Hideki Sato Discussing the Sega Saturn

(This is a re-post of a post on Sega-16.)

Recently, an interview was conducted with Hideki Sato on his life and his time at Sega as part of an oral history research project documenting the game industry in Japan. The interview transcription is over 150 pages long. If you don’t know, Sato was in charge of Sega’s consumer R&D department for many years and took part in the development of many/all of Sega’s consoles. He later served as Sega’s president.

I’ve translated a few interesting snippets of the final part of the interview that relate to the Sega Saturn.

The full transcripts can be found here: Interview Transcripts

Highlights
• More information on Sega of America’s desire to use the 68020 in the Saturn
• Changes made in the Saturn design in response to the PlayStation
• Difficulties that third party developers had with the Saturn, and the lack of early support from Sega
• Sony’s strong support for third party developers
• Sega intentionally limiting Saturn production due to being unwilling/unable to bear the losses they were taking on sold units
• The strong advantages Sony had in manufacturing cost and flexibility
• Ken Kutaragi telling Sato that Sega should become a third party to Sony

On the MC68020 and why the SH was chosen:

“Motorola had the MC68020, the successor to the MC68000. It was a strong-selling 32-bit CISC microprocessor. Sega of America, who were developing their own 16-bit Genesis games, wanted to use the MC68020 in the Saturn. That would have allowed for essentially updated versions of the current types of game software, and the development libraries could easily be done. They wanted to go for forward compatibility.

“However, from my viewpoint, this lacked the necessary “jump” in technology. I thought that it might be okay to move forward with such a continuation of the current technology, but all the same, I felt we needed to move in a new direction, to change things up. Compared with the 16-bit generation, we needed to move away from mask ROMs, from solid-state memory, which was too expensive. CD-ROMs had become cheap, but the technology was no longer new. The PC Engine had already been using it for years. We needed something more.

“At the time, Hitachi happened to be developing the SH processor. After seeing the specs, I was impressed by its high performance. I decided to go with it, even though it was still in development (this was a very rash move for me). The SH is a RISC (Reduced Instruction) CPU, and at that time, NEC was also developing one, the V Series. I felt that Hitachi’s SH was good, so I went with that.”

On how the Saturn design changed in response to the PlayStation:

“The Saturn actually had just one CPU at the beginning. Then Sony appeared with its polygon-based PlayStation. When I was first designing the Saturn architecture, I was focused on sprite graphics, which had been the primary graphics up to that point.

“So I decided to go with polygons (due to the PlayStation). However, there weren’t any people at Sega who knew how to develop such software. Of course, we had Yu Suzuki in the arcade department, but I couldn’t just drag him off to the console department. He was developing titles like Virtua Fighter and Virtua Racing. The expertise of all of the developers we had was in sprite graphics, so there seemed no choice but to go with sprites. Nevertheless, I knew we needed polygons. Using various tricks, adding a geometry engine and so on, I changed everything. In the end, just like the PlayStation, we had pseudo-polygons built on a sprite base. I felt no choice but to design a sprite-based architecture. Having said that, after some significant progress, pseudo-polygons did represent a “jump” in graphics in a certain way. There was a distinction of sorts. The processor was very powerful and could support 4,000, even 5,000 sprites, and I thought we could make the graphics work using a sprite engine after adding the Yamaha and such.

“It seemed like we were finally nearing completion. Then, the final PlayStation was revealed. It supported 300,000 polygons. Well, that was ultimately a bunch of lies, but… When you compared the Saturn with the PlayStation, we were completely missing something. The response that I chose was to add another SH processor, so we ended up with two SH-2s. By chance, the SH supported two-way cascaded data transfer. You could add a second processor and connect them in a cascade and get multi-CPU performance. When you get to about the PlayStation 3, multi-processors had become common, but the Saturn was the first home console to use multi-processors. So I added a second SH-2, but I felt that the ‘impact’ was still weak. Well, the SH-2 is a 32-bit processor, and we had two of them, so we could call the Saturn a 64-bit machine. It’s a dirty way of getting to 64-bits. But we revealed the CD-ROM-based Saturn using 64-bits as our sales point.”

On the difficulties of developing for the Saturn:

“At the beginning, there was no compiler. You had to program the SH in assembly. The people at Sega were good at assembly. That’s all they had been using on the MC68000. C, C++ were too slow to use.

“However, third parties struggled with programming the SH in assembly, and there were two of the CPUs along with a CD-ROM. We asked third parties to make games, but without development libraries, they couldn’t do anything. They’d take a week and barely even be able to get something to display on the screen, let alone be able to start making a game. Our third party support was awful. The hardware was incredibly difficult to use. However, if you worked with it a bit, you could get a ton of sprites, with scaling and rotation and so on.”

On Sony’s support for third party developers:

“Sony was good at supporting PlayStation third party developers. Why? Sony didn’t have a development department. They didn’t have a software department. What do you do if you don’t have a software department? You ask somebody else. Sony went to Namco, to Taito, to Konami. They said that they were putting together a game console called the PlayStation, and they invited these companies to develop games for it. Sony exerted all its efforts on supporting third parties and enhancing their collective powers. Sony CEO Norio Ohga himself went to talk to the third parties. From their perspective, it was a big deal for Ohga to come and ask this. From Namco’s viewpoint, if they put out Tekken, they could compete evenly with Sega’s Virtua Fighter.

“The number one game in the PlayStation world was Ridge Racer. And Konami being Konami, they had their typical games. It’s obvious that the PlayStation had the better games. No matter how much effort Sega put in on its own, it wasn’t going to be enough.

“So Sony went to Namco, Taito, Konami, and others, and they said here are the specs, and don’t worry, there aren’t two CPUs or anything difficult like that. They said the PlayStation will be easy to develop for, and here are all the development libraries we’ll put out. Sony had a very easy-to-use SDK (Software Development Kit). And Ohga himself was making these offers, and the third parties were told they could port all of their own titles, and so on. With all of that, it certainly seemed like the PlayStation was better.”

On Sega’s losses associated with the Saturn and their response:

“So we released the Saturn in 1994, and as I said before, there were two SH-2s. In addition, memory was expensive at this time, and we were using a large amount, so costs were very high. For each Saturn sold, we lost about 10,000 yen ($100). That’s how the hardware business works. But the goal was to recoup the losses from software royalties. If there are lots of third parties, lots of games sold, and we get 2,000 yen for each, it’s possible. However, if software sales are weak, and for each console sold, we’re ultimately losing 5,000 – 6,000 yen, what’s going to happen from the business perspective? We’re going to stop selling consoles. This later became a huge problem.

“Every month, or even every week in Sega’s case, we had meetings to examine the current situation. Each department would report on where it stood in relation to its goals. So, imagine if the sales goal for the end-of-year sales war is, say, 3 billion yen, and the profit goal is 300 million yen—but wait, the profit is in the red. That profit is a very important factor, so what does the business side do? They decide that it’s not necessary to have sales of 3 billion yen. Instead, 2 billion yen will do. In other words, they stop selling 1 billion yen’s worth of hardware. That way, if each unit sold is losing 5,000 yen, and we extend that to 20,000 units, that’s 100 million yen lost. By stopping the sales of 20,000 units, in a way that becomes 100 million yen in profit. So they slammed on the brakes in terms of unit distribution. Even though there were people that wanted to buy the console, Sega didn’t want to sell it, because the more they sold the more they went into the red.

“From the perspective of the third parties, they saw that Sega was curbing the sales of the Saturn. The more consoles there were, the more games would be sold. But if console sales were being limited, then this created a serious problem. As they say, poverty dulls the wit. This led to a negative feedback loop.”

On Sony’s manufacturing advantages and Kutaragi’s invitation to become a third party:

“To launch a new console, you really need 50-60 billion yen at the least. You have to sell those first million units. If your costs are 30,000 yen per unit, then that comes to 30 billion yen for 1 million units. And you have to design the hardware and create the electronics, make the molds and do the tooling, and this will soon use about 10 billion yen. And then you have to create the games and do advertising. You need about 500-600 people. Without all this, you can’t launch a home console. You can’t do it little by little. You really have to go all in.

“Sony had annual sales of 3 trillion yen. They made their own CD-ROM drives. They had their own semiconductor factories. Once when I was talking with Ken Kutaragi [the creator of the PlayStation], he said “Hideki-chan”—he refers to me using the “chan” diminutive—“Hideki-chan, there’s no way you can beat me. Where are you buying your processors? From Hitachi. From Yamaha. What about your CD-ROM drives? You’re buying everything. By buying from Hitachi, Hitachi is profiting. You can’t make anything yourselves. We can make everything ourselves, including custom parts. We have our own factories.” Near Nakashinden, they had a huge factory where they made audio equipment that they were using for the PlayStation. Their cost structure was completely different.

“‘That’s the way it is, Hideki-chan,’ Kutaragi told me. ‘So quit the hardware business. Why not just do software? We’ll give you favorable treatment.’ He wanted us to go third party. We had been going for so long in the hardware business, for better or worse, and to go third party now? We had been half-heartedly successful in America once, and this made it impossible to quit the hardware business. Maybe if the Mega Drive, the Genesis, had been a failure, things would have been different. But we had a strange taste of success.

“At that time, Sega’s brand image was incredible. When you powered on a Sega console, ‘SEGA’ would always appear first. Even if it was a third party game from Namco (or anybody else), Sega’s name always appeared first, followed by Namco’s. So anybody that had a Sega console, it didn’t matter what game they played, they would see Sega’s name. This helped plant the Sega brand in peoples’ minds. This was incredibly effective. To go from that to a Sony third party… Well, we had already started so it was too late.

“I would have a polite dinner with Kutaragi about once every three months. He’d tell me that because we released a console last time, they would be the ones to do so this time. We are the same age, although he’s two or three months older. I would call him the polite ‘Kutaragi-san,’ although sometimes I’d call him ‘Ken-chan.’ Because I was two or three months younger, he’d say ‘Hideki-chan, please give up!’

“So we released the Saturn, and in the end, it came down to software. It’s obvious, but what do consumers look forward to? They want fun games. And that’s where we failed.”

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