In the hardware arena, Sega had every right to look down on Nintendo.
"Not only that," Masayuki Uemura adjusted his glasses and added, "they specifically bypassed Minoru Arakawa. If Arakawa had been chosen, the event would have likely devolved into a pure commercial spectacle and an internal political power struggle. Takuya Nakayama knows full well that Arakawa is a shark that bites, while Miyamoto—"
"—Miyamoto is Nintendo's face, an artist in the field of game development," Gunpei Yokoi interjected, leaning back in his chair with a hint of self-mockery. "Having someone who only knows how to make games talk about sentimentality gives the industry a nod without posing any real threat to Sega's business strategy. Their calculations are so precise, I can hear the gears turning all the way from Kyoto."
"But can we refuse?"
A brief, deathly silence fell over the conference room.
Refuse? How could they refuse?
The IDSA's debut was the first time the world's spotlight had turned to Los Angeles.
If we don't send Shigeru Miyamoto, should we suggest Nolan Bushnell from Atari instead?
Don't be ridiculous. Atari is a relic of the past now, a historical footnote. Bringing Bushnell on stage would only remind people of that disastrous era when millions of game cartridges were buried in the Alamogordo, New Mexico landfill.
Sending Miyamoto would bring honor to Nintendo. Refusing would be to spit in the face of our own dignity.
Yamauchi Hiroshi, who had remained silent until now, finally stirred.
He picked up his cold cup of tea and took a sip, unfazed by his subordinates' pessimistic outlook.
The man who had steered Nintendo for decades gazed past the group, his eyes settling on the meticulously manicured courtyard outside the window.
"If Takuya Nakayama wants to turn E3 into a stage that prioritizes software," he said, his voice quiet yet carrying an undeniable authority, "then we'll play along with his show."
"Since the hardware is still in development, we'll silence the critics with software. Sega has been aggressively recruiting talent these past two years, haven't they? We'll expand too."
The old man tapped his finger sharply on the table—a signal of decision.
"The Super Famicom's market share rebound has given us quite a bit of confidence. Since we have cash in hand, let's not let it go to waste.
Spread the word: move up the investment plan for third-party developers. It's not just Intelligent Systems and Enix—we'll fund any promising small studios that can create something truly special. Nintendo will invest in quality."
Genyo Takeda and Gunpei Yokoi exchanged glances, both surprised by the decision.
Yamauchi's Dictatorship, known for its stinginess, was about to open the vault.
"Miyamoto, prepare your opening remarks for Los Angeles carefully. Don't focus on business jargon; talk about games, fun, and the things those Sega engineers could never dream up."
"Yes, I'll prepare it meticulously," Shigeru Miyamoto replied, accepting Yamauchi Hiroshi's request.
Yamauchi Hiroshi stood up, straightened his suit. "Takuya Nakayama thinks he's trying to sabotage us with praise. Hmph, let's see how long his Jupiter can boast once our lineup crushes them. For this first E3, we need to showcase a robust lineup that will reignite players' expectations."
"And Yokoi-kun, put that idea on hold for now. We need to focus all our energy on hardware development for Project Reality." As he reached the door, Yamauchi Hiroshi paused, scanning the room. "If Project Reality's progress slips again, you can forget about attending next year's budget meeting. My patience has its limits. For two generations in a row, Sega has been two years ahead of us. Nintendo has never been this humiliated!"
Tokyo, Sony Computer Entertainment (SCE) Headquarters.
Nobuyuki Idei tossed the copied document onto the conference table. The paper slid just the right distance to stop at Ken Kutaragi's side.
"Takuya Nakayama is trying to put us on the spot," Idei said, rubbing his temples. This future Sony leader looked troubled. "By promoting Shigeru Miyamoto to talk about game philosophy and positioning Sega as the technological vanguard, what does that make us? Just appliance dealers who only know how to make Walkmans and TVs?"
The atmosphere in the conference room grew stifling. SCE, though recently established and backed by the mighty Sony, was still viewed as an unwelcome outsider in the gaming industry, its "money-grubbing" origins a constant source of suspicion.
If E3's opening ceremony truly became a "pure gamer's" carnival, then Sony executives in suits and ties droning on about hardware specs would likely be met with a chorus of boos from the audience.
"Let him talk," Ken Kutaragi said without even looking up from his sales report. He roughly flipped a page with his thick fingers. "No matter how flowery Shigeru Miyamoto's words are, can he make the Super Famicom's pixels look like 3D polygons? Players have sharp eyes. They want Next-Gen graphics, not some plumber's outdated fantasies."
He pointed to a line item on the report, and the tension in his face finally eased. "Look at this. Battle Arena Toshinden. Takara really nailed it this time."
It had to be said, this 3D fighting game, released on January 2nd, was practically PlayStation's lifeline.
While many veteran fighting game players felt its hit detection and feel still lagged behind Sega's Virtua Fighter 2, it excelled in one area: spectacle.
When the background spun around during sidesteps, creating a true 3D effect never before seen on a home console, the visual impact was so overwhelming that it masked all its flaws.
And most importantly—it was a PlayStation exclusive.
"Look at this," Ken Kutaragi said, tapping the whiteboard with his pen cap. "Players' actions speak louder than words. Many claim to miss the exquisite pixel art of the 2D era, yet they're the first to open their wallets for 3D games. Battle Arena Toshinden proves we were right: 3D is the future, and polygons are justice."
"Four hundred thousand units," Shigeo Maruyama added, his voice brimming with excitement. "And still climbing. These are actual sales, not just shipments. The royalties from these four hundred thousand software units are like a powerful stimulant, directly injecting life into SCE's once-atrophied veins."
"What about console sales?" Nobuyuki Idei asked.
"Nine hundred thousand units. We'll break the million mark next week," Kutaragi replied, closing the folder with a crisp snap. "With every console sold, our losses shrink. As long as the software catches up, profitability is just a matter of time."
Even more gratifying to management was the fact that the royalty collection mechanism was finally kicking in. Every game disc sold was channeling precious cash flow into SCE.
This business model—selling consoles at a loss to profit from software—was finally beginning to demonstrate its ability to sustain itself.
"The Hardware Department reports that production costs are steadily declining," Ryoji Nakabachi added. "While we haven't reached profitability yet, the losses are narrowing. As our installed base grows, third-party developers will gain even more confidence."
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