History

 

Released in Japan as the Mega Drive in 1988, North America in 1989, and Europe and other regions as the Mega Drive in 1990, the Sega Genesis was Sega's entry into the 16-bit era of video game consoles. In mid-1990, Sega CEO Hayao Nakayama hired Tom Kalinske as CEO of Sega of America. Kalinske developed a four-point plan for sales of the Genesis: cut the price of the console, create a U.S.-based team to develop games targeted at the American market, continue aggressive advertising campaigns, and pack Sonic the Hedgehog in with the console. The Japanese board of directors initially disapproved of the plan, but all four points were approved by Nakayama, who told Kalinske, "I hired you to make the decisions for Europe and the Americas, so go ahead and do it." Magazines praised Sonic as one of the greatest games yet made, and Sega's console finally took off as customers who had been waiting for the Super Nintendo Entertainment System decided to purchase a Genesis instead.

 

Development

 

Shortly after the release of the Mega Drive, the Sega hardware R&D team, led by Masami Ishikawa, began to explore ways to expand the capabilities of the system through an add-on device. When development began, the add-on was not planned as a CD-ROM player, but was instead centered around increasing the graphical capabilities of the system, which lagged behind those of the competing Super Famicom system from Nintendo. Ishikawa's team implemented a new Digital Signal Processor (DSP) that allowed the Genesis to employ rotating and scaling graphics similar to the Mode 7 functionality of the Super Famicom. The team also greatly increased the amount of RAM available for programs, which proved to be one of the greatest technical challenges during development because the speed at which the Mega Drive could access the additional memory was initially too slow to run programs effectively.

 

By the early 1990s, compact discs were making significant headway as a source of storage media for music and video games. NEC had been the first to utilize compact disc technology in a video game console with the release of the PC Engine CD add-on in October 1988, which sold 80,000 units within six months. That same year, Nintendo announced a partnership with Sony to develop its own CD-ROM peripheral for the Super Famicom. In early 1991, Commodore International released a multimedia system called the CDTV centered around CD-ROM technology, while the long in development CD-i from Philips finally arrived before the end of the year. Faced with the increasing prevalence of CD-ROM devices in the marketplace, Ishikawa's team decided to incorporate a CD drive into their peripheral device, which soon gained the name Mega-CD. To transform the add-on into a CD-based system, Sega partnered with JVC, which had already been working with Warner New Media to develop a CD player utilizing the CD+G standard combining CD audio with graphics displayed on a television.

 

Up until the middle of 1991, Sega of America had been kept uninformed of the details of the project, without a functioning unit to test. According to former Sega of America executive producer Michael Latham, "When you work at a multinational company, there are things that go well and there are things that don’t. They didn't want to send us working Sega CD units. They wanted to send us dummies and not send us the working CD units until the last minute because they were concerned about what we would do with it and if it would leak out. It was very frustrating." Despite not being provided a functioning unit, Latham and Sega of America vice president of licensing Shinobu Toyoda put together a functioning Sega CD by acquiring a ROM for the system and installing it in a dummy unit. Also proving frustrating to Sega of America executives was the construction of the add-on. "The Mega-CD was designed with a cheap, consumer-grade audio CD drive, not a CD-ROM," stated Scot Bayless, former Sega of America senior producer. "Quite late in the run-up to launch, the quality assurance teams started running into severe problems with many of the units - and when I say severe, I mean units literally bursting into flames. We worked around the clock, trying to catch the failure in-progress, and after about a week we finally realized what was happening. The specified limit on time spent seeking the heads versus playing a track was 5 per cent. Some of our video-based titles were running around 90 per cent. We were causing the motors in the drives to catch fire."

 

Launch

 

Sega announced the release of the Mega-CD in Japan for late 1991, and North America (as the Sega CD) in 1992. It was unveiled to the public for the first time at the 1991 Tokyo Toy Show, to positive reception. The Mega-CD would go on to be released in Japan on December 12, 1991, initially retailing at JP¥49,800. Though the unit sold quickly, the small install base of the Mega Drive in Japan meant that sales declined rapidly after launch. Within its first year in Japan, the Mega-CD only sold 100,000 units. Other factors impacting these sales included the high launch price of the Mega-CD in Japan and only two titles being available at launch.

 

On October 15, 1992, the Sega CD was released in North America, with a retail price of US$299. Advertising for the add-on included one of Sega's slogans, "Welcome to the Next Level". Though only 50,000 units were available at launch due to production issues, the add-on sold over 200,000 units by the end of 1992. As part of Sega's sales, Blockbuster LLC purchased Sega CD units for rental in their stores. The Mega-CD was launched in Europe in the spring of 1993, at a price of GB£270. Only 70,000 units were initially available in the United Kingdom, but 60,000 units were sold by August 1993. Packed in with the Sega CD at its initial launch was the game Sewer Shark, a full motion video (FMV) game developed by Digital Pictures. Emphasized by Sega of America, the benefits of the Sega CD's additional storage space allowed for a large amount of FMV games to be published for the add-on, with Digital Pictures becoming an important partner for Sega.[6] Despite the initial competition by both Sega and Nintendo to develop a CD-based add-on, Nintendo did not release a competing peripheral after examining the possibility of partnering with both Sony and Philips to develop one.

 

Sega would go on to release the add-on's second model, the Sega CD 2 (Mega-CD 2), on April 23, 1993 in Japan at a price of JP¥29,800, and at a retail price of US$229 in North America. Designed to bring down the manufacturing costs of the Sega CD, the newer model is smaller and does not contain the motorized disc tray used in the initial model. A limited number of games were also later developed that utilized both the Sega CD and the Sega 32X add-ons, the latter of which was released in November 1994.

 

Night Trap controversy

 

On December 9, 1993, the United States Congress began to hold hearings on video game violence and the marketing of violent video games to children. One of the games at the center of this controversy was the Sega CD's Night Trap, a full-motion video adventure game by Digital Pictures. Night Trap had been brought to the attention of United States Senator Joe Lieberman, who said of the game, "I looked at that game, too, and there was a classic. It ends with this attack scene on this woman in lingerie, in her bathroom. I know that the creator of the game said it was all meant to be a satire of Dracula; but nonetheless, I thought it sent out the wrong message." Lieberman's research later went on to conclude that the average video game player at the time was between seven and twelve years old, and that video game publishers were marketing violence to children. Similar issues were brought up in the United Kingdom, with former Sega of Europe development director Mike Brogan noting that "Night Trap got Sega an awful lot of publicity.... Questions were even raised in the UK Parliament about its suitability. This came at a time when Sega was capitalizing on its image as an edgy company with attitude, and this only served to reinforce that image."

 

As a result of the Congressional hearings, Night Trap started to generate more sales and also released ports to the PC and Sega 32X. According to Digital Pictures founder Tom Zito, "You know, I sold 50,000 units of Night Trap a week after those hearings." Despite the increased sales, Sega decided to recall Night Trap and re-release it with revisions in 1994, due to the Congressional hearings. After the close of these hearings, video game manufacturers came together in 1994 to establish the rating system called for by Lieberman. Initially, Sega proposed the universal adoption of their own system, the Videogame Rating Council. Objections from Nintendo and others, however, prevented the use of the Sega rating system, so Sega took a role in the creation of a new system along with other developers. This would materialize in the form of the Entertainment Software Ratings Board, an independent organization which received praise from Lieberman.

 

Decline

 

Because Sega took a long amount of time to release its software development kit for the Sega CD, third-party development of games for the system suffered. As time had passed as well, the releases of new CD-based consoles such as the 3DO Interactive Multiplayer and the Philips CD-i rendered the Sega CD technically obsolete, making public interest in the add-on stale. 2.7 million Sega CD units were sold by the end of 1994, compared to the 29 million Sega Genesis units sold by the same time. In early 1995, Sega announced a shift in focus to the Sega Saturn and discontinued all advertising for Genesis hardware, including the Sega CD. The add-on itself was officially no longer supported in 1996.

 

Reasons for the Sega CD's limited sales include the add-on's high price, lack of significant enhancement to the Genesis console, and lack of ability to function without a console attached. Bayless, however, attributes the unsuccessful market to a lack of direction from Sega with the add-on. According to Bayless, "It was a fundamental paradigm shift with almost no thought given to consequences. I honestly don't think anyone at Sega asked the most important question: 'Why?' There's a rule I developed during my time as an engineer in the military aviation business: never fall in love with your tech. I think that's where the Mega-CD went off the rails. The whole company fell in love with the idea without ever really asking how it would affect the games you made."