FTC makes console market without Switch
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I know some stuff. They went to cartridges out of fear of Sony. It's completely unknown what it was, but Nintendo ran as hard as they could from the company as they could. Even at bad negotiations Nintendo will leave and come back. They'll even work with military contractors and the mob. This time, they stayed away. Whatever Sony was doing was too much. Even historians who know the truth stear clear of the subject.
Also, the sales numbers for PS1 when compared to game sales show it was more evenly matched with the 64. The hundred million ps1s don't make sense compared to the top selling game being at 12 million.
I saw a show on the history of video games that said Sony and Nintendo were pretty far along and they're negotiations to release the PlayStation as a Nintendo console. They had pictures of the early versions which were basically a PlayStation with an SNES controller attached.
According to the show, the way Nintendo backed out of the deal was to let Sony believe that they were going to publicly announce the partnership at E3, and then they got on the stage and snubbed them. Regardless of how bad Sony maybe is, that sounds like bad form to me. After that Sony negotiated with Sega who also showed interest but later backed out, without the public humiliation aspect.
So, Sony released the console themselves, and the rest is history.
I've actually played the early form, it was a super Nintendo with a CD player.
I don't think it was bad form. I think Nintendo stumbled onto something that made them realize a lot was in danger. I actually work with those kind of historians and there is a lot of speculation on what it could be. This is especially after interviewing Nintendo employees who were scared to even talk about it.
I don't think backing out of the deal was bad form. Sega did the same math and came to the same conclusion apparently. I just did a little bit of research, and it was about royalties for the games put on the discs. I guess Sony wanted too much.
I take issue with how they did it. Telling Sony you're going to make an announcement about your partnership and unveil your new console at CES (not E3, which apparently didn't exist yet), and then instead announcing a partnership with their competitor Phillips is unprofessional.
That's the official statement, but not the reason why they did what they did.