The Rise And Fall Of The Dreamcast
September 9, 2009 Page 4 of 7
The Sports Situation
To launch a console in North America in 1999, console manufacturers had to lead with their own sports games. EA was used to competing with a host of other sports products made by Nintendo, Konami, Namco, Acclaim, and eventually Sony.
To launch the Dreamcast in North America, Stolar had done his due diligence on a company called Visual Concepts. With Sega of Japan's approval, Stolar bought Visual Concepts for $10 million.
"Visual Concepts was a very, very key part of this because they made all the sports titles," said Stolar. "And if you looked at the sports titles on Dreamcast, they far surpassed EA's sports titles. Our football game at the time, NFL 2K, was far superior to Madden. Everybody agreed to that once they came out."
In 1999, during a lunch meeting on neither Sega nor EA turf, Stolar and Probst discussed terms of a potential EA and Sega deal.
"This is what happened, very clearly," explained Stolar. "Larry came to me and said, 'Bernie, we'll support Dreamcast, but this is what I want.' And I thought, 'Great, I know Larry, I know the company real well, I can negotiate this,' I thought he was going to ask for smaller royalties. I would have given him smaller royalties, no question about that."
In the late 1990s, EA was a keen observer of console launches. It knew that striking a deal with hardware companies while they were building their system -- when, according to Gordon, they were worried about costs and putting the company at risk -- was to EA's advantage. "That's when you strike your five-year licensing deal," Gordon said. Probst saw a field of competitors going against EA's growing sports franchises and wanted something more.
"'We want to be the only sports brand on Dreamcast,'" Stolar recalled Probst saying. "'We want the exclusive rights to be the only sports brand on Dreamcast.'"
This surprised Stolar, whose strategic planning included Visual Concepts as a key element in making Dreamcast a success.
Stolar countered. "I said, 'Larry, I'll tell you what. As a third party, I'll agree to that. But I'm not going to agree to that for first party. I bought Visual Concepts for $10 million. So you can compete with Visual Concepts. We'll have Visual Concepts sports titles and we'll have EA sports titles, and that will be it.'"
Probst didn't budge.
"No, I don't even want to compete with Visual Concepts," Probst told Stolar, who replied, "'Forget it then, end of story.' That's what it was all about, right there."
Weeks after Stolar's and Probst's lunch meeting, Japan tried to change EA's mind, but it didn't work, said Stolar. "Sega tried to lower royalties but EA wouldn't budge."
Considering EA's built-in customer base, did Stolar make the right decision?
"Look what Visual Concepts brought to the table, look what they brought to Sega. If you look at those games today, everybody will tell you those games looked better than EA's games. So I would not have changed my opinion."
Stolar may have been right about Visual Concepts' talents as a sports developer, but even before the Dreamcast launched in the US, Sega was found itself in third-party trouble. The largest independent third-party publisher wasn't going to support Sega? When Gordon unequivocally said, "Dreamcast can't succeed without EA," the press jumped on the story.
The message couldn't have been clearer. Sega would struggle on without its long-term software partner and confront Sony and Nintendo with a giant question mark associated with its new system.
Bellfield put the loss into perspective: "The fact that EA didn't support us was a ding against us. But I'm not sure what breakthrough game EA would have given the platform from September 1999 through January 2001 that we hadn't already got in the same genre," said Bellfield. "Sports, the power of the Madden brand, sure. But NFL 2K had a breakthrough experience."
"I'm very proud of what we built with the 2K series," said Moore. "I think it actually made the sports genre bigger and healthier. It created a lot more interest in the genre because of the ferocious competition. That was the flip side of EA not supporting the Dreamcast."
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