My analysis of Saturn's failure

You can spare me the sermon about Nintendo's "genre king" foresight — that's not some mystical Nintendo-only trait. Every company with half a brain tries to build sustainable IP. The real difference is Nintendo's third-party lockdowns in the '80s and early '90s, not some moral superiority in "business discipline." They kneecapped Sega and everyone else through exclusivity deals, period.

And as for Kalinske — the way you describe his strategy like it's a bad thing just shows how little you understand what Sega actually hired him to do. His job was to make Sega competitive in the U.S., and that's exactly what he did. Under him, Sega went from a rounding error to neck-and-neck with Nintendo — something Sega of Japan never came close to replicating before or since.

Those "unsold inventory" numbers you're quoting? They're the direct result of Sega of Japan abandoning the Genesis too early in favor of the Saturn. If you stop supporting the hardware that's still selling, of course retailers send back stock. Kalinske wanted to keep the Genesis alive through '95 — that's literally what could've prevented those losses. But instead, Japan forced the pivot, botched the Saturn launch, and torched all that momentum.

So let's not twist history: the Genesis era was the only time Sega ever stood toe-to-toe with Nintendo, and that happened because of Kalinske's leadership — not in spite of it. If anything, Sega's downfall came from Sega of Japan ignoring the guy who actually figured out how to win in the West.


They stopped supporting the Genesis because Genesis stock wasn't moving, when you have almost 0 orders for software why would you keep supporting that. You don't turn your inventory to scrap when there is demand for it.

Japan forced them because they had revenue problems because only Saturn stock was moving moving, Tom has a lot of credit for getting the Genesis into retail in 91 but by 95 his strategy wasn't working and it was crippling Sega.
 
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love this thread is still going
interesting reads

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Just stop with your silly system war framing. I don't need to compare anything to the PlayStation or N64 releases at the time to find Sega's output in '97 disappointing. It was disappointing compared to what we got on Saturn in the year or year and a half before that! Sega went from putting out games that were cutting edge at the time (VF2, Rally, Virtua Cop...) or unique and innovative like Nights and Panzer Dragoon Zwei to uninspired sequels, lackluster conversions lacking in content and outsourced mediocrities. Their few late Saturn releases in '98 showed that they still had it in them, but there was a very problematic gap in fresh quality titles from them between early '97 and the spring of '98, when PD Saga and Burning Rangers finally came out.

And yeah, if you didn't import anything, a handful of belated PAL releases of '96 hits from Japan and the US were still very much worth playing, but I still remember what that also meant: Instead of having Sega magazines full of new games, we'd be getting early previews, previews based on the import version (or outright import reviews), sometimes yet another preview before the PAL release and then finally the PAL review. Everything was milked to the max because there was a lack of good and truly fresh PAL releases in '97.

The decline in quality output after 1996 was really evident in the Sega Flash demos too

The first 3 volumes were absolutely incredible, you always looked forward to an SSM issue when they had one and pretty much all of my game purchases came from these.

4 and 5 were nowhere near as good.

6 and 7 were just dire, I thought Touring Car and Steep Slope Sliders were crap, yet they appeared on two demos, the only change being one meh footie game for another.


 
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Anyone have a good list of games to play on the Saturn? A list including japanese and American gems?

An excuse to post my top 10 western releases

1. Virtua Fighter 2
2. Sega Rally
3. NiGHTS into Dreams
4. Resident Evil
5. Saturn Bomberman
6. Virtua Cop
7. Tomb Raider
8. Fighting Vipers
9. Virtua Cop 2
10. Panzer Dragoon Zwei
 
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Confused Tom Hanks GIF

Out of all the Saturn games you choose this?

The only other guy I knew at school with a Saturn had it.

For some reason this was the only Saturn game we could get our mates into so we ended up constantly playing this with a multitap.

So yeah I've got a lot of nostalgia for it and it's the series' peak. I paid a lot of money not that long ago to add it to my collection.
 
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You can spare me the sermon about Nintendo's "genre king" foresight — that's not some mystical Nintendo-only trait. Every company with half a brain tries to build sustainable IP. The real difference is Nintendo's third-party lockdowns in the '80s and early '90s, not some moral superiority in "business discipline." They kneecapped Sega and everyone else through exclusivity deals, period.

And as for Kalinske — the way you describe his strategy like it's a bad thing just shows how little you understand what Sega actually hired him to do. His job was to make Sega competitive in the U.S., and that's exactly what he did. Under him, Sega went from a rounding error to neck-and-neck with Nintendo — something Sega of Japan never came close to replicating before or since.

Those "unsold inventory" numbers you're quoting? They're the direct result of Sega of Japan abandoning the Genesis too early in favor of the Saturn. If you stop supporting the hardware that's still selling, of course retailers send back stock. Kalinske wanted to keep the Genesis alive through '95 — that's literally what could've prevented those losses. But instead, Japan forced the pivot, botched the Saturn launch, and torched all that momentum.

So let's not twist history: the Genesis era was the only time Sega ever stood toe-to-toe with Nintendo, and that happened because of Kalinske's leadership — not in spite of it. If anything, Sega's downfall came from Sega of Japan ignoring the guy who actually figured out how to win in the West.



That video isn't entirely accurate though, and I don't know if they read the leaked FY '97 document from a couple years ago, either. I actually like that channel BTW and regularly watch a lot of their content, but yeah there are some points made in that video which I don't feel are accurate.

Some other people ITT have touched on it since your post, but basically what made it seem like SEGA was doing so strongly against Nintendo between '92 and '95 had more to do with the arrangement they made with big box retailers. Big box retailers wanted a certain amount of guaranteed inventory for the holidays, but in return wanted the ability to return all unsold stock following the holiday period. Nintendo wasn't willing to do this and big box retailers couldn't pressure them into doing so due to the success of the NES. SEGA of America was willing to do it and certain big box retailers used the arrangement as leverage to carry Genesis or to not carry it at all.

So basically every holiday season there'd be a huge surge in Genesis hardware sales due to the retailers getting their stock, and that'd take the sold-in numbers which SEGA of America then reported on or whatever. However, all unsold inventory'd be bought back by SEGA of America afterwards, so they'd suddenly take big losses due to the buybacks. That went on for a few years. Now, I'd say for certain SEGA of America very likely sold through most of the supplied inventory during '91, '92 and '93 because those were big years for Sonic releases, and they had Genesis & Sonic bundles as well. They probably sold through a good amount of the holiday inventory for '94 as well again due to Sonic. However, that dried up fast in 1995, and I'd assume that SNES sales were stronger than Genesis ones in America outside of the holiday period from the 1992 - 1994 period. Some of the software sales charts we have from that era would suggest as such.

Of course the main reason SEGA of America were able to do things this way was in part because of unconsolidated accounting. There's no way SEGA of Japan would've agreed to that type of big box retailer strategy if they knew the losses SOA would incur on the buybacks. Now all of that said, I do agree that Nintendo's 3P contracts made getting 3P support on SEGA hardware harder until sometime in the early 1990s, tho I'm not sure if that was necessarily due to Nintendo of Japan. I say that because in Japan, the PC-Engine did very well in sales up to the Super Famicom's release, and got decent 3P support as well, such as Namco, under the Namco label, NOT Namcot. As well, it was NOA who were found guilty of antitrust in the early 1990s, which is why they had to issue rebates to customers (tho in a way this just funneled them right back to NESes anyway).

So I'll never deny that Nintendo's ironclad licensing practices with 3P inhibited 3P support on Master System and even Genesis early on. However, Japanese 3P like Namco, Hudson Soft (who also helped make the PC-Engine, TBF), Victor Musical Industries, Irem, Pack-in-Video, Taito, Data East etc. ALL released games for PC-Engine in Japan, and Western 3P like EA took open arms to the Genesis from its earliest days. So I'm just not sure how much of SEGA's struggles in Japan or the West for 3P support can be directly blamed on Nintendo's policies, because some of those policies might be exaggerated similar in ways to certain urban myths.


The OST at least is flippin' fantastic though, especially this specific track:



A very peak jungle track; the drum programming on it is absolutely insanely good stuff.
 
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That video isn't entirely accurate though, and I don't know if they read the leaked FY '97 document from a couple years ago, either. I actually like that channel BTW and regularly watch a lot of their content, but yeah there are some points made in that video which I don't feel are accurate.

Some other people ITT have touched on it since your post, but basically what made it seem like SEGA was doing so strongly against Nintendo between '92 and '95 had more to do with the arrangement they made with big box retailers. Big box retailers wanted a certain amount of guaranteed inventory for the holidays, but in return wanted the ability to return all unsold stock following the holiday period. Nintendo wasn't willing to do this and big box retailers couldn't pressure them into doing so due to the success of the NES. SEGA of America was willing to do it and certain big box retailers used the arrangement as leverage to carry Genesis or to not carry it at all.

So basically every holiday season there'd be a huge surge in Genesis hardware sales due to the retailers getting their stock, and that'd take the sold-in numbers which SEGA of America then reported on or whatever. However, all unsold inventory'd be bought back by SEGA of America afterwards, so they'd suddenly take big losses due to the buybacks. That went on for a few years. Now, I'd say for certain SEGA of America very likely sold through most of the supplied inventory during '91, '92 and '93 because those were big years for Sonic releases, and they had Genesis & Sonic bundles as well. They probably sold through a good amount of the holiday inventory for '94 as well again due to Sonic. However, that dried up fast in 1995, and I'd assume that SNES sales were stronger than Genesis ones in America outside of the holiday period from the 1992 - 1994 period. Some of the software sales charts we have from that era would suggest as such.

Of course the main reason SEGA of America were able to do things this way was in part because of unconsolidated accounting. There's no way SEGA of Japan would've agreed to that type of big box retailer strategy if they knew the losses SOA would incur on the buybacks. Now all of that said, I do agree that Nintendo's 3P contracts made getting 3P support on SEGA hardware harder until sometime in the early 1990s, tho I'm not sure if that was necessarily due to Nintendo of Japan. I say that because in Japan, the PC-Engine did very well in sales up to the Super Famicom's release, and got decent 3P support as well, such as Namco, under the Namco label, NOT Namcot. As well, it was NOA who were found guilty of antitrust in the early 1990s, which is why they had to issue rebates to customers (tho in a way this just funneled them right back to NESes anyway).

So I'll never deny that Nintendo's ironclad licensing practices with 3P inhibited 3P support on Master System and even Genesis early on. However, Japanese 3P like Namco, Hudson Soft (who also helped make the PC-Engine, TBF), Victor Musical Industries, Irem, Pack-in-Video, Taito, Data East etc. ALL released games for PC-Engine in Japan, and Western 3P like EA took open arms to the Genesis from its earliest days. So I'm just not sure how much of SEGA's struggles in Japan or the West for 3P support can be directly blamed on Nintendo's policies, because some of those policies might be exaggerated similar in ways to certain urban myths.
Funny thing is, I already brought up the FY '97 doc — and it's no coincidence things went south for Sega right when they shifted to the Saturn in '95. It's like people are blind to the obvious cause-and-effect there.

As for the "unconsolidated accounting" point and how Sega of Japan supposedly would've never agreed to those retail deals — yeah, that's exactly why Sega never stayed on top. You don't get to compete with Nintendo by playing small and safe. Tom understood that. He played the game the way it had to be played in the U.S. market — aggressive, flexible, and willing to take risks — and it worked until Sega of Japan undercut him and SoA.

And on the third-party issue, let's not pretend it was easy for Sega to get outside support early on. There are plenty of documented cases where Sega literally had to port third-party games themselves just to get them on the Genesis. Nintendo's stranglehold absolutely limited what third-parties could do in that era — that's not myth, that's history.
 
Funny thing is, I already brought up the FY '97 doc — and it's no coincidence things went south for Sega right when they shifted to the Saturn in '95. It's like people are blind to the obvious cause-and-effect there.

As for the "unconsolidated accounting" point and how Sega of Japan supposedly would've never agreed to those retail deals — yeah, that's exactly why Sega never stayed on top. You don't get to compete with Nintendo by playing small and safe. Tom understood that. He played the game the way it had to be played in the U.S. market — aggressive, flexible, and willing to take risks — and it worked until Sega of Japan undercut him and SoA.

And on the third-party issue, let's not pretend it was easy for Sega to get outside support early on. There are plenty of documented cases where Sega literally had to port third-party games themselves just to get them on the Genesis. Nintendo's stranglehold absolutely limited what third-parties could do in that era — that's not myth, that's history.

But that's exactly it: Nintendo, to my knowledge, DIDN'T do those retail deals and still managed to build a massive market share between NES and then SNES. Now I get with SNES they'd be going off reputation of the NES and what-not, but with NES the furthest I think Nintendo did to appease retailers was R.O.B, and that was short-lived. If it helped them avoid a cycle of big sales followed by big losses due to buybacks, then I'd say Nintendo went with the better approach.

Maybe SEGA should've done something similar to R.O.B to get big-box retailers to trust the SEGA brand vs. agree to that buyback structure. Because for a company like SEGA, it just was never going to be sustainable. As for the masses of unsold stock being due to shifting towards the Saturn...I don't really buy that. The 16-bit market on the whole dropped very hard in 1995, you can find some reports at the time talking about the decline. At least, it was that way in America. And AFAIK, Nintendo hadn't shifted to N64 in '95 so why would they have seen a drop for SNES sales that year unless they were affected by a market-wide decline?

I'll agree that the inventory issues with SEGA at and after that point were in part due to them shifting to Saturn, plus of course SEGA of Japan cancelling all 16-bit hardware in favor of Saturn that same year. Those play big parts. But I don't think that can really explain the 32X inventory issue; that peripheral simply saw a massive decline in interest shortly after '95 rolled in. SOA could've kept pushing it and sales would've still been bad.

But then you look at Saturn software sales of various 1P titles through CY '96 as seen in that document, and you'll see what I'm really talking about. Tons of 1P games just weren't moving or weren't moving at the rate SOA anticipated. Even titles like SEGA Rally underperformed compared to what they expected, as you can see in the stock produced vs. units ordered by retailers.
 
But that's exactly it: Nintendo, to my knowledge, DIDN'T do those retail deals and still managed to build a massive market share between NES and then SNES. Now I get with SNES they'd be going off reputation of the NES and what-not, but with NES the furthest I think Nintendo did to appease retailers was R.O.B, and that was short-lived. If it helped them avoid a cycle of big sales followed by big losses due to buybacks, then I'd say Nintendo went with the better approach.

Maybe SEGA should've done something similar to R.O.B to get big-box retailers to trust the SEGA brand vs. agree to that buyback structure. Because for a company like SEGA, it just was never going to be sustainable. As for the masses of unsold stock being due to shifting towards the Saturn...I don't really buy that. The 16-bit market on the whole dropped very hard in 1995, you can find some reports at the time talking about the decline. At least, it was that way in America. And AFAIK, Nintendo hadn't shifted to N64 in '95 so why would they have seen a drop for SNES sales that year unless they were affected by a market-wide decline?

I'll agree that the inventory issues with SEGA at and after that point were in part due to them shifting to Saturn, plus of course SEGA of Japan cancelling all 16-bit hardware in favor of Saturn that same year. Those play big parts. But I don't think that can really explain the 32X inventory issue; that peripheral simply saw a massive decline in interest shortly after '95 rolled in. SOA could've kept pushing it and sales would've still been bad.

But then you look at Saturn software sales of various 1P titles through CY '96 as seen in that document, and you'll see what I'm really talking about. Tons of 1P games just weren't moving or weren't moving at the rate SOA anticipated. Even titles like SEGA Rally underperformed compared to what they expected, as you can see in the stock produced vs. units ordered by retailers.
Yeah, I'm not even sure Nintendo didn't have to agree to retail buybacks at some level — that's just how the U.S. market operated. Big-box retailers had all the leverage back then. But either way, Sega of America had to play ball if they wanted shelf space next to Nintendo. The alternative was exactly what happened in Japan: no market presence. So yeah, maybe it wasn't ideal long-term, but it was the only way to compete short-term, and it worked — until Japan pulled the plug.

And I keep seeing people say "the 16-bit market collapsed in '95" like it just magically happened. Come on — that's the year Sega ditched the Genesis for the Saturn. Of course Genesis sales tanked. Meanwhile, Nintendo kept supporting the SNES well into the N64 era — that's the difference. Sega chose to stop selling what was still viable, and it bit them.

Same thing with the 32X. You can't abandon a product six months in and then point at low sales as proof it failed on its own. Sega made it irrelevant overnight.

As for Saturn's first-party titles, yeah, a lot of them were technically great — but they didn't fit the Western market at all. Sega's U.S. success with the Genesis came from understanding what Americans wanted — sports, arcade-style action, edgier branding. The Saturn lineup was too niche and too Japan-focused. Those "losses" weren't proof Tom's strategy failed — they were proof Sega of Japan didn't understand their biggest market.

Also, the Genesis decline didn't just magically start in '95 — you can trace it back to early '94, maybe even late '93. Sega of Japan had already started redirecting resources to Saturn development by then to prep for its Japanese launch later in '94. That meant fewer in-house Genesis projects, less marketing, and less support from Japan overall. The slowdown was inevitable once that shift happened.
 
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