Microsoft, Electronic Arts Mull Separate Bids for Sega
CM
February 28, 2003
TOKYO -- Sega Corp., grappling with a plan to merge with a pinball-machine
company, now has two huge potential suitors mulling their own bids for the
ailing videogame maker: Microsoft Corp. (MSFT) and videogame giant
Electronic Arts Inc. (ERTS), Friday's Wall Street Journal reported.
The two U.S. companies are separately exploring the possibility of buying
all or parts of Sega, according to people familiar with the situation. These
people stressed that the two potential suitors have yet to hold formal talks
with Sega, and no deal appears imminent.
Still, either company could emerge as a white knight to grab Sega from a
plan to combine with Sammy Corp., the pinball maker, a deal that appears
rife with difficulties and internal opposition. Sega, once a leader in the
videogame business, has stopped making its own game machines and now creates
titles for Microsoft's Xbox, Nintendo Co.'s consoles and Sony Corp.'s
market-leading PlayStation 2.
For Microsoft, a deal with Sega could give its 16-month-old Xbox access to
exclusive game titles -- analysts say the software giant lacks enough of
them to make the Xbox a long-term success. A potential jewel for Microsoft
would be Sega's Visual Concepts, a U.S. maker of sports games, one of the
most popular and fast-growing game categories.
Acquiring Sega also could give Microsoft a strong boost in Japan, where a
dearth of Xbox titles that appeal to Japanese gamers has left Microsoft with
a vast stock of unsold machines.
Sega also would give Electronic Arts, of Redwood City, Calif., a boost in
Japan, where it has been expanding. And a deal would remove a competitor:
Sega's Visual Concepts competes with Electronic Arts in sports games, albeit
with modest success.
Spokespeople at Microsoft and Electronic Arts declined to comment. A Sega
spokeswoman said the company hasn't been approached by suitors.
Meanwhile, Sega's financial plight is deepening: As early as today, the
company is expected to announce a reorganization of its U.S. operations that
will involve shedding perhaps 20% of the American work force of 450,
according to people familiar with the plan. The cuts, which are expected to
focus on sales and marketing positions at Sega of America and at Sega's
online unit, are part of a global restructuring that could lead to
additional layoffs, one person said.
Wall Street Journal Staff Reporters Robert A. Guth, Jason Singer and Phred
Dvorak contributed to this article.
dre
Would this be wise for Microsoft to allow EA to get the division of sega
that makes the best sports games... cuase as we all know EA port most of its
games from a lower to higher stabdard defacto = pure Sh*?y titles
"CM" <carlos...@hotmail.com> wrote in message
news:ekWq#n03CH...@TK2MSFTNGP10.phx.gbl...
Christmas Ape
news:ekWq#n03CH...@TK2MSFTNGP10.phx.gbl...
> http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20030228-000011-0027
> Acquiring Sega also could give Microsoft a strong boost in Japan, where a
> dearth of Xbox titles that appeal to Japanese gamers has left Microsoft
with
> a vast stock of unsold machines.
Boy, I don't know any more. Sometimes I think the Japanese won't buy
anything for Xbox. Even if they got FF exclusively, the Japanese would
suddenly decide they didn't like it.
--
<lord_...@hotmail.Com> wrote in message news:
> well ! it came out ! .. it seemed to be stuck :S im glad
> i dident damage the port with all that pulling (thx for
> the info anyway dude)
Matthew Webb
be Xenophobic. Partially why the region cannot maintain solid growth.
"Christmas Ape" <as...@kajlfdsa.com> wrote in message
news:U0N7a.273815$tq4.6414@sccrnsc01...
James Duncan
I agree. Buying Sega makes sense if Microsoft is serious about pushing Xbox
to the next level and really being able to compete with Sony in the
videogame wars for the long haul.
"Daniel of Lorien" <daniel...@hotmail.com> wrote in message
news:05ca01c2df67$62312a50$a201...@phx.gbl...
> You guys still remember that MS tryed to buy Sega back
> before the DC when down the tubes. I think that Microsoft
> needs to get all of Sega. They need a mascot and who
> better to battle it out with Mario than Sonic? They could
Absolutely. Sonic is one of Gamecube's best sellers and would be a great
title for the Xbox. That would give Xbox a solid family friendly
platformer.
> drop their stupid sports team and push all of that on
> Visual Consepts. Also you will remember that of all the
> companies Sega has the most experience with online games.
On target. Sega's sports games are excellent, but they can't compete with
EA's marketing muscle and dominence in thhe area. Microsoft could dump all
of their sports titles which are not as good and haven't sold all that well.
> This could assist MS in pushing the Live platform into
> more houses. I don't want to see EA get their grubby
> little hands on my favorite software company. I would
> kill myself and then blow EA out of the sky. They are
> such a worthless company! All they ever do is crappy
> ports and they don't even know what innovation is
> anymore. I'm telling you now, if MS buys Sega... the Xbox
> will be home to some of the greatest games you have ever
> seen. I'm sure that many wanted titles would be shifted
> out like Streets of Rage and Phatasy Star 5.
Hey, I really want to see Virtua Fighter as a franchise on the Xbox. VF4 as
an XBL title would be extraordinary, and reason enough for lots of folks to
sing up for XBL.
Sega has a very deep library of games that Microsoft shoud want to acquire:
All the sports titles
Sonic
Virtua Fighter
Panzer Dragoon series
Shenmue
Virtua On
Not only would this boost Xbox's game library, it would deplete the
libraries of the competition. The PS2 wouldn't be affected much, but it
would definitely make a difference to the Gamecube. Also just think of how
damaging it would be if EA acquired Sega and then did NOT develop the Sega
titles for the Xbox, especially with the exclusives.
Dark_Blade
"James Duncan" <j.du...@verizon.net> wrote in message
news:7F28a.50536$_J5....@nwrddc01.gnilink.net...
Eric Pobirs
interested me enough to buy at full price when the system came out.
An interesting question would be whether to continue developing for Game
Boy Advance. This doesn't directly compete with anything MS has now or in
the near future and can be highly lucrative. Add a cable to connect the GBA
to an Xbox controller port...
"Dark_Blade" <bfann...@hotmail.com> wrote in message
news:4_68a.280910$tq4.6516@sccrnsc01...
James Duncan
I definitely think they would develop for the GBA, at least until they came
out with a competing handheld. Not sure they ever would but there isn't a
reason not to make money selling games for GBA if there's no competition.
Microsoft wants to work with Sega to create arcade titles powered by the
Xbox. If Sega is sold to EA, that deal will probably go down the tubes.
Microsoft really needs to buy Sega.
"Eric Pobirs" <epo...@pacbell.net> wrote in message
news:iXx8a.818$tF3.66...@newssvr13.news.prodigy.com...
....
Eric Pobirs
arcade games I greatly doubt there would any interference in the choice of
hardware. They have no particular reason to be against using it and they do
have good reason to desire a platform that easily ports to the home market.
EA may not support Xbox as well as we'd like but they are in the Xbox
software business. It would be to Microsoft's advantage to cooperate as it
would be a high margin customer for the Xbox chipset, albeit in fairly small
quantities compared to the home market. Alternate applications that raise
production levels help keep the partners at Nvidia and TSMC happy as well as
contributing to lowered costs.
They will likely use a different motherboard with much more RAM. The
economics of an arcade machine allows for more expense in that regard and it
gives the developers a chance to make the arcade version more spectacular
than the eventually home version. It also allows the attract mode to run
without a lot of drive activity, reducing the chance of mechanical failure.
"James Duncan" <j.du...@verizon.net> wrote in message
news:GJlaa.1852$u%.1796@nwrddc02.gnilink.net...
James Duncan
> I disagree. So long as an EA-owned Sega was going to continue to
produce
> arcade games I greatly doubt there would any interference in the choice of
> hardware. They have no particular reason to be against using it and they
do
There's not a lot of money in the video arcade business these days. EA may
decide it isn't in their best interest to go into the aracde business. Then
Microsoft would need to pay high prices for content they do not control.
> have good reason to desire a platform that easily ports to the home
market.
> EA may not support Xbox as well as we'd like but they are in the Xbox
> software business. It would be to Microsoft's advantage to cooperate as it
> would be a high margin customer for the Xbox chipset, albeit in fairly
small
> quantities compared to the home market. Alternate applications that raise
> production levels help keep the partners at Nvidia and TSMC happy as well
as
> contributing to lowered costs.
EA isn't that much of an Xbox friendly company. They haven't been willing
to do any XBL games. What happens if EA gets Sega and decide they don't
want to continue doing the sports line at all? Then XBL losses the online
Sega sports games. If EA decides to not bring their sports titles to XBL
we'd be left only with Microsofts own online sports titles, which are not as
highly regarded as Sega.
> They will likely use a different motherboard with much more RAM. The
> economics of an arcade machine allows for more expense in that regard and
it
> gives the developers a chance to make the arcade version more spectacular
> than the eventually home version. It also allows the attract mode to run
> without a lot of drive activity, reducing the chance of mechanical
failure.
Actually they'd probably use a very similar motherboard since Xbox graphics
are powerful enough now. They'd certainly boost the memory and probably
hard disk space. They'd have large screens and special input devices. Say
arcade quality joysticks for mech simulators and fighters. Halo would
probably have a special light gun assault rifle. House of the Dead would
have a light gun set up also.
Eric Pobirs
>
> "Eric Pobirs" <epo...@pacbell.net> wrote in message
> news:Vgoaa.601$8Y7.40...@newssvr21.news.prodigy.com...
> > I disagree. So long as an EA-owned Sega was going to continue to
> produce
> > arcade games I greatly doubt there would any interference in the choice
of
> > hardware. They have no particular reason to be against using it and they
> do
>
> There's not a lot of money in the video arcade business these days. EA
may
> decide it isn't in their best interest to go into the aracde business.
Then
> Microsoft would need to pay high prices for content they do not control.
>
Gee, I think I covered that already. Read the second sentence.
What would this have to do with content prices? Unless Microsoft was
seeking an exclusive on the home version of a game the normal royalty
relationship would pertain.
> > have good reason to desire a platform that easily ports to the home
> market.
> > EA may not support Xbox as well as we'd like but they are in the Xbox
> > software business. It would be to Microsoft's advantage to cooperate as
it
> > would be a high margin customer for the Xbox chipset, albeit in fairly
> small
> > quantities compared to the home market. Alternate applications that
raise
> > production levels help keep the partners at Nvidia and TSMC happy as
well
> as
> > contributing to lowered costs.
>
> EA isn't that much of an Xbox friendly company. They haven't been
willing
> to do any XBL games. What happens if EA gets Sega and decide they don't
> want to continue doing the sports line at all? Then XBL losses the online
> Sega sports games. If EA decides to not bring their sports titles to XBL
> we'd be left only with Microsofts own online sports titles, which are not
as
> highly regarded as Sega.
I also already covered this, too. EA has shipped a substantial number of
Xbox games. So they don't have all the features you'd like. Boo hoo. Vote
with your wallet and get over it. Either the games stand on their own merits
or they don't. You cannot realistically expect every company, especially one
as strong as EA, to mold their decisions to Microsoft's will.
Continuing the Sega Sports line would be contingent on whether it
represented a greater profit by their existence or removal. Certainly the
orientation of the games might change so as to differentiate them from EA's
existing sports line. Simulation vs. action is a major dividing line in the
genre and it isn't unknown for a publisher to offer several games at once
offering different perspectives on the same sport.
Being your own competition is not at all uncommon in the marketing
world. Consider how many brands of toothpaste or laundry detergent emanate
from the same parent company.
> > They will likely use a different motherboard with much more RAM. The
> > economics of an arcade machine allows for more expense in that regard
and
> it
> > gives the developers a chance to make the arcade version more
spectacular
> > than the eventually home version. It also allows the attract mode to run
> > without a lot of drive activity, reducing the chance of mechanical
> failure.
>
> Actually they'd probably use a very similar motherboard since Xbox
graphics
> are powerful enough now. They'd certainly boost the memory and probably
> hard disk space. They'd have large screens and special input devices.
Say
> arcade quality joysticks for mech simulators and fighters. Halo would
> probably have a special light gun assault rifle. House of the Dead would
> have a light gun set up also.
>
You misunderstand. The chipset would remain the same (although the GPU
might be cherrypicked for a substantially higher clock rate and using a
faster x86 CPU presents no great obstacle) so by definition the graphics are
powerful enough for the application or the subject wouldn't be under
discussion. RAM is a hugely important variable that can greatly expand what
can be done with those chips. Additional texture memory alone can easily
allow for a much better looking game. The Xbox motherboard was designed to
allow for 128 MB. If chip prices were sufficiently low at the time the spec
was frozen the machine would have been released with double the RAM.
Developers would much more readily produce games that leave the competition
for dead. As it is, the 64 MB in the Xbox is a substantial advantage,
especially when combined with fast caching from the hard drive, but it isn't
so much more than the competition that the difference is always obvious to
the casual viewer. All too often multi-platform games are given little or no
features to exploit the special features that distinguish one of the support
system, as seen in the complaints about EA.
There would be no reason whatsoever to use a larger hard drive in an
arcade application. If anything, a much smaller drive would be perfectly
adequate if there were any significant savings to be had. There would be no
storage of custom soundtrack files, no save games, and only one game to
cache. (Unless they went the Neo-Geo multi-game route.)
James Duncan
>
> "James Duncan" <j.du...@verizon.net> wrote in message
> news:eypaa.724$5V1...@nwrddc04.gnilink.net...
> >
> > "Eric Pobirs" <epo...@pacbell.net> wrote in message
> > news:Vgoaa.601$8Y7.40...@newssvr21.news.prodigy.com...
> > > I disagree. So long as an EA-owned Sega was going to continue to
> > > produce arcade games I greatly doubt there would any interference in
the choice
> > > of hardware. They have no particular reason to be against using it
and they
> > There's not a lot of money in the video arcade business these days. EA
> > may decide it isn't in their best interest to go into the aracde
business.
> > Then Microsoft would need to pay high prices for content they do not
control.
> >
>
> Gee, I think I covered that already. Read the second sentence.
>
> What would this have to do with content prices? Unless Microsoft was
> seeking an exclusive on the home version of a game the normal royalty
> relationship would pertain.
It has do with being able to pursue ARCADE games. EA may decide they want
to have nothing to do with them. Of course, for a high enough price they
may change their mind. But then the price may be so high it would have just
been cheaper to buy Sega to begin with. Arcade games aren't under the same
market as home games. As Microsoft would be the sole dealer in that area,
an EA-owned Sega may decide not to deal.
> > EA isn't that much of an Xbox friendly company. They haven't been
> willing
> > to do any XBL games. What happens if EA gets Sega and decide they don't
> > want to continue doing the sports line at all? Then XBL losses the
online
> > Sega sports games. If EA decides to not bring their sports titles to
XBL
> > we'd be left only with Microsofts own online sports titles, which are
not
> as
> > highly regarded as Sega.
>
> I also already covered this, too. EA has shipped a substantial number
of
> Xbox games. So they don't have all the features you'd like. Boo hoo. Vote
Buffy the Vampire Slayer is one of my favorite Xbox games and EA is the
publisher. However, EA is not doing much in the way of developing games
which make good use of Xbox's capabilities. They've cancelled some titles.
They aren't doing anything to support Xbox Live, especially with their
sports titles.
> with your wallet and get over it. Either the games stand on their own
merits
The only Xbox game I've purchased from EA is Buffy. It is an Xbox
exclusive.
> or they don't. You cannot realistically expect every company, especially
one
> as strong as EA, to mold their decisions to Microsoft's will.
Which is precisely why Microsoft should buy Sega. They'd have control over
the content. EA can decide at any time that Xbox isn't profitable enough.
They can decide not to support XBL, and Microsoft has no say in the matter.
The only thing they can do is make an offer to pay more for the game. When
you own a company the dynamic is completely different. Just think of how
Xbox would be hurt if all of Sega's games were removed from their library.
What if all of EA's games were removed from Xbox's library. Now imagine the
effect of removing both from Xbox's library.
EA can do whatever they want with games in their library. Letting them get
ahold of Sega's library would not be in Microsoft's best interest.
> Continuing the Sega Sports line would be contingent on whether it
> represented a greater profit by their existence or removal. Certainly the
> orientation of the games might change so as to differentiate them from
EA's
> existing sports line. Simulation vs. action is a major dividing line in
the
> genre and it isn't unknown for a publisher to offer several games at once
> offering different perspectives on the same sport.
I don't see the differentiation being great enough. It's not like Sega is
simulation and EA is pure arcade style action.
> Being your own competition is not at all uncommon in the marketing
> world. Consider how many brands of toothpaste or laundry detergent emanate
> from the same parent company.
You don't pay $50 for toothpaste or laundry detergent. And the dynamics of
stocking supermarket and drug store shelves is different than the video game
marketplace. There aren't specifically marked areas for Brand X laundry
detergent vs. Brand Y such as is the case with Xbox vs. PS2 games. It is
adventagious for a company to have several brands of say cereal so they can
take up more space on the shelves and "muscle out" the competition. There's
a whole marketing tactic dealing with maximizing "facing" on grocery store
shelves.
Sega isn't selling anywhere near as well as EA sports titles. I'd be
willing to bet if EA gets Sega, they'll kill off the Sega sports line within
two years of the sales. EA sports is a lucrative franchise which is
outselling Sega -- one of the big reason's Sega's willing to sell. Killing
off Sega sports may very well be a great cost cutting measure which
virtually hands EA a monopoly in the sports game arena.
> There would be no reason whatsoever to use a larger hard drive in an
> arcade application. If anything, a much smaller drive would be perfectly
> adequate if there were any significant savings to be had. There would be
no
> storage of custom soundtrack files, no save games, and only one game to
> cache. (Unless they went the Neo-Geo multi-game route.)
The entire game would be on hard disk. No CD at all. Faster load times,
more high res cut scenes, lots of music tracks.
And yes the Neo-Geo multi-game route would be an option. Especially for
things like having Halo 1 and Halo 2. A Steel Battalion style arcade
quality control scheme could be done. It could support say Steel Battalion
and Mechwarrior.
[Other stuff was deleted since it clarified some items and I understand your
point].
Eric Pobirs
>
> "Eric Pobirs" <epo...@pacbell.net> wrote in message
> news:VMqaa.622$ww.42...@newssvr21.news.prodigy.com...
> > What would this have to do with content prices? Unless Microsoft was
> > seeking an exclusive on the home version of a game the normal royalty
> > relationship would pertain.
>
> It has do with being able to pursue ARCADE games. EA may decide they want
> to have nothing to do with them. Of course, for a high enough price they
> may change their mind. But then the price may be so high it would have
just
> been cheaper to buy Sega to begin with. Arcade games aren't under the same
> market as home games. As Microsoft would be the sole dealer in that area,
> an EA-owned Sega may decide not to deal.
You're missing the point. Microsoft is just as likely to not want to be
in the arcade business. In fact I'd say they'd be even less likely to keep
that portion of Sega active. EA has much more history in LBE ventures. If
Microsoft bought Sega the arcade portion easily still go to Sammy so that
each part of the business has a new parent in the best position to receive
benefit. Otherwise the hassle of shutting down and disposing of those assets
would be a reason NOT to buy Sega.
You've still offered no explanation of why this would affect content
prices. In the great majority of cases third party publishers PAY to release
their games on a platform. This is the very heart of the entire video game
business since Nintendo resurrected it in the 80's after the collapse that
came from the failed business models of Atari, Coleco, and Mattel.
By and large, this wouldn't play out in the US. The arcade business
these days in toto is a flyspeck here compared to Japan. The arcade
divisions revenues are not readily available as separate numbers so it's
difficult to say if this would be viewed as another failed division or one
that would be a viable business if broken away from the decaying hulk of a
once proud game company.
If Microsoft really cared at all about the arcade business (They've had
numerous opportunities in recent year to make purchases in that area for
cheap but all were passed by) they could simply wait until the company
collapsed and just hire the talent and purchase any worthwhile IP at
auction. This would be substantially cheaper than purchasing Sega outright.
It is the all too often inevitable outcome of a corporate collapse like
Sega's. Stuff gets lost forever along the way. First was the home console
business, next will likely see the arcade business subsumed within another
company and the Sega identity largely lost.
> Buffy the Vampire Slayer is one of my favorite Xbox games and EA is the
> publisher. However, EA is not doing much in the way of developing games
> which make good use of Xbox's capabilities. They've cancelled some
titles.
> They aren't doing anything to support Xbox Live, especially with their
> sports titles.
>
> > with your wallet and get over it. Either the games stand on their own
> merits
>
> The only Xbox game I've purchased from EA is Buffy. It is an Xbox
> exclusive.
Yes, but it is also very unusual for an EA release in that it started
life under a different publisher and platform. (More than one of both.) A
more typical EA console release is conceived and fleshed out in house and
then coded for each viable platform by in-house or contract developers as
needed. It bothers EA not at all that the individual platforms are not very
well served in term of features. EA tends to think of itself as being a
platform and the hardware companies as distribution outfits. For a highly
generic title like their 'Ty the Tasmanian Tiger' they track its success or
failure as an aggregate of the sales on all platforms combined. The
individual platforms matter only in observing if one of them severely
underperforms on its contribution and shouldn't supported in the future for
this genre or at all.
EA does what is in its interest and nobody else's. Their current
partnership with Nintendo including the involvement of Miyamoto in advising
EA development teams on GameCube features is coming entirely out of
Nintendo's pocket. The use of Miyamoto's valuable time could be especially
wasteful if these games don't bring the kind of royalties needed to offset
the sort of sales a Miyamoto in-house project typically produces. (Although
much of the old magic has been lacking in the GameCube era. If the new Zelda
doesn't do very, very well I think the shine will be off the apple.) EA has
always been ruthless in exploiting outsiders to the company. At one time it
wasn't uncommon for them to take a game design to several contract houses
and have all of them, unbeknownst to each other, take the project to its
first milestone and then cancel at all but the most promising example. This
was pretty rough for the losers who already thought they had the job from
start to finish.
>
> > or they don't. You cannot realistically expect every company, especially
> one
> > as strong as EA, to mold their decisions to Microsoft's will.
>
> Which is precisely why Microsoft should buy Sega. They'd have control
over
> the content. EA can decide at any time that Xbox isn't profitable enough.
> They can decide not to support XBL, and Microsoft has no say in the
matter.
> The only thing they can do is make an offer to pay more for the game.
When
> you own a company the dynamic is completely different. Just think of how
> Xbox would be hurt if all of Sega's games were removed from their library.
> What if all of EA's games were removed from Xbox's library. Now imagine
the
> effect of removing both from Xbox's library.
>
> EA can do whatever they want with games in their library. Letting them
get
> ahold of Sega's library would not be in Microsoft's best interest.
And what of Vivendi, Infogrames, Ubisoft, Konami, Namco, Capcom, et al,
ad infinitum? There is no end of the companies to be won over by purchase.
It isn't a winning strategy if they cannot deliver some major hits. Which is
an area where Sega has been deficient for some time.
Keep in mind that if Sega were in possession of a string of bestselling
hits their valuation would keep them off the bargaining table despite their
debt situation. In the eyes of stock traders past debt isn't nearly as great
a sin as lack of revenue, especially if that debt is largely due to portions
of the company that no longer exist. This is the reason Vivendi Universal is
valued so high despite the horrendous overall condition of the company and
why the long overdue breakup and sale of its assets has been so long
delayed.
Only so much can be achieved by the outright purchase of content and
developers of future content. Every such purchase puts more red ink on the
division's book creating yet more pressure for the platform to perform well
in advance of anything that generates revenue coming from the purchase, as
in the case of Rare.
There is one primary reason to buy a developer: to have their output
exclusive to your platform. If that developer is already doing well by your
platform it isn't in your interest to buy them and take on all of their
expenses rather than just enjoying the disc production royalties. Sega has
been amongst the most dedicated in making the most of their Xbox products
and has little or nothing to show for it.
> > Continuing the Sega Sports line would be contingent on whether it
> > represented a greater profit by their existence or removal. Certainly
the
> > orientation of the games might change so as to differentiate them from
> EA's
> > existing sports line. Simulation vs. action is a major dividing line in
> the
> > genre and it isn't unknown for a publisher to offer several games at
once
> > offering different perspectives on the same sport.
>
> I don't see the differentiation being great enough. It's not like Sega is
> simulation and EA is pure arcade style action.
That is the current situation. With both brands under one roof the
differentiation would be put in place. (Sega has already done this, offering
both realistic and cartoonish fantasy versions of sports i.e. Soccer Slam.
Likewise for Acclaim, Konami, and Capcom, although much of this is limited
to Japan.) This would give the new parent company a better spread against
the competition. Madden could continue to dominate its traditional market
while the new sub-brand goes up against the Midway action oriented titles.
Or not. Sega's valuation is diminishing rapidly. The eventual sell-out
may be for a pitiful price with only a few remnants of the franchises
actively given continuing budgets for new entries. Such is life. About the
only way Sega can avoid this is to start parceling itself up so that no one
buyer is forced to pick and choose which products it wishes to continue. The
dividing lines are largely already in place with the branding of the various
development teams. For instance, Sonic Team could pass into Capcom's hands
while Sega Rosso goes into Namco's clutches, depending how the potential
bidders perceive those groups and their franchises fitting as part of a new
stable.
> > Being your own competition is not at all uncommon in the marketing
> > world. Consider how many brands of toothpaste or laundry detergent
emanate
> > from the same parent company.
>
> You don't pay $50 for toothpaste or laundry detergent. And the dynamics
of
> stocking supermarket and drug store shelves is different than the video
game
> marketplace. There aren't specifically marked areas for Brand X laundry
> detergent vs. Brand Y such as is the case with Xbox vs. PS2 games. It is
> adventagious for a company to have several brands of say cereal so they
can
> take up more space on the shelves and "muscle out" the competition.
There's
> a whole marketing tactic dealing with maximizing "facing" on grocery store
> shelves.
Try doing laundry for a family with five kids as my mother did long ago.
(I'm the youngest at 38, so the burden is long since alleviated.) Those big
monster drums and boxes that look like they'd last a bachelor the rest of
his single days can be consumed in very short order. Unlike a game that
lasts forever and can even be sold to recover some of the value the laundry
detergent must be replaced regularly. Think of the washing machine as a
console and the detergent as a game disc that disintegrates after a certain
number of plays even though the family expects a steady flow of
entertainment.
This is not a trivial or optional (as games are) expense. The individual
usages are cheap but that is more than mitigated by frequency.
Yes, there is also the aspect of selling a minor variation on a product
to a different demographic via packaging and marketing rather than giving
those customers up to a competitor. The whole range of products has to sell
or the vendor will soon find the stores only stock that portion of the
product line that moves. If the vendor tries to force the store to carry all
of the sub-brands regardless they'll soon find none of their products in
that chain. There is no shortage of others waiting to fill that space. So
you see, all of those sub-brands are there for a reason.
Sometimes a new brand is introduced for no other reason than to give
younger consumers something to think of as their own. (This is why no mater
how dismal there will always be somebody selling a ton of CDs to
12-year-olds intent on identifying with anything that they can think of as
being of their generation as opposed to their parents or older siblings.)
"Not your father's <insert product category>" A semblance of defiance can
make an old familiar product into a new and improved bestseller. In the
early to mid 90's it seemed every other game was a platformer trying to
leech off Sonic's buzz by starring a whatever "with attitude."
Meet Murray Grofnick. He's a tax accountant, with attitude! Coming soon
for the Super Nintendo and Genesis video game systems.
> Sega isn't selling anywhere near as well as EA sports titles. I'd be
> willing to bet if EA gets Sega, they'll kill off the Sega sports line
within
> two years of the sales. EA sports is a lucrative franchise which is
> outselling Sega -- one of the big reason's Sega's willing to sell. Killing
> off Sega sports may very well be a great cost cutting measure which
> virtually hands EA a monopoly in the sports game arena.
Nothing from Sega is selling especially well. This is why the company is
a target for acquisition. Despite producing some of the hard core market's
favorites of recent times they've had a terrible time connecting to the
vastly larger mainstream market.
If the Sega Sports line dies it will be because it deserves to. If it
were a source of serious profits it would be kept alive by any new owner
with adjustments to accommodate the side by side existence of multiple
sports brands within the company.
If Sega continues on their current death spiral the line is sure to die.
A purchase offers at least a chance of continuing development. A chance at
survival is always a better option than death.
> > There would be no reason whatsoever to use a larger hard drive in an
> > arcade application. If anything, a much smaller drive would be perfectly
> > adequate if there were any significant savings to be had. There would be
> no
> > storage of custom soundtrack files, no save games, and only one game to
> > cache. (Unless they went the Neo-Geo multi-game route.)
>
> The entire game would be on hard disk. No CD at all. Faster load times,
> more high res cut scenes, lots of music tracks.
> And yes the Neo-Geo multi-game route would be an option. Especially for
> things like having Halo 1 and Halo 2. A Steel Battalion style arcade
> quality control scheme could be done. It could support say Steel
Battalion
> and Mechwarrior.
The existing hard drive is already large enough to contain any
conceivable arcade game except extremely video-centric ala a very long
Dragon's Lair sort of thing. (Ugh.) This is especially unlikely as
real-time rendering has proven more versatile and more storage resource
efficient if the necessary graphic performance is there. As noted in some of
the recent discussions in this group, users of modified Xbox units can place
several games on the hard drive. By invoking titles like Halo you're
positing the offering of games designed expressly for the home experience
that would be extremely
atypical of arcade offerings. (Even those don't come near to overflowing a
single layer disc.) This doesn't fit the profile of what we're discussing,
which would be newly developed products for the arcade market which might in
turn see home versions released and favor the native hardware equivalent in
that happenstance, although the vastly greater user base would still likely
see a much inferior version for the PS2.
There would likely still be a DVD drive in the system or a port for
connecting one temporarily. The ability to change out the game offered by an
existing cabinet is an important feature.
Games designed for the home market have different priorities than arcade
designs. You've already given them full payment, online play and
downloadable updates aside. There is no pressing need to kill you off and
extract more money from your wallet to try again. In most home games these
days you can waste quite a lot of time accomplishing nothing.
Arcades games are driven by the need to extract more money from the
current player, which makes continues a lucrative feature, or get another
paying customer clutching the stick. That machine is sucking electricity
whether someone is playing or not but a single player who ties up the
machine for a prolonged period is also a net loss in the arcade business
model. In the early 80's, at the height of the arcade business in North
America, the amount of time targeted for a first time player to have
expended all of his lives was 30 seconds. From the time you first gained
control of Mario or Pac-Man that was how long you were expected to survive
before dropping in another quarter or moving aside for someone else who
would. Much like the studio anticipation for a new film's opening week (when
they get the largest share of the box office receipts with the theater
operator's share gaining the longer it plays) an arcade owner with a new
machine wants a constant procession of quick plays to reach the payoff point
ASAP and actually start seeing some profits.
The duration has increased as games became more elaborate and
increasingly facing competition from the home market that was once primarily
driven by arcade conversions but now is dominated by original works. The
arcade operators have raised price per play accordingly to the point that
coin catchers for SBA and Sacagawea dollars have made a comeback. (For those
of you too young to recall, when the Susan B. Anthony dollar coins first
appeared arcade owners welcomed them and promoted their use by practices
such as giving five plays on a pinball machine if an SBA were used instead
of four quarters. Since SBA's are only slightly larger than a quarter they
made for a much larger haul before a coin bin became full and had to be
emptied, disrupting that machine's operation.) Even so, the pace of an
arcade machine remains very different from a game designed purely for the
home market.
The items you've suggested are more suited to a gaming cafe operation
that charges by time regardless of how well or badly you do in the game.
This can easily use existing Xbox hardware, especially for System Link play
that is inconvenient for most home users in respect to the need to gather
much hardware in one place. This isn't what Sega means when they say arcade.
They mean something that takes in cash (or a payment card in some of the
swankier places) directly and provides a brief experience for the average
player on the first time through.
James Duncan
>
> "James Duncan" <j.du...@verizon.net> wrote in message
> news:3jNaa.3314$qB5....@nwrddc01.gnilink.net...
> >
> > "Eric Pobirs" <epo...@pacbell.net> wrote in message
> > news:VMqaa.622$ww.42...@newssvr21.news.prodigy.com...
>
> > > What would this have to do with content prices? Unless Microsoft
was
> > It has do with being able to pursue ARCADE games. EA may decide they
want
> > to have nothing to do with them. Of course, for a high enough price
they
...
> > been cheaper to buy Sega to begin with. Arcade games aren't under the
same
> > market as home games. As Microsoft would be the sole dealer in that
area,
> > an EA-owned Sega may decide not to deal.
>
> You're missing the point. Microsoft is just as likely to not want to
be
> in the arcade business. In fact I'd say they'd be even less likely to keep
> that portion of Sega active. EA has much more history in LBE ventures. If
> Microsoft bought Sega the arcade portion easily still go to Sammy so that
> each part of the business has a new parent in the best position to receive
> benefit. Otherwise the hassle of shutting down and disposing of those
assets
> would be a reason NOT to buy Sega.
Microsoft is on record as wanting to be in the arcade business. Sega is the
partner they've chosen to work with. If Sega is sold that deal may go down
the tubes. Mocrosoft views the arcade as a way to showcase their games and
reach more hardcore gamers.
http://www.bayarea.com/mld/mercurynews/business/5319668.htm
http://www.cnn.com/2001/TECH/fun.games/10/15/sega.arcades.idg/
> You've still offered no explanation of why this would affect content
> prices. In the great majority of cases third party publishers PAY to
release
> their games on a platform. This is the very heart of the entire video game
> business since Nintendo resurrected it in the 80's after the collapse that
> came from the failed business models of Atari, Coleco, and Mattel.
>
> By and large, this wouldn't play out in the US. The arcade business
> these days in toto is a flyspeck here compared to Japan. The arcade
> divisions revenues are not readily available as separate numbers so it's
> difficult to say if this would be viewed as another failed division or one
> that would be a viable business if broken away from the decaying hulk of a
> once proud game company.
Microsoft is looking to boost sales in Japan (and the Asian markets). Sega
is strong in that market. They also want to hit hard core gamers and they
are the ones who still play arcade games. In the US the arcade market is
rather small. Most arcade machines are found in specialty locations such as
amusment parks, Dave and Busters, or Jillians. There aren't a lot of
arcades in malls anymore.
> If Microsoft really cared at all about the arcade business (They've
had
> numerous opportunities in recent year to make purchases in that area for
> cheap but all were passed by) they could simply wait until the company
> collapsed and just hire the talent and purchase any worthwhile IP at
> auction. This would be substantially cheaper than purchasing Sega
outright.
> It is the all too often inevitable outcome of a corporate collapse like
> Sega's. Stuff gets lost forever along the way. First was the home console
> business, next will likely see the arcade business subsumed within another
> company and the Sega identity largely lost.
Sega is key due to it's content. Rare was bought by Microsoft as a long
term investment. They may get perhaps five games out of that deal in the
next three years. Sega is a game company that has a large varied library of
proven hits. Much more so than Rare. Sega has captured the Japanese market
in the past. Microsoft wants to finally break into that market in a sizable
manner and so far they've failed. Sega is the way to go. The arcade
business is the trojan horse Microsoft can use to break increase sales in Ja
pan. Sega is there best hope for doing so.
> EA does what is in its interest and nobody else's. Their current
Absolutely, and that probably is NOT in Microsofts best interest. MS needs
to have control of the content. Sega has great content which will help sell
more Xbox's and that will increase the installed base which is necessary to
sell more games.
> >
> > EA can do whatever they want with games in their library. Letting them
> >get ahold of Sega's library would not be in Microsoft's best interest.
>
> And what of Vivendi, Infogrames, Ubisoft, Konami, Namco, Capcom, et
al,
> ad infinitum? There is no end of the companies to be won over by purchase.
> It isn't a winning strategy if they cannot deliver some major hits. Which
is
> an area where Sega has been deficient for some time.
Few of these companies have game libraries as good as Sega. Ubisoft is
already turning out good games for the Xbox and are friendly in terms of
development. If they were up for sale and looked to go to EA, than I'd say
Microsoft should look to buy them as well. Sega has delivered major hits
recently -- Virtua Fighter 4 was a top seller for sometime on PS2. Sonic
was the number one game on the Gamecube for a couple of months, outselling
Nintendo's own first party titles.
> Only so much can be achieved by the outright purchase of content and
> developers of future content. Every such purchase puts more red ink on the
> division's book creating yet more pressure for the platform to perform
well
> in advance of anything that generates revenue coming from the purchase, as
> in the case of Rare.
Sega is a much better deal than Rare.
> There is one primary reason to buy a developer: to have their output
> exclusive to your platform. If that developer is already doing well by
your
> platform it isn't in your interest to buy them and take on all of their
> expenses rather than just enjoying the disc production royalties. Sega has
> been amongst the most dedicated in making the most of their Xbox products
> and has little or nothing to show for it.
The problem is Xbox got the wrong titles for the platform. Sonic and VF 4
are the titles that they should have gotten. These are Sega's big sellers.
But they went to the Gamecube and PS2 instead. The titles Xbox have gotten
are good ones but they don't have the commercial appeal of the two I
mentioned. Also lossing Sega sports will be a big loss. Getting Sega would
mean Microsoft could dump their current sports titles and concentrate on
developing Sega's sporst line which is better.
> Or not. Sega's valuation is diminishing rapidly. The eventual sell-out
> may be for a pitiful price with only a few remnants of the franchises
> actively given continuing budgets for new entries. Such is life. About the
> only way Sega can avoid this is to start parceling itself up so that no
one
> buyer is forced to pick and choose which products it wishes to continue.
The
> dividing lines are largely already in place with the branding of the
various
> development teams. For instance, Sonic Team could pass into Capcom's hands
> while Sega Rosso goes into Namco's clutches, depending how the potential
> bidders perceive those groups and their franchises fitting as part of a
new
> stable.
If Microsoft is in the videogame business for the long haul, they need to
grab Sega while they can. Getting the whole ball of wax is the way to go.
>> If the Sega Sports line dies it will be because it deserves to. If it
> were a source of serious profits it would be kept alive by any new owner
> with adjustments to accommodate the side by side existence of multiple
> sports brands within the company.
>
> If Sega continues on their current death spiral the line is sure to
die.
> A purchase offers at least a chance of continuing development. A chance at
> survival is always a better option than death.
If Microsoft buys Sega the sports line will live on at least with the Xbox
version. If EA buys it the Sports line dies.
Eric Pobirs
>
> "Eric Pobirs" <epo...@pacbell.net> wrote in message
> news:8J4ba.667$Im5.70...@newssvr13.news.prodigy.com...
> Microsoft is on record as wanting to be in the arcade business. Sega is
the
> partner they've chosen to work with. If Sega is sold that deal may go
down
> the tubes. Mocrosoft views the arcade as a way to showcase their games
and
> reach more hardcore gamers.
>
> http://www.bayarea.com/mld/mercurynews/business/5319668.htm
>
> http://www.cnn.com/2001/TECH/fun.games/10/15/sega.arcades.idg/
Note how differently these stories read and remember that Dean Takahashi
has a book he wants to sell you. His spin grossly distorts the story. This
is not Microsoft's entry into arcades. This is Sega choosing some new
hardware for its arcade operation. They could just as easily slap together a
more powerful standard platform from going direct to Nvidia for nForce
chipsets and GeForce 4 Ti GPUs, all off the shelf, but touting it as an
arcade derivation of the Xbox makes for a bit of free publicity. It's a
passing bit of hype, not a big influential deal that could mold the future
of Xbox.
If Microsoft wanted to be in the arcade business in their own right they
have a funny way of going about it. A few years ago Midway was using PC
technology to produce arcade games like Mace, the Rush series, and Gauntlet
Legends. These were P-II systems with video systems based on the 3Dfx VooDoo
series. (Third parties could acquire these systems for their own use in LBE
via Quantum.) This use of commodity parts in a high-end configuration was
very cost effective and avoided creating a new development environment.
It would be incredibly simple for Microsoft to put together such an
operation and simply hire on experienced arcade product developers. Quite a
lot of them are looking for work these days or have already had to shift
into different careers.
But they aren't doing this, because they don't really care. If a company
wants to make the investment and give Microsoft sme free prestige that's all
swell but not if Microsoft's money is on the line. A new LBE venture would
go over very badly with the stockholders.
> Microsoft is looking to boost sales in Japan (and the Asian markets).
Sega
> is strong in that market. They also want to hit hard core gamers and they
> are the ones who still play arcade games. In the US the arcade market is
> rather small. Most arcade machines are found in specialty locations such
as
> amusment parks, Dave and Busters, or Jillians. There aren't a lot of
> arcades in malls anymore.
No kidding? This is news? What do you think I meant by LBE? This is
Location Based Entertainment, which is at the high end the primary consumer
of elaborate customized installations and at the low end the remnant of the
arcade business. Important note: while not as diminished as in the US the
Japanese arcade business is no great shakes either. The attractions still
supporting the industry there are those which can only be realized in the
form of an expensive hardware base that cannot be mass marketed in to the
home sector. This doesn't offer much hope for driving Xbox acceptance in
Japan.
Sega isn't strong in that market. They aren't strong in any market. Why
do you think everybody in the financial community expects a buyout? The
alternative is liquidation. Sega's reputation vastly outweighs it's ability
to actually produce bestselling games. Their difficulties are the direct
result of still being many times larger of a company than their sales can
justify. If Sega had reduced themselves to a head count comparable to a
Tecmo or a Koei and winnowed the number of releases they'd be in pretty good
shape. But too much of the executive staff still has they're egos tied to
the days when they were a big platform company and not just a third party
developer of some repute. It's killing the company. If they go on this way
the actual talent will go elsewhere and Sega will be left with a lot of IP
but no dependable means to exploit it.
>
> Sega is key due to it's content. Rare was bought by Microsoft as a long
> term investment. They may get perhaps five games out of that deal in the
> next three years. Sega is a game company that has a large varied library
of
> proven hits. Much more so than Rare. Sega has captured the Japanese
market
> in the past. Microsoft wants to finally break into that market in a
sizable
> manner and so far they've failed. Sega is the way to go. The arcade
> business is the trojan horse Microsoft can use to break increase sales in
Ja
> pan. Sega is there best hope for doing so.
A complete waste of time. It's been a long, long time since the console
market was driven primarily by arcade hits. Nowadays the number of major
console hits that originated in arcades is minimal. The biggest one
currently is DDR. Microsoft could simply pay Konami to do an Xbox version at
much less expense than running an arcade hardware division.
Sega's most recognizable property was created for consoles and didn't
have an arcade version until much later. That arcade game was such that Sega
never bothered to release a home version for the Western markets.
A purchase of Sega would also have to be considerd a long term
investment as they have nothing on the current schedule that appears to be a
major hit in the making. Microsoft is already publishing PSO.
That really says more about Nintendo's weak launch than it does about
Sega. Super Monkey Ball was my own obigatory full price game purchase when
the GameCube first came out.
Buyouts of developers is not a good strategy for most of one's needs.
Rare was specifically looking to be purchased after they'd developed a
mutual dissatisfaction with Nintendo. Opportunities to acquire an operation
with such an excellent track record don't come along often. Rare was already
structured to be a second party operation so it made for a very
straightforward transaction without having to fire numerous people and chop
off various gangrenous parts of the company.
The situation where it is better to bring a developer inhouse rather
than have them as a third party is, well, rare. The single greatest source
of profits in the video game business for the company that owns the platform
is from the royalties collected from third party media production. If a
company orders 100,000 units it doesn't matter if only 30,000 of those sell
at full price in retail stores. The platform owner still collects the full
royalty payment on each unit. There are some variables. The 'payment' in an
exclusivity deal is often in the form of greatly reduced royalties or
completely foregoing royalties for a set number of units. So long as the
games is a big seller it's still a profitable item and all the more so for
being exclusive to that console.
When a developer is made into a first or second party operation the
royalties are no longer a factor. The platform company makes more on the
wholesale purchases of those games from them but they also take on all the
risks of overproduction. This is why Nintendo is regarded as being in a bad
situation with the GameCube. Their third party support is weak and first
party releases haven't compensating the way they did on the N64 and Game
Boy. This makes it difficult to grow the installed base and is why the
GameCube is increasingly being treated as a GBA accessory. Nintendo is
pushing developers hard to make GC-GBA connected games to shore up the one
part of their business where they still remain unchallenged.
(Zelda is shaping up to be the all-time bestseller on the GC but note
that a fairly expensive bribe was involved in obtaining all those
pre-orders.)
The advantages of a title published by a third party is why Microsoft
could be just as happy to let Sega go to EA. The games may not exploit the
Xbox to its fullest but they'll be more profitable and low risk so long as
they continue to be published for Xbox at all.
> Sega is a much better deal than Rare.
The numbers are against you on that one. Rare in the last five years has
had a vastly better ROI than the massively larger Sega. Notably this British
company, in a market notoriously difficult for non-Japanese developers to
crack, has four games in the Japanese Platinum chart while Sega has but one.
That's Virtua Fighter II from almost eight years ago. Sega has never had a
bigger hit in its native market before or since.
http://www.the-magicbox.com/topten2.htm
Note that Star Fox Adventures, an original Rare project that was
reworked to use the Nintendo franchise characters, released in September of
last year has out sold all but six other Game Cube titles. Sonic Adventure 2
Battle, with seven more months in the stores and substantially better name
recognition is only three positions ahead. Rare will arguably deliver
worldwide as much net revenue as the much larger cost of a Sega buyout.
http://www.gamedaily.com/trsts/full_2002/top10gc.asp
Not bad for a company in size best compared to one of Sega's development
units rather than the whole company. Rare's track record for hit titles is
quite good. The most notable disappointment was 'Conker's Bad Fur Day.'
While I loved this very British satire of the video games andother things it
was not a mainstream title and nintendo seriously miscalculated how this
would play with the demographic of the N64. If it had been a disc-based
system it would have been safer to produce a smaller quantity and more as
needed. But the requirements of a mask ROM economy forced a very specialized
title to be treated as a potential mainstream hit.
That is much of the problem with buying Sega in whole. You'd have to
take on a lot of people and property that haven't been producing when all
you really wanted was a couple of Rare-sized development units like Yu
Suzuki's group.
For all of 2002 Sega had only two games that made the year's top 50 in
Japan. To their credit they ranked pretty high but all of their profits were
lost to numerous other releases that didn't do much business. If Microsoft
were to purchase just the units that produced those two game it would be a
well advised choice but not if they have to take all the dross in the deal
as well.
(BTW one of those titles was a sports entry that has no US version. Yes,
multiple genres of the same sport within a single publisher. Who would ever
have thought it possible? And don't forget 'Home Run King' for the
GameCube.)
>
> > There is one primary reason to buy a developer: to have their output
> > exclusive to your platform. If that developer is already doing well by
> your
> > platform it isn't in your interest to buy them and take on all of their
> > expenses rather than just enjoying the disc production royalties. Sega
has
> > been amongst the most dedicated in making the most of their Xbox
products
> > and has little or nothing to show for it.
>
> The problem is Xbox got the wrong titles for the platform. Sonic and VF 4
> are the titles that they should have gotten. These are Sega's big
sellers.
> But they went to the Gamecube and PS2 instead. The titles Xbox have
gotten
> are good ones but they don't have the commercial appeal of the two I
> mentioned. Also lossing Sega sports will be a big loss. Getting Sega
would
> mean Microsoft could dump their current sports titles and concentrate on
> developing Sega's sporst line which is better.
Oh please, get real and examine the numbers. Both of those games were
less than blockbuster releases and that was the best they had. VF 4 was
marked down to $20 in most Los Angeles retail outlets long before it could
be considered for 'Greatest Hits' status, a fate shared by the Acclaim
produced PS2 version of Crazy Taxi. This is a plain indicator of serious
overproduction and sales that diminished at a greater pace than expected.
The sales of Sonic on the GameCube said more about the dismal line-up
from Nintendo than the strength of Sega's franchise. The evidence indicates
that very few people if any bought a GameCube just to play Sonic Adventure 2
Battle and wait for more good releases. The bulk of that title's sales came
at the period when the installed base was fairly small and being a big fish
in that small pond wasn't a difficult task.
Meanwhile, EA hasn't apparently done badly in the eyes of the rank and
file Xbox owners. For the month of January 03 they put three EA titles in
the Xbox Top Ten sellers but only one Sega release.
http://www.gamedaily.com/trsts/january_03/top10xbox.asp
Being a fan favorite counts for little in the real world compared to
mainstream sales success.
> If Microsoft is in the videogame business for the long haul, they need to
> grab Sega while they can. Getting the whole ball of wax is the way to go.
Nonsense. Why would ownership by Microsoft magically turn Sega into a
winner? Why blow money on a loser? Anybody except Sony or Nintendo who picks
up the pieces after Sega crashes will be as likely to produce for Xbox as
anybody else, provided Microsoft holds up their end and makes a convincing
case that the installed base will continue to grow into something developers
can get excited about.
>
> If Microsoft buys Sega the sports line will live on at least with the Xbox
> version. If EA buys it the Sports line dies.
Don't bet on that. The NFL Fever team is very much part of Microsoft. (I
used to work with lead producer Pat Cook at Cinemaware, where he worked on
his first Football title, TV Sports Football, and went on to produce the
highly successful Front Page Sports series for Dynamix. He describes his own
high school team participation as "tackling dummy.") They aren't likely to
want to spend money on acquiring the NFL 2KX team when they're currently
happy with what they've already got.
They would be just as likely as EA to require some genre separation if
they to continue Sega's sports line in addition to their own.
And from Fatbabies.com, a site the industry execs hate for its accuracy:
SEGA OF AMERICA CRASHES AND BURNS
By FatSonicTheHemphog
Sega of America let go of close to 50% of their staff two weeks ago.
Hardest hit was the marketing department-it's basically gone. Only Rich
Briggs remains. Visual Concepts is going to be handling all the marketing
for Sega products, as SOA marketing failed abysmally in the year 2002. The
company released great products, but sales were pathetic. Both Stacey Kerr
and Mike Rhineheart have moved over to VC in San Rafael.
The recent layoffs took out the creative services director Bob Schonfisch
and most of his staff. This group was responsible for the hideously
mediocre packaging and market materials produced by Sega since the launch of
the Dreamcast. Ever wonder how a company as big as Sega could consistently
put out such sub-par packaging? This group was responsible for it. No eye
for detail, no concept of marketing, and a design aesthetic from the mid-80'
s. Most of the "art" that Schonfisch was responsible for was simply the
Japanese package with a hastily thrown together Engrish logo dropped on top
of it.
Terry Higgins, formerly of Sega PR is now in charge of creative services.
Tetsu Kayama, the 42-year old Japanese CEO of Sega of America, has appointed
a gang of three to run the company following the departure of COO Peter
Moore. Kayama, who doesn't speak English and is deathly afraid of flying,
made his second-ever visit to the company's San Francisco office in early
February to announce his intentions.
Greg Thomas, the president of Visual Concepts, will take over management
over Sega Sports. Inept yes-man Shinobu Toyoda, EVP of Content Strategy,
will run Sega's entertainment titles. Toyoda is widely acknowledged as the
architect of the infamous test department purge by personally directed
firing of its Filippino testers. Because of his actions, Sega is now
embroiled in a multi-million EEOC class-action law suit. Fred Huey,
formerly CFO of Sega.Com, will head up Sales and Administration. While at
Sega.Com, Huey oversaw an orgy of spending dumping over $150 million in to
the money losing operation before taking it into bankruptcy. Now tasked to
shutter Sega.Com, he has cut a significant portion of Sega of America's IT,
HR and Legal departments to make room for his dot-bomb cronies. Now with
the Sammy merger announcement, the big question emerging from Japan is
whether Kayama and his troika of toadies will survive the next few months.
-FatSonicTheHemphog
James Duncan
> If Microsoft wanted to be in the arcade business in their own right
they
> have a funny way of going about it. A few years ago Midway was using PC
> technology to produce arcade games like Mace, the Rush series, and
Gauntlet
I really loved Mace and would like to see it on Xbox. That's the one game
that I wanted an N64 to play. One game didn't justify the N64's price
though so I never bought one.
> Sega isn't strong in that market. They aren't strong in any market.
Why
> do you think everybody in the financial community expects a buyout? The
> alternative is liquidation. Sega's reputation vastly outweighs it's
ability
> to actually produce bestselling games. Their difficulties are the direct
> result of still being many times larger of a company than their sales can
> justify. If Sega had reduced themselves to a head count comparable to a
> Tecmo or a Koei and winnowed the number of releases they'd be in pretty
good
> shape. But too much of the executive staff still has they're egos tied to
> the days when they were a big platform company and not just a third party
> developer of some repute. It's killing the company. If they go on this way
> the actual talent will go elsewhere and Sega will be left with a lot of IP
> but no dependable means to exploit it.
Thanks for the well written and insightful reply. I still want Microsoft to
buy Sega as a long term investment and I think they will be greatly damaged
in the console arena if Sega goes to someone else, especially a company that
is less interested in developing for the Xbox including online games for
XBox Live.
At this point I still have hopes of seeing Virtua Fighter on the Xbox not to
mention Sonic. Loss of Sega titles from the Xbox will be a crippling blow
to an already struggling console.