A television crew from Movietime spent part of an evening in Manhattan in August 1989 filming a party thrown for a black plastic box. David Rosen, who had co-founded Sega, talked to camera about the power of the machine. A New York property developer called Donald Trump turned up and shook his hand. The box was the Sega Genesis: a Motorola 68000 clocked at roughly 7.6 MHz, $189 with Altered Beast in the packaging, on sale from 14 August 1989 in precisely two cities. New York and Los Angeles. That was the entire American launch.
Sega had fewer than fifty employees in the United States at the time. Nintendo had the country.
What Sega actually put in the box on 14 August 1989
The Genesis was the North American version of the Mega Drive, which had gone on sale in Japan on 29 October 1988 at ¥21,000. What arrived in those two American test cities ten months later was, on paper, the fastest thing a child could plug into a television set:
- CPU: Motorola 68000 at approximately 7.6 MHz, with a Zilog Z80 at 3.58 MHz handling sound and doubling as the Master System’s processor for backwards compatibility
- RAM: 64KB work RAM, 64KB video RAM, 8KB audio RAM
- Video: Yamaha YM7101 VDP, 61 colours on screen from a 512-colour palette
- Sound: Yamaha YM2612 FM synthesiser plus a Texas Instruments SN76489 PSG
- Launch price: $189 (US, 1989), bundled with Altered Beast
- Launch line-up: Altered Beast, Space Harrier II, Last Battle, Super Thunder Blade, Thunder Force II, Tommy Lasorda Baseball
Set that against what it was fighting. The NES, four years old in America by 1989, ran a Ricoh 2A03 at 1.79 MHz with 2KB of work RAM. The Genesis had a 16/32-bit 68000 running roughly four times faster and thirty-two times the main memory, and it wore the fact on its face: the words 16-BIT moulded into the lid in letters you could read from across a shop floor.
The chip choice alone doesn’t explain it. What made the 68000 the right answer was that Sega already had years of arcade code written for one. The System 16 board, which Sega had been shipping since 1985, ran a 68000 at 10 MHz. Shinobi ran on it. Golden Axe ran on it. Altered Beast, the game sitting in the launch box, ran on it. Sega’s home console was in a real sense its own arcade hardware with the clock pulled down and the budget squeezed, which meant the conversions landing on shop shelves sat far closer to the coin-op originals than anything Nintendo’s 8-bit machine could physically produce. That is the thing Sega’s engineers got right, and it took genuine discipline to get right: they built a console that made the incumbent look old the second you switched it on.
Even the name was a compromise. Sega couldn’t use Mega Drive in America because a storage company called Mega Drive Systems Inc. already held the trademark, so the console became the Genesis instead. The machine that spent the next five years telling America it was the future got its name because a hard-disk manufacturer had first claim on the better word.
Why a faster machine didn’t shift a single American living room
Michael Katz is the man usually credited with the Genesis’s American strategy. He arrived in October 1989, a month after the launch he is remembered for. ‘I arrived one month after Genesis launched (Oct. 1989),’ he told Sega-16 in 2006. ‘The company was small (under 50 people).’
Hayao Nakayama, running Sega from Japan, wanted a million units in six months. Katz recalled being expected to chant ‘Hyakumandai’ (one million) daily. They sold about 500,000.
‘Which I considered damn good,’ Katz said, and he was right, because everything about the American market in late 1989 was working against him. The software library was thin. Nintendo’s grip on shelf space was near-total. Retailers who had heard the 16-bit rumours out of Kyoto were content to sit on their hands until the Super Nintendo turned up in 1991.
And there was a wall Sega simply could not climb with better silicon. ‘We COULD NOT compete with the strength of the Nintendo arcade licenses,’ Katz said. Nintendo had spent the back half of the decade locking up the arcade names American children actually recognised. Sega had a faster 68000 and a catalogue of its own coin-ops that nobody outside an arcade had heard of.
The $1.7 million cheque that made the Genesis look real
Katz’s answer had nothing to do with hardware. He went shopping for famous people instead. ‘So as a defensive move, we decided to get (for awareness) personalities: Montana, Pat Riley, Lasorda, Michael Jackson, Holyfield.’
The Joe Montana deal is the one that mattered. Katz fought Sega’s Japanese management for permission to chase it, outbid Nintendo and handed Montana a cheque for $1.7 million as an advance and guarantee. Over three years the franchise paid Montana $3.5 million in total.
Sit with that number for a second. In 1989, $1.7 million was more than most publishers spent developing several games, and not a penny of it bought a line of code. It bought a name on a box, in a shop, in a country where the customer had never heard of the company selling the console. Which is exactly why it worked. The question an American parent or a Toys R Us buyer was asking in 1989 wasn’t whether the Genesis had a better VDP. It was whether Sega would still exist in 1991. A Joe Montana licence answered that question in a way a clock speed never could.
Worth noting that Tommy Lasorda Baseball was already sitting in the six-game launch line-up before Katz walked through the door, so the celebrity-sports instinct was at least partly in place before he formalised it.
Where ‘Genesis does what Nintendon’t’ actually came from
The Los Angeles office of the New York agency Bozell picked up Sega’s $10 million advertising account in May 1989, three months before the console reached a shop. Their first swings were the sort of thing everybody was making: ‘Genesis Does It All’. ‘Your World Will Never Be the Same’. Perfectly competent, entirely forgettable and they moved nothing.
Then a copywriter suggested a line in an afternoon meeting. Al Nilsen, part of Sega’s marketing operation at the time, described what it was like to see the rival’s name with an apostrophe and a T welded onto the end of it: ‘just so visually exciting.’
Here is what made it dangerous. The American console business had an unwritten rule that you did not name your competitor in an advertisement. You implied, you compared vaguely, you talked about your own machine. Sega broke it on purpose, and Katz didn’t ask Tokyo first. ‘I didn’t talk to/fight with Sega Japan about it. I just told Dave Rosen that this was what we were going to do.’
The campaign ran from 1990 across Electronic Gaming Monthly and GamePro and onto national television.
The single most effective thing Sega of America did in its first two years was a piece of punctuation.
The man who broke the rule was gone before the payoff
Katz hit Nakayama’s million and was replaced anyway. His own account of why is brief and reads exactly as bitter as you would expect: ‘Japan management replaced me with Tom Kalinske. I never knew how to say Hyakumandai.’
Nakayama had found Kalinske on a beach in Hawaii, where he was recuperating after selling Matchbox. ‘You’ve got to come with me to Japan and look at 16-bit technology.’ Kalinske went, took the job and came back with a plan: cut the hardware to $149, build up American development, sign the sports leagues properly, position the Genesis as the machine for teenagers and up against Nintendo as ‘a little toy for little kids’, and get Altered Beast out of the box in favour of something people actually wanted.
He presented it to Nakayama and the board in Japan. ‘Nobody agrees with anything you said,’ Nakayama told him, then kicked over a chair and walked towards the door. He turned round before he reached it and let Kalinske do the whole thing anyway, because he had promised him the Western decisions were his to make. That is the moment the American console war actually starts.
Sonic the Hedgehog reached North America on 23 June 1991. By November it had replaced Altered Beast in the box.
So Katz did the unglamorous half: the licences nobody else would sign, the first advertisement that named the enemy. Half a million consoles into a market that had no reason to care. He was out before the mascot arrived. Kalinske inherited a working campaign and a stocked sports catalogue, cut the price and got the statue. The engineering was Sega’s; the timing was luck; the credit went where credit usually goes.
How a two-city test launch ended up taking America
The Super Nintendo landed in North America in 1991 at $199 with Super Mario World. The Genesis met it at $149 with a blue hedgehog, three years of software already on the shelf and a marketing operation that had spent eighteen months teaching American teenagers that Nintendo was what your little brother had.
It worked. Nintendo’s dollar share of the American 16-bit market fell from around 60 per cent at the end of 1992 to around 37 per cent at the end of 1993. Sega passed Nintendo in the United States in 1993 and held somewhere near 55 per cent. By 1995 the Genesis had sold roughly 18 to 18.5 million units in America, from a launch that had originally covered two postcodes.
The hardware deserved it. A 68000 with a decade of arcade code already written for it was a real, defensible advantage, and Sega’s engineers earned every frame of it. But the thing the rest of the industry copied wasn’t the VDP. It was the apostrophe. Every console generation since has run its own version of that advertisement, and every one of them is a descendant of a line a Bozell copywriter threw out in a meeting in 1989.
The part that still needles is what came next. Sega abandoned the confrontational posture for the Saturn, at precisely the moment a new competitor turned up in America selling attitude to teenagers. The company that taught the games business to name its enemy went quiet at the worst possible time.
