https://mdshock.com/2022/05/09/a-second-atari-shock-the-decline-of-the-16-bit-console-era/ A very interesting article about the violent decline of 16-bit consoles that started in 1993 and almost destroyed Sega and Nintendo.>Sega Enterprises is preparing to take a massive extraordinary loss brought on by the restructuring of its overseas businesses to clear debts and dispose of excess inventory. At one point, Sega’s 16-bit game console grew to surpass Nintendo’s in North America, but it is now paying the price for a rapid expansion built through the disregard for profits. Almost all Japanese game companies are reporting heavy losses in both North America and Europe due to uncontrolled underselling. Sega, which has been considered one of the favorites in the new multimedia era, is now planning drastic revisions to its home console business.>“It’s almost like a return of the 1982 Atari Shock,” said one expert in the game industry>“The wave that brought us here was huge, but the tide has turned very quickly,” said Sega director Shunichi Nakamura in reference to the state of the 16-bit console market in Europe. At its peak in 1993, Sega’s revenue in Europe was about ¥60 billion, but now it has shrunk to one-third of that, around ¥20 billion.>In the fiscal period ending in March 1995, Konami took an extraordinary loss of ¥11.6 billion due to clearing out unsold inventory. During the same period, Capcom took a loss of ¥7.5 billion after writing down the value of its American subsidiary, and in the mid-year period ending in September 1995, Nintendo also took a loss of ¥9.8 billion after doing the same with its American subsidiary. This fiscal year, Sega is taking an extraordinary loss of ¥26 billion due to the downsizing of its American and European subsidiaries and due to the disposal of unsold inventory.People didn't care anymore about 16 bits games,tons of unsold stock
>“It’s true that 16-bit consoles sold quite well and we were able to sell off a good portion of our inventory, but the games did not sell at all,” said Sega director Shunichi Nakamura. The best-selling game charts for the past few weeks in North America reveal that almost all of the top titles are for Sony’s PlayStation console. Games for Nintendo’s SNES console, which has sold over 30 million units far more than the PlayStation have disappeared from the best-selling charts.>According to Sega’s Nakamura, “Through large-scale mass production, Sega has been able to reduce the manufacturing costs of its 16-bit console to the point where we aren’t losing money on production. However, we can’t earn a profit because the software the most essential part is just not selling.”>As a result of downsizing its operations, Sega has reduced its personnel in Europe from 480 people in 1993 to just 120 people now, and in North America from 900 people in 1993 to just 350 people now
the impact of Sony to 3rd partyhttps://automaton-media.com/en/news/capcom-veteran-says-nintendo-was-the-only-one-making-steady-revenue-from-nes-game-carts-capcoms-profits-really-took-off-with-the-ps1/Basically, on a cartridge sold for 10,000 yen, the developer pocketed 4,000 yen and Nintendo 3,000 yen, of which 1,500 yen was used for manufacturing.This amount was already low as a return for the developer, but it could be worse.:d) The cartridges took 3 months to manufacture, and the developers were paid not upon delivery to the distributors, but 3 months later.:d) This meant that the developers had to advance 6 months of cash using credit.:d) Nintendo, of course, was paid immediately upon ordering the cartridge, so there was no risk and a guaranteed profit.:d) To top it all off, since cartridges took three months to manufacture, to avoid losing sales, studios tried to order a little more than expected.:d) As a result, for unsold copies, studios had to pay 3,000 yen per copy...
Then Sony arrived with the PS1, which allowed profits to take off: Sony's share per disc dropped to 1,800 yen, of which only 200 was for manufacturing.In the event of unsold copies, Sony only charged 200 yen per copy.Manufacturing time reduced to one week = less risk of over-ordering or missing out on sales in the event of a shortage.Sega and Nintendo saw their consoles primarily as a way to sell their own games. Third parties hated this because they were always at a disadvantage and had to give up money to their competitors. Sony offered the 3rd party a dedicated platform, with a revolutionary game distribution system, low royalties, and solid development support.
>>12040887While there is a truth in the fact that producing games for Nintendo and Sega consoles was expensive (Sega was only marginally better before the Saturn), claiming that "nobody was making profit" is 100% bullshit.That era in time was the era of small devs, small publishers, producing low budget games with low print runs and those low print runs were enough to meet the budget back and make profit. If it wasn't the case there wouldn't have a literal thousand+ games released on NES/SNES and hundreds on Sega consoles.What the guy really means is that the possibility for profit skyrocketed with the PSX, which in turn makes the kind of profit one could make prior to that look like nothing; but that doesn't mean it used to equal to 0.As for the first article it's confusing as fuck because it's mixing data from 1993 and 1995. 1993 was indeed a poor year for video games though.>>12040893>Sega and Nintendo saw their consoles primarily as a way to sell their own games.That is true however you can't underestimate the money Nintendo made on third party games production, they'd make money on every single game produced for their systems regardless of whether the game was bought by a customer.This is however true for Sega in Japan but I don't believe it was by choice. More than 80% of the top 100 sellers of the Megadrive in Japan were Sega published games. With a couple of exceptions the Megadrive had almost zero support from third parties in Japan, precisely because the production cost was almost similar to that of Nintendo but with 1/10th of the player base.
>>12040953>That era in time was the era of small devs, small publishers, producing low budget games with low print runs and those low print runs were enough to meet the budget back and make profit. If it wasn't the case there wouldn't have a literal thousand+ games released on NES/SNES and hundreds on Sega consoles.SNES:+1700 gamesPS1:+4200 gamesNot the same scale
>>12040876What Sony really did to save the industry was creating 30 second load times every 30 seconds. This allowed virgin losers to stroke their cocks a few times between playing sessions, which made the games seem so much more interesting.
Is this another console warring thread disguised as pseudo discussion?
>>12040972>SNES:+1700 games>PS1:+4200 games>Not the same scalePS1 didn't have the same level of competition that the SNES had. Saturn was dead on arrival, and the N64 had almost no 3rd party support, which meant that most games made in that era went to PS1.
>>12040876>When Sony saved video gamesEh.I'd argue that was 1997 when PS1 got Tomb Raider 2 and Saturn didn't, and PS1 also got FF7. Saturn helped to build up the TR fan base, and when the sequel went somewhere else, well that put a lot of Saturn-owning fans in a bind. The same goes for FF-loving Nintendo owners. Before then, the over-whelming majority of PS1 games were short and often as short as 30 minutes long. The PS1's mission statement was originally "arcade games for your home," and arcade games are short because no one's gonna play a 60-hour JRPG at the movie theater to kill time while waiting for the movie to start.
>>12040887>Nintendo, of course, was paid immediately upon ordering the cartridge, so there was no risk and a guaranteed profit.nintendo nigger mentality never ceased to amaze me
>>12040998>Saturn helped to build up the TR fan base, and when the sequel went somewhere elseSega should've catered to video game enthusiasts and stuck with 2d games and arcade ports, and let Sony have the interactive movies and simulators that appeal more to non gamers. The Saturn should've launched with a 2d Sonic the Hedgehog game. 2d Sonic is what made Sega huge in the first place, to abandon it for an entire console generation was a suicidal decision.
>muh 16-bit console market collapse>1995Which is precisely when they were hyping up the Saturn and N64, so people were holding off on buying new games to save up for the next gen console.>people didn't care about 16-bit games anymoreWhich is why Sega complained about the Saturn having to compete against the Genesis, since Genesis sales were still going strong while people were ignoring the Saturn.Crappy internet videogame journalism at it's best.
>>12040972What's your point exactly? The player base grew exponentionally in the 5th gen. The Switch has even more games than the PSX.This is beside the point, the point is that claiming that "only Nintendo was making profit" is bullshit no matter how you look at it.
lmao, why are Sony fans so enamoured with the idea of Sony being the best?They turned into a Californian woke company. You lost.
>>12041040>Which is precisely when they were hyping up the Saturn and N64, so people were holding off on buying new games to save up for the next gen console.No the crack began in 1993 ,2 full year before PS1/Saturn NA and european launch>Which is why Sega complained about the Saturn having to compete against the Genesis, since Genesis sales were still going strong while people were ignoring the Saturn.We talking software sale SNES and Megadrive were still selling relatively well,not the games which is were all the profits came fromPeople were tired of old school 2D games,they wanted something new, something that Sony will give them
>>12041110I'm not a Sony fan ,just a passionnate about video game history
Sega FY 1997 https://youtu.be/gQPFKMx21Sk?si=OfTSSeIxA7U770mz a complementary video about the fall of 16 bits market and the huge lose of money of Sega from that period
>>12040983Yeah.
>>12041115Well, in that case you're getting confused by corporations talking about their profit, which can be really different to the average person's experience of video games back then.I was actually alive and conscious in the 90s and I can tell you that, while it's true that people were super hyped for 3D (oh, if only we knew how underwhelming it all would be after the initial excitement..) saying people didn't care about 2D and weren't buying 16 bit games in 1994 and 1995 is really detached from reality. 1994 was the year of Super Street Fighter II and Mortal Kombat II, not... The Horde or whatever shit was being released on 3DO and PS1 (well PS1 came out in 1994 only in Japan and at the very end, most people didn't really start buying the console until 1996-ish when it actually started getting games).Thinking there was a "crash" and people stopped caring about 2D games altogether by 1993 is just misinformation, sad if you believe that.
>>12041126Anon i think that Nakamura know more about the market than you...>“It’s true that 16-bit consoles sold quite well and we were able to sell off a good portion of our inventory, but the games did not sell at all,” said Sega director Shunichi Nakamura. The best-selling game charts for the past few weeks in North America reveal that almost all of the top titles are for Sony’s PlayStation console. Games for Nintendo’s SNES console, which has sold over 30 million units far more than the PlayStation have disappeared from the best-selling chartsJust read the articles
>>12041118There's a lot of difference between 1993 and 1997, OP.
>>12041021The transition to 3-D was happening like it or not. Sega would have died sooner if they stuck to 2-D flat-plane games. Getting games like Tomb Raider was a step in the right direction, and missing out on games like Tomb Raider 2 was a mistake.
>>12041137I read the article, its all a mish-mash of quotes of dubious translation (where's the Japanese original source?) and laughable clickbait journo shit ("experts say...")The quote you're using isn't even clarifying what year is it talking about.What year did people stopped buying SNES and Genesis and PS1 topped the charts? Maybe 1996, not before that.
>Sega president Hayao Nakayama announced at the beginning of the year, “We are planning to increase our arcade game division by a factor of three to a revenue scale of ¥350 billion.” The plan is to greatly increase the relatively stable income of the arcade division in order to absorb the risk of the home console division.By cleansing itself through the extraordinary loss, Sega’s overseas console division will be starting over from zero. Sega’s policy now is to focus on establishing the Saturn, and also on expanding into PC game software in the North American market. “The question now is how much our profits from the arcade market will be able to turn around the console market,” said Nakayama, whose words will be put to the test this year.Without the arcade market, Sega would probably have gone bankrupt by 1995
>>12041112A bunch of the SNESs best selling games came out when the PlayStation and Saturn were out. Killer Instinct, Chrono Trigger, DKC 2 & 3, Yoshi’s Island, Mario RPG, Dragon Quest VI sold 3 million in Japan alone.
>>12041118Tens to Hundreds of Thousands of Genesis, Game Gear, Nomad, 32X in warehouse with few to no ordersgenesis games - 1 402 226 games in watehouse & 28 824 ordersGame Gear Games – 941,000 in warehouse & 7,000 Orders32X & 32X Bundles – 400,000+ in warehouse & Zero OrdersThe crack of 93 was terrible Thanks Sony for saving video games
>>12041461How many californian cocks did you suck this week, OP?
>>12041463Kept your sexual fantasy for yourself
>>12041501>tfw no sony fanboy sucking my californian cock today
>>12041501If you lay down the video game industry fanfiction first.
In 1993, the industry had peaked at $6 billion and dropped to $2.5 billion in 1995! That's a drop of $3.5 billion!More than the crack of 83
>>12040953Is there any data for how much it cost to make games for the PC Engine?
>>12041640It wouldn't be a problem if people stopped caring about Japanese gaming and started caring about British gaming
