The Top 10 Ways Sega Was Ahead of Its Time All Along

A few months ago, I asked the Top 10 List board to help me brainstorm examples of gaming hardware that was way ahead of its time. The history of the video game industry is rife with examples of ideas and technologies that failed the first time they were attempted, but went on to become incredibly significant. Long before the Oculus Rift and Project Morpheus started to make virtual reality a, well, reality, the failed Nintendo Virtual Boy was trying to do the same thing. More recently, the idea of a console that only plays downloadable games was laughable; the PSP Go was an unmitigated flop. Now, a mere four years after it was discontinued, online stores for the major consoles do as much business as their disc-based counterparts, and a vibrant (if casual) gaming culture has emerged on smartphones that depend on downloadables alone. In a business as competitive as the video game industry, there will always be companies rushing to try the next big thing, even before the technology is ready for the big time. No revolutionary new feature succeeds the first time.

As a result of that initial discussion, two lists have emerged already. The first, David Kempe’s (BlueGunstarHero) Top 10 Innovations That Intellivision Brought To Console Gaming, covered how the Intellivison, a console from toymaker Mattel released in 1980, introduced several features that would go on to become standard (or at least common), like digital distribution, professional sports licenses, and voice control. The second list, my own Top 10 Ways Handheld Consoles Led To Smartphones, covered several standard smartphone features that were initially seen in the mobile device market on a handheld console.

A third discovery emerged out of that discussion, however. Although every console manufacturer has some failed ideas that would eventually find success on other devices, one seems to have more than its fair share: Sega. Founded in 1940 as a slot machine company, Sega made its fortune as one of the first movers in the arcade industry. When Atari and Nintendo helped shift the focus of the gaming industry from arcades to home consoles, Sega followed shortly thereafter. Atari was in steep decline when the NES came out, meaning that Nintendo had no true rival in the home gaming market until Sega’s appearance on the scene. Their first console, the Sega Master System, reached popularity abroad but never gained a foothold in the United States. Their second, however, the Sega Genesis ushered in the first console war. While the device did not outsell its direct competitor, the Super Nintendo, it made the biggest splash of any non-Nintendo console yet, and would remain the best-selling non-Nintendo console ever until the arrival of the PlayStation in 1994.

Sega followed up the Genesis with two consoles: a portable console to compete with the Game Boy, the Game Gear, and a new home console to compete with the Nintendo 64 (which would not arrive for two years) and a new challenger, the Sony PlayStation. Both these and Sega’s final systems, the Sega Nomad and the Sega Dreamcast, were badly outsold by their direct competitors, leaving Sega to exit the console market and focus on game development. Yet despite this eventual failure, the years of Sega’s participation in the console industry were filled with ideas that were years ahead of their time. We’ll discuss what ultimately doomed Sega in the conclusion of this list, but had the cards landed differently, it is entirely possible that, as the first mover on many new features, Sega could have become the dominant force in modern console gaming.

To call something ‘ahead of its time’ is often something of a back-handed compliment. On the one hand, it praises whatever it was about the work that would go on to become significant. On the other hand, however, it’s difficult for something to be ‘ahead of its time’ while also being successful; if the work was successful, it would usher in its own time. Thus is the plight of Sega; in their time, Sega developed numerous features that would become the foundations of others’ success, but by virtue of being so ahead of their time, Sega failed to fully capitalize on the success of any of them.

Note that no claim is made that Sega was the first to develop any of these features; this list solely claims that Sega used them before they become popular in the industry as a whole, and that Sega’s usage of them itself did not reach significant popularity. Significant credit goes to segagamer, MaxCHEATER64, MJackMagee, FreshFeeling, Sanctuary_Remix, Spoofer, BlueGunstarHero, and and Truck_1_0_1_ for contributing some of the items on this list.

#10: 3D Gaming (Master System)

In 2011, Nintendo shook up the handheld market with the release of the Nintendo 3DS. Modeled after the Nintendo DS, the 3DS featured a top screen that could deliver a stereoscopic 3D view without the use of any special glasses or equipment. While I, personally, originally considered it a silly gimmick, I have to admit the 3D effect of the Nintendo 3DS is actually pretty impressive.

The 3DS isn’t the first stereoscopic 3D game device, but rather just the first one to make it big. The history of the gaming industry is filled with attempts to get 3D right, but leading the charge from the beginning was Sega. In 1982, Sega released Subroc-3D, an arcade game that featured a mounted pair of “binoculars” that the player looked through during gameplay. Later, Sega would try their hand at stereoscopic 3D gaming in the home market as well, putting out the Sega 3-D Glasses peripheral for the Sega Master System. The peripheral was a modest success, but like many Sega peripherals, it was limited by the lack of titles released taking advantage of the tool. In 1991, Sega laid the groundwork to jump from 3D gaming to virtual reality, but its device, the Sega VR attachment for the Genesis, never actually made it to market. Sega never again attempted a stereoscopic 3D attachment for a handheld or home console, but that doesn’t mean it was completely done with the market yet. In 2011, Sega put out one last stereoscopic 3D “device”, a Japanese-only arcade game called Let’s Go Island 3D. Meanwhile, outside the 3DS (and one could argue over whether its 3D feature is actually responsible for its success), true stereoscopic 3D gaming is still struggling to find an audience.

 

#9: Video (GameGear)

In the last couple console generations, a trend has emerged where it’s no longer sufficient for a game console to just be a game console. Sure, the Xbox One is criticized for trying to be too much of a jack of all trades instead of focusing on gaming first, but let’s not forget we’re only a few years removed from the Wii facing major criticisms for not playing DVDs or Netflix. Game consoles are now also video players, from the 3DS’s Netflix channel to the PlayStation 4’s entire ‘TV and Movies’ menu, dating back to the PSP’s push for UMD movies a decade ago.

Long before streaming video was added to every modern gaming console, however, Sega tried to get into video streaming on its own. Its way was incredibly conventional, however. Many TVs still operated on TV tuners to get VHF and UHF broadcasts of network television. Why not attach one to a portable console? That’s exactly what Sega did with its TV tuner attachment for the Game Gear. With that attachment, the Game Gear became a portable color television. And unlike many of Sega’s ill-fated peripherals, the TV tuner attachment didn’t rely on support from game developers because it already had the support from a far more powerful group: television. Ultimately, the TV tuner failed to truly boost the Game Gear’s fortunes primarily because it was prohibitively expensive, priced at over $100. This limited the device’s ability to sell systems, which in turn, limited the impact that the device itself could have. Nonetheless, however, its development and release showed Sega’s willingness to think outside the box and try to identify technologies that would be successful in the future.

#8: Game Subscriptions (Genesis)

Today, PlayStation Plus and Xbox Live Gold are two of the best deals around (well, if you take advantage of them, that is). If you happen to have all three current PlayStation consoles, a one-year PlayStation Plus membership that runs you roughly $50 can deliver you an entire year’s worth of gaming with no need to buy or rent any additional games. You may have to wait some time for new releases, but that’s a small price to pay to receive hundreds of dollars of games per year for a fraction of the cost. In fact, PlayStation Plus has largely mimicked the way in which the entertainment industry in general has shifted to a subscription model, with services like Spotify, Netflix, and GameFly replacing iTunes, Blockbuster, and… well, Blockbuster.

Sega, however, pioneered that subscription model 20 years ago. Released in 1993, Sega Channel was a subscription service that delivered games to players over the coaxial cable that they used for their television (and heck, while we’re giving Sega credit for every major gaming innovation, we might as well go ahead and call this a prelude to cable internet itself). Doing so granted access to a significant library of games (rotating in their availability) for only a monthly cost. Ultimately, Sega Channel failed to take off in part because the subscription fee was considered rather high ($25/month adjusted for inflation) for the service delivered. After Sega Channel, it would be over a decade before another similar subscription service was seen supplied to Sony and Microsoft’s consoles.

#7: Downloadable Games (Genesis)

Much has been made over the past couple years of the rise of downloadable games as a real alternative to traditional disc-based games. While downloadable games have some natural drawbacks such as the inability to resell, they also have some major benefits: linking them to an account means never having to worry about losing or damaging the original disc, there’s no more waiting for games to ship or going to stores to pick them up manually, and saved data can be synced with the downloadable itself to remove any risk of data loss. Given these benefits, it shouldn’t be surprising that many other industries have made the shift to downloadables as well, first seen with iTunes running CDs out of town.

The above entry described Sega Channel’s role in pioneering subscription-based gaming, but it also played a major role in introducing downloadable games as well. The games received by the subscription to Sega Channel were downloaded over the home’s cable service, a predecessor to modern video game downloads (which, oftentimes, are often modern cable internet services). After Sega Channel closed in 1998, however, it would be several years before downloadable games were seen in a big way again. Cell phones slowly started to reintroduce the idea throughout the early 2000s, but it wasn’t until the advent of smartphones, the explosion of broadband internet, and the decline in prices for both bandwidth and storage space that downloadables began to present a real viable option. Sega Channel worked in and of itself, but the rest of the technology involved in the system had to catch up before it could form a truly viable service; Sega was just several years early to the party.

#6: Operating System (Dreamcast)

Throughout the first several console generations, turning on a console launched the screen directly into whatever game was plugged in. With the seventh generation, however, it became standard that every console should actually run an operating system that would allow the user to adjust settings or launch different apps instead of jumping straight into the game. This was a necessary development because it was around the seventh generation that truly multi-function consoles became the norm.

The original Xbox is often credited with initiating this development with Microsoft bringing its operating system savvy to the development of the system as a multi-function media device. However, Sega was again an early mover in this realm. The Sega Dreamcast, the first console of the sixth generation launched in 1998, featured its own operating system that could be used to launch games, browse the Internet, or many other functions. At the time of its release, it competed with the Nintendo 64 and PlayStation, neither of which had any features resembling these functions at all. In fact, the only other sixth generation console to feature an operating system was the Xbox. The Dreamcast and Xbox never competed head-to-head, and with good reason: Microsoft actually authored the Dreamcast’s operating system, a modified version of Windows CE. In fact, it is reasonable to speculate that had the Dreamcast been a commercial success, Microsoft likely would have never entered the console industry independently and instead would have continued its collaboration and support for Sega’s line. Instead, the Xbox became something of a spiritual successor to the Dreamcast, picking up sequels to Dreamcast hits like Shenmue and Jet Set Radio.

#5: CD-Based Games (Sega CD)

Just as downloadable games are putting pressure on disc-based games, disc-based games once took control of the industry in force, wresting control from traditional cartridges. The PlayStation was the first commercially success system to strictly use CDs, leading to its monumental success in the fifth console generation. Its success led to the entire console industry shifting to discs for the sixth generation. Initially, Sony had intended to collaborate with Nintendo on developing a disc-based gaming system, a device that was to be called the SNES-CD, but conflicts over licensing agreements led to Sony withdrawing and developing its own console.

The phrase ‘SNES-CD’ likely sounds strange because not only did the SNES not support CDs, its successor, the Nintendo 64, didn’t either. Nintendo didn’t embrace discs until the GameCube, and it didn’t embrace traditional discs until the Wii. Why, then, was Nintendo looking into CDs as early as the SNES? The answer is Sega, and specifically the Sega CD. The Sega CD was an attachment for the Sega Genesis that supported CD-based games, audio CDs, and CD+Gs, a predecessor to modern DVDs. Like many Sega peripherals, it met modest success, but it was held back by the same two things that seem to threaten all Sega peripherals: a high price ($300 on top of the Genesis’s $200 price, an inflation-adjusted total of $900 for the entire system) and lack of compatible games. The Sega CD suffered from the recurrent chicken-and-egg problem: players didn’t buy the device because developers didn’t develop for the device because players didn’t buy the device because developers… and so on. Despite its lack of success, however, the Sega CD demonstrated disc-based gaming was the future, scaring Nintendo into trying to compete, inadvertently jump-starting Sony’s entrance and dominance of the industry.

#4: 32-Bit Gaming (32X)

One way in which to characterize the march of console development history is in terms of bits. I won’t get into what a bit is and why it matters here because for right now, all you need to understand is that more bits means more powerful. A console that uses more bits in processing can do more complex things. The NES was an 8-bit console, the SNES was a 16-bit console, and the Nintendo 64 derived its name from being a 64-bit console. Generations are often named after the number of bits used by most consoles in that generation; when someone says “8-bit game”, they are not necessarily referring to a game that uses 8 bits, but rather one that uses the same style seen in the 8-bit generation.

The number of bits used by a console represented a bit of an arms race, with each generation surpassing the previous. The Sega Genesis and SNES were both 16-bit consoles, but Sega wanted to be the first mover in 32-bit gaming. Rather than releasing a new console, they released an add-on for the Genesis, similar to the Sega CD. The 32X was released in 1994, the first notable 32-bit home console. The 32X was never a commercial success, reported as selling under a million units (compared to almost 40 million Genesises). Two of the reasons we’ve heard before: the add-on was expensive and was not heavily supported by third-party developers, limiting the demand for it. The 32X also flopped due to poor market timing; by the time of its release, 64-bit gaming was already on the horizon with the Nintendo 64 (although the PlayStation, a 32-bit console, still won the next console generation).

#3: Portable Ports (GameGear)

A couple weeks ago, Nintendo announced the New 3DS, which will receive a port of the Wii hit Xenoblade Chronicles. The 3DS previously had received ports of other console classics, like The Legend of Zelda: Ocarina of Time, Tales of the Abyss, and Metal Gear Solid 3. The Nintendo DS and Game Boy Advance had large libraries of ports and remakes as well .Sony gets in on the portable ports action, too: Persona 3 Portable and Person 4 Golden are among the most popular PSP-family games, and Tactic Ogre and Final Fantasy Tactics for PSP gave the turn-based strategy genre a bit of a modern resurgence. The dawn of smartphones has exacerbated this trend even further, as games like Grand Theft Auto: San Andreas hitting the mobile platform.

In most cases, these ports come several years after the original games because it takes quite a long time for handheld consoles to catch up in technology to their home console cousins. Sega, however, wanted to close this loop a bit, and did so by constructing their Game Gear handheld out of much of the same hardware as the Sega Master System. A simple converter, much cheaper than many of Sega’s other peripherals, allowed the entire Master System library to be played on the Game Gear, and the system supported titles of its own as well. Although the converter was affordable, the mere act of having to purchase one hampered the Game Gear’s viability as a “portable” Master System, and ultimately the system never really took off. However, the idea demonstrated how portable ports could bring established libraries to new handheld consoles.

#2: Backwards Compatibility (Genesis)

One error we have come back to again and again in this list is what I call the chicken-and-egg problem of game development. Gamers won’t buy a system or peripheral that doesn’t have good games, and developers won’t develop for a system that no one is buying. With this dynamic, how can a new console ever succeed? One way is to leverage past games as a foundation for new consoles. The Game Gear playing the Master System’s library is one example of this; even if the Game Gear lacked a library on its own, it benefited from the Master System’s library. Another way to go about this, though, is through backwards compatibility. A console that plays old games as well as new is a major selling point for gamers. Those who own the old console can view it as a new system that still plays their existing library. Those who skipped the old console can see the new as a way of playing those games they missed while also staying up to date. For these reasons, backwards compatibility was nearly standard in the seventh generation before unfortunately dropping off again for the eighth (which is, in my opinion, part of the reason the eighth generation has struggled to get off the ground).

Backwards compatibility may have seemingly burst onto the scene with the Wii, but it was Sega that pioneered the idea not only with its Game Gear, but also with its Genesis. The Genesis came with the same processor used in the Master System as well as the same physical cartridge design, meaning that any Master System game could be simply plugged into the Genesis. Given that the Genesis was Sega’s most successful console, it is not unreasonable to speculate that backwards compatibility was a major selling point.

#1: Online Console Gaming (Dreamcast)

This week marks the release of Destiny, arguably the most anticipated title of the eighth generation. Destiny has the potential to be the culmination of online gaming. On the one hand, Destiny is much like an MMO, the genre that is entirely reliant on online gameplay for its appeal. On the other, Destiny is a first-person shooter, arguably the most popular genre over the past twenty years and one that derives much of its appeal from its online head-to-head gameplay. In Destiny, Bungie combines two genres that have each become successful largely because of the proliferation of online gaming.

While online gaming has been around for decades, it largely was confined to PC gaming until the seventh console generation brought it to the masses. The Xbox in the sixth generation provided some online functionality as well, but Sega was the first company to provide a home console with real online gaming functionality. Two of the Dreamcast’s most popular online titles were Quake III Arena, a first-person shooter, and Phantasy Star Online, an MMORPG, foreshadowing the popularity these two genres would find when online gaming would finally become a standard feature. Sega demonstrated early on a deep appreciation of the importance that online gaming would have in the industry going forward. While this might seem obvious to us now, at the time this demonstrated major forethought: in 2000, fewer than 5% of American households had the kind of broadband internet that would be necessary to facilitate a good online gameplay experience, and only a third had home internet in any form. Sega was extraordinarily ahead of its time with its understanding of the importance that online gaming would take. As with these other developments, however, they were ultimately too ahead of their time. Not enough people had high-speed internet in 2000 to take advantage of the Dreamcast’s online gameplay, and thus, the console’s major selling point would become a complete afterthought. There’s a major impetus in industry to be the first mover in a new area, but in the case of the Dreamcast, it might have been more successful had it been released later rather than earlier.

Conclusion

Honorable Mention: On-Controller Screens (Dreamcast). The Sega Dreamcast pioneered another new feature that had not yet been seen in the console industry: a screen placed directly on the controller. The device, called a Visual Memory Unit (VMU), was a memory card that also contained a screen and six buttons. I leave this innovation off the main list for two reasons. First, screens on the controller have not yet been shown to actually be a good thing (sorry, Wii U). Second, the VMU in the Dreamcast was ultimately much more than a simple screen on the controller; it was also a standalone handheld console complete with speaker, a memory card with built-in communication features, and even a couple PDA features. Aside from, again, the Wii U’s controller, none of these features have been seen again in a significant way.

Honorable Mention: Motion Gaming (Sega Activator). Motion gaming hit its stride with the success of the Nintendo Wii, but Sega had attempted motion gaming with the Sega Activator, a large, octagonal floor pad. The Activator was a peripheral for the popular Sega Genesis, and several series, including Mortal Kombat and Street Fighter, released games that used it. Its high price, however, largely doomed it. I leave the Sega Activator off this list for two reasons. First, Sega is not as unique in their early attempts at motion gaming as the other technologies mentioned here. Nearly every console and manufacture attempted motion gaming at some point during their history, from Atari’s Mindlink to the DDR pad for PlayStation. Second, like the screen on the controller, I have yet to be convinced that motion gaming is actually important in the industry. It’s true that the Wii had success with it and spawned imitators in the Xbox Kinect and PlayStation Move, but at present, nothing seems to suggest motion control will remain a foundational piece of the industry.

If Sega was so far ahead of their time with so many of these technologies, how did they become the highest-profile console manufacturer to exit the industry altogether? Personally, I speculate three reasons. The first reason explains why these ahead-of-their-time ideas failed to sufficiently bolster the company’s actual prospects. The second and third reasons, in turn, explain why the company ultimately failed.

The first problem with these features is that over half of them are optional add-ons for Sega’s other consoles. The SegaScope 3D, GameGear TV tuner, Sega CD, Sega 32X, Master System Converter, and Power Base Converter were all separate attachments. In the history of the gaming industry, optional attachments have historically failed to become major selling points because developers typically want to develop for the largest audience possible. Restricting your audience not only to one console, but to just a subset of one console, is not a smart business move unless you have a killer app (that is, a game that will get people to buy the add-on in the first place). With few exceptions, most add-ons lack a killer app, and thus people never buy them in the first place, further discouraging developers from developing for the add-on.

It isn’t a coincidence that motion gaming did not become a major player in the industry until a console, the Nintendo Wii, made it a foundational feature of their controller. We can debate why the Wii remained successful when Sony and Microsoft put out competitors, but in my opinion the reason is the same: the Wii remained the only console for which developers knew every player had access to motion controls, and so it remained the only one for which development of motion controls was prudent. In my opinion, this is the reason why Microsoft has been so reluctant to make the Kinect optional; not because it is truly as necessary to the infrastructure of the system as they claim, but rather because they recognize that only by making it mandatory will it ever be utilized to its full potential. Of course, despite making it mandatory, Microsoft has still managed to lay an egg this generation, but we’ll touch on why later.

That only covers six of the features on this list, however. What about the DreamCast’s online console gaming? What about its operating system? Online gaming represents the same chicken-and-egg problem as peripherals; unless people are already playing online, there’s little incentive for a new player to play online. The console’s operating system, while an ahead-of-its-time feature, was not on its own a reason to buy the system. What about the Genesis’s game subscriptions and downloadables? The Sega Channel was never affordable enough to gain popularity, requiring a $25 setup and $15 monthly charge for limiting offerings. It and the downloadable games were also poorly timed, arriving right as Sega announced it was discontinuing the Genesis and its add-ons to focus on the Sega Saturn. Thus, these other four features never had an opportunity to significantly bolster Sega’s fortunes.

But why didn’t the later consoles released by Sega capitalize on the Genesis’s success? For that, we need to take a look at Nintendo’s playbook to understand not only how Nintendo helped drive Sega out of the industry, but also how Nintendo has maintained such incredible longevity in a rather transient industry. Nintendo has always built itself on two major selling points: affordability and good games. Embedded in this is an understanding that gaming is a hobby, and thus game consoles need to be affordable. They also have always understood that games sell consoles, not the other way around; for a console to succeed, it needs games so good that people will buy the console just to play them. The two reasons that Sega floundered in the industry were that it could not compete on these two counts.

With the Sega Genesis, Sega mimicked these same priorities. The console was affordable ($346 at release adjusted for inflation, the cheapest home console ever released at the time) and the game library was excellent. The Sega Saturn? Not so much. At $595 on release adjusted for inflation, the Sega Saturn was the most-expensive console ever released by one of the four major developers. The high price was because of the complex, advanced hardware; the console was by far the most powerful ever made at the time by one of the big four, putting its competitors – the PlayStation and the Nintendo 64 – to shame. Unfortunately, that complexity worked against it; developing for the console was a chore. It provided a few excellent games, such as Nights into Dreams and the Panzer Dragoon series, but ultimately its library could not compete. The new PlayStation benefited from massive third-party support thanks to a relatively easy development process, and the Nintendo 64 succeeded largely on its affordability (the cheapest console ever made upon release, adjusted for inflation) and its strong first-party developers.

Sega tried to return to the Nintendo formula with the Dreamcast, which remains today the second-most affordable console ever released at a mere $200 on release, the same price as the Nintendo 64 released three years earlier despite massively superior hardware. The console cost $272 adjusted for inflation, undercutting the Nintendo 64’s $289 and barely losing to the Nintendo GameCube’s $259 for the title of most affordable console of all time. Sega also tried to regain market share by being the first mover in the sixth generation, beating Sony by a year and Nintendo by two. However, the other side of the formula still doomed them; perhaps still reeling from the failure of the Sega Saturn or perhaps enamored with the success they found with the PlayStation, third-party developers never supported the Dreamcast significantly. Without strong games in its library, the other features were relatively irrelevant. Despite an adoring fanbase, the Dreamcast was discontinued before Nintendo and Microsoft even released their sixth-generation consoles. In a final twist of irony, the Dreamcast’s early release may have even doomed it; the sixth console generation was the first generation to see significant multiplatform releases, and had the Dreamcast been released later, it might have received the multiplatform treatment more often alongside the PlayStation 2 and Xbox, bolstering its game library and allowing its other features to drive sales.

So, to briefly summarize, despite being ahead of the game on many features, Sega’s ultimate demise in the console market can be owed to the optional nature of many of their add-ons and the prototypical blunders of their later consoles. Over and over in the history of the gaming industry, we have seen expensive, powerful consoles outsold by more affordable weaker consoles. Although it mounted a comeback, the PlayStation 3’s initial $567 (adjusted for inflation) sticker nearly priced it out of the market compared to $348 for the Xbox 360 and $284 for the Nintendo Wii. The same phenomenon can be seen today; the Xbox One’s $500 price tag is considered too high for many.

Since exiting the console market, Sega has gone on to a decent career as a game developer and publisher. Although they have had some massive flops – for example, almost every Sonic the Hedgehog game released since 1994 – they have also had several quality releases, such as NiGHTS: Journey of Dreams for the Wii, Valkyria Chronicles for the PlayStation 3, and the Yakuza series across three generations of consoles. Still, given their strength in the 1990s and the foresight of many of their ideas, the company was likely a few small moves away from becoming the dominant face of gaming.

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