Time entered October 1995.
The autumn breeze in Tokyo swept through the streets, carrying away the lingering warmth of summer, but it couldn't disperse the bustling crowds in the electronics districts of Akihabara.
The dazzling demo footage from the E3 exhibition, after months of mastering and distribution channel stocking, had gradually turned into physical discs and cartridges sitting on store shelves.
As the end of the year approached, game companies were releasing new titles more and more frequently, and many of the promises made by companies during the summer were finally being fulfilled.
Gamers faced the toughest test of their wallets, with an endless stream of new releases driving up their spending on games.
The adoption rate of 32-bit consoles exceeded the expectations of many traditional analysts.
According to data aggregated from major distributors, Sega's Jupiter had cumulatively sold over 5 million units globally.
Sony's PlayStation, despite facing resistance in the North American market, had also surpassed 2 million units in July, thanks to its steady performance in its home market of Japan and the support of its third-party lineup.
In sharp contrast to this was the 16-bit console market.
Throughout the second half of the year, a large number of SFC and MD games continued to be released, and the sales figures were still passable, but the atmosphere of nationwide frenzy was no more.
The attention of millions, if not tens of millions, of core gamers had long since been captivated by the more impactful 3D graphics and CD-quality audio of 32-bit consoles.
When it comes to shifts in market trends, third-party software developers are always the most sensitive.
At this time, Sega released a message through official channels within the gaming industry: throughout December and the New Year holiday, Sega would not release any major first-party blockbusters, effectively ceding the most lucrative commercial battle period at the end of the year to its third-party partners.
When the news broke, the industry was in an uproar once again, although this was not the first time Sega had made such an arrangement.
Inside the offices of Sony Computer Entertainment, several executives sneered at this approach.
In their view, this was nothing more than posturing by Sega to cover up internal issues—either insufficient production capacity for the Jupiter or delays in first-party development—while simultaneously trying to win some favor within the third-party camp.
However, those "old foxes" who had been grinding away in the gaming industry for years saw things very differently.
A high-end Japanese restaurant in Minato Ward.
The sliding doors shut out the hustle and bustle of the outside world.
On the tatami mat, three cups of sake were pushed to the center of the table.
Konami President Kazumasa Kozuki picked up his cup and took a sip. Sitting to his left was Capcom President Kenzo Tsujimoto, and to his right was Hudson's Hiroshi Kudo.
These three companies were the most significant third-party powers in the Japanese gaming industry at the time.
This private gathering today was held without any aides—just the three helmsmen facing off and testing one another.
"Have you both seen Sega's press release?" Kudo asked, setting down his cup and getting straight to the point. "That young man, Takuya Nakayama, is getting more and more cunning. Giving up December sounds nice, but in reality, he's just putting us third-party developers on the spot. By offering the slot, if you can't come up with a good enough game to fill the void, your rating with distributors will drop next year."
Kenzo Tsujimoto crossed his arms and snorted. "Capcom's Street Fighter ZERO is selling well on the Jupiter, but development costs aren't low either. The threshold for the 32-bit era is just too high. Sega is forcing us to pick a side. If you take the slot and fail to deliver a hit, you lose leverage with the distributors."
Hudson had been immensely successful during the 16-bit era, but in the face of the shift to 3D, their transition had not been smooth. Kudo sighed, "
Kudo Hiroshi sighed. Hudson had been immensely successful in the 16-bit era, but the transition to the 3D wave hadn't gone smoothly. "We've also invested in Jupiter, putting a lot of resources into Space Adventure and Dungeon Explorer.
"It's hard to say how much longer 16-bit consoles will last. Sega leaving December open is indeed an opportunity for us, but it also means the 'meat grinder' war between third-party developers is going to start ahead of schedule."
Kozuki Kazumasa fiddled with his glass, his tone calm: "Do you really believe Sega would just hand over their year-end profits to others?"
Tsujimoto Kenzo looked up at him: "Do you have inside information?"
"I don't need inside information; just do the math," Kozuki replied, analyzing clearly. "Sega saying they aren't releasing any major titles in December doesn't mean they won't release anything in November. Don't forget, there's a movie coming out in Hollywood."
Kudo Hiroshi frowned, thinking for a moment: "That all-CGI animated film from Disney and Pixar?"
"Toy Story," Kozuki said, naming the film. "The schedule is set, with the North American premiere in late November. Sega secured the game adaptation rights and handed it over to their North American development team a long time ago. Given their experience dealing with Hollywood over the past few years, the game will definitely be released simultaneously with the movie."
Kenzo Tsujimoto tapped his fingers on the table, looking somewhat skeptical. "How much damage can a game adapted from an animated movie really do? Most of those previous movie-based games were just shoddy, re-skinned cash grabs. Gamers have already wised up to that."
"Don't underestimate Takuya Nakayama's vision, and certainly don't underestimate Pixar's technology," Kagemasa Kozuki countered. "Sega specifically reserved time at E3 to showcase this game. With fully 3D-rendered graphics, combined with the buzz from the movie and Sega's distribution channels in North America, this game, releasing in late November, has the sales momentum to carry right through the entire month of December, and even into the New Year holidays."
Hiroshi Kudo understood the implications and gasped. "So, Sega's concession... was actually a trap. They used a long-tail product to occupy the shelf space at the end of the year, then let us third-party developers fight it out among ourselves in December while they sit back and collect the royalties. No matter which third-party wins, Sega is the ultimate victor."
"That's exactly it," Kozuki said, topping up their glasses with wine. "Sega played their hand too cleverly. Takuya Nakayama isn't a man to move without a sure bet. He dared to cede the December slot because the card he holds is big enough—big enough that he doesn't need to crowd into December to compete with us."
"What does Konami plan to do?" Kenzo Tsujimoto asked the core question.
"Avoid it." Kazumasa Kozuki replied decisively, without the slightest hesitation. "For the Jupiter versions of Suikoden and Live! Crazy Big Shooting, I've already had the development department adjust the disc pressing schedule. Either we release them before mid-November to reap a harvest before Toy Story arrives, or we postpone them directly until after Christmas to avoid the most intense meat grinder of a period."
He paused for a moment and added, "Konami needs profits to sustain our upcoming development plans; we can't afford to waste resources on a pointless battle for release windows. Head-to-head confrontation is not a wise choice."
Hiroshi Kudo nodded in agreement. Hudson's situation required even more caution than Konami's. "We'll be adjusting our strategy for Panic Bomber as well. It's meant to be a game targeting the casual market anyway, so there's no need to vie for attention with those 3D blockbusters. Pushing it back to after the New Year holiday and marketing it as a family-friendly game might yield better results."
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