The 10 Biggest “Oopsies” in Gaming History: Part 1

Some of my readers are idiots. I mean, I love you all. I really do. But a lot of you guys have your heads so far up your ass that you could floss your teeth with your small intestines. Especially when you say stupid shit like this:

“THE WII U IS THE BIGGEST DISASTER IN GAMING HISTORY!“

Holy hyperbole, Batman! Have you ever looked into the history of gaming? Companies have made a lot of really stupid moves. I said I could come up with at least ten things worse than Wii U, and I think I have. And I’ll share them with you. Now, we don’t know what the long-term ramifications of Wii U will be. Maybe it will ultimately be the biggest blunder in gaming history. But it’s too soon to tell. With the ten examples I’ve come up with, we can definitively point to them and say “those mistakes had significant consequences.”

Here’s what DID NOT make the list.

Virtual Boy – Yes, it flopped. But Nintendo certainly did not over-manufacture it. And nobody can say they waited too long to pull the plug. It’s a black-eye on their record, but Nintendo has never come remotely close to giving up their title of most successful portable gaming developer. If Virtual Boy was in any way consequential, they would have.

32X – 32X was bad, but it could have been a lot worse. Originally, it was going to be an entirely new console called “Genesis 2” with the only improvement being a slightly upgraded GPU that was capable of displaying more colors. Sega of America hated the idea and pushed for an add-on instead. It was over-priced ($179.99 at launch) and the games for it were mediocre (one title, Cosmic Carnage, was so bad that Sega’s development team circulated a petition to have it cancelled). Sega was also slightly dishonest, implying that a Genesis with 32X and Sega CD would be compatible with its upcoming Saturn console. When Trip Hawkins of EA and 3DO (more on that later) said it wouldn’t be, they said he didn’t know what he was talking about. But, of Sega’s MANY problems, this wasn’t that high on the list. Even when it was cleared out at $19.95, it wasn’t losing THAT much money (possibly even breaking even). Most of the money lost from 32X was the result of over-manufacturing software for it, and the ensuing inventory crush.

Microsoft Buys Rare – At the time, this sure seemed like one of the biggest coups in gaming history. Rare was fresh off creating some of the most iconic games for Nintendo 64. They were Nintendo’s single most important partner for the N64, and helped Nintendo cap off the SNES successfully with its Donkey Kong Country series. Ultimately though, it was inconsequential to Nintendo and fairly costly for Microsoft. Rare’s early efforts on Xbox flopped, and Microsoft ended up looking like they were sold a bill of goods. It’s widely believed that executives at Microsoft thought they were also acquiring the rights to Donkey Kong. I’m not sure how even the most dense person could not know it wouldn’t be part of the package, especially after going through the type of due diligence acquisitions like this are subject to, but that’s what people say. The Rare of today is, for all intents and purposes, a new studio completely different from the one Nintendo sold Microsoft. But it didn’t really hurt Microsoft, so it doesn’t belong on the list.

So what did make the list?

#10 – THQ over-manufactures the uDraw tablet, for the wrong platforms.

The History: THQ was a giant among third parties. They owned some of the most lucrative licenses in gaming. Nickelodeon. Pixar. WWE wrestling. All of them resulting in top-selling games. And, unlike Acclaim near the end of their existence, THQ’s games tended to be higher quality. And then they made uDraw.

The Oopsie: Let’s be clear about something: uDraw was a modest success on the Wii. At least the initial hardware bundle was. The software for it was never a big seller, in part because the games were a bit weak. I did have a uDraw and Pictionary for it, and my family enjoyed it quite a bit. However, I think convincing them to give Disney Princesses a try would have been a tough sell.

Having said that, THQ wanted to recoup their investment in the R&D for the project and decided to give it a kick at the can on Xbox 360 and PlayStation 3. Even though it just didn’t seem like the demographics would match up at all on those platforms. Although they only manufactured it for a relatively short period of time (four months), they ended up with over $100,000,000 in inventory crush, which might be the largest amount of crush any third-party game company has ever had. What the HELL were they thinking?

The Ramifications: They went bankrupt. Now, I don’t mean to imply that the only thing THQ did wrong was uDraw. When a company the size of THQ goes bankrupt, it is never one thing. They had tons of issues on a managerial level. But there’s no denying that uDraw was the tipping point. It’s like how saying the Titanic sank because it hit an iceberg is grossly oversimplifying things. The ship couldn’t turn fast enough, was going too fast at the wrong time of day to be trying such speeds, at the wrong time of year, in the wrong part of the ocean, with not enough lookouts. Hitting the iceberg was practically inevitable. uDraw was THQ’s iceberg. At a time when the company’s financing was shaky at best, being stuck with over one-million units of relatively expensive dead inventory was simply too much to overcome. The way they were being managed, they were destined to sink anyway, but you sort of have to give credit to the iceberg.

#9 – PlayStation 3 launches at $599 (or $499).

The History: Sony had a very storied legacy of surprising the game industry by modestly pricing their hardware. In 1995, at the first E3, Sony shocked the world (especially Sega – more on them later) by announcing that PlayStation would retail for $299.99. In fact, “$299” was the entire speech given by Sony’s American president Steve Race at the show. It was, and probably still is, the biggest bombshell ever at E3. Analysts predicted that PS1 would retail for at least the same, but likely more, than the Sega Saturn’s $399 tag.

Fast forward to 2000. Everyone knew for sure that PlayStation 2 would have to retail for around $500. After all, it was a DVD player, at a time when those were still relatively new and expensive. Not only that, but it was a fucking super computer! George Lucas claimed it was more powerful than the computers used to create the special effects for Star Wars: Episode 1. When Sony announced they were once again launching at $299, it is said that Sega chairman Isao Okawa turned to his assistant and said “it’s over.” In 2006, at E3, people had come to expect the $299 price tag, no matter what analysts predicted. Or, at the very least, it would be priced to match the $399 Xbox 360.

The Oopsie: At E3 2006, Sony announced that PlayStation 3 would have two SKUs. One would include a 20GB HDD for $499, and one with a 60GB HDD for $600. On the bright side, they managed to shock the crowd at E3 again. But this time, it was for the wrong reasons.

The Ramifications: I had friends argue that the price ultimately didn’t matter. Sony is still around, and the PS4 is outselling the Xbox One. To which I say, tell Microsoft the PS3 launch price didn’t matter. To them, it was like a presidential pardon. Sony had dominated the previous two console generations, so much so that they knocked Sega out of the manufacturing business altogether. The absurdly high price tag on PS3 opened the door for Xbox 360 to ultimately outsell the PS3 (though it was very close, with just a couple million units separating them worldwide). This just a generation after the PS2 outsold the Xbox by over 130 million units. And let’s not forget Nintendo, who ultimately won the generation in terms of hardware by a comfortable margin (over 20 million units more than Xbox 360 and PS3). In the previous two generations, Sony’s consoles sold a quarter-of-a-billion units combined to Nintendo’s measly 55 million combined for Nintendo 64 and GameCube. Anyone who doesn’t think Sony’s price tag cost them a chance to put one or both of those players out of the market forever is kidding themselves.

#8 – Atari fails to come to terms with Nintendo for the rights to NES, then does it again with Sega years later.

The History: Nintendo had a tough time breaking into the US arcade market. And, when they did with Donkey Kong, they were immediately dragged into a lawsuit by Universal Studios. In 1983, the Nintendo’s Famicom console had taken Japan by storm. They knew it could be successful in the United States, but they had found the experience of handling everything themselves to be bothersome and infuriating. So they decided they would seek a partner. Internally, they briefly discussed going with Coleco, who they had licensed Donkey Kong to for the Colecovision’s launch. However, the lawsuit with Universal had soured them on that, as Coleco spinelessly settled without attempting to put up any fight, and they did so behind Nintendo’s back. So, Nintendo decided to offer the worldwide rights (excluding Japan) of the Famicom to Atari. After haggling for a couple of days in Japan, Atari’s lead attorney Skip Paul got the go-ahead from Ray Kassar (President of Atari) and Manny Gerard (President of Atari parent Warner Bros) to make the deal. The contracts were drawn up and the two companies entered due diligence.

The Oopsie: The deal never finalized. The first problem came at CES in 1983. Nintendo had sold the home computer rights for Donkey Kong to Atari, while Coleco owned the rights to Donkey Kong on cartridges. At that CES, Coleco debuted their pet project, the Adam home computer. And the key piece of software they demonstrated on it? Donkey Kong. Mind you, Coleco never cleared this with Nintendo. Atari felt double-crossed and was furious. Nintendo later strong-armed Coleco into cancelling the game, even though they had no leg to stand on. Games on Coleco Adam used cartridges, not floppy discs, which is all Atari had the rights to. However, other issues arose, especially when Nintendo discovered that Atari had misled them about developing a new system of their own (later released as the Atari 7800). Both sides walked away, the game industry crashed, Ray Kassar was fired, Atari was sold to Jack Tramiel, and Nintendo later released the Famicom in the United States on their own as the NES.

The Ramifications: Nintendo would not exist as it does today if Atari had just stayed the course. Internally, Atari had no intention of ever marketing the Famicom as anything but a last resort. The deal they made with Nintendo included no provision of good faith. In other words, they were under no obligation to actually try to market the Famicom. Instead, they would push their own 7800 out and smother the Famicom globally. However, if the 7800 bombed, they would still have the rights to the Famicom and could use it as a lifeboat. Alas, it was not to be.

Amazingly, history repeated itself in 1988. Atari was a different company by then, owned by Commodore International founder Jack Tramiel. Atari was never as successful as it had previously been, but the Atari 7800 was hugely profitable for them and opened the Tramiels eyes to the video game market. However, they struggled to create a new generation console of their own. Sega, learning of this, offered them the worldwide (excluding Japan) rights to their 16bit Mega Drive console. This time, a deal was close to being completed but never entered due diligence. Every time Sega thought they were ready to draw up the contracts, Tramiel decided to change the terms again (something he was infamous for). The process dragged out so long that Sega started having second thoughts. Sega went out on their own and launched Mega Drive in the United States as the Genesis. The rest is history.

#7: The 3DO launches at $699.

History: The 3DO was developed by the same two people who designed the Atari Lynx. That probably should have been a clue that it wouldn’t turn out so well, but you couldn’t convince EA founder Trip Hawkins of that. He bought into the technology, then came up with a novel (and absurd, but still novel) way of marketing it: he would simply create a hardware standard and license it to other companies. Thus, there would be no “first party” games for 3DO, and multiple different manufactures all offering essentially the same console. Also, Trip’s license agreement stipulated that he would set the price.

The Oopsie: That price was $699, over four-times the price of its two main competitors, the Genesis and SNES. Hawkins was inspired by the Commodore 64’s $599 price tag. He figured, since the 3DO was more powerful than Commodore 64 (top-selling computer of all time), and could do more stuff, it should be priced higher. Why not? I guess he forgot that the Commodore 64 was a computer and the 3DO was a glorified video game machine. Mind you, the 3DO was mostly made out of cheap, off-the-shelf parts. In fact, expensive components (the same ones that would later be used in the PS1 and Nintendo 64 that allowed for higher polygon counts) were dropped from the initial design in order to keep the cost of manufacturing down. The 3DO could have sold at $300 or possibly even $200 and turned a profit. Again, the Commodore 64 (which could have been sold profitably at $100) inspired Hawkins. His inspiration was tragically misguided.

The Ramifications: These days, the 3DO is looked back on as somewhat funny, somewhat sad footnote in gaming history. But before it launched? The hype on it was unreal, at least on the same level Xbox had when Microsoft entered the console business. Time Magazine named 3DO “Product of the Year” for God’s sake, the only pure gaming device to ever receive it. And the media had an infatuation with Trip Hawkins. People Magazine even named him to their annual 50 Most Beautiful People list. It was the first, and let’s face it, the only time the mainstream media was actively cheerleading a new game console. Yes, the lack of any first party software hurt, but if the system had been priced at $300, the 3DO almost certainly would have exploded. The landscape of gaming today would be unrecognizable. Greed is not good.

#6 – Atari rushes Pac-Man and E.T. into production, then over-manufactures them.

The History: The Atari 2600 was kind of a bust. And then Nolan Bushnell got beached by Warner Bros for calling a board meeting without Warner representation, Ray Kassar took over, licensed top arcade hit Space Invaders for the console, and sales exploded. By a stroke of luck, Atari already owned the home rights to all of Namco’s arcade games, and when Pac-Man became the new cock of the walk, Atari was elated.

The Oopsie: At the time the Atari 2600 port of Pac-Man went into production, developers hadn’t learned how to fully optimize the console. Tod Frye, a developer who wasn’t considered especially skilled among his colleagues, was selected by Kassar to deliver Pac-Man within the four-month deadline. His selection inspired huge jealousy among his co-workers, who circulated a memo asking “Why Frye?” He was paid a ten-cent royalty on every unit sold, which meant he stood to become a millionaire whether the game sucked or not. And suck it did. Pac-Man enthusiast and Atari marketing manager Frank Ballouz told Kassar that fans would hate Atari’s port and they should postpone it until it was better. Kassar ignored him and ordered twelve million copies to be manufactured. Just under ten million people owned Ataris at this point. Kassar figured that, like Space Invaders before it, people would purchase Ataris just to play Pac-Man. He was wrong.

To Kassar’s credit, he did learn his lesson, and Atari eased up on over-manufacturing games. That is, until E.T. That one wasn’t Kassar’s fault. Manny Gerard, president of Warner Bros, wanted to secure Steven Spielberg to produce movies for their studio, and thus, as an incentive to secure the director, included a deal to make a game based on E.T. For it, Spielberg netted $25,000,000, plus a hefty royalty. Under the terms Gerard secured, there was no way Atari could profit on the game. Kassar really got a shit deal. Gerard wanted Warner’s movies to do well, and screwed Atari over in the process, since they would end up posting a loss for the benefit of the unrelated movie division. Gerald also guaranteed Spielberg the game would be out by Christmas, giving Atari only five weeks to produce the game. Gerald then made Atari manufacture four million copies, without doing any market testing. I mean, it was a game based on the highest grossing movie of all time. What could go wrong?

The Ramifications: Atari sat on some of the largest quantities of inventory crush by volume in consumer electronics history. Both games sold very well, and if they hadn’t been over-manufactured, you would have to include them on any list of the most successful games ever, regardless of quality. In Pac-Man’s case, Atari probably did turn a profit on it despite of the crush. They paid Namco a very, very low royalty on it, and it did sell millions of copies. Its top consequence was it shook consumer confidence in Atari’s ability to have decent home translations. Space Invaders on the 2600 was a very close facsimile of the coin operated version. Pac-Man was like a bad bootleg.

In the case of E.T., Manny Gerard’s deal with Spielberg not only cost Atari millions in revenue due to inventory crush, but they also had to swallow Spielberg’s insane signing bonus. Warner as a whole ultimately made out pretty decent in the deal (which led to the production of the hit films Gremlins, the Color Purple, and The Goonies), while Atari got left holding the bag. These two games alone did not crash the industry, but they contributed to the action that actually did do the job. But that’s going to be covered in the next part.

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