Nintendo vs. PlayStation: The Rivalry of a Lifetime

The late 1980s and early 1990s saw gaming giant Nintendo engage in a rapid-fire series of corporate deals and backstabbing — the consequences of which would create a new rival and industry titan to change the gaming landscape forever.

 

A Fateful Collaboration

In the late 1970s, a young aspiring engineer joined Sony following his graduation. That man was none other than Ken Kutaragi, who would go on to be known as the father of the PlayStation. As his parents were the owners of a small printing plant business, Kutaragi grew up with a hobby of tinkering with various things, including taking toys apart to understand their inner workings — something his parents encouraged him to do to better understand the operations at the family plant. Kutaragi’s habits and later love for electronics would serve him well in the decades to come.

A variety of factors, including an oversaturated market, led to the video game industry crash of 1983, before Nintendo would enter the scene and revitalize the industry with the release of the Nintendo Entertainment System, also known as the Famicom in its native Japan. Its policies, though borderline draconian in nature (such as limiting how many games a third party could publish per year, and forcing prospective developers to sign exclusivity contracts) resuscitated the market and helped them achieve dominance.

Nintendo’s reign would only last for so long, as Sega debuted the Genesis (or Mega Drive) in Japan in 1988. It did, however, take a few years for the new 16-bit rival on the block to become a real threat to Nintendo, and so its executives initially felt no need to rush a new console to the market — at least, until Nintendo’s dominance was challenged.

Meanwhile, by 1994, Sony had yet to enter the video game market; its executives had little interest in the medium. To them, video games were nothing more than a passing fad. Kutaragi, however, had other ideas. His daughter played games on the Famicom, and watching her play made him realize the potential that gaming — or at least, its hardware — had. When Nintendo came looking for someone to design the then-upcoming Super Famicom’s audio chip, Kutaragi wasted no time in accepting the offer — and he did so behind his bosses’ backs.

The higher-ups were livid when they discovered this, and it was only through the intervention of Sony CEO Norio Ohga that Kutaragi was able to keep his job and continue working on the project. Ohga, who had landed his job at Sony by directly complaining to them about the quality of their tape recorders, was a kindred spirit who saw the outspoken and brash Kutaragi as a protegé and an asset that could shake up what he saw as an overly safe and conventional company.

The rest was history; the SNES would go head-to-head against the Genesis in a fierce battle for western living rooms, while absolutely dominating in Japan.

This successful project gave Kutaragi and Sony inroads with Nintendo and the gaming industry, leading to the birth of another collaboration — whose eventual failure would go on to shape the fate of gaming for decades to come.

 

Above Their Station

At the dawn of 1990, Nintendo and Sony made an official agreement to collaborate on a new project. This would be a two-pronged approach: the companies would create an add-on for the SNES that would support a CD-ROM based format known as the Super Disc, while Sony would also release a hybrid system known as the Play Station that would likewise support both SNES cartridges and the aforementioned Super Discs.

In truth, there were red flags about this collaboration from the outset. While Kutaragi had faith in cutting edge technology like CDs, Nintendo was far more apathetic, believing the downside of extensive loading times to outweigh potential benefits.

This skepticism and apathy towards the medium would lead Nintendo to make a careless mistake: having been told by Kutaragi that Sony would focus on non-gaming software for their CD-based output, Nintendo agreed to sign a contract that would give Sony full royalties for the add-on’s CD software; Nintendo wouldn’t see a single yen of profit from these sales. What’s more, despite having been explicitly told that Sony’s CD software would be purely non-gaming, this statement was never actually in the contract itself.

Either way, Nintendo was giving an unusual amount of control to Sony, something that Hiroshi Yamauchi, Nintendo’s president at the time, didn’t appreciate. He had already been wary of the company’s rise in recent years; it didn’t help matters that the SNES audio chip was supplied solely by Sony, with Ken Kutaragi himself designing the chip, and required an expensive proprietary development kit to work with. Unwilling to become a pawn in Sony’s incursion into the gaming industry, Yamauchi and Nintendo began to look elsewhere for a better deal.

That “elsewhere” would turn out to be Dutch conglomerate Philips. Yamauchi sent Nintendo of America president Minoru Arakawa and Nintendo of America chairman Howard Lincoln to the Netherlands in May of 1991 to secure a better deal, one that would give Nintendo the control they wanted over the games that would be published.

The two companies worked together to develop the CD-based add-on for the SNES, and to sweeten the deal, Philips were given the rights to use some of Nintendo’s IP to develop their own games for the CD-i, an optical disc media player and hardware platform. Though marketed as a device for education and home entertainment, the CD-i also boasted extra features like internet connectivity, keyboard accessories, and a heavy focus on music, edutainment, and encyclopedic software.

Philips, however, decided that competing against the likes of industry titans Nintendo and Sega would be a bad idea, and so avoided mentioning video games in their marketing. The system would still ultimately flop, both due to a lack of compelling software and because consumers in the market for what the CD-i offered could instead go with a low-end PC for much cheaper than Philips’ asking price of $699.

At the Consumer Electronics Show of June 1991, Sony announced their partnership with Nintendo to develop the SNES add-on, only for Nintendo themselves to come out the very next day and publicly announce that they would be working with Philips instead.

The truth behind this event is a tad more complicated; rather than find out about the new partnership at the same time as the audience at the show, Sony knew at least a day or two in advance that the betrayal was coming, and scrambled to put a stop to it. But their phone calls to Nintendo would go ignored, and the press conference went ahead as planned.

Nintendo had very suddenly and publicly jilted Sony, and the latter’s executives were left fuming. Though legal action was threatened, and Nintendo faced potential backlash from the Japanese business community for daring to betray a local company in favor of working with a foreign one, both sides ultimately decided it was better to settle their differences instead of making the situation even worse.

This meant that, for a brief period, Sony would actually continue to develop the SNES Play Station hybrid system, while Nintendo and Philips continued to develop their version of the SNES add-on. As many as two hundred prototypes were created, with games entering development, before the project was canned.

A variety of factors, including the commercial failure of the Sega CD, saw Nintendo abandon their interests in CD development altogether. The Phillips version of the add-on was also canceled, though Philips themselves still had the rights to use some of Nintendo’s characters in their own CD-i games.

In contrast to the careful and stringent, yet creative development cycles of Nintendo’s best first party games, the company had little input on Philips’s games — and it shows. The most infamous titles of the bunch were the Zelda CD-i games, which were low budget projects farmed out to a Russian studio.

This low budget — and a one-year development time — was to be used to finish both Link: The Faces of Evil and Zelda: The Wand of Gamelon. And while Philips insisted on developers using all of the features the CD-i had at its disposal, this didn’t amount to much, given that the system was never designed explicitly for hardcore gaming. Decades later, all that would remain of Nintendo’s downsized partnership with Philips was a wealth of YouTube Poops and meme videos featuring cutscene footage from the failed CD-i games.

Meanwhile, sometime in late 1992, things had finally completely fallen apart between Sony and Nintendo, and the idea of an SNES with CD-playing capabilities was well and truly dead. In light of the frustrations from this failed partnership, Sony would reach out to Sega and see if they were receptive to working together. While the Sega of America president at the time, Tom Kalinske, saw promise in the idea, it was shot down pretty quickly by Sega of Japan’s board of directors, including president Hayao Nakayama.

Sony was left with no prospective partners to enter the console market with, but gained an even fiercer determination to do so on their own terms this time. This time, they would not back down.

 

Contestants Enter the Ring

After having been rebuffed by both Sega and Nintendo, and fed up with the higher ups’ seeming cowardice at going it solo, Ken Kutaragi was more determined than ever to break into the console market. To facilitate this, he took an unusual yet simple approach: get his boss, CEO Norio Ohga, mad. A reminder of what Nintendo had done to Sony was enough to convince Ohga to greenlight Kutaragi’s plans. Sony wasn’t going to take that humiliation lying down.

To avoid potentially damaging Sony’s brand in the event of commercial failure, Kutaragi and his team were moved to Sony Music. This also gave them the know-how to get and retain potential developers, while also giving them control of disc pressing and distribution, something that would be necessary to launch a CD-ROM based console. Together, Sony and the Sony Music subsidiary would go on to establish Sony Computer Entertainment, which would handle the PlayStation’s launch.

Having seen Nintendo’s draconian policies and its desire for absolute control burn Sony first hand, the team at SCE sought to turn their rival’s strengths that once revived the industry into something of an Achilles’ heel. Nintendo forced exclusivity contracts on third parties and dictated how much cartridges each would receive; SCE established a dedicated sales team to allow potential third parties more control over sales and distribution of their own games. Nintendo and Sega both took months to complete game certification processes; Sony would guarantee developers a fast and painless two-week period instead.

Topped with reasonable royalties and less competition early on due to a lack of first party Sony games in production, Sony was able to amass support from third parties in both Japan and the west alike, such as Squaresoft, Konami, and Activision — support that would eventually result in the PlayStation having thousands of games in its library compared to the Nintendo 64’s meager library of less than 400.

Meanwhile, from late 1992 to early 1993, Nintendo held meetings with Silicon Graphics to use their tech for an upcoming console. This, of course, would be unveiled as the Ultra 64, named after the 64-bit CPU the system used. Of the major contestants of this console generation, the system — later renamed to “Nintendo 64” — would be the last to enter the ring, releasing in 1996 for Japan and the United States, and 1997 for Europe and Australia.

Though packing more raw power than the PlayStation, the Nintendo 64 broke from popular trends. Rather than a more traditional controller layout, Nintendo went with an unconventional design that placed its analog stick at the center, with the intent that players could hold the controller in three different ways, depending on the style and needs of the game they were playing. That raw power also gave Nintendo leeway to include four controller ports on the system, as Nintendo 64 was capable of four-player splitscreen without slowdown.

The most notable aspect of the console’s design, however, was the fact that Nintendo continued to use cartridges when the competition switched to CD-ROMs. These cartridges — or Game Paks — could store between 4 to 64 MB of data, a far cry from the PlayStation, which could not only manage 700 MB per disc, but also use multiple discs for longer games like Final Fantasy VII. This decision was driven by the desire for superior loading times, which did end up being one of the Nintendo 64’s key advantages over the PlayStation.

 

A New Household Name

On its first day in the wild in Japan — December 3, 1994 — the PlayStation sold 100,000 units; that number grew to two million six months later. Those who personally knew Ohga, such as family and friends, went as far as to beg him to help them secure the console for their kids in time for the holidays, an event that finally made him realize that Sony had something special on its hands.

The following year saw Sony blessed by serendipity in the west, at Sega’s expense. At the very first E3 in 1995, Sega clumsily attempted to shadow drop the Sega Saturn, which dramatically backfired when Steve Race, then the president of Sony Computer Entertainment America, seized the chance to derail those plans in mere seconds. The PlayStation’s American launch, at $299, was likewise a massive success, selling close to a million units between its September 1995 release and the end of that year.

But to keep that momentum going and truly solidify PlayStation as a household name, Sony needed to ramp things up. Owing to CDs being cheaper to produce than cartridges, Sony had an easy time convincing developers to take creative risks and break the mold by creating new experiences.

Sony would also bolster the PlayStation’s library with their own in-house output. Founded as an internal development studio, Polys Entertainment cut their teeth on developing racing games, including the Japan-exclusive Motor Toon Grand Prix. Released at the tail end of 1994, SCE’s first major first party title featured a cartoonish aesthetic paired with surprisingly realistic vehicle handling and gameplay.

Its director, Kazunori Yamauchi, would go on to release a direct sequel, Motor Toon Grand Prix 2; Motor Toon 2 would go on to receive both a western release and improved critical reception compared to its predecessor.

While all of this was going on, Yamauchi and a small team had been cooking up something else since the back half of 1992 — something that would become critically acclaimed, a massive sales success, and leave its mark on console racing games forever.

We’re talking, of course, about Gran Turismo. Development on this all-time classic had begun long before the PlayStation had even hit store shelves, and lasted an agonizing five years — during which Yamauchi estimated he’d only gone home for about only four days each year. Such a lengthy development period was mostly unheard of in this era, with other devs like Squaresoft imposing strict deadlines for their projects.

The final product, built upon what the team had achieved with Motor Toon, featured 140 cars and 11 race tracks. Upon release, Gran Turismo was an instant hit with critics and players alike, being lauded for its driving controls and attention to detail. Gran Turismo sold six million units worldwide by March 1999, and over ten million by the end of 2000. Polys Entertainment, fresh off of the initial success of Gran Turismo in Japan, would rebrand themselves as Polyphony Digital just before the game’s North American release, and they remain the stewards of the series to this day.

To push their groundbreaking new hardware and its games, Sony adopted a bold, brash, and at times unusual marketing approach for the PlayStation and its games, with the goal of reaching an older target audience of gamers in their early twenties. To that end, they experimented with ideas like putting consoles into nightclubs, running a series of commercials warning people not to buy the system (helmed by a spokesperson of the “Society Against PlayStation”), and generally pushing the boundaries of what was considered morally acceptable at the time.

Some of these ads were absolutely wild, such as a flier proclaiming that the PlayStation was “more powerful than God.” One ad in particular for racing game Wipeout drew controversy for depicting a pair of young adults suffering from nosebleeds — imagery that was intended to emphasize the game’s high-octane action, instead evoking implications of drug abuse.

 

A Treasure Trove of Classics

With its eclectic mix of first party and third party games, Sony took the industry by storm. Nintendo, however, wasn’t about to take that lying down, even bringing out ads like a Nintendo Power promo that portrayed Sony and Sega as kidnappers and torturers.

Meanwhile, within the hallowed walls of their talented development studios, Nintendo continued to rely on its usual strategy of delivering top notch first party games with its iconic properties.

Mario’s first foray into 3D was initially conceived during the development of the SNES’s Star Fox, which utilized the Super FX chip for its 3D graphics. Actual production would begin in 1994 for the Nintendo 64 instead, which Miyamoto preferred due to its controller having more buttons to work with. Despite its nature as something revolutionary, for which there were no existing games and blueprints for developers to reference, the team were still hugely ambitious about what they could achieve, with Miyamoto going as far as to say he wanted to change gaming’s culture itself.

Released as a launch title for the Nintendo 64 in every region, Super Mario 64 marked the series’ leap to 3D, one that would be remembered as one of the greatest games of all time. Having sold over two million copies in its first three months, Super Mario 64 revolutionized the genre overnight, and many other aspiring 3D platformers in the years after its release followed its lead, such as Banjo-Kazooie.

Nintendo wasn’t done changing the course of gaming history just yet. Developed concurrently with Super Mario 64, and with a budget of over $12 million and over 200 staff members, The Legend of Zelda: Ocarina of Time would likewise mark the Zelda series’ debut in full 3D. Though Link’s biggest adventure yet at the time would take him all across Hyrule, the Nintendo 64’s cartridge storage constraints were enough of a concern during development that Miyamoto had a backup plan that would see them structure the game similarly to Super Mario 64, where Ganon’s Castle would have been a hub area, and Link would have traveled to different locations via paintings.

This didn’t come to pass, however, and Nintendo was ultimately able to realize their vision for Ocarina of Time. Similar to how Super Mario 64 revolutionized platformers overnight, Ocarina likewise revolutionized action-adventure games, introducing game mechanics that would become integral throughout the industry in the years and decades that followed. The game was also a massive commercial success, managing 2.5 million in less than two months.

By 1996, though the PlayStation was a success featuring classics like Resident Evil, Sony was still missing its very own mascot character. Seeing this as an opportunity to bring their favorite genre, platformers, into 3D, Naughty Dog’s founders Andy Gavin and Jason Rubin signed a contract with Sony, paid $35,000 for a dev kit, and began development on what would become Crash Bandicoot, one of the PlayStation’s premier platformers.

Despite the lack of any track record in games at the time, Sony was the best choice for the duo, as according to Gavin, the other hardware options like the 3DO, 32X, and Saturn were too weak and selling too poorly to consider — the Saturn itself had dev kits that would’ve been difficult to work with.

At the time of Crash’s development, Super Mario 64 had yet to launch (and Crash itself would launch in North America a mere three months after 64’s Japanese release and 20 days before the western release), and so Naughty Dog, like Nintendo, had no precedents to learn from and build upon. As they figured that a 3D platformer would have players spend most of their playtime seeing their character from behind, the project was affectionately referred to as “Sonic’s Ass Game” during development.

To ensure that this would not define the game in its entirety, Naughty Dog’s plan was to incorporate 2D levels, as well as stages that had Crash running towards the screen instead of away from it — resulting in the game’s now famous levels where a boulder chases after the bandicoot.

Development was by no means easy, especially for a team attempting to break new ground during an era where gaming as a whole was entering a brave new dimension. Finding that sweet spot of making the game fun to play required constant iteration, as well as putting dev builds into the hands of completely inexperienced people like the staff at Universal Studios, whose in-game actions spoke far louder than their polite words of positivity.

Naughty Dog’s ideas paid off, as Crash was a big success, selling over one million by the end of 1996 and establishing Naughty Dog as a big new name to watch for.

And of course, it’s impossible to recount the history of Nintendo and PlayStation without also mentioning Final Fantasy VII, the JRPG masterpiece widely credited with popularizing the genre in the west.

Though initially conceived as a 2D RPG in the vein of its predecessors, complications arose when Nintendo announced the 64’s use of cartridges. Though Squaresoft briefly flirted with the idea of developing the game for the 64DD add-on, early testing revealed the hardware wasn’t up to muster, and the 64 MB capacity of its disks would have necessitated 30 of them to store the whole game.

Square had to take the risk: leave Nintendo for Sony and their CD-ROM technology to fully realize their vision. Though it was likewise also a risk for Sony to push this game due to the niche nature of its genre, they still had enough confidence in the game to allocate $40 million for its marketing budget.

The rest, of course, is history. Final Fantasy VII sold over 2 million copies in its first three days on the Japanese market, in turn inspiring western retailers to break the street date en masse to meet demand. The game was a massive critical and commercial success.

 

The Console War Has Changed

While the fierce competition between Sony and Nintendo yielded an unprecedented treasure trove of quality games for consumers, there was ultimately a clear winner in the console wars of this generation. Despite the many internal doubts within Sony, the PlayStation went on to sell over 102 million units in its lifetime, compared to the 33 million of the Nintendo 64. And Sega, who had fallen far out of the limelight by this point due to their mistakes, saw its Saturn sell less than 10 million worldwide.

Though the Nintendo 64 was acclaimed for its graphics and for being the home of some of gaming’s greatest masterpieces, it suffered from a lack of games, especially role-playing games and third party games. The console barely had any RPGs to its name, and of the ones that did release, only Paper Mario and Ogre Battle 64 received any real acclaim, and only Paper Mario still really lingers in public consciousness today.

There were a variety of factors that contributed to Sony’s success — such as a controller layout with dual thumbsticks and vibration functionality that would become the template to emulate industry-wide — but at the end of the day, its games were its greatest strength. The PS1 had a mind-boggling amount of absolute classics in virtually every mainstream genre — Final Fantasy for RPGs, Crash Bandicoot and Spyro the Dragon for platformers, Gran Turismo for racing games, Resident Evil for horror, and Metal Gear Solid for stealth and narrative-driven titles.

Over the course of their lifetimes, Super Mario 64 sold nearly 12 million units, Ocarina of Time sold over 7.6 million, Gran Turismo sold over 10 million, and Final Fantasy VII sold over 14.4 million.

How was the CD-i doing during all this? Well, it pretty much died in obscurity, with it being discontinued in 1998 — but its race was run well before that.

Regardless of who won or lost the console generation, one thing is clear: gamers themselves were the ones who gained the most out of it all.

All of this came to be because Nintendo reneged on its deal with Sony to create an SNES add-on. In their bid to maintain total control over profits and the direction of the gaming industry, Nintendo would create a fearsome rival — one whose emergence would reshape all of gaming in the decades that followed.