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What really happened between Nintendo and Sony?
- Thread starter FalsettoVibe
- Start date
protomouse
Member
People love to over-dramatise what probably was little more than a disagreement of terms between two business entities, based on some unforeseen change most likely. Sony (Kutaragi, specifically) had intents to enter the video game market anyway, irrespective of whether they could make a beneficial deal with Nintendo or Sega.
Rodolink
Member
This is really how it works, companies have schedules, contracts, lots of money to move, and I think sadly it really was a backstab. But it was for the better. Playstation and even the Xbox wouldnt have existed.
thechristoph
Sir!
I really wonder if Yamauchi had ulterior motives the whole time. If the deal was so bad (what I had read was that Sony would have retained all licensing rights for CD games. Nintendo made a lot of money by licensing third parties to make the games, so they'd miss out on all that revenue), why did they enter it in the first place? Did they hope to learn something from Sony and ditch out from the get-go?
The whole thing was just Yamauchi pulling the renegade trigger over and over again.
The whole thing was just Yamauchi pulling the renegade trigger over and over again.
detrimental
Banned
How do you explain this then?
Any update on these figures for the last 4 years? Just curious on how they're trending
DeadDuck144
Member
How do you explain this then?
This is net profit, correct?
Just the Playstation and Xbox divisions of Sony and Microsoft, respectively?
This table supports the point that Nintendo has been doing way better than its competitors financially, but it would help if it was presented better.
There's a book; Console Wars (being made into a movie!) that talks about what happened. Read that. Most of this thread are fanboys trying to spin things.
The main takeaway is that Nintendo more or less ended up creating their two biggest rivals. Had that deal not gone as south as bad as it did (fault be damned), Sony would not have created the Playstation (it was legitimately authorized because the head of Sony was that mad at Nintendo). which then led to Microsoft entering the console wars because they were afraid of the PS2 becoming the hub for the living room (and not the PC, like they had hoped for). It's a little crazy how one decision had such an insane ripple effect.
The main takeaway is that Nintendo more or less ended up creating their two biggest rivals. Had that deal not gone as south as bad as it did (fault be damned), Sony would not have created the Playstation (it was legitimately authorized because the head of Sony was that mad at Nintendo). which then led to Microsoft entering the console wars because they were afraid of the PS2 becoming the hub for the living room (and not the PC, like they had hoped for). It's a little crazy how one decision had such an insane ripple effect.
Well if Nintendo were to cancel the partnership with Sony they should've told earlier because if cancellation is too late project will go beyond the point of no return. I think Kutaragi and his team had no choice but go forward, despite of oppositions rising from his own company (I also work at Japanese electronics company so I could see what happened there). That's usually how those "wtf is this?" product gets released lol. As for Playstation Kutaragi was lucky enough to make it a viable product.
whynotboth.gif
Edit: Should have read the whole thread first before posting :
GifGafIsTheBestGaf
Member
thanks, i just purchased the kindle edition.
spindashing
Banned
Could you imagine if that deal went through? What-If scenarios like this amaze me to no end. I figure Microsoft would still have entered the console market eventually if it happened, too.
DragonSworne
Banned
How do you explain this then?
What'a your point? Nintendo gave all that profit away to their investors. It's one of the reasons why they barely have any presense in the market.
I imagine what would have happened is that Nintendo would be the gaming division of SONY.
And we'd probably have the best of both worlds actually..
How sad.
Probably not though.
DXB-KNIGHT
Member
What happened was a forbidden love affair that resulted in a beautiful bastard named PSX
According to this article, Sega of America wanted to work with sony, having little faith in the Saturn.
However...Sega of Japan being Sega of Japan, said no.
Blueingreen
Member
I always thought it was two assholes at that time trying out-asshole each other.
Watched it all.
It happened like this .. only if you actually believe that Sony broke inside Nintendo's HQ at night to rewrite the contract, or if they drugged the Nintendo execs to make them sign on stuff they didn't know about in the contract.
It has the historical outlines, but viewed through seriously tinted Nintendo glasses.
Basically, the Nintendo execs messed up by being short sigthed and thinking they had the better deal (by giving up on the "worthless" CD licensing), but then when realizing their mistake instead of doing the rational and logical thing (try to re-work the deal with Sony) they went behind their back and backstabbed them publicly, I guess hoping to have them laughed out of the console market.
Anyways, not the brightest slice of Nintendo's history really.
Sony was overly greedy with their contract, it seems.
But Nintendod lawyers/representatives/CEO actually read the contract, agreed with it and signed it.
Then Nintendo simply broke the contract and went to Phillips without telling Sony. So Nintendo was fully at fault here. Greedy contracts are made all the time between companies, and if both of them agree to them, and one of the companies later disrespect the contract, then who is at fault?
But Nintendod lawyers/representatives/CEO actually read the contract, agreed with it and signed it.
Then Nintendo simply broke the contract and went to Phillips without telling Sony. So Nintendo was fully at fault here. Greedy contracts are made all the time between companies, and if both of them agree to them, and one of the companies later disrespect the contract, then who is at fault?
Doesn't change the fact that since the Playstation, Nintendo has still made more money in the gaming sector than Sony. So this Phillips/Sony/Nintendo issue did not destroy Nintendo.
Pancakes R Us
Member
Whatever happened, I'm glad it did. More competition, better for consumers in the end.
It depends. Sony was able to use the PS3 to push Blu-Ray as the major next-gen media of choice. Should all the royalties they get from Blu-Ray be tied to that? Nintendo is a gaming company, period. Microsoft and Sony have gaming divisions. If MS took a loss in Xbox but was able to push Windows 10 into everyone's homes by using the Xbox and Windows sales went insane...that wouldn't show up in a random missing context excel spreadsheet.
The biggest what-if in modern gaming history is probably "what if Sony & Nintendo end up making the Nintendo Playstation", and for good reason. You probably never have Sony enter the market as a competitor, which means you never have Microsoft enter the market as a competitor. Does Sega survive by virtue of being the only other alternative? Does someone else (Apple? Google? Samsung?) enter the gaming market? What happens if MS ends up concentrating what ended up being their Xbox efforts into PC?
The ripple effects of that one decision are bonkers.
There is no point in revisionist history. All I noted was Nintendo still made more money in the gaming sector than Sony did since the inception of the Playstation. The impact of blu ray was mitigated by the rise of digital content. I'm not sure that was worth billions of dollars in losses.
Rodolink
Member
I thought everybody knew that, since the announcement consoles, specs are the first thing that comes out
Pretty sure Playstation overall has made them Sony quite a bit of money (gonna point out that the excel chart cuts off right as the Wii drops off a cliff...incomplete data for the win). Not as much as Nintendo; but it is also unfair to compare a company that is solely invested in gaming versus companies that have divisions (and in MS' case, relatively small divisions) of gaming. Nintendo's made a lot of money, sure; but the decision to move away from Sony probably cost them billions (maybe tens of billions) of dollars in the long run. (Especially since the N64/GC generations went handily to Sony).
But, then you get into the idea of whether gaming ever becomes nearly as big without the entrance of Sony (and later, Microsoft) into the market. Insane and fun to think about.
Bluekaveli
Member
Sony made fun of Mario.
thewhitehawk
Member
I don't know what happened but given their history and actions up until that point it's not hard to see why it was simply not very likely to happen.
Nintendo entered the console market after a large video game crash and had a very restrictive licensing plan that made a lot of publishers uneasy and upset. Atari even famously engineered cartridges that didn't require Nintendo's permission or licensing to sell them for additional profit.
Sony has always been one of the most locked-down proprietary restrictive companies. Most Japanese companies are arrogant and stubborn but Nintendo and Sony are some of the biggest ones. Even until this day, they still make design or business decisions based around their outdated way of thinking.
It's much more impressive to me that they ever announced a near-finished console than that their business plan eventually fell flat and they parted ways.
Nintendo entered the console market after a large video game crash and had a very restrictive licensing plan that made a lot of publishers uneasy and upset. Atari even famously engineered cartridges that didn't require Nintendo's permission or licensing to sell them for additional profit.
Sony has always been one of the most locked-down proprietary restrictive companies. Most Japanese companies are arrogant and stubborn but Nintendo and Sony are some of the biggest ones. Even until this day, they still make design or business decisions based around their outdated way of thinking.
It's much more impressive to me that they ever announced a near-finished console than that their business plan eventually fell flat and they parted ways.
Thug life
Lionel Richie
Member
How do you explain this then?
I fucking love this data table, it makes the constant Nintendo is doomed talk even more amusing.
Note; the last three years (2012 - 2014) would be
2012: -532 million US
2013: -456 million US
2014: +207 million US
Assuming those are operating profits. The chart doesn't say what those numbers are from.
Note: If we're sticking purely to "gaming" - not sure how Nintendo classifies the Amiibos. Those are primarily responsible for Nintendo's profitability in FY 2014 (March 31st 2014 to March 31st 2015).
I can't perfectly predict what would have happened if this deal never went through. What I can do is point out that Sony made much less money in gaming than Nintendo did.
Sony may have lost more than they gained with Playstation. Sony also invested a lot of resources in the Playstation brand. Those resources could have gone to other areas of the company. Now their TV business is failing, their mobile phone business is underperforming, they sold their laptop division and they also sold their original headquarters.
Sony outcompeted Nintendo in the home console video game market and were subsequently outcompeted by Samsung and Apple in the consumer electronics market.
Adjusted for inflation Sony's revenue in 1994, when the first playstation launched, was greater than its revenue in 2014.
Is Playstation the sole factor to blame for Sony's collapse? No definitely not. However, I do believe it may have been a distraction that Sony could have done without.
Golden Darkness
Member
If you guys are interested in reading some... fiction, someone's writing a timeline here where Nintendo and Sony do go ahead with their alliance after some renegotiations. (Basically Yamauchi uses a possible Philips deal as leverage to get a better deal from Sony.)
Warning, also has non-videogame butterflies such as a not-so campy Batman Forever, Saban bringing Sailor Moon over with little localization, the future Eminem being gunned down, the Cleveland Indians actually winning the World Series...
Yeah... it's that kind of alternate timeline.
Warning, also has non-videogame butterflies such as a not-so campy Batman Forever, Saban bringing Sailor Moon over with little localization, the future Eminem being gunned down, the Cleveland Indians actually winning the World Series...
Yeah... it's that kind of alternate timeline.
Zombie James
Banned
Nah, what's funnier is seeing charts like that and then hearing the excuse that Nintendo can't afford to compete on specs, online, third-party deals, or anything else. Can't have it both ways.
Lionel Richie
Member
It speaks volume on how much of a well-oiled machine Nintendo is that in their first and biggest loss they posted in a year they still lost less money than the best year during the first 4 years of the PS3 by Sony.
To be completely fair, that's also a reason why Nintendo is so profitable.
JSoup
Banned
Another account, specifically related to the bolded bit, from Console Wars by Blake J. Harris (and the book is presented as a supposed first hand account) says that the Sony executives were pissed, but weren't really fully on board with the whole video game thing and were content to just let the matter go. Kutaragi finished his alpha of the system behind their backs, then, while pleading with them to reconsider, plopped it down on the desk like "I already made it, it's really powerful, give me money".
BocoDragon
or, How I Learned to Stop Worrying and Realize This Assgrab is Delicious
TreasureHunterG
Banned
There isn't a definitive answer for this.
No one knows exactly what determinated Nintendo and Sony to withdraw their deal, everything else is merely conjecture or spectulation based on the story given at the time. Right thing is, the deal would be way more benefic for Sony than Nintendo, as they would hold the rights for everything made for the Play Station, thus, making Nintendo to work, in practice, as a third-party.
IMO, the major reason why Nintendo dropped the deal was because they didn't wanted to loose cartdrige manufacture and demand control, as it would use CD-ROM's instead, a reason for why they chose to use carts on N64 as well, and it's still a major source of income even nowadays. Nintendo was always very restricted over this business practice (a media they can be able to control manufacture and demand) and they even chose to loose third-party support and market leadership with the N64 to keep this practice intact.
No one knows exactly what determinated Nintendo and Sony to withdraw their deal, everything else is merely conjecture or spectulation based on the story given at the time. Right thing is, the deal would be way more benefic for Sony than Nintendo, as they would hold the rights for everything made for the Play Station, thus, making Nintendo to work, in practice, as a third-party.
IMO, the major reason why Nintendo dropped the deal was because they didn't wanted to loose cartdrige manufacture and demand control, as it would use CD-ROM's instead, a reason for why they chose to use carts on N64 as well, and it's still a major source of income even nowadays. Nintendo was always very restricted over this business practice (a media they can be able to control manufacture and demand) and they even chose to loose third-party support and market leadership with the N64 to keep this practice intact.
Playstation is probably what saved Sony during their collapse the last few years. Sony used to be the gold standard for consumer electronics - but think of what happened to their businesses
CD / Cassette Players - MP3s happened, Apple eats everyone's lunch.
TVs - Sony starts getting crushed on prices, and Samsung + upstart TV makers launch
Sony Music - MP3s + iTunes + music industry as a whole not able to fully adjust
Odds are the Playstation is solely what kept Sony alive. Had they thrown more resources at consumer electronics - I think they would have just lost more and more. Also, you could easily credit much of the gaming boom to Playstation and Sony getting involved. How many of those Wii customers (or DS customers) were folks who started gaming with Playstation?
The reason everyone freaked out about Nintendo going under is because those were the first two years in Nintendo's 100+ year history that they had not been profitable. It was definitely an overreaction; Nintendo is a fairly well oiled machine. They definitely need to work on new IPs, as the nostalgia factor from SNES and earlier will eventually fade, and there is just a general "shiny new toy" feeling from mobile gaming. But it's too early to predict whether mobile gaming will kill console gaming or instead just end up being a gateway to more console gaming.
Plus, Nintendo has the knowledge that their neighbor will happily partner with them if things get really bad.
IdreamofHIME
Member
Nintendo blinked 1st.
Kutaragi built the SNES sound chip without his bosses permission because he wanted to make videogames better. When it was done and essentially sold to Nintendo, then he convinced his bosses that it was a good idea. This made Sony a "partner" and gave them access to the inner workings of the SNES. Sony was also apparently able to make Sony-branded SNES hardware, like controllers (prototype Sony-branded SNES controllers were seen with the original Play Station), because Nintendo didn't care about hardware, software was where the real money was. And more hardware equals more software. I suspect that the sound chip/partner deal was all the contract that was needed for these events to happen.
Kutaragi apparently talked with Nintendo about a CD drive (which Kutaragi really wanted to make because he wanted to make videogames better), and Nintendo said "That would be nice." Kutaragi went off and made the original Play Station using Sony's money and facilities. When it was done, Kutaragi had built a backdoor into the SNES, and it was better than Nintendo's front door. And Sony was naturally holding the keys to this shiny new back door. Then Nintendo said "Very nice, now hand us those keys" and Sony said "What? These keys are ours. We built this door. You never paid us to do it." Because apparently in Kutaragi's eagerness to get things done, payment and ownership were not really discussed. (And Japanese contracts are written on cocktail napkins, even today, Ben Judd just mentioned in a recent interview that it's a real problem in Japan and he currently makes his living by protecting Japanese companies from entering into unwise, unclear contracts.)
Sony started going around to Nintendo's third parties and saying "Hey, forget about that front door, the real party's going on around back. And the entrance fee is only $10 a head, not $50 like it used to be." This drove Nintendo crazy, because while they didn't care about hardware, they love their software money. They didn't realize that new hardware from a trusted partner could negatively impact their software money in such a way. Nintendo tried to take Sony to court, but the court said "You gave them permission to do this."
Then Nintendo hooked up with Phillips and made their own CD-based backdoor, and made it clear that there was going to be a major fight over the backdoors, and third parties choosing one over the other would have consequences. Sony tried to take Nintendo to court for breach of contract, but the court said "They let you make a backdoor. They never said anything about you being allowed to have the only backdoor."
Sony and Nintendo stared each other down for a year, until Sony blinked and agreed to give Nintendo the keys to the original Play Station. Nintendo agreed in exchange to give Sony a cut of the profits. Then Nintendo decided that Sony and Phillips should work together on merging the two competing SNES CDs into one super-powered SNES CD, and Sony said "That's nonsense, we're leaving."
The combined SNES CD turned into vaporware, an angry Sony made the PlayStation-X all by themselves, and Nintendo rejected CDs with the N64.
Kutaragi apparently talked with Nintendo about a CD drive (which Kutaragi really wanted to make because he wanted to make videogames better), and Nintendo said "That would be nice." Kutaragi went off and made the original Play Station using Sony's money and facilities. When it was done, Kutaragi had built a backdoor into the SNES, and it was better than Nintendo's front door. And Sony was naturally holding the keys to this shiny new back door. Then Nintendo said "Very nice, now hand us those keys" and Sony said "What? These keys are ours. We built this door. You never paid us to do it." Because apparently in Kutaragi's eagerness to get things done, payment and ownership were not really discussed. (And Japanese contracts are written on cocktail napkins, even today, Ben Judd just mentioned in a recent interview that it's a real problem in Japan and he currently makes his living by protecting Japanese companies from entering into unwise, unclear contracts.)
Sony started going around to Nintendo's third parties and saying "Hey, forget about that front door, the real party's going on around back. And the entrance fee is only $10 a head, not $50 like it used to be." This drove Nintendo crazy, because while they didn't care about hardware, they love their software money. They didn't realize that new hardware from a trusted partner could negatively impact their software money in such a way. Nintendo tried to take Sony to court, but the court said "You gave them permission to do this."
Then Nintendo hooked up with Phillips and made their own CD-based backdoor, and made it clear that there was going to be a major fight over the backdoors, and third parties choosing one over the other would have consequences. Sony tried to take Nintendo to court for breach of contract, but the court said "They let you make a backdoor. They never said anything about you being allowed to have the only backdoor."
Sony and Nintendo stared each other down for a year, until Sony blinked and agreed to give Nintendo the keys to the original Play Station. Nintendo agreed in exchange to give Sony a cut of the profits. Then Nintendo decided that Sony and Phillips should work together on merging the two competing SNES CDs into one super-powered SNES CD, and Sony said "That's nonsense, we're leaving."
The combined SNES CD turned into vaporware, an angry Sony made the PlayStation-X all by themselves, and Nintendo rejected CDs with the N64.
MrCunningham
Member
I think this is fairly accurate for the most part. The whole CD thing was a crazy ordeal with a lot of backstabbing and companies that were burned in the process.
It should also be noted that Silicon Graphics brought the prototype N64 hardware to Sega of America first before they settled on Nintendo. But Sega of Japan rejected the proposed console because they were already working on the Sega Saturn in Japan. SOA president Tom Kalinske was really impressed with the early hardware prototype and wanted it as Sega's next console. But in the end he told Silicon Graphics to look elsewhere for another partner and SGI aligned with Nintendo on Project reality. I guess it makes sense given that Miyamoto was eying up the prospect of making a 3D Mario game after working on Star Fox on the SNES. The N64 hardware probably looked really appealing to him. I could only imagine this appearing at the most opportune time for NOA as it gave them a fresh starting point for their next generation console.
Another thing is Sega apparently let Sony look at early specs for the Saturn, which gave Sony a good idea at what their competition from Sega would look like. The developers at Sega were unaware at what Sony was developing. This also put Sega into a tailspin with the Saturn and made them revise the hardware only making it more expensive and harder to use than the PS1.
Sony learned this lesson hard with the PS3.
Very interesting. Any kind of sources for your story?
BocoDragon
or, How I Learned to Stop Worrying and Realize This Assgrab is Delicious
Time to replace its 72 pin connector.
akidnamededdy
Banned
Instead of taking the shot itself, Nintendo passed the ball to Sony, who was wide open. It bounced off the rim and fell dead to the arena floor at the sound of the buzzer, and to this day Nintendo kicks itself for not going for that game-winning shot.
encephalon
Member
Whatever the case, it's clear that it's a deal Nintendo initially agreed to, then later changed their mind. Any talk of "didn't notice _ language in the contract" is unrealistic.
Nope.
itchyass86
Member
Yes. This has been confirmed many times. In fact, this is basically the story of Star Wars.
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