Developer: Sony
Origin: Japan
Release: 1994
This is a story that isn’t just about the design of an object made from silicon, plastic and metal. Nor is it just the story of the corporate politics that allowed the project to commence. It’s also the story of sales forces and distribution systems, of marketing strategies and product evangelists, of a confluence of social, economic and technological circumstances that allowed it to thrive. It’s about the vision behind the piece of hardware that pushed videogames into 3D and a veteran yet wide-eyed technology corporation into an industry that it would transform.
And it’s a vision that rose out from the rubble of a very public disaster. At the Consumer Electronics Show in June 1991, Sony revealed to the world a videogame console on which it had jointly worked with Nintendo. This SNES with a built-in CD-ROM drive was a project driven by Ken Kutaragi, a Sony executive who had come out of its hardware engineering division. It was to be Nintendo’s route into a brave new world of multimedia, and a way for Kutaragi to show his company how important the videogame industry could be. But the very day after Sony’s announcement, Nintendo declared that it would be breaking its deal with Sony by partnering with Philips instead.
Sony's original prototype PlayStation, a SNES with a CD-ROM drive
This humiliating turnabout enraged Sony president Norio Ohga, but though it seemed sudden from the outside, problems had been boiling between the two companies for some time. The main issue was an agreement over how revenue would be collected – Sony had proposed to take care of money made from CD sales while Nintendo would collect from cartridge sales, and suggested that royalties would be figured out later. “Nintendo went bananas, frankly, and said that we were stepping on its toll booth and that it was totally unacceptable,” explains Chris Deering, who at the time worked at Sony-owned Columbia Pictures but would go on to head the PlayStation business in Europe. “They just couldn’t agree and it all fell apart.”
But Ohga was dead set on remaining in the game. At the end of a July meeting to plan litigation against Nintendo, he declared defiantly: “We will never withdraw from this business. Keep going.” And so Kutaragi went to work with strong support from the very top of Sony. “Ken brought together a handful of engineers that had come out of a broadcast and professional realtime 3D graphics engine called System-G,” explains Phil Harrison, who joined Sony in September 1992 to start its European game publishing business, and would eventually go on to become president of Sony Computer Entertainment Worldwide Studios. System-G was a special-effects computer that broadcasters could use to augment live broadcasts with 3D images in realtime. “Technologically, that’s not really a million miles away from videogames, but this was a super high-end workstation. And Ken’s big vision was to take that, apply it in high volume and bring it into the home,” recalls Harrison.
But the relationship with Nintendo wasn’t quite over. It had indistinctly proposed that Sony could remain involved in ‘nongame areas’ of the project, though the move was probably just to delay any attempt Sony may have been making to enter videogames off its own bat, as well as sidestep the legal challenges Sony had made over Nintendo’s breach of contract. Kutaragi was frustrated. Not only was he facing criticism and resentment from many at Sony who disagreed with the idea of Sony entering the game business, but the project’s focus was also dissipating within the company. ‘There is no consensus within Sony about why we are engaged in this business’, he wrote candidly in his January 1992 business report. ‘We are wasting time and missing opportunities while expecting too much from Nintendo and dealing with them in blind good faith’.
In May that year, Sony finally put a stop to negotiations, and whether or not it should retain the project was decided at a pivotal meeting chaired by Ohga on June 24. The great majority of those present opposed it, but Kutaragi nevertheless revealed that he’d been developing a proprietary CD-ROM-based system capable of rendering 3D graphics, specifically for playing videogames – not multimedia. When Ohga asked what sort of chip it would require, Kutaragi replied that it would need one million gate arrays, a number that made Ohga laugh: Sony’s production of the time could only achieve 100,000. But Kutaragi slyly countered with: “Are you going to sit back and accept what Nintendo did to us?” The reminder enraged Ohga all over again. “There’s no hope of making further progress with a Nintendocompatible 16bit machine,” he said. “Let’s chart our own course.”
Ken Kutaragi
And achieving that meant Ohga removing Kutaragi from Sony, fearing that the widespread internal opposition to the project might crush Kutaragi’s resolve. “There was a huge resistance inside the company to actually being in the videogames business at all,” explains Harrison. “The main reason why the Sony brand wasn’t really used in the early marketing of PlayStation was not necessarily out of choice, but it was because Sony’s old guard was scared that it was going to destroy this wonderful, venerable, 50-yearold brand. They saw Nintendo and Sega as toys, so why on Earth would they join the toy business? That changed a bit after we delivered 90 per cent of the company’s profit for a few years.”
Kutaragi was moved with nine team members to Sony Music, a separate financial entity owned by the corporation, in the Aoyama district of Tokyo. There, he worked with Shigeo Maruyama, CEO of Sony Music and soon to become a vice president of the division that ran the PlayStation business, Sony Computer Entertainment International (SCEI), and Akira Sato, who’d also become a VP. Though on face value it hardly sounds significant, the involvement of Sony Music was fundamentally important to PlayStation’s subsequent success. “Music was huge business back then, and they knew you had to attract talent and that you have to spend money to launch things,” says Deering. Sony Music knew how to nurture creative talent and how to manufacture, market and distribute music discs – with the move to CD-ROM, the mechanics of making and supplying games had become very similar to that used for music. “Sony made an awful lot of money pressing music discs,” explains Deering. “Between the converging interests of the disc pressing divisions and Ken Kutaragi and Ohga-san they were truly well down the road to developing PlayStation.”
The final two key players in PlayStation were Olaf Olafsson, who was president and CEO of SCEI’s umbrella organisation, Sony Interactive Entertainment (and, incidentally, a writer who’d been nominated for the Icelandic Literature Prize), and Terry Tokunaka, who became president of SCEI and had come from Sony’s head office. Tokunaka’s vision for the project was simple, as Harrison explains: “It was that if we can be the creative choice of the game developers, and the business choice of the publishers, then those two together give us a chance of becoming successful. In order to be very successful you need both elements; you can’t have one and not the other. I think this still holds true today for any company that wants to stay in the hardware platform business.”
Chris Deering (left); Phil Harrison (right)
Harrison was among the evangelists who went out to scout for developers and publishers to create games for the platform, having joined PlayStation when it was finally greenlit in the summer of 1993. “We had to work hard to demonstrate our credibility, because bringing hardware to market is one thing, but being an organisation to market and distribute and sell it is another,” he says. With Sony’s strategy distinctly different to that of Sega and Nintendo, it had a huge opportunity to change the console market, change that prospective publishers and developers were only too keen to happen. “A lot of the business questions related to what the business model was for a publisher, what the royalty rates would be, how we’d make and distribute the software,” says Harrison. “That was set against the backdrop of the incumbent business models of Sega and Nintendo, which were at the time very restrictive. They’ve changed now, but at the time, publishing on 16bit Nintendo was an expensive and risky proposition.”