The exorbitant R&D expenses had to be recouped by selling a massive number of arcade cabinets.
A single cabinet equipped with the latest motherboard cost as much as a used Ford.
Yet, the return on investment was far slower than that of SNK's low-cost, easily distributable MVS motherboards.
The shifting winds of the era only worsened this predicament.
North America was the world's largest gaming market.
Its cities were designed around the car, sprawling and sparsely populated.
Travel was heavily dependent on automobiles.
In such a social structure, arcades—which required specific physical spaces and relied on foot traffic—showed even more pronounced signs of decline. In contrast, densely populated Japan remained a golden market for arcades.
Car culture and the logic of arcade placement were fundamentally at odds.
The California arcades, once packed with high schoolers after class, were now deserted.
Young people preferred to stay in their living rooms or garages, playing games on their televisions.
In stark contrast, home consoles were surging forward.
Under Tom Kalinske's leadership, Sega of America had spent the past few years relentlessly pursuing product placement in film and television.
In Hollywood sci-fi blockbusters, the protagonists played games with Sega controllers. In the living rooms of hit sitcoms, Sega consoles sat on the sofas. On the scoreboards of nationwide sports broadcasts, the blue Sega logo was proudly displayed.
This subtle cultural infiltration completely transformed the entertainment habits of North American families. Video game consoles were no longer niche geek toys; they had replaced traditional board games and VHS tapes to become the default entertainment hub of the North American living room. Players no longer needed to drive twenty minutes to an arcade to insert coins; they just had to sit on their own sofas and turn on the TV.
The arcade market shrank, while the console market exploded. This shift in the era was an unstoppable force.
Namco's executives understood the trend report. The development cycles for major 3D games were doubling. A two-to-three-year span from project approval to release had become the norm. During this long research and development gap, the company needed to maintain a massive cash flow.
Thus, old game collections like Namco Museum and Namco Gallery were born. They were cheap to port and had extremely high profit margins. As long as they sold a few tens of thousands of copies, they could provide precious financial lifeblood for those money-burning 3D projects.
This was a reluctant business compromise, a growing pain of the transition between the old and new eras.
After a round of complaints about Namco's approach to their game collection, the first morning's presentation schedule was drawing to a close. The final company to take the stage was none other than Square.
Hironobu Sakaguchi stepped from the wings into the spotlight.
He wore a light gray shirt, sleeves rolled up to his elbows.
There was no long-winded opening speech.
The gaming industry already knew him all too well.
The large screen immediately displayed the footage.
The Mega Drive logo flashed by.
Trials of Mana.
The colors of the 2D pixel art were highly saturated.
Three characters moved through a forest scene.
Players could switch control between characters in real-time, with the other two managed by AI.
The combat was fluid and efficient—sword swings, spellcasting, and positioning all ran at a stable frame rate.
The release date appeared at the bottom of the screen: Late September 1996.
Applause erupted from the audience.
For the MD console to receive such a high-quality RPG at the very end of its lifecycle was a fitting tribute to its veteran players.
But this was only the warm-up.
Sakaguchi pressed a button on his remote.
The screen faded to black.
Nobuo Uematsu's orchestral score swelled through the sound system.
The violin melody soared from low to high as the brass section joined in.
The camera dove from the starry sky, piercing through the clouds.
The steel jungle of Midgar.
A train screeched to a halt at the platform.
Cloud leaped from the train.
In the front row of the media section, several Japanese reporters leaned forward, their eyes glued to the screen.
The camera zoomed in for a close-up of Cloud.
The character model had undergone a drastic transformation.
In last year's technical demo, the character was still a crude assembly of polygonal blocks, with visible seams at the joints.
Now, Cloud's hair texture was clearly defined.
His facial contours were soft, no longer a blocky mess.
The metal zipper on his clothes reflected the ambient light.
The Editor-in-Chief of Famitsu took off his glasses, wiped them with a cloth, and put them back on.
"This model's fidelity is insane," he muttered, turning to his colleague. "This is way beyond the specs they were bragging about. The polygon count has doubled."
"Sega's technical support," the colleague scribbled in his notebook. "Sega is an investor in Square, after all. Square got full access to Jupiter's low-level development tools and engine optimization schemes. They've combined their own CG technology with Sega's 3D engine."
It is worth noting that in the game development circle, Square's artistic prowess has always been in the top tier.
In the past, due to hardware and technical barriers, progress in 3D development was slow.
However, after two years of accumulation, Square has unearthed many good things from Sega's technical library.
The live gameplay demo continued.
Cloud swung his Buster Sword, slashing through Shinra soldiers.
The battle scenes were no longer rigid, parallel formations.
The camera followed the characters' movements, zooming, panning, and tilting within the 3D space.
Magic was unleashed.
Fire effects illuminated the entire screen, with light and shadow cast in real-time on the characters' armor.
Bahamut appeared, spreading its wings.
The demo video ended.
White text on a black background: FINAL FANTASY VII.
Platform: Jupiter.
Release Window: Late 1996.
Applause spread from the front row to the back.
After the noise died down, Hironobu Sakaguchi raised the microphone again.
"We have invested a tremendous amount of effort into building this world. We've added a lot in terms of scene detail, cutscenes, and script branching."
He paused for two seconds.
"This also brought a side effect: the capacity is over the limit. We hope such rich content will allow players to thoroughly enjoy themselves!"
In the bottom right corner of the screen, a CD-ROM icon appeared.
Immediately after, a second one slid out beside it.
Then a third.
And a fourth.
Four disc icons now lined the screen in a row.
A brief silence fell over the venue.
A GamePro editor swallowed the coffee he'd just taken a sip of and coughed twice.
"Four discs?" He turned to his colleague.
The colleague was still staring at the icons on the screen, counting them.
The industry's current blockbusters—Sega's own top-tier titles—usually came on two CD-ROMs. Most Sony games couldn't even fill a single disc.
Four discs.
That meant a massive amount of pre-rendered CG, an enormous volume of text, and an immeasurable amount of art assets.
This was Square flexing its muscles for the entire industry to see.
"How much will the pressing costs increase?" an industry analyst quickly calculated on a piece of paper. "Four discs... they'll need custom packaging. A standard single-CD case won't fit them; they'll have to use those thick, multi-disc plastic cases. Square has pushed the budget to the absolute limit."
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