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Stalled engine: The TurboGrafx-16 turns 25
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# Stalled engine: The TurboGrafx-16 turns 25

September 12, 2014 Page 3 of 6

"Worried," however, isn't the word to describe the mood at NEC in the U.S.

"The reality was, in terms of the graphics, the hardware, and the graphics that the hardware could produce, the TurboGrafx was superior to the Sega Genesis," Balkcom told me just weeks ago, reciting 25 year old talking points.

In truth, while the system's 16-bit GPU was speedy and offered excellent color depth, the TurboGrafx-16's main processor was 8-bit, and an evolution of the one in the NES. It was underpowered for the era.

Doug Snook, who worked at TurboGrafx-16 developer ICOM Simulations, talks of struggling with the TurboGrafx hardware: When developing Beyond Shadowgate, he says, "We ran into trouble with sprite drop-outs when the sword was extended, and more significantly we were forced by memory limitations to flip the character graphics horizontally for walking left and right."

# The Tragic Number

Very soon after the console hit the market, however, it became apparent things were not going to plan: "the sales were kind of disappointing," says Wirt.

Though Nintendo steamrolled Sega in the 8-bit war, Sega's arcade success was tough to contend with in a fight based on graphics as much as gameplay. NEC was an upstart, and soon an underdog. The near-simultaneous launch -- "which we didn't know was going to happen till it got right pretty close," Wirt says -- was particularly damaging, given the circumstances.

But what really hurt the TurboGrafx-16, says Greiner, is the fact that NEC produced a huge number of consoles off the bat -- 750,000 units. (Brandstetter claims 735,000; Wirt called Greiner's estimate "probably a reasonable number." In 1991, Wirt told Computer Gaming World there were 750,000 TurboGrafx units in the U.S., but the article doesn't specify if these were simply produced, shipped to retail, or sold to consumers.)

"I think, as I said, the hype had a life of its own. And I think that it probably infected the thinking of management at NEC when they made that order: 'This is going to be big and we better be prepared. Let's make as much as the market needs so we're not caught short-handed,'" says Greiner.

Retailers, used to being starved by an arrogant Nintendo, asked for more hardware than they actually wanted. "That was their way. And we should have known that, right? That was our job to have known what that was going to do, and that we should have cut them back as well," Greiner says.

While both Sega and NEC started out with roughly the same amount of marketing money at launch -- $10 million for Sega, says this report;$10-15 million for NEC, according to the New York Times -- Sega's initial success meant that it soon felt comfortable investing more heavily in marketing. Its confrontational "Genesis does what Nintendon't" campaign is still remembered by all who were around at the time.

"It was really Sega that really had some great marketing that really trumped Nintendo at the time, if you remember. It was something that I think probably, more than anything else, is what got them into position to actually win," Greiner says.

Soon, Sega was trouncing NEC with marketing: "they outspent us probably 4-to-1 in marketing, or even higher -- I don't know, maybe 10-to-1," says Wirt. But NEC wasn't moving units, and had paid out an extraordinary amount of money to Hudson in royalties on its initial allotment of systems and games: "When they created 750,000 units, we were paid royalties on those 750,000 units. We were also paid royalties on each sale of each HuCARD. So Hudson did not hurt from the poor showing that they had against Sega," says Greiner.

NEC's Japanese management was hesitant to invest more money into the TurboGrafx-16 until it saw some return. It was also complacent. "To do some of the things we wanted to do, we needed support from Japan, from NEC corporate. And they didn't have a great understanding of why we were having problems, because they were doing quite well in Japan," says Wirt.

In Japan, Sega was never a force in the 16-bit war; the Mega Drive was a niche product. NEC had captured a lot of market share by launching the PC Engine early, and it had a better lineup of games for the market. Now, that situation was reversed in the U.S.

"They're all in Japan and they understand the Japanese market. They didn't see the problems we were having. They were kind of like, 'Give it more time, there's more titles coming, you're going to have these other products,'" says Wirt. NEC Japan expected the launch of the CD-ROM add-on and the TurboExpress handheld, which boasted a bright, color screen and used the same HuCARDs as the TurboGrafx, to make a splash.

However, it was quickly apparent that things were not going to plan: "let's say that after the first month, it was pretty clear," says Wirt. By Christmas 1989, says O'Keefe, it was obvious that "the sell-through just wasn't that good," and as soon as six months after the console shipped, it was "very apparent" how bad things were, Greiner says.

"I think they had some serious problems. ... I don't know what the market numbers were. Whatever they were, they were not good," says O'Keefe.

# Dark Times

The problem wasn't just the software lineup, though it did contribute. Third parties were still making PC Engine games in Japan, but NEC couldn't attract publishers in the West. Only a few released games for the system. Those that did didn't tend to stick around.

"Basically, the economics were very difficult for publishers because the little HuCARDs -- they use a technology called chip-on-board," says Wirt. The minimum order was high and so was the cost of fabrication; the medium was "spectacular," says Wirt, thanks to the fact that it worked well for both portable and home games, but it just didn't work for publishers when taken in combination with the TurboGrafx's sluggish sales.

The economics were difficult for consumers, too. The system launched at the same price as the Sega Genesis, but its games were more expensive, broadly speaking. The most idiosyncratic thing about the PC Engine's design is the fact that it has only one controller port. Though it makes some sense given how small the system is, that feature was carried over to the much larger TurboGrafx. An adaptor was needed for two- to five-player play, adding unnecessary expense in the price-sensitive U.S. market.

And while NEC Japan thought the CD-ROM add-on would change the console's fortunes, NEC America began to get cold feet. "I think by that time, we were already pretty cautious because we knew it was going to be pretty expensive," says Wirt. Despite a fight to reduce its cost "below a normal kind of margin" for NEC, the add-on launched at \$399 with no pack-in game.

16-bit rivals: The PC Engine HuCARD, as compared to Sega Genesis and Super Nintendo cartridges

NEC U.S. "knew it was expensive," says Wirt, so "we did not produce that many systems, and there wasn't that much software." In fact, evidence suggests the company shipped around 20,000 units of the TurboGrafx CD hardware in the U.S.

TurboGrafx CD launched at the end of 1989 with just two games available at retail: Fighting Street, a Hudson-developed port of Capcom's original Street Fighter, well before the series' explosive popularity, and Monster Lair, a solid but very obscure arcade shoot 'em-up. Neither was a showcase title.

A 1990 episode of Computer Chronicles, broadcast nationally on PBS. A segment on the TurboGrafx-CD begins at 17:26.

The CD-ROM unit does boost the system's capabilities drastically, and it was the first console to get such a unit by several years. But it had no reach in the U.S. "It was all new. TurboGrafx was new, the games were new, the notion of a CD-ROM was new, and because of that there was so much education of the market involved in order to make them choose TurboGrafx," says Balkcom.

"I mean, the hardware was decent enough, right? When we added the CD-ROM we should have been able to do a lot more with that. But, we didn't pursue it that much, because it just added too much cost to the game unit, I guess," O'Keefe says.

# The Software Problem

More CD-ROM titles didn't arrive until the back half of 1990, and the system's obscene cost didn't attract many takers. Even staunch PC Engine supporters that had U.S. presences ignored the TurboGrafx; NEC began to localize and publish CD games by Nihon Telenet -- despite the fact that the company had established a U.S. arm that same year and steadily released Sega Genesis games.

In fact, it was almost entirely up to NEC to support the TurboGrafx-16. With system sales failing to take off, companies were happy to let NEC take the risk. "In some cases they'd say, 'You know, we don't really want to publish ourselves. We'll license you our game. Why don't you publish it?' ... basically we were pretty much the only publisher as a result of that," Wirt says.

"The problem was, without a large installed base of the game systems, companies didn't want to take on the financial risk of development, publishing, and distribution. They were interested in licensing games to NEC to publish, only," says Balkcom. Sonoko Saito, who worked for Hudson Soft at the time, explains publishers' thinking: "It's much easier, and it's instant profits if they license the games to somebody else to publish, right?"

This created the perception in the West that only NEC supported the system, however. Magazines were full of ads for NES and Genesis games; NEC could only fill a few pages before things got too expensive. So NEC used advertising to try and kill two birds with one stone: "We tried to show the breadth of the games available, because that's one of the things that hurt us… we had a page spread that showed all the games coming out with the latest games highlighted," says Wirt.

There was another problem: the U.S. staff were not software people, as Greiner observed. They relied on NEC Japan to suggest games for the West, which O'Keefe said the company did with the best of intentions. Hudson also made its choices, and its titles continued to dominate the system's lineup. But NEC's U.S. staff were clueless about which games were good.

"As I recall, our decisions were informed in large part by the relationship between NEC Japan and the Japanese software companies," Balkcom said. The Atari crew's game expertise was pre-NES era, and it seems nobody at NEC knew much about contemporary arcade titles or player preferences at all.

"I think that the Americans [at NEC] underestimated the power of Sega in the market, because those arcade games were ported from success in Japan to success in the U.S.," Balkcom says.

Victor Ireland started out as a TurboGrafx fan and then a journalist. After developing a close relationship with NEC, he soon moved to become a TurboGrafx game publisher thanks to a mix of enthusiasm, frustration, and opportunity. His company, Working Designs, released its first two TurboGrafx-16 games in 1991.

"I became aware of so many cool games for PC Engine, and NEC was bringing over so many of the wrong games for the TurboGrafx," Ireland says. "The people in charge of picking what games to do were completely out of their element. A main producer was letting her little kids pick which games to bring over because she had no idea what she was looking at. It was absurd."

While Sega steadily released ports of its arcade hits and original console games, backed up by an increasing number of third parties, NEC struggled to select games for the West, and to get players interested in them: "we had a lot of education to do that Sega did not," Balkcom says.

Still, the system had some hits: Blazing Lazers, a 2D shooter developed by Hudson, was an early standout exclusive. Namco's macabre Splatterhouse courted controversy and looked very good doing it. Hudson Soft developed the first 5-player version of Bomberman for the PC Engine, and it "took on a life of its own" in the West, too, says Balkcom -- despite the expense of all those controllers.

And in 1990, the system's crowning glory, if ever it had one, arrived: Bonk's Adventure. This platformer, supplied by Hudson Soft, gave NEC a title to rally around and, arriving a year before Sonic the Hedgehog, was an early volley in the 16-bit mascot wars. Of any game for the TurboGrafx, it's the one people are most likely to have heard of. It gave the system an identity -- a face.

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