Sega of Japan was very jealous of the insane success that their American counterparts were having with the Sega Genesis in comparison to the meager success they had at home with the Sega Mega Drive, and the ensuing internal Right Hand Versus Left Hand drama was leading to several decisions that would ultimately sink the Sega Saturn outside of Japan and destroy their reputation as a hardware manufacturer. Why would we want to do this?' note (The answer wasn't surprising, in retrospect. They don't know how to make software either. Kalinske then brought the idea to the attention of his Japanese counterpart Hayao Nakayama and the Sega Board of Directors, who promptly shot it down, claiming ' That's a stupid idea, Sony doesn't know how to make hardware. The hardware, which both companies agreed had to be CD-based, would likely be sold at a loss, and the partnership could mean Sega and Sony splitting the losses. The proposal of partnering with Sony intrigued Kalinske, who met up with Kutaragi, similarly bullish over the concept. They sent Sony Electronic Publishing president Olaf Olafsson and Sony Corporation of America president Micky Schulhof to meet with Sega of America president Tom Kalinske, with the logic that both companies had a common enemy in Nintendo. Yamauchi didn't like the deal, so he went with Phillips to develop a different CD-ROM add-on for the SNES, a deal which also imploded and caused Nintendo to spurn optical media for several years, as well as spawning the four games based on Mario and Zelda on the Philips CD-i.įeeling insulted by Nintendo's actions (Because Nintendo chose to make the announcement in front of a public audience at CES, where the Sony CEO and Ken Kutaragi were also at) note and were actually waiting for their cue from the Big N to get on stage when the Big N dropped the bomb, Sony moved on to attempting to woo the other hot video game company of the time: Sega.

The contract gave Sony all profits for a potential CD-ROM add-on for the Super Nintendo Entertainment System that was being developed by Ken Kutaragi. So basically, Nintendo overlooked the fine print on a contract with Sony by Hiroshi Yamauchi, then-president of Nintendo.

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