Recaps

Nintendo dismissed Panasonic’s $699 3DO as too expensive to threaten its consoles, but Yamauchi Hiroshi recognized that the 32-bit era was approaching and ordered work on a successor to the SFC. At Sony, Ken Kutaragi also mocked the 3DO, leaving the company’s next move unstated.

• In Tokyo, Nakayama Takuya read the 3DO’s $699 North American launch price and predicted that the console would not survive two years.
• At Nintendo, Yamauchi Hiroshi and his executives discussed the 3DO’s specifications and estimated that its hardware costs would force a high retail price.
• After learning the 3DO would sell for $699, Yamauchi Hiroshi dismissed it as uncompetitive but warned that the next-generation console race had begun.
• Yamauchi Hiroshi ordered Masayuki Uemura and the team to develop Nintendo’s next-generation console under the code name Project Reality.
• At Sony, Ken Kutaragi watched the 3DO demonstration and criticized Panasonic’s hardware-focused design.

Sony decided to pursue PlayStation market share by selling consoles below cost and planned a dinosaur graphics demonstration to answer Panasonic’s 3DO. Atari then announced its 64-bit Jaguar and launched a numbers-based advertising campaign, while Sega executives examined the threat and worried about its specifications.

• Norio Ohga approved Ken Kutaragi’s plan to sell PlayStation hardware at a loss to expand market share and earn CD-ROM royalties.
• Ken Kutaragi proposed demonstrating PlayStation’s graphics with a Tyrannosaurus rex inspired by Jurassic Park.
• Atari announced that development of its Jaguar console was complete and promoted it as a 64-bit system, though players remained wary of Atari’s reputation.
• At Sega headquarters, Hisao Oguchi warned Nakayama Takuya that Jaguar’s claimed processing power could surpass Sega’s Mega Drive and challenge its planned next-generation console.

Nakayama Takuya, Nintendo, and Sony assessed Atari’s Jaguar and dismissed its 64-bit claims and unusual controller as bluster backed by weak resources. Sony’s executives concluded that PlayStation should remain their priority.

• Nakayama Takuya told Hisao Oguchi to investigate Atari’s recent activities, the Jaguar’s specifications, and its launch lineup.
• At Nintendo headquarters, Yokoi Gunpei reported that Minoru Arakawa believed Atari had dwindled since Jack Tramiel acquired it, and executives mocked the Jaguar’s telephone-like controller.
• Yamauchi Hiroshi dismissed the Jaguar as hardware without good games and judged that Tramiel did not understand the game industry.
• At Sony headquarters, Ryoji Chubachi, Nobuyuki Idei, and Ken Kutaragi cited Atari’s weak finances, cost-cutting, and Jaguar design as reasons to doubt its claims.
• Norio Ohga concluded that Sony should ignore Atari’s boasts and focus on completing PlayStation.

Atari’s Jaguar launch faltered under criticism of its misleading 64-bit claims, difficult architecture, and lack of games. Meanwhile, Square’s understated promotion of its Tokyo game-music concert drew enthusiastic ticket and recording reservations across Japan.

• Nakayama Takuya and Hisao Oguchi reviewed the Jaguar’s Tom and Jerry processors and concluded that Atari’s 64-bit claim concealed a difficult, fragmented architecture.
• Electronic Gaming Monthly criticized the Jaguar, while developers struggled with its tools and players left the game-starved machines on store shelves.
• Nakayama Takuya decided Sega no longer needed to monitor Atari after the Jaguar and another recent console both performed poorly.
• Square’s concert posters appeared in Japanese game shops, where the owner explained that Nobuo Uematsu and Yasunori Mitsuda would perform, including a Chrono Trigger suite.
• A salaryman bought two premium concert tickets, and students and other shoppers reserved the concert’s CD and vinyl recording.

At the first game music concert in Tokyo, Nobuo Uematsu introduced Nakayama Takuya and credited him with helping make the event possible. The audience warmly cheered and teased Nakayama before Uematsu thanked him for fulfilling a dream for game musicians.

• Nakayama Takuya and Sakaguchi Hironobu discussed the sold-out Tokyo concert and record preorders, and Sakaguchi gave Nakayama two VIP tickets.
• On December 10, Nakayama Takuya attended the concert with Eri and saw a packed hall filled with fans and industry figures.
• Nobuo Uematsu took the microphone instead of beginning to conduct and introduced Nakayama Takuya as the person who helped make Chrono Trigger and the concert possible.
• An audience member jokingly pleaded with Nakayama to stop draining players' wallets, prompting laughter and affectionate heckling throughout the hall.
• Nakayama Takuya stood and jokingly asked the audience for mercy, and Nobuo Uematsu thanked him for helping fulfill a dream for game musicians.

Nobuo Uematsu led the orchestra through Final Fantasy music before Yasunori Mitsuda electrified the concert hall with a rock-infused arrangement of Chrono Trigger. The audience erupted in applause as Mitsuda finished his performance.

• Nobuo Uematsu conducted Final Fantasy Main Theme, and the audience listened in reverent silence before applauding.
• Risa Ohki sang Theme of Love, moving audience members and Nakayama Eri and Nakayama Takuya.
• Yasunori Mitsuda took the stage as the lighting and instruments shifted to an electronic setup.
• Yasunori Mitsuda performed a forceful rock-and-orchestra arrangement of Chrono Trigger, prompting the audience to tap along and the musicians to play with energy.
• The audience gave Yasunori Mitsuda a thunderous standing response of applause and whistles when the performance ended.

After Square's game concert won enthusiastic media attention and drove concert-ticket demand and CD preorders sharply upward, Nakayama Takuya turned to Sega's winter sales strategy. Sega prepared a Christmas and New Year promotion across its platforms, leading small publishers to reconsider their release plans.

• Players were moved by the concert, and Sakaguchi Hironobu and Nakayama Takuya celebrated its success as a breakthrough for Square's game music.
• Famitsu praised the concert, while Shukan Bunshun publicized Nakayama Takuya's playful debt-collection exchange with the audience.
• Media coverage boosted demand for the remaining concert tickets and doubled CD preorders from fifty thousand to more than one hundred thousand.
• Nakayama Takuya told Hisao Oguchi to launch another major sale of older Sega games across Europe and America during the Christmas and New Year period.
• Small publishers worried the promotion would undermine new releases, and one president proposed delaying a game until mid-January while clearing old cartridge stock through the sale.

Nintendo followed Sega into a New Year promotion after third parties delayed releases and retailers threatened to reduce Nintendo's display space, turning the 1993 holiday season into a price war. Afterward, Sega confirmed its custom R3000S CPU had taped out successfully and began naming its next console, with the first proposal drawing ridicule.

• Yamauchi Hiroshi ordered Nintendo to run a New Year customer appreciation promotion and threatened delayed-release manufacturers with harsher royalty reviews.
• Sega and Nintendo competed in a year-end discount battle that ended after the 1994 New Year holiday.
• Sato Hideki brought Nakayama Takuya news that Sega's custom MIPS R3000 CPU had taped out successfully, with its indicators meeting expectations.
• Nakayama Takuya said Sega would call the CPU the R3000S and instructed Sato Hideki to arrange assembly and testing of the Model 2 board and console prototype.
• Nakayama Hayao convened a board discussion to name the new console after the R3000S succeeded and hardware assembly began.
• A sales director mocked the branding department's top name, “Dreamaker,” as sounding like a mattress brand.

Nakayama Takuya persuaded Sega’s directors to name its fifth-generation console Jupiter, then watched the Mega Drive and Super Famicom compete with impressive new games in early 1994. The chapter ended as a crowd gathered around Sega’s new System 32 arcade title, TheKingofFighters2.

• Nakayama Takuya proposed Jupiter as the codename for Sega’s fifth-generation console, and Nakayama Hayao and the directors approved it unanimously.
• In February 1994, Square’s Final Fantasy V launched on the Mega Drive and impressed players with its visuals, smooth action, and job-change system.
• Yokoi Gunpei released Super Metroid for the Super Famicom, earning Nakayama Takuya’s respect and strengthening Nintendo’s position.
• Nakayama Takuya declined Sato Hideki’s suggestion to respond to Nintendo’s game and focused instead on Sega’s System 32 project, TheKingofFighters2.
• A packed Shibuya arcade crowd gathered to watch TheKingofFighters2, with eager onlookers trying to catch a glimpse of the red-haired fighter.

King of Fighters 2’s story and Iori Yagami’s introduction drew players into a wider world of games, manga, and merchandise. Meanwhile, Sega’s team tested the customized R3000S chip and saw Virtua Fighter 2 run smoothly, clearing the way for other projects to migrate.

• King of Fighters 2 introduced Iori Yagami, Saisyu Kusanagi’s brainwashing, and Rugal’s use of the Orochi Power, while its manga attracted readers curious about the characters and lore.
• Nakayama Takuya reviewed rising coin-in rates and marked King of Fighters 2 as a success.
• Sato Hideki reported that the customized R3000S prototype had stable data flow and safe temperatures, then Yu Suzuki switched on the signal.
• Yu Suzuki ran Virtua Fighter 2 on the new chip and demonstrated fluid Akira Yuki animations at a steady 60 frames per second.
• Yu Suzuki said the Sega Racing and Gundam Battle Operation teams were migrating their projects, and noted that the racing team planned to add real-time light-and-shadow reflections.

Nakayama Takuya celebrated the progress of Sega’s Model 2 hardware and promised its developers new development kits, then set out to visit Blizzard because he believed the studio could make a major breakthrough in real-time strategy games. He left Tom Kalinske overseeing Sega of America while heading to Irvine, eager to review Blizzard’s plans.

• At the Model 2 laboratory, Hisao Oguchi confirmed that the next-stage development budget had been approved, and Sato Hideki announced hardware stress testing would begin the following day.
• On his flight, Nakayama Takuya read about Blizzard and decided the studio’s potential went far beyond its game Blackthorne, especially in the RTS genre.
• In Redwood City, Tom Kalinske reported encouraging Model 2 prototype test results, and Nakayama Takuya argued that Blizzard could make RTS games more accessible and become a major opportunity.
• Nakayama Takuya told Sega of America’s developers that Model 2 development kits were on the way and that the Jupiter console prototype would follow in a few months, prompting them to celebrate.
• Nakayama Takuya left Tom Kalinske in charge and headed to Irvine to see Blizzard’s plan in person.

Nakayama Takuya visited Blizzard’s new office in Irvine and saw the freedom and chaotic work culture Sega had allowed the studio to keep. Mike Morhaime and the other developers were astonished to discover that the Sega president himself had arrived with drinks.

• Nakayama Takuya recalled how Sega won Silicon & Synapse from Davidson & Associates by offering global publishing reach, faster payments, and a partnership rather than an acquisition.
• Nakayama Takuya had let the developers choose their own location, and they renamed the studio Blizzard before settling in Irvine.
• Nakayama Takuya entered Blizzard’s cluttered office and overheard its developers complain about their game’s pathfinding and an expected Sega inspection.
• Mike Morhaime recognized Nakayama Takuya, and the developers sprang up in surprise.
• Nakayama Takuya shook Mike Morhaime’s hand and gave him and the team a dozen chilled Cokes.

Nakayama Takuya visited Blizzard, reassured the team that Sega would not interfere with their PC game, and reviewed the development proposal for Warcraft: Orcs & Humans. He urged Mike Morhaime and Chris Mason to expand the game beyond battles into a deeper world, leaving Chris startled by his questions about the orcs’ origins.

• Mike Morhaime, Allen Adham, and Frank Pearce welcomed Nakayama Takuya to Blizzard.
• Nakayama Takuya told the team Sega valued Blizzard’s creativity and would let it focus on PC games while seeking mutually beneficial cooperation.
• Nakayama Takuya read Blizzard’s internal proposal for Warcraft: Orcs & Humans and considered its early setting and gameplay.
• Nakayama Takuya called Mike Morhaime and Chris Mason over and praised the gameplay before saying their ambitions were too limited.
• Nakayama Takuya challenged Chris Mason to deepen the setting by exploring where the orcs came from and who taught them to build a portal.

Nakayama Takuya helped Chris and Mike Morhaime shape a larger Warcraft setting and encouraged Blizzard to build a lasting culture around its games. He then returned to Silicon Valley Online, where Frank Marshall and Tom Kalinske described the company’s growing influence and online startup incubator.

• Nakayama Takuya explained that Blizzard could establish Warcraft’s wider lore now and develop it through novels and future games, easing Mike Morhaime’s concerns about cost and workload.
• Chris became excited by the Burning Legion ideas and agreed with Mike to reorganize the setting documents for Azeroth.
• Nakayama Takuya returned to Silicon Valley Online, where Frank Marshall said the company’s valuation had passed 300 million dollars after Clinton promoted the Information Superhighway.
• Frank Marshall and Tom Kalinske explained that copycat services had failed to match Silicon Valley Online’s trusted communities and expert discussions.
• Tom Kalinske said venture capital partners now monitored the Startups&VC section, which had helped more than a hundred companies secure funding.

Frank worried that image uploads were driving Silicon Valley Online's bandwidth costs sharply upward, but Nakayama Takuya argued that the expense would deepen the company's competitive moat. Nakayama then hinted at a way to turn the site's growing traffic into cash and asked how many websites existed in America.

• Frank showed Nakayama Takuya financial reports and warned that rising server and bandwidth costs were threatening profitability.
• Frank explained that Silicon Valley Online had avoided moving its BBS fully onto Mosaic by offering a read-only web mirror that directed users to the secure client.
• Frank blamed the new image-upload feature for tripling bandwidth expenses, despite the surge in user activity.
• Nakayama Takuya urged Frank to treat the spending as an investment in a deeper competitive moat, and Frank agreed to negotiate a long-term bandwidth contract with PSInet.
• Nakayama Takuya hinted at a new way to monetize traffic and asked Frank how many websites existed in America; Frank estimated that there were more than a thousand.

Nakayama Takuya proposed an Internet directory that would help users find websites and earn money through paid rankings, prompting Frank to rush off to build a prototype. After Frank left, Takuya discussed with Tom Kalinske why he was withholding further ideas, while reflecting that his move might prevent Yahoo from emerging.

• Nakayama Takuya asked Frank how ordinary users found websites, and Frank described BBS recommendations, FTP lists, and Wired magazine.
• Nakayama Takuya sketched a categorized website directory with links, and Frank recognized its potential to attract traffic and sell prominent rankings.
• Frank grabbed Nakayama Takuya’s shoulders in excitement and rushed to order the Development Department to build a prototype within a week.
• Tom Kalinske teased Nakayama Takuya for holding back further ideas, and Takuya said the company needed to stay focused and release its advantages gradually.
• Nakayama Takuya reflected that his proposal might change the course of history before Jerry Yang and David Filo created Yahoo.

Nakayama Takuya laid out his plan to keep launching disruptive businesses and explained a new personal publishing service called WebLog, or “We Blog.” Frank grasped the idea’s appeal, while the service’s full design remained to be revealed.

• Nakayama Takuya told Tom that regular new businesses could make Silicon Valley Online a major force and drive its valuation far beyond three hundred million dollars.
• Frank returned from rallying the Development Department and learned from Tom that Nakayama Takuya had only explained half of his idea.
• Nakayama Takuya had Frank drink ice water, locked the conference room door, and introduced the concept of WebLog.
• Nakayama Takuya proposed giving every user an independent URL to publish posts, photos, and tagged content, with moderation in place.
• Nakayama Takuya explained that blogs would give users ownership over their pages and control over who could see them, leaving Frank visibly intrigued.

Nakayama Takuya outlined a Blog business model built on paid customization, advertising revenue shared with users, and real-name verification for influential accounts. Frank and Tom embraced the plan as a way to turn users into earners, promoters, and a new media network, before Nakayama moved on to discuss ICQ.

• Nakayama Takuya proposed likes, comments, search, and paid page customization to make Blogs interactive and profitable.
• Nakayama Takuya suggested sharing advertising revenue with bloggers, and Frank realized users could create content and attract traffic for the site.
• Nakayama Takuya explained how Blue V real-name verification could make influential figures' Blog posts authoritative news sources.
• Tom proposed using official Sega Blogs to promote consoles, while Nakayama recommended recruiting writers to establish the service's style.
• Nakayama Takuya announced that he would move on from Blogs to ICQ, and Frank and Tom drank their ice water.

Nakayama Takuya outlined plans to monetize ICQ through virtual goods, casual games, and paid membership while keeping the games themselves fair. He then challenged Frank to consider the limits of a human-edited web directory, leaving the next stage of the business unresolved.

• Nakayama Takuya proposed selling users full-body virtual characters and clothing through ICQ Show.
• Nakayama Takuya proposed adding casual card and board games where users could display their virtual goods and socialize.
• Nakayama Takuya outlined paid membership perks and argued that free users also formed part of the experience for paying players.
• Frank recognized the business model’s profit potential, while Nakayama Takuya stressed that basic functions should remain free and membership could later offer tournament benefits.
• Nakayama Takuya called the web directory a transitional product and asked Frank how long human editors could keep categorizing a rapidly growing number of websites.

Nakayama Takuya laid out plans for Silicon Valley Online to build a search engine and portal, turning it into an essential internet destination. He, Frank, and Tom Kalinske then made a wager on the company’s future IPO valuation.

• Nakayama Takuya proposed crawling and indexing the internet so users could find relevant webpages through a search engine.
• Nakayama Takuya outlined a portal combining news, weather, sports, finance, and entertainment to keep users on Silicon Valley Online.
• Frank worried about the technical demands and expense, while Tom Kalinske urged him to organize an assessment with technical staff and Sega North America’s investment director.
• Nakayama Takuya proposed a wager on Silicon Valley Online’s IPO valuation, with the two losing participants paying for a meal for the company’s senior executives.
• Nakayama Takuya, Frank, and Tom Kalinske each wrote down a valuation estimate to seal until the IPO.

Nakayama Takuya arranged a meeting with Ted Turner to pitch Sunrise’s animation to Cartoon Network and summoned Miyagawa Yasuo to prepare for the trip. He then headed to Universal Pictures, where Sega’s improved standing was immediately apparent.

• Tom Kalinske told Nakayama Takuya that Ted Turner had agreed to meet them at the CNN Center in Atlanta next Wednesday.
• Nakayama Takuya called Miyagawa Yasuo and invited him to join talks about bringing Sunrise’s animated works to Cartoon Network.
• Miyagawa Yasuo eagerly agreed, ordered his staff to prepare sample footage and materials, and called an urgent meeting.
• Nakayama Takuya and Bernard drove to Universal Pictures, where the publicity department manager warmly welcomed them.

Nakayama Takuya searched Hollywood for another film suited to a game adaptation, then explained to Miyagawa Yasuo how Sunrise could use Cartoon Network to bring Japanese animation to America. He proposed Mashin Hero Wataru and Mado King Granzort as a test and began outlining changes Sunrise would need to make if the plan succeeded.

• Nakayama Takuya visited Universal, but Spielberg was occupied with his Schindler's List Oscar campaign and could not meet with him.
• Nakayama Takuya and Bernard visited Fox and Warner Bros., but none of the scripts they reviewed seemed suitable for a game adaptation.
• Two days later, Nakayama Takuya told Miyagawa Yasuo that American broadcast syndication required at least sixty-five episodes, while cable channel Cartoon Network could air shorter shows.
• Nakayama Takuya rejected Gundam and presented Mashin Hero Wataru and Mado King Granzort as accessible, toy-friendly shows for American children.
• Nakayama Takuya said the two shows could test the American market and began explaining that Sunrise would need to change its animation-production habits if the plan worked.

Nakayama Takuya coached Miyagawa Yasuo on pitching Sunrise’s anime to U.S. networks with shorter episodes and a tiered pricing deal. At their meeting with Ted Turner, Miyagawa and Nakayama began negotiations over programming for Cartoon Network.

• Nakayama Takuya advised Miyagawa Yasuo to standardize overseas episodes at twenty-two minutes and plan seasons in multiples of thirteen.
• Nakayama Takuya proposed discounted first-broadcast rights with higher revenue sharing if a show reached specified ratings, while Miyagawa Yasuo agreed to lead the negotiations.
• Nakayama Takuya and Miyagawa Yasuo reviewed their plans in Atlanta before visiting the CNN Center the next morning.
• Ted Turner gave Miyagawa Yasuo and Nakayama Takuya twenty minutes to explain what Sega’s executive director could offer his cartoon channel.
• Nakayama Takuya asked Ted Turner whether Cartoon Network was struggling to fill its programming schedule.

Nakayama Takuya negotiated with Turner over Sunrise’s animated series and agreed to connect TV Tokyo with Turner for the North American rights to Who Wants to Be a Millionaire. Sunrise’s business team then began discussing an unusually low licensing fee with CN, but the chapter ended before the supplementary agreement was explained.

• Miyagawa Yasuo presented Mashin Hero Wataru and Mado King Granzort to Turner, who agreed in principle to consider importing them after content review.
• Turner asked Nakayama Takuya for the North American adaptation rights to Who Wants to Be a Millionaire, and Nakayama agreed to arrange negotiations with TV Tokyo.
• Turner told Betty to handle the remaining details and left, while Nakayama insisted that the business discussions continue before lunch.
• Sunrise's business team showed CN managers episodes edited to twenty-two minutes with clearly marked GG slots.
• Sunrise's business manager quoted a first-broadcast licensing fee of five hundred dollars per episode, and Miyagawa Yasuo began explaining the supplementary agreement.

Nakayama Takuya secured a favorable Cartoon Network licensing deal for Bandai’s robot anime and told Nakagawa Jun that Ted Turner wanted to buy TV Tokyo’s quiz-show format. After returning to Sega of America’s Redwood City headquarters, he ran into the exhausted Mark Cerny.

• Miyagawa Yasuo and Cartoon Network’s executives signed a tiered deal that gave Bandai larger revenue shares if the anime’s ratings rose.
• Nakayama Takuya explained his confidence in the anime’s appeal and left Atlanta with Miyagawa Yasuo.
• Nakayama Takuya called Nakagawa Jun to report that Ted Turner wanted to purchase TV Tokyo’s quiz-show format, and Nakagawa Jun welcomed the opportunity.
• Nakagawa Jun offered Nakayama Takuya a share of the licensing fee and invited him to celebrate with whisky when he returned to Tokyo.
• Nakayama Takuya returned to Sega of America’s headquarters and found Mark Cerny looking exhausted beside a vending machine.