Sega Retro, a Wiki that aims to “cover everything possible about Sega from the 1940s to today,” is currently hosting a 272-page PDF of classified Sega of America documents that date back to the 1990s, revealing console manufacturing costs, retail margins, and more. One of the more interesting pages comes in the form of an email on p. 18, where Tom Kalinske—Sega of America’s then president and CEO—discusses how Sega is “killing Sony” in sales, citing various successes that include Saturns being sold out and PlayStations collecting dust at retail stores in Japan. Sega left the console industry in 2001 after the Dreamcast (9.13 million sales) was crushed by the PS2 (155 million sales), Nintendo GameCube, and other competitors.
It is one thing to hear/read about how well we are doing in Japan vs. Sony, it’s another to personally witness it. | just visited 10 retail stores in Tokyo (most in Akihabra); it’s now spring break so the crowds of teens/college kids are huge. We are killing Sony. In every store, Saturn hardware is sold out and there are stacks of Playstation. The retailers commented they can’t compare the true sales rate because Saturn sells out before they can measure accurately. Our interactive displays are better, our software displays and stocking far superior. It is not unusual to see 40-50 copies of Panzer Zwei or Virtua Fighter 2 stocked in even small stores and they are selling fast. | wish | could get all our staff, sales people, retailers, analysts, media, etc. to see and understand what’s happening in Japan; they would then understand why we will win here in the U.S. eventually.
The total cost to manufacture the Saturn in early 1996 was $232 – much lower than expected.
— John Harrison – Mega Drive Shock (@MegaDriveShock) July 3, 2023
The retail margin was only 6%! Meaning retailers made only $15 per Saturn sold.
Emails reveal concern that retailers were going to abandon the market en masse due to low margins.
Discussion (2 replies)
Join Discussion →Dreamcast was an excellent console. Its just that only Nintendo so far has been a company willing to eat years of low or no profit when a console fails, this might not always be so, but so far its a company culture thing. Sega came off from the fast growth 80s and 90s, didnt have the right culture for long tern. Sony was hurting for a while, wouldn't surprise me if they could not eat a flop ala WiiU. Microsoft is too big a company so its just a matter of strategy not survival.
Which is how they ate the cost of RRoD repairs.