Alternative reality: When Sega went from Mega Drive to Mega failure

I've written two articles before about how gaming history could have gone in a radically different direction with just small changes, first about how Microsoft screwed up the Xbox 360 generation and then about how Nintendo were the ones who made Sony the gaming giant they are today. Another company that we don't talk about as often anymore, but which could also have changed everything - is Sega.

They had launched their Master System in 1985, an 8-bit console that was in many ways more powerful than the NES. And already this generation it was noticeable how it was a completely different kind of company than Nintendo. Sega had lots of ideas and they really loved to test their wings. This resulted in, among other things, the SegaScope 3D active glasses, a trackball called the Sega Sports Pad, the Handle Controller flight controller and the Paddle rotary controller.

Really strange gadgets that of course were sold in very limited quality and today are worth a good penny. The Master System didn't sell as well as it deserved either, and by 1989 (1990 in Europe) Sega was ready to move on with the Mega Drive - their most famous and probably most loved console. The Mega Drive turned out to be a stroke of genius. Nintendo had intended to harp on about the NES for a while longer, using inbuilt chips in the cartridges (which made them very expensive), and the Mega Drive was only marginally more expensive than the NES and the games were out of this world.

I was basically exclusively a Nintendo gamer at this point and could stand in toy stores and just look at games like James Pond and Castle of Illusion. It looked like cartoons, graphics from another world. The time was ripe for something different, and in 1991 it really exploded when Sonic the Hedgehog was unleashed and, for the first time, Super Mario himself had a true contender.

Sega were also arcade game makers at heart, something they diligently exploited for the Mega Drive, which was thus filled with cool and tough action games, as well as an attitude that made video games cool (or cooler at least, it was with PlayStation and Wipeout that the last resistance was eliminated). Or as Sega themselves said in their advertising campaigns (see the video below): "Sega does what Nintendon't".

Also missing was Nintendo's conservative business sense. Nintendo regarded its third-party partners as competitors as much as allies, and made sure to lock down their game development in a variety of ways. If you made games for Nintendo, you could only do that. And you couldn't release as many games as you wanted either. Sega was a hobby project by comparison, and after Nintendo's harsh treatment, many went over to Mega Drive instead. There they could release whatever games they wanted without a lot of rules, which in practice meant more adult games. The most classic example is of course Mortal Kombat, which kept all the blood and gore at Sega, but was censored beyond recognition at Nintendo.

When the Super Nintendo finally replaced the NES (1991 in the US and 1992 in Europe), the Mega Drive was already two years old. It was almost half a generation at this point, and the Super Nintendo had several advantages. However, the Mega Drive was already established and, according to a collective body of developers, it was also easier to make games for the Sega console (thanks in part to the much faster processor that required less customisation and more straightforward Assembler programming), which thus enjoyed continued third-party support, and often had games that were better than the inherently more powerful Super Nintendo.

So Sega was well positioned. But Sega was still... Sega, the madmen who seemed to do everything they could think of. When Nintendo released its violently weak Game Boy, for example, Sega responded with the Game Gear, which was the performance equivalent of the Master System - but with a huge colour palette for the time. And later, a TV tuner was added as an accessory so you could watch TV on your portable gaming device, something that at the time seemed utterly scifi.

And so they continued. Just like with the Master System, Sega was churning out odd Mega Drive accessories like the Kinect predecessor Sega Activator, the Sega Channel Adapter TV support, the Sega Sports Pad sports controller, the Mega Drive Karaoke Unit singing accessory, and much more. If they had a whim, the gadget would be released.

And it's in this second one that we'll see the Mega CD, the CD add-on that Sega released in 1992 for the Mega Drive. It was meant to counter the Super Nintendo, and meant that Sega once again had the most powerful hardware, and CDs in this era (when games were a few megabytes at most - although they were often presented as megabits to sound bigger) had endless storage possibilities, as well as being able to play sounds that made the SNES chip seem like it was screaming into a cardboard tube. There were video adventures and titles like Final Fight and Sonic CD, which technically felt more Neo Geo than 16-bit. As if that weren't enough, CDs were also crazy cheap to make compared to cassettes.

Even Nintendo got scared and started working on the Nintendo PlayStation, which I wrote about here. But... sales were not going well. You needed both a Mega Drive and a Mega CD, and of course Sega had released new models of the Mega Drive and Mega CD, which meant they didn't fit together easily. In addition, it released a Multi-Mega that had everything built together. And if the Mega Drive was easy to develop for, the same couldn't be said for the Mega CD, which would co-operate with the basic console.

But why stop there after that misstep, which showed that consumers did not want the console add-on approach? Just two years after the Mega CD, in 1994, the 32X was launched. Another accessory with better performance and expensive games, and it was considered horribly difficult to develop for. The 32X was an even bigger flop than the Mega CD.

However, Sega wouldn't be Sega if they didn't have even more plans. Because at the same time they were also working on Neptune, which would be a Mega Drive with a built-in 32X. This was in 1994, the same year that Sega launched the Saturn in Japan. So in the same year as the Saturn, a 32-bit accessory came to the Mega Drive that made people less likely to upgrade, and also consider another console.

But... why stop there. Because along with the Saturn, Sega had plans to release the Jupiter. Another console with games on cartridges. This one was fortunately scrapped in favour of the Saturn, but the damage was done. The Saturn was a great console, and today I'd much rather play the Saturn than the PlayStation (1), its many 2D games stand up well while the more primitive 3D-heavy PlayStation is harder to enjoy in 2025. The Saturn was simply built for two dimensions in an era that wanted three.

However, this is an article about alternate reality. So let's back the tape to 1992. The Mega CD was a brave accessory, no kidding. And without it, Nintendo wouldn't have wanted to make a CD accessory with Sony and we would never have had the PlayStation (Sony might have made a console anyway in time, but it probably wouldn't have been called the PlayStation, wouldn't have arrived exactly when it did, and wouldn't have had the same performance - and we can only speculate how that would have turned out). So we should be glad they tried. But after that they should have pulled the brakes. Actually, before, even, but Sega couldn't very well know that.

However, they should have realised that 32X was complete madness. They basically launched two consoles at the same time, which shared no games whatsoever. Of course, all the focus would have been on the Saturn. And after the success of Virtua Racing in 1992 and Virtua Fighter in 1993, Sega should have realised that three dimensions were the future. Just as the Mega Drive was a scaled-down version of the arcade units of the time, the Saturn should have been an extension of the Model 2 hardware that powered Daytona USA and Virtua Fighter 2. There were cost reasons for the decision, but the benefits would have been enormous, and the most important explanation is probably that Sega's arcade and console teams barely co-operated at all.

Had the 32X money been spent on the Saturn, Sega would have been in a completely different situation. It should be remembered that the Saturn is still the best-selling Sega format in Japan, so the market was there, the Mega Drive crowd would have gladly bought Sega if they hadn't screwed up so badly. Plus, of course, they would have made sure a Sonic game was released for the Saturn. Even the 32X got the Knuckles' Chaotix spinoff, the Saturn only got the Sonic Jam collection and the Mario Mart challenger Sonic R. What if Nintendo didn't give a shit about releasing Mario on their consoles?

I think most people would agree that things would have gone much better with a greater focus on the Saturn with more thoughtful hardware and a Sonic game, and a Sega that hadn't completely ruined its reputation. It wasn't until a generation later that Sega got serious and released the Saturn, partly funded by the then boss's own wallet. By then it was too late. It was an excellent and innovative console that set several sales records, not least in the US where it was the fastest selling ever at its premiere. But without proper third-party support and with too little money for proper marketing, Sega had to pull the plug.

It's a shame, and it's easy to be hindsighted, which is part of the point of the Alternative Reality series. And in this case, one can also ask if Sega would still be Sega with better management and without all the exuberant ideas that led to their innovative, beloved and often completely insane games?