thought they could do the same again. They were absolutely ripe for getting picked off by Sony.
Nintendo and Sony aspirations were incompatible, but it sure is a trip to imagine a timeline where decided to split hardware profits and a successful Nintendo/Sony machine had been made instead of what we got with a separate PS1 and a later N64.
I can't even sort out the timing and details. Would it have been as 3D focused as the PS1 if it happened? Would Mario 64 be as great if they had started on that platform? Final Fantasy 7 would have landed there and 3rd parties would have swarmed back to a Nintendo (Sony) console. Makes me want to revisit the details of that prototype...
Maybe somebody could make some "what if..." versions of Mario and Zelda and Metroid and FF 7 on that different machine.
@electrolite77 Poor analogy that, like I said they spent time making games look good, if you are saying that games previous to that time looked good then maybe you would be right.
The Super NES dominated the Genesis at the end of the 16-bit war. While Genesis was adding expensive attachments to keep their aging hardware relevant, Nintendo was releasing amazing games on their native console. Donkey Kong Country and Yoshi's Island are beautiful and have stood the test of time.
Nintendo's refusal to move to CDs with the Nintendo 64 cost them a lot of goodwill and third party support. Final Fantasy VII and Metal Gear Solid were both slated to be games for the Nintendo 64, but once it was confirmed that the Nintendo 64 would be cartridge based, Square and Konami looked elsewhere and found the PlayStation. I think there are a lot of great games on the Nintendo 64, though I think as a whole that generation has not aged well, but decisions made by Nintendo there started their decline in the home console space, and it wasn't until the Wii went into the "casual gaming" direction that they recovered. The Switch is the first home console, arguably since the Super Nintendo, that was successful and also focused on gamers once again.
lol ya we were no where close to an industry crash in the 90s. Problems we were facing were largely caused by Nintendo themselves and their 3rd parties. Those cartridge games were expensive and weren't made in large enough qauntity. people complain about 70 dollars today, imagine 90 dollars for Final Fantasy VI in the mid 90's. Granted there were sales and other factors at play.
We also had a lot of new platforms poping up. 32x, Sega CD, Saturn, PSX, Neo Geo, 3DO, Jaguar, N64. It was a bit much and not getting any cheaper.
I think by time Nintendo started to doing the multiple packins I was just waiting for N64 and Playstation to release.
It wasn't this poor software nonsense. That wasn't the problem. As anyone dipping into that library today and discovering games they didn't even know existed.
Fascinating article. Thanks for sharing!
This article end with the notion that a second video game crash would be scrary… the first was a correction to a blown up market.. made some space for innovation in the(european) home computer phere and allowed nintendo in… all good things… imagine what great things a second one could have triggered..
@NotSoCryptic Not just the 3DO but also its successor, the M2.
Significant in that M2, as I recall, was rather heavily promoted but after it was delayed to even beyond the N64 launch, I think is when they had to call it off. Probably the same reason Sega called defeat in the hardware business once Xbox was announced: they don't want to risk being that fourth-place contender.
The hardware I believe ended up being used in a few arcade games, and for banking machines.
@dew12333
Dude. The PS1 and PS2 had the best libraries of their generations.
Tons of amazing games came out for both platforms.
@Bunkerneath The thing in the 90s was that the entry barrier for development was much higher. It was higher risk, for unknown reward.
There really was no way for hobbyists to suddenly decide that they want to make games. Now, you have cross-platform kits like Unity or Unreal that allow bedroom coders to make their own games of any scale, not to mention royalty-free assets. The entry barrier for making games is lower than ever, though success is as questionable as ever.
I love these translated articles!
Pretty interesting! Boy the comments so far are all over the place LOL, so here's my two cents. 1. Nintendo hit arguably its lowest point in the mid 90s as the SNES declined, they attempted a horrible transition from Game Boy to Virtual Boy, etc. N64 has a handful of the best games of all time, but overall its game library is pretty abysmal beyond the top 50 titles. 2. Sega had amazing games on Saturn & Dreamcast, but not enough people bought them and the company was dreadfully mismanaged, hemorrhaging money. 3. PC gaming was (in my opinion) at its best in the late 90s ... but you had to buy an expensive machine to play the good games. 4. So, essentially, I see Playstation as playing a savior role for the industry. Great games; very popular with successful marketing to veteran gamers, noobs and kids. PS1 games weren't great in 1995 (which is the time period this article focuses on), but excitement in the the gaming community was very high ... and by 96-97-98 PS1 was offering classic after classic, in several different genres. I was a Sega-first guy back then, but I loved PS1 (and N64) as well — now I am so thankful for PS1 & PS2's success in hindsight.
@KingMike the M2 I really don't consider. Killed off before it had a chance to make it to market. I don't know about arcade machines but the hardware was sold off for various uses. I wouldn't consider the M2 the result of industry strength, but weakness of the 3do company to make its vision work. Honestly glad it didn't release it would have been a mid gen launch and really would have caused issues for the success of the industry during the ps2 era.
I also consider m2 part of the dreamcast era so not relevant to what was happening to the snes. M2 started becoming a topic around 97 I think.
@OrtadragoonX I agree and I did own a PS2 to play some of them. But overall the approach of making games look better came from Sony's introduction into the market, especially an over use of FMV sequences to show their off their software. Now the industry is split in half, AAA titles with a budget to spend hours and hours putting nostril hairs and tiny details like that into games, whilst the others struggle to survive and often using the strategy of copying old ideas to ensure return. When we really didn't need to go past PS2/Gamecube graphics as they more than gave the additional upgrade from 16bit games.
Don't get me wrong I like the new tech to bring the extra power to keep the industry moving along. but suffice to say I feel Sony pushed consumers to want things to look good which stalled the industry into this slight upgrade in console generations, rather than time I feel would have been better spent innovating the industry.
I know I maybe a bit lonely with my opinion but until I'm controlling a game with my eyes or something then I just think games makers didn't think enough about that, and that was probably cause they were wasting their time drawing nostril hairs again.
@dew12333
You said “ the industry started to care what games looked like and forgot to concentrate on making them good.”
This doesn’t make sense. The industry cared about making games look good before Playstation launched. That’s why we had e.g. Mode 7, extra chips in cartridges, adverts based on how many colours or sprites a system could do or “blast processing”. Many people cared about making good games after Playstation launched and did so. Playstation launching didn’t affect any of these things.
@dew12333
Nah we have to keep advancing visual fidelity and production values. Otherwise what’s the point of having new consoles? Plus the PC side was advancing rapidly back then and consoles had to keep up to stop from becoming obsolete.
With that said, the downside of such high production values is that developers have become risk averse to an insane degree. The last generation where developers really took risks on game design on AAA projects was the 360/PS3 era. And during that era a ton of publishers and developers had to close shop and Sony itself nearly went bankrupt.
Since then, everyone has been playing it way too safe. And that includes Nintendo. There’s very little innovation in the AAA scene because everyone is terrified of having a repeat of the 360/PS3 Gen. For every successful AAA game and series back then you had five other games that killed their publishers.
The good news is that a new generation of game engines are coming online, stuff like UE5 and the latest version of Unity. These engines are optimized to make game development faster and even include tons of pre-made assets in their basic builds to help with that.
Hopefully that will lead to the industry becoming more willing to take risks, since the barrier of entry will become lower and costs on active development will go down from what they are today with current engines.
I'm sure there were a lot of factors to it. As much as I loved Sega, they created many of their own problems. Nintendo arguably should have had the SNES ready sooner since the 16-bit era started without them. By 1994 and 1995, 3D gaming was picking up steam. The game developers knew 3D was the future years prior and it was finally time. The home consoles could not even hope to provide ports. Even 2D arcade games, such as X-Men Children of the Atom, were pushing 2D presentation to a new level. While the home consoles could provide reasonable ports of Street Fighter 2, the new fighting games and other arcade games were quickly becoming more than the Super Nintendo could handle. I think that was a big factor. Once people were exposed to what was possible in the arcades, there was a desire to move forward. Same thing happened before that. Interesting to hear about these industry concerns.
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