While Sega's Development Department was working tirelessly, steadily advancing toward the next generation in both arcade and home console development, the storm of the next generation had already begun.
On the giant screen in Times Square, New York, the Matsushita Electric logo flashed briefly, followed by the slow rotation of the futuristic black box—the REAL—3DO.
The screen cut to a montage of explosive effects, cinematic cutscenes, and high-fidelity CD-quality audio, finally freezing on a line of bold, golden text: "Welcome to the 32-bit era."
Without pixelation, without harsh electronic tones, Matsushita announced to the world with almost arrogant confidence: The true entertainment terminal has arrived.
At Sega Headquarters, in the Executive Office.
Matsuda entered, clutching a stack of freshly printed battle reports, and nearly tripped over the carpet.
"Managing Director! Matsushita—Matsushita has finally made their move!"
Matsuda spread the documents across the table, his voice tight as he pointed to the data. "REAL—3DO, a 32-bit RISC processor, double-speed CD-ROM—this configuration is a monster! And they haven't just secured EA; they claim over fifty developers have signed letters of intent. The media is buzzing—Nintendo and Sega are in trouble."
Takuya Nakayama glanced at the promotional flyer displaying the black console. Matsushita's industrial design was undeniable; it looked more like an expensive, high-end audio system.
"In trouble?" Takuya closed the magazine and tossed it aside, finally letting out a laugh. "Trip Hawkins is a master at selling snake oil, and Matsushita is a giant in the appliance industry. But put those two together? They might not make a good child."
He stood up and walked to the floor-to-ceiling window. Outside, Tokyo Tower twinkled in the night.
"Matsuda, why do you think people buy game consoles?"
"To play games, of course!" Matsuda blinked in surprise.
"Exactly. Gaming," Takuya Nakayama said, tapping his fingers lightly on the glass. "Not for watching movies, not for listening to CDs, and certainly not for buying an expensive, high-tech gadget to show off in the living room. I've looked at the specs for Matsushita's machine, and they're indeed impressive. But impressive comes at a price."
A mischievous glint flashed in his eyes. "Just wait. When Matsushita announces the price, that's when this whole farce will truly reach its climax. They think they can treat a game console like an appliance? They haven't figured it out yet. In this industry, even players with only five hundred yen in their pockets will unhesitatingly throw their money at fun games, not at some cold, meaningless number like '32-bit'."
He patted Matsuda's shoulder, his tone as casual as if he were discussing tomorrow's weather.
October 7, 1993, United States.
The "next-generation storm," which the industry had been hyping for over half a year, finally landed.
The REAL—3DO console, jointly developed by Matsushita Electric and the 3DO Company, officially hit the shelves.
From the moment it appeared, its hardcore industrial design language screamed a single message to the world: I'm not a toy. I'm a high-end appliance.
Its design was thick and solid, entirely black. Four large circular feet on the front panel supported the rectangular body, making it look less like a game console and more like a miniaturized, clunky VCR.
Yet, one had to admit that this design exuded a modern, high-tech vibe that clearly said, "I'm expensive."
Matsushita had evidently poured all the expertise they'd honed from making audio equipment and VCRs into this console.
The controller design was also quite ingenious. The three-meter cable allowed players to comfortably lounge on the sofa while playing.
But the most revolutionary feature was the headphone jack on the controller itself.
This was an absolutely ahead-of-its-time innovation for the era, making it possible to play games late at night without waking the family.
Moreover, the controller supported "daisy-chaining." Through an expansion unit, up to eight people could play simultaneously—though no games at the time supported eight-player split-screen, Matsushita didn't hesitate to tout this as a selling point in the manual.
Beyond Matsushita, AT&T and Sanyo Electric had also secured licenses and were busily preparing their own 3DO models.
Samsung Electronics, which had previously maintained an ambiguous stance, suddenly withdrew from the 3DO Consortium at the last moment. The reason, it is said, was that Samsung executives, after evaluating the hardware costs, deemed the venture too risky and decided to focus on their core business.
Looking back, it seems the Koreans' instincts are sometimes sharper than the Japanese.
When the price tag for the REAL-3DO was revealed, the entire North American gaming community fell silent.
$699.
Not $399, not $499, but a staggering $699.
In an era when the Nintendo SNES sold for $199 and the Sega Mega Drive for $149, Matsushita had directly raised the price barrier for game consoles to an astonishing level.
"We're not selling a game console; we're selling a home multimedia terminal," Matsushita's sales representatives tirelessly pitched to the crowds in the stores.
To justify the $699 price, they emphasized the 3DO's "all-in-one" capabilities. With an optional VCD adapter, it could play full-motion MPEG-1 VCDs. It also supported standard CDs, Kodak PhotoCDs, and CD-G discs.
The visuals were truly stunning.
Thanks to its powerful RISC processor and double-speed CD-ROM drive, the 3DO's launch titles significantly outshone the 16-bit consoles of the era in terms of graphical fidelity.
Crash "N'Burn, a flagship title, showcased remarkable polygon processing capabilities. Cars raced across the track, explosions lit up the screen with flames and debris flying everywhere, all without any lag or flickering.
Another first-person shooter, Escape from Monster Manor, demonstrated smooth 3D maze exploration.
The PC port of Star Control II and Atari's puzzle game Kwirk were also packed with extensive cutscenes and voice acting.
Without the limitations of cartridges, the discs were stuffed with CG movies as if they were going out of style.
Yet, as onlookers gazed at the dazzling visuals on the screen, they reached into their pockets, glanced at the $699 price tag, and most people withdrew their hands.
"The graphics are amazing," a young man said after staring at the console at the Best Buy counter for a long time. "But at this price, I just can't justify it."
This was the inevitable consequence of Hawkins' "three-dollar royalty" model.
Software companies were delighted, able to release games for just three dollars.
But the cost had to be borne elsewhere. Without the subsidy from software royalties, hardware manufacturers were forced to maintain high prices to cover their material costs and avoid losses.
Matsushita wasn't a charity; they needed to make a profit on every machine sold.
This created an awkward, vicious cycle:
The high price of the machines led to low sales. Low sales meant software developers couldn't make money. With no profits, developers were unwilling to invest in major titles. Without major titles, the machines sold even less.
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