How Nintendo Tried To Embarrass Sony And Created Their Biggest Rival

Recently I spoke with Tristan Donovan: “the writer for the Nintendo vs. Sony series of Wondery’s No. 1 podcast Business Warsand author of Replay: The History of Video Games..

We talked about his viewpoints on how Nintendo set to discredit Sony during the development of the first Playstation and how it motivated Sony to dominate the console market.

Can you take readers through the history of how Sony got into game consoles and what made them approach Nintendo?

Initially Sony had no real interest in games. A few divisions of Sony had dabbled in the games publishing market but there was little committment to the business and Sony regarded game consoles as beneath them since in the late 80s consoles were viewed as toys rather than consumer electronics. However Ken Kutaragi, the Sony engineer who drove through the PlayStation project, wanted to get the company into the video game console business. To lay the groundwork he decided to forge links with Nintendo, starting by persuading them to give Sony the contract to design the Super Nintendo’s sound chip. After that he arranged the deal with Nintendo to create the PlayStation, which was originally to be a Sony manufactured Super NES console that also had a CD-ROM drive. As the first episode of Wondery Business Wars podcast xplains, Nintendo changed its mind about the deal and effectively pushed Sony into giving up on the project. After that Kutaragi persuaded the head of Sony to seek revenge by creating the original PlayStation and taking on Nintendo in the console business.

This was before the N64 Correct and was Nintendo currently working on a new console?

Yes it was before the N64. The Nintendo-Sony PlayStation deal collapsed in 1991/1992. At that point the Super Nintendo was only just launching so Nintendo wasn’t yet working on the N64.

How far did the proposed joint design make it towards reality?

Sony did make some prototypes of the Nintendo-Sony PlayStation. Someone actually got hold of a working model a year or two back. So as far as I understand it was at a stage or very close to a stage where it could be put into production.

What caused Nintendo to do an about face on the project?

Nintendo’s primary concern was a clause in the contract with Sony that allowed Sony to manufacture CD games for the PlayStation. Console manufacturers make the bulk of their money by charging game publishers for manufacturing their games and then taking an additional royalty on every copy sold. By allowing Sony to make PlayStation games, Nintendo was surrendering total control over what could be released on the PlayStation. Nintendo decided after signing the deal that it couldn’t live with that.

What were the short and long-term effects of this for both companies?

In the short term, the collapse of the deal ultimately meant the Super NES never got a CD-ROM drive. Nintendo did sign an alternative deal with Philips but that never amounted to anything. Longer term however it brought Sony into the console business and ultimately the PlayStation outsold the N64 ending Nintendo’s time as the number one console manufacturer. For Sony the PlayStation became a crucial division of the company. Sony’s consumer electronics division really struggled during the 1990s and the PlayStation was really the product that pulled the company out of the doldrums. The PlayStation became the single biggest business unit in Sony so it really became a fundamental part of the company.

What did Sony end up doing as a result to bring the PS1 to market?

Sony had no background in video games of any note to build on. So it had to go from nothing to creating a console, building up the distribution networks and setting up Sony Computer Entertainment and its offices across the world. The big challenge, as covered in episode 3 of the podcast, was getting support from game publishers. Sony had no development teams and while it set some up they were inexperienced and there was no way they would be able to create games good enough to rival Nintendo early on. Sony needed the game publishers to make PlayStation games in order to have any hope of success but initially publishers were wary. They had seen lots of corporate giants try and fail at releasing game consoles before and many were loyal to Nintendo. Sony had to overcome that.

How long did it take Sony to match the quality of Nintendo and the surpass them in terms of quality and sales?

Well quality is a really subjective term. Thanks to external publishers Sony had a bunch of good and soon after great games. Nintendo, of course, had and still is one of the very best game makers around. By the time you start seeing games
like Gran Turismo, Sony’s own teams were getting up to similar quality levels but if you look at all those lists of the best ever games, Mario 64 and Zelda: Ocarina of Time are usually near the top so you could argue that Sony never surpassed Nintendo
on the quality front.

In terms of sales Sony launched the PlayStation 2 years before the N64 came out and by the time the N64 launched Sony had a good lead. For a while the N64 came close to catching up (in the US at least) but ultimately the N64 never surpassed the PlayStation in sales.

Why do you think that Nintendo has lagged behind Sony in terms of system power and versatility in recent consoles?

At the most basic level when Sony – and Microsoft – think about making a new console they look to make an even more powerful one. Nintendo thinks differently, It looks to make consoles that offer a new experience and its long taken that approach – just look at the Game Boy which was much less powerful than the rival handheld consoles coming out at the same time. The last time Nintendo really tried that Sony/Microsoft approach was with the GameCube. Since then it’s opted to focus on offering something different and that worked really well with the Wii, Nintendo DS and (so far) the Switch. Not so well with the Wii U. At this stage Nintendo probably does this partly out of necessity as it needs its consoles to stand out from what Microsoft and Sony do but its philosophy has always been about new experiences rather than a new console just means the old console but more powerful.

What do you think that Sony and Nintendo did right and wrong with their current consoles?

Sony got two big things right with the PlayStation 4. First, it didn’t develop a custom CPU as it did with the PlayStation 3. Instead it used generic PC tech just like the Xbox One, that makes it much easier for game developers to create games for PS4, X1 and PC at the same time. Second, Sony kept focused on games, unlike Microsoft which was initially billing the Xbox One as a home entertainment device of which games were just a part. History is littered with consoles that positioned themselves as more than games machines and not a single one of them has been a success. I don’t think Sony has made any serious mistakes yet. That PS4 is by far the biggest selling current console underlines that.

What Nintendo has done right with the Switch is offer something truly different and appealing. They also backed it with some of the best games Nintendo has ever made, which when you consider how strong Nintendo’s games have been in the past is quite an achievement. The Wii U tried to do the same but the execution wasn’t quite there and the iPad made its tablet controller seem less interesting than it probably was when Nintendo first came up with the concept for the Wii U. As for mistakes, it’s a bit too early for see any with the Switch. The online offer hasn’t been received especially well from comments on the internet but it’s cheap and just because people who are vocal on the internet dislike it doesn’t mean it is disliked more broadly.

What do you think both companies need to do going forward?

Nintendo’s big challenge is ensuring game publishers get behind the Switch. So far it’s looking good and the sales so far have got to be encouraging for publishers, but I think the Switch will need publishers bringing more big name games to it to keep up the momentum. For example, it’s got FIFA but will it get Madden and will it keep getting FIFA?

Sony’s next challenge is deciding when to go ahead with a new console.

It’s in a good position now but at some stage we will be moving onto a new generation of consoles. That could be years away yet but timing can be everything. They’re on top so bringing out a new console involves the risk that they might not be the victor next time. Equally there’s risk in leaving it too long and finding themselves trying to catch up with a rival.

Do you think Nintendo will ever regain their spot as the top console maker or are those days gone for good?

It’s totally possible. The Wii was the biggest selling console of its generation so they were the number one not that long ago and with a console everyone dismissed before it launched. Sure they dropped the ball with the Wii U but the Switch is doing well.

Which is your Favorite Nintendo and Sony console; past or present and why?

For Nintendo it’s definitely the Switch. It’s versatile, fun to use and the quality of games Nintendo is putting out on it is exceptional. For Sony I have a soft spot for the PlayStation 2. It still looks great and being able to have it vertical or horizontal was a great touch. It also came with dual analog sticks on the controllers as standard, had a DVD player and ran games for the original PlayStation. That said, the PS4 is the Sony console under my TV. The PS2
is lurking in the attic somewhere.






  1. Kevin said:

    So where’s the part that Sony wanted ownership of all game rights Published on the system .in others Sony wanted hold Nintendo games hostage . How does that back stabbing part never make it into retellings of this story .

    May 18, 2018
    • gareth said:

      It is a very interesting story. I did not know a lot about it before the interview as at the time I played PC first as I do now and at times SNES. I did not get into PS until the PS2.

      May 18, 2018
  2. What your article fails to point out is that Sony dug their own grave through Switch. Vita’s problem to sell was obviously not because “console quality gaming on the go has not market” or Switch wouldn’t be selling so well.

    Vita had the potential to reap this market before Switch got here and instead Nintendo is eating it up because Sony bought this lie that people are done with handhelds when the reality is both can coexist.

    Vita wasn’t too late Jack Tretton. It was too early.

    May 19, 2018
    • gareth said:

      The Switch will be hard pressed to sell as many units as the PS4 has though.

      May 19, 2018
      • You are right. This was a very good read from you. Its nice to see some people do investigate this stuff because this kind of history has an impact on the people who buy their products.

        What could have happened if this deal had gone through? Would the market have been controlled by Sony in the way it once was by Nintendo?

        May 19, 2018
        • gareth said:

          That is the big question. I was not overly aware of this issue and they came to me to offer and interview. I think the issue was that you had two companies with very different ideas. Nintendo is more about fun games and mobility/social interactions. Sony is about power, expanding tech such as VR, and exclusives which often push the boundaries of their tech. Nintendo still does not have a big emphasis on online gaming compared to what others do and their hardware lags behind the other two in terms of power. Games appearing on the Switch have had graphical and framerates decreases vs the Xbox One and PS4 to say nothing about the Xbox One X and PS4 Pro. I can tell you most developers always want more power and to push tech with their releases. Nintendo often faces the issue of third party developers often do not factor them into release plans until after the fact. I look at many of the AAA games coming to E3 and see the Switch not being an ideal platform for them. So now that the wave of Switch buyers has slowed they need exclusives and third party support. I think we would have had a versatile system that combined the fun of Nintendo with the power and versatility Sony often shows.

          May 19, 2018
          • I don’t think Nintendo will ever get AAA support back. The problem back then was (as you pointed out) Nintendo had virtually no competition so they could dictate to the bigger publishers such as EA and Activision. Now they’ve noticed a market Nintendo don’t align with they don’t need them to be successful.

            Their approach on hardware couldn’t be further from what consoles have become these days. They definitely failed to notice a market shift with consoles.

            I’m glad Switch has been successful though because it definitely seems like a child that Wii U and Vita gave birth to after they ‘hooked up’ from their conversation about the world not understanding what unique libraries they had.

            May 19, 2018
          • gareth said:

            I am curious about the future systems. We are seeing a new emphasis on PC gaming but the key for consoles seems to be in question. Nintendo went with portability over power and versatility. PS5 rumors say backwards compatibility with PS4 titles and VR integration. EA, Bethesda, Activision, Ubisoft, etc seem to be focused on pushing the tech boundaries as they have so many games that do not factor the Switch into play. It reminds me of the Wii. There were so many sold that publishers did not want to lose the market but had to make watered down versions of their games to run on it. Many ended up regretting this and when the Wii U struggled, they dropped the line. Plus Nintendo is famous for not lowering the price of their older games and I think they run the risk now of facing a marketplace where demand for the Switch has been largely met and they need to release exclusives that will make people say I have to buy a Switch. I am very curious about E3. I have our panels at Phoenix Comic Fest next weekend and game publishers have been extra quiet. We usually have some clamoring to be included in the games panel but we are seeing unusual silence. E3 wise we have showcase invites but mainly smaller companies and tech have been doing meeting request. Konami and Square Enix are the biggest meetings to come forward so far. That will change in the weeks ahead but it seems nobody is tipping their hand as much as we have seen in years past.

            May 19, 2018

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