Thoughts on “Revolutionaries at Sony”

 

asakura
April 30, 2000

I’ll take a wild guess and assume you are interested in the history of PlayStation. If you are either a geek for gaming consoles, entrepreneurship, Japanese management, or interested in the massive impact of Sony’s PlayStation had on western markets and culture, then you are in for a treat.  This book takes a close look at the great personalities behind the PSX and the conflicts they overcome to make the magic happen. Reiji lets you walk through the story from the underdogs like Ken Kutaragi, business and engineering visionary, and big bosses as Norio Ohga, CEO of Sony at the time. There is a unique focus on how this two sides competed and cooperated under the distinctive culture of the Japanese video game industry. The tales within this book go from business model to technological aspects, developing every facet into a comprehensive view on how this revolutionary product came to be. It is fair to say that beyond an entertaining and concise profile of the PlayStation business history, Asakura’s work is a great contribution towards understanding Japanese game industry during the 90’s. Reiji’s portrayal is particularly interesting in how he puts the spotlight on the ‘revolutionaries’, allowing to understand the innovators’ mentality and the conformed culture that surrounded them.

The book gives light to what they prioritized towards consumers (reputation, trends, awareness of segments (core and mass, ages, etc), education on how to use hardware), other competitors (minding relationships with Sega and Nintendo was critical for a newcomer like Sony), and internal organizational relationships (struggles between Kutaragi and top management for starters, then the mixture to develiopo SCEI as a Sony Music driven unit, struggles with Sony of America, or even decisions that didn’t get everyboy on board like the riskful decision to drop PSX’s price). The portrayal of this mindsets and actors helps to understand the historical context of the late 16bit into the 32bit era, showing the key properties of the business (distribution, hardware advantage, innovate and respect political protocols) they looked upon and the social conditions that restrained actions.

It is difficult to assess how much they knew about platform business (regarding platform or multi-sided markets economic theory), especially considering they recognize themselves as newbies that made several mistakes (like not knowing about the retailers share on stock sales). Still, they faced many challenges of the platform model straight on. One example is how they focused on getting on board third-party developers as the main element. Although they probably didn’t have much choice. They were a respected brand and had an advantage on that point, so asking for others to develop there looked more promising that invest in in-house devs. Interesting enough the top-end software houses knew about the risks involved in platform ventures, and they wouldn’t risk licensing if they were not sure that the platform would establish. It is important to consider that Nintendo had a hard and menacing attitude around licensing, getting to a bully-like position when publishers didn’t play along. So beginning negotiations with a newcomer and outsider would not play along Nintendo’s license minefield.

The whole deal on Nintendo’s rejection of the PlayStation project is very interesting. Asakura provides a lot of insight and anecdotical evidence that would suggest a more definitive scenario for the big N. Yamauchi’s decision to drop the project is usually explained by the slowness of the CD-ROM, I need to check the specifics here, and it is probably something that he said. But as many other Japanese statements, this seems only to provide a face of respectful denial on a superficial property of the new hardware. Although very important if you prioritize consumer experience, the CD-ROM loading time wasn’t a big deal compared with the advantages. First of all, PSX way of dealing with 3D rendering and CD-ROM loading was far superior to the competition, they just loaded once and then had 3D rendering without the need for data reading. Most importantly, the CD-ROM format entailed an advantage in one of the most costly aspects of running the game business, demand volatility! With the CD-ROM, against the standard format mask ROM, the manufacturing costs and speed would decrease considerably. Although this is a face-on advantage, the real underlying benefit was the flexibility provided by this process. They could adjust to demand and prevent over or under stocking.

Overall, I guess I wouldn’t be the only one to be suspicious about what really happened when we revisit personality-driven histories. As it is common to have antagonizing aftermath tales, it is difficult to assess. Even more, the natural glamour that we seek and create around these personalities is usually another trap. Romanticizing their personas and actions is something that comes naturally. I believe that Asakura’s profile intentionally provides and restrains from this type of storytelling. When present, it feels that is there for the merit of entertainment; when it’s not there, Reiji leaves an open window to facts and personal stories. Even with embellishments or building around personalities that could obfuscate what was happening around other teammates or companies, this book is (especially for western aficionados) a lighthouse in the black seas of Japa

 

 

 


If you’ve read so far, and you still feel captivated by what this book has to offer, I would recommend to go and grab a copy. It’s fast-paced and concise, you will go through many different situations and facets of the PSX history.

Here you have some personal notes while I was reading the book:

Chapter by Chapter

Chapter 1: Ken Kutaragi.

Display R+D, LCD. Kutaragi’s passion for consumer tech products. 3.5 vs 2-Inch Floppy! Ken’s ability to maneuver within org, politics, and bureaucracy.  Digital tech: Despised within Sony. Dig. Engineers lowest rank. Found a R+D on digital, was transferred and deployed/learned skills there. Finally, he would grow in a dual business/engineer talent looking for a new consumer market hit. System G would look forward to a decade later, mid 90’s as a target for massive consumption. He would later find a successful merge of his tech and his son’s inspiration on the Famicom.Opinion/thoughts: Sony shows to be a great success, not a “traditional” Japanese company. It seems that not being part of a “social welfare” activity it looked as undesirable/lower reputation. It is a consumer goods (luxury?) for profit. It is remarkable that this was also the same company that amassed japan’s reputation abroad and connected with consumers worldwide. Part of the Japanese success in the world that was not related to its culture, but its tech capability.

Chapter 2: DO IT, the decision-making process.

CD/I vs CD-ROM: Phillips/Nintendo/Sony triad. 1991 Kutaragi Tokyo station gets the news. Nintendo going to Phillips (CDi). Nintendo was afraid Sony would take over after game-machines. Phillips and Nintendo had a common enemy.  Nintendo didn’t back from SNES, they agreed on a CD-ROM add-on for the Super Famicom and a separate game machine for Sony. The threat of a standalone console is clearly bigger. Supposedly, higher ranks in Sony knew about Nintendo’s plotting before Kutaragi. Ken gets pissed off, possibly more energy imbued into the dev of the PS machine. They also pissed Norio Ohga (President) and his rage was focused on pursuing this business no matter what. Negotiations were kept into 1992 (Ends May 6).  Kutaragi was hated for the messed he drag Sony into. Americans only knew about this on the CES reveal (LOL). Supposedly Kutaragi uses Ohga rage for Nintendo to pursue the dev of 1million gates LSI chip. With such a chip they could integrate the 3d rendering machine and defeat Nintendo. Ohga supported and respected Kutaragi, but many didn’t approve Sony’s entry into the game industry. Epic Sony, Maruyama. Team up! They struggled with failed games for Nintendo. He supported proprietary development as it game control of information and management. Maruyama was founding member of CBS Sony with Ohga so Kutaragi could interact with Ohga through him. To develop this “startup within Sony” he already had Maruyama, he needed credibility and with daily interaction in the top level: Teruhisa Tokunaka. They mention ‘simulations’ and the consideration of A, B, C scenarios. The release was a success in 1994. Ohga remarks that it would’ve been terrible if it wasn’t.

Having a separate machine by Sony would be a big threat. Not developing a unique PlayStation together would be a terrible decision. Let’s remember that Nintendo already had only one console, a console they sold until late 90’s. They were reluctant to changing platform generations, as they were with the Super Famicom in response to Sega’s threat. Once SFC was on the market they would probably want to stick with the add-on business model that worked with the Disk System on the FC. Overall, it seems an incapacity to control/negotiate/manage the situation of Sony’s technological superiority and being too rigid with their own culture/business plan. Adopting a conjunct standalone Nintendo/Sony PlayStation could’ve been a short-term solution with a great impact, but in the long term, Sony’s capacity and infrastructure could become a clear internal threat as they could follow on with their own machines. Probably delaying Sony’s

Chapter 3: Appealing to the Software Developers.

Many stories on prominent Soft-devs that were pursued to get into third-party development for the PSX. The main strategy to overcome the market as usurpers were to get third-party collaboration. Most asked for 3 million units sold to include their participation. Most events denied the possibility of having the retail consumer-ready 3D technology. Virtua Fighter opened the doors for this idea but the hardware of the kind was only believed to appear at arcades. After revealing demos to all these high tier developers they decided that with proper adjustments (marketing strategies, or X selling price) they would hop in. Namco was one of the biggest and most symbolic participants. As a big arcade machines / 3D specialized company they found a great opening in home console opening for a 3D game that allowed for low-cost software. Tekken was the leading success after this alliance was made. They also mention the relevance of middlewares for soft-devs provided by Sony. Although controversial and with several complications the operation persisted and allowed many developers to focus on creative decisions. Developers didn’t appreciate these libraries as they didn’t trust the code. But it is also mentioned that high-tier developers thought a complicated 3d machine would be an advantage for them as average developers wouldn’t be able to work on it. The library platform opened the doors for many developers. This support service was new in the industry.

Chapter 4: Distribution revolution.

Sato tells the story of buying a used game as new. Problem with mask ROM was a two to three months manufacturing process, predicting/forecasting precise units was near impossible and the uneven performance/demand/popularity of titles presented a high-risk situation for game manufacturers. Either keeping stock or losing sales opportunities. Mask ROM also had perverse practices on retail and distribution with second-hand sales, selling under MSRP for recapture and resale. Pag 99-100: A lot of distribution costs and practices. Talk about decisions regarding mask ROM sales. Appeal and revolution of CD-ROM. Pag 101 (bottom): price/cost production for software houses. Sony made a 35$ price to the wholesaler (Nintendo’s mask ROM had 61$). CD-ROM also allowed flexible production volumes! “CD repeat production”. Adaptability to variability in demand! Key first weeks are even more capitalizable.

Mind this! “Common knowledge”: SEGA SATURN’S FAILURE CAUSED BY DEPENDENCE ON SHOSHINKAI ORGANIZATION.

Gotta research more on Sato. Sato is amazing: he figured that old customs on mask ROM business distribution model would possibly truncate the new model. He decided to make SCEI the distributor and take control of production volumes. This way they could protect the model and educate about it.  He also valued accurate information on sales (and the dependent relationship between hardware and software). There was a bad reception from big software houses, they wanted control on their titles. Particularly on big titles that would prefer a larger stock initially.  They would compete only with 5.000 stores (Shoshinkai had 25.000), record stores worked with 7-8 thousand. Maintain credit is one of the key roles of a wholesaler, Sony had a better reputation in that regard. Konami was a hard opposition. They didn’t like Shoshinkai but wanted control. They finally accept for short period 1.5 years. They were also integrating distribution. Kitagami (Konami) complained against SCEI performance. Under warning, they still missed the 3 days of production on out of stock retailers. Weird, only until June 1997 they loosed on developers input for initial volume.

1 store every 30-40 thousand population!! Yamauchi teased them xD. They achieved 2 million sales focusing on core players. Then moved to the general public (10million domestic, 1998) Page 142: mature price structure on software. Motivated multi-CD games Parappa the Rapper is a software attempt to broaden the segments.Opinion/thoughts: There are relevant insights regarding rationality and information in the 32bit beginning stage. PlayStation had to learn a lot and the team engaged in several innovations that secured a good release of the platform. They got people on board and offered different new services that would reduce costs and create flexibility for software developers. Distribution management and retail accuracy would be a great sales point in the consolidation of the new platform. Support in dev also created this, while CD-ROM was a huge point in favor of flexible production and reduced costs. It also provided more space for innovative games (not even mention 3D) that would be encouraged by the support libraries. Sato, Kutaragi, and many others were aware of these business strategies (even if they missed some basic aspects of retail profit shares on hardware sales). The resistance from software developers is also critical. They show that an integrated (probably  There are many shady stories about how things came to be, very particular of Japanese social customs. Yamauchi’s decision on not adopting PlayStation is one of them, stories about not taking the PSX because of CD-ROM and pursuing the mask ROM model with the Nintendo 64 looks weird (they finally changed to cd on the Game Cube, which should’ve been in development among the nineties (so they did got into it right away). There are too many factors to simplify this decision like that. He should’ve known they had the upper hand and decided to trump their development with the last minute swap towards Phillips. The values of CD-ROM as a business go beyond the costs of users, this seems very contradictory considering the relevance to organizational and operational aspects of the business. It is known Nintendo has overvalued users experience, but overlooking the major shift of a CD- ROM based production seems unlikely (was it?).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s