As the memory of E3 1996 faded into the background and the long days of the summer season slowly ticked by, Sega found itself in the unenviable position of not being fit to do battle with either Sony or Nintendo.  Many new Saturn titles were suffering production delays.  Sega was losing money hand over fist due to Sony's bold moves in forcing down nextgen console prices, so much that now Sega could never hope to break even on Saturn production costs.  Rumors were already starting to surface within the videogame industry that Sega was going to drop the Saturn in 1997.  Industry insiders pointed to Sega's steadily shrinking profit numbers, its shallow pockets, its cranky console, and its lack of software for it.  They confidently predicted that Sony was going to win the second great console war hands down.  Sega's Japanese masters saw things differently, as you might expect - after all, N64 sales in Japan had all but stopped due to a dearth of software and Saturn was still outselling PlayStation.  What was happening in Europe didn't matter, because the market was too small to worry about.  What was happening in the United States was a mere abberation, and would be quickly corrected now that Kalinske was gone.  They were taking moves to correct the situation.  The Americans would come around ... in time.
     Sega of Japan's arrogant confidence did not jive, however, with current company performance in the one market that mattered more than any other.  By this time Sega had somehow manged to sell just over 500,000 Saturns in the U.S., which was less than half the number of PlayStations being purchased by consumers nationwide.  Gamers didn't care what was happening on the higher planes - all they knew was that PlayStation was cheaper and had more of the cool games, and this was reflected in the market performance numbers.  Sony was giving them more of what they wanted than Sega, which had seemingly turned its back on its glorious past and was now in the mood to alienate as many good gamers as it could with high prices, lack of good software, and broken promises.  Sony's share of the videogame industry kept growing by leaps and bounds as the critical 1996 holiday shopping season inevitably approached, while Sega's continued to plummet at record speed.
     Sega's chances of surviving the second great console war were now slim to none.  It was no longer a question of whether or not Sega could pull off an upset.  Instead, everybody except Sega was wondering just how far the former champion would fall.  They would begin getting their answers soon enough.

     The long-missing Saturn releases in the U.S. started building in the back half of 1996 as Sega ramped up its software base as fast as possible for 1996.  All-new NetLink versions of Daytona USA and Sega Rally, an Olympic sporting simulation named Decathele (appropriately enough), Kenji Eno's Enemy Zero, fighting games such as Dark Savior and Fighting Vipers, and lots more RPGs such as Legend of Oasis, Albert Odyssey, Shining the Holy Ark Shining Wisdom excited the Saturn customer base to no end.  At long last, Saturn would have a decent chance of competing against the upstart PlayStation.  The one thing that was obvious with the Saturn from the start was a dearth of good software.  Now, finally, it was here and more was coming.  Oh, if only Sega wasn't so choosy about what titles it brought over from Japan!  The more the merrier, argued Sega fans and supporters - especially RPGs.  GameArts, the company behind the phenomenal Lunar series for Sega CD, was already having them ported to Saturn and had another epic in the works named Grandia.  The early previews looked as awesome as its name implied, and since Working Designs had already secured the rights to the Saturn Lunar ports, there was every reason to expect that Grandia would also put in a Stateside appearance.  Many a RPG-inclined U.S. Saturn fan began saving their money and hoping for the best.
     If you weren't an RPG fanboy, though, there was one big factor weighing against Sega's expanding software base.  It didn't have a good American-style football game to draw in the sports crowd.  That's right - Saturn didn't have one.  Period.  The only one available was Acclaim's NFL Quarterback Club '97, but that franchise was well known for being long on looks and short on gameplay, and this Saturn incarnation proved no different than its 16-bit predecessors.  No, Saturn was not going to have the likes of Sega Sports NFL 96 or EA's Madden NFL 97 this year.  Acclaim's game was all football fanatics were going to get.
     "Wha-?"
     You heard me.  I'm not making this up.  It really happened that way.
     "How could this be?" the Sega faitful wail.  "Who screwed up this time?"
     The impulsive response is to blame Sega yet again, but that would be too easy.  The actual answer requires a little explaining.
     You see, right about the time that Sega of America's in-house programming teams needed to start work on a football game for 1996, they were not available and would not be for some time.  The reason?  Almost everybody with any programming skill was hard at work on Sonic X-Treme, and as it turns out they were running into all kinds of programming roadblocks in the process.  Sega would have liked to have contracted an outside programming house to do the game, but no high-caliber ones were available - they were all busy developing games for PlayStation.  Well, there was one, a little start-up company by the name of Visual Concepts, but they had just blown their first big shot at the limelight by badly flubbing EA's Madden NFL 96 the year before, which had caused EA to miss out on the PlayStation launch. Madden NFL 96, which was to have been the first all-3D incarnation of the game, wound up in the trash can and Sony's own NFL GameDay took the PlayStation football spotlight that year.  Now, in 1996, EA's own programming teams were working overtime to bring a 3D Madden NFL football game to what it considered to be the more profitable of its two 32-bit console licenses and had neither the time nor consideration for a Saturn port.  It is a rather wieldy set of circumstances, but once combined, they ensured that there would be no good Saturn football game for fall 1996.  It would prove to be a dreadful oversight on Sega's part once the American football season began and the software sales figures started rolling in. NFL GameDay 97 would be the #1 football game of the year almost by default, with EA's Madden NFL 97 a close second.  As for the Saturn port of NFL Quarterback Club '97, it was nowhere to be seen on the charts.

     Yuji Naka's NiGHTS: Into Dreams hit U.S. store shelves on 21 August 1996, bundled with a special "3D controller" and backed by a US$8.5 million promotional and merchandising campign.  That was almost as much as Sega had spent promoting the Genesis launch back in 1989.  Sega was taking no chances with its latest killer Saturn app - it even briefly resurrected its trademark "Sega Scream" in order to promote the game.  Those who remember that campaign will also remember the "Full Freakin' Frame Footage" TV spots by Ingalls Moranville Advertising, designed specifically to highlight as many of the game's features within a 30-second TV commercial as possible.  "NiGHTS is the most significant game launched for the Sega Saturn to date," said Sega of America president Shoichiro Irimajiri.  "It proves the power of our multiprocessor architecture and demonstrates the fresh new direction in game development Sga is taking, like those in NiGHTS and the rest of our fall lineup." NiGHTS mania was everywhere, and even NextGen magazine admitted that the game would become one of the best-selling titles of the season.  It did.
     According to industry reporter Steven Kent, NiGHTS is probably the one game more than any other that best typifies both the good and the bad of the Saturn.

The game's atmosphere and design were exceptional; but while the game had a free-flowing 3D feel, most of it actually took place within two dimensions.  While Nintendo and Sony had true 3D game machines, Sega had a 2D console that did a good job with 3D objects but wasn't optimized for 3D envionments.

     By the end of August, Sega of America's financial situation was so bad that president Bernie Stolar ordered the company to discontinue all television advertising starting the following month.  It was a move Sega could ill afford - after all, television ads had been the backbone of Sega's earlier promotions - but Stolar could read the numbers as well as anybody.  Sega simply couldn't affort the kind of multimillion dollar, multimedia blowout for which it had become known in days past.  Stolar was berated by both industry pundits and hardcore Sega gamers for his move, but he neither regretted his decision nor apologized for it.  In all fairness, Stolar's move probably didn't hurt Sega as much as others made it to be.  By this time, it was pretty obvious who was dominating the American console markets - and it wasn't Sega.  Not by a long shot, and Stolar deemed it unnecessary to waste precious company resources on a battle he knew he couldn't win.  He was already looking beyond the Saturn ... but few of his critics at the time realized that.
     It was also about this time and during the following months that what few American gamers were left who had not yet committed to 32-bit consoles finally began to play their hand.  Their choice?  The Sony PlayStation.  Why?  "It's cheaper," they reasoned, "it has more games, and even if a lot of these are crap, there's a lot that aren't.  Besides, all of the really cool titles come out on PlayStation first or exclusively.  The only people buying Saturn are either losers or Sega fanatics, and most of those are losers anyway.  They just don't get it - Sega isn't cool anymore.  Sega is so old school ... but PlayStation is cool.  Even Nintendo's looking pretty good these days, what with the N64 and all."  Say what you will about the system itself, but Sony's marketing machine had done its job and done it well.  PlayStation was now the "in" system, with an installed user base of some 2 million consoles and growing larger every day.  Saturn was definitely "out," with just under 900,000 consoles sold and almost no good games to be had.

     Nintendo launched its 64-bit N64 videogame console in the U.S. market on 29 September 1996.  All 350,000 consoles allocated sold out within four days, thanks largely to massive gamer interest in just one game.  Nintendo's mascot was making the comeback of a lifetime in his new 3D adventure, Shigeru Miyamoto's Super Mario 64.  Also of interest was a Star Wars game exclusive to the system, Shadows of the Empire, again in full-blown, light-sourced, texture-mapped 3D.  That, in a nutshell, pretty much sums up the N64 software situation at launch time.  Just as there had been in Japan, there was a dreadful lack of games - especially quality onces - and Nintendo's decision to stick with the cartridge format meant that new N64 owners were shelling out as much as US$80 a pop for their games.  It didn't matter, though - American gamers had deep wallets, and there was still a strong sense of loyalty to both the Nintendo brand and the idea of unbreakable cartridges over easily damaged CD-ROMs.  Besides, the releasing of Star Fox 64 and the impressive first-person shooter GoldenEye (based on the James Bond movie) in the following months helped improve console sales even more.  Still, N64 sales weren't about to come anywhere close to those of the Playstation, yet Nintendo's arrival on the nextgen scene effectively eliminated any chance Sega might have had of making a Saturn comeback.  Sega's already dwindling market share was cut in half by Nintendo's resurgence, and it would only be a matter of weeks before N64 sales would surpass and then outstrip the beleaguered Saturn.
      So why couldn't the N64 catch up with PlayStation?  You know the answer as well as I - especially if you were among those of us watching MTV that fall.  You might remember a wildly popular television commercial about a guy dressed up in a big orange animal suit standing outside of Nintendo of America's headquarters.  Shouting at the building through a bullhorn, the character challenged "Plumber Boy" to come out for a showdown.  Nintendo's supposed response?  A couple of security guards bag the guy in the funny suit and haul him away at the end of the commercial.  It was the very first commercial for Sony's new 3D platformer, which was ... yep, you guessed right.  Crash Bandicoot.  Sony's Kaz Hirai, who was now running the American end of the PlayStation business, had wasted no time in tearing another page out of Sega's own book by mating its new quirky corporate mascot with a bad-ass advertising campaign.  Guess what?  It worked.  Remember, "a rebellious image sells."  Gamers were now seeing in Sony and Crash what they used to see in Sega and Sonic only a few years before.  Crash Bandicoot sales were phenomenal, and PlayStation console sales figures went up right along with them.
      As PlayStation console and software continued to skyrocket, N64 console sales continued to soar, and everything Saturn continued to sink, rumors arose that Sega was beginning to seriously consider leaving the console business.  They had by now grown so persistent that Sega of America's Ted Hoff was detailed by his masters to address them.  In response to the question of whether or not Saturn would be Sega's last console, Hoff replied that Sega was still committed to the console business and that Saturn would not be Sega's last console.  His statement made perfect sense in the eyes of U.S. industry analysts.  The sooner Sega could jettison the boat anchor around its neck that was Saturn, the better off it would be.  They began to watch Sega, collecting tips and keeping in touch with their contacts.  Somewhere, somehow, Sega was quietly designing a successor to the Saturn.  It was as tacit an admission as any that Sega understodd that the Saturn had failed.  Not only had it bombed, it had bombed big-time.  There was only one way for Sega to even begin to recoup its lost Saturn investments, and that was by absorbing the costs in the successful launching of a brand new console.  Unfortunately for Sega, hardware development took time and money, and those were commodities of which it was fast running out.  Once again, I quote from Steven Kent's The First Quarter:

Thngs were [now] closing in on Sega.  The company that had once proved that the market was big enough for two competitors was now demonstrating that it wasn't big enough for three.

     So how did 1996 turn out once all was said and done?
     To put it bluntly, the second great console war was now effectively over.  Sony had won the field of battle, sweeping away all opposition in its path and giving both of its competitors a good old-fashioned ass-whuppin'.  In spite of this, Nintendo had successfully joined the nextgen wave with the N64, supplanting Sega and taking its place as the weak number two on the console market.  There was no room in which a third competitor could remain profitable for long, and Sega would learn that bitter fact soon enough.  On 31 March 1997, Sega submitted its annual consolidated financial reports to its stockholders.  Sega had against all odds still managed to pull off a profit, but was a paltry ¥5.57 billion (US$46.4 million) - less than half of what the company had made the year before.  Sega had not done this badly in the videogame market since before the days that the Genesis came on to the scene.  As it would turn out, 1996 would be the last year that once-mighty Sega would post a net profit.  It was as if Nakayama and his cohorts at Sega of Japan were deliberately devolving their company back into the industry whipping boy it had once been.
     Sega's downward spiral would not stop here.  The worst was yet to come.

Paying the piper

     1997 would be the year of reckoning for Sega.  The once-proud videogame giant, only the third company to dominate the American videgame market since its inception, would now be forced suffer humiliation like it had not experienced since the "great crash" in the videogame market back in 1983.  The culture of corporate arrogance that had been leading it by the nose was now about to bite it in the proverbial ass.  All of Sega's mistakes of the past few years would come home to roost in dramatic fashion at this time, thus ensuring that the Saturn would always be considered a failure in the public eye.  While its rivals were better financed and had stronger market positions, it can be said in truth that what happened to Sega in 1997 was largely a disaster of its own making.  It was during this year that Sega woud go from making clear profits per annum to posting massive losses, casting a shadow over the future of the successor to the doomed Saturn and causing the rest of the industry to wonder if Sega could ever rebuild itself again.  All that had taken place up until now had set the stage for this one year, for 1997 would mark the beginning of the end for Sega in the videogame console industry.
     The time had now come for Sega to pay the piper.

     The first thing Sega did right out of the gate was, true to form, trumpet its console sales.  7.16 million Saturns had been sold worldwide as of 14 January 1997 - 4.4 million in Japan, 1.7 million in the U.S., just under 900,000 in Europe, and 160,000 in "other markets."  They were impressive considering the beating that Sony had just given them the previous holiday season, but still impressive just the same.  About the same time, Sega of America did in starting the new year was renew its Three-In-One promotion, but with a slighly different twist.  From 15 February to 15 April, Saturn gamers would get a "buy two and get one free" deal on a dozen different top Saturn releases.  The free games that were initially offered in the promotion were nothing at which to sneeze - NiGHTS, Sega Rally Championship, Sega Worldwide Soccer, and Virtual On.   The new promotion proved as popular as the old one, so much that Sega of America wound up extending it all the way to the end of May 1997.  Meanwhile, behind the scenes, Sega of America quietly laid off about 100 people and rearranged its operations.  They were battening down the hatches for what they anticipated would be a troubling year for the company.
    Sega started 1997 still barely maintaing the nextgen console lead in Japan, falling way behind in America, and practically nowhere to be seen in Europe.  Sega's lead in its home country was not to last, however and it lacked the resources to attempt any kind of serious comback in the West.  Anyone who could read the market trends knew what was about to happen.  Sony started 1996 with an installed user base of 3.3 million PlayStations in the U.S., a full one-third of which had sold during the 1996 holiday shopping season alone.  In contrast, Sega had only 1.6 million Saturns in the homes of U.S. gamers.  It too had sold about one-third of that number during the holidays, but Sony's console had outsold the Saturn by more that two to one.  It didn't take a rocket scientist to figure out that 1997 would be the year of the PlayStation.  Sony was now the undisputed king of the hill, with Nintendo showing a stronger-than-expected second and Sega a very weak third.  All that remained was to see just how far Sega would fall.
     The rest of the videogame industry was so sure of the PlayStation's impending dominance that they didn't mind Sony buying up exclusive rights to many of the up-and-coming good games for 1997 - a practice that the corporation had already started the previous year once their success started becoming evident.  While Nintendo couldn't match this, they had something Sony didn't:  their own in-house programming teams that could crank out many an excellent game in their own right.  Sega was fully capable of matching Nintendo's programming efforts with its own; however, it lacked Nintendo's financial reserves, superior management practices, and canny marketing techniques.  Yes, 1997 would be the year in which Sega's reputation for failure as a nextgen console manufacture would begin to manifest itself, despite the fact that it would turn out to be the best year that Saturn would ever have.  Many industry pundits blamed the machine itself (rightly or wrongly), its limited software base, and the obviously dreadful way that Sega was mismanaging the marketing of their flagship console.  At times, it seemed as if Sega of America would follow one brilliant marketing move with five or six bad ones.  What few realized at the time was who was really pulling the strings, but already there were voices of dissent to be heard from within Sega itself.

     In mid-March of 1997, Bernie Stolar was officially promoted to the position of chief operating officer (COO) of Sega of America.  Prior to this he had been in charge of Sega's third-party licensing; now, he was in charge of the company's entire American operations.  Before joining Sega, he had worked with Steve Race over at Sony on the successful PlayStation launch.  Stolar knew perhaps better than any other of Sega's Western executives that the Saturn's days were numbered, and he made no bones about it.  "I felt Saturn was hurting the company more than helping it," he later recalled in an interview with MSNBC.  "That was a battle that we weren’t going to win."  After taking some time to assess the situation, he went to his superiors in Japan and bluntly told them the truth.  Sega of Japan needed to re-evalulate the direction it was taking the company with its flagship console and, to use his own words, "... see how we can best manage the winding down of Saturn."  To his surprise, Stolar found an audience more receptive than he had anticipated.  It was as if Sega's Japanese executives had been milling about smartly in their three-piece suits, all knowing something needed to be done about Saturn but not sure which way to go.  "I don't believe there was direction before," Stolar later recalled.  "It was a matter of, 'Let’s see the plan. Show me how it looks financially to our business plans. Show me how it looks towards where the company is heading and how it transcends into that.' And once I did that, they felt comfortable letting me do what I did."  Part of the reason for Stolar's success was due largely to the fact that he had a previously unavailable ally on Sega's board of directors - one who knew the business world well and just how right Stolar's analysis of Sega's situation actually was.
     Another notable dissenting voice within Sega was Isao Okawa, a well known wealthy Japanese venture capitalist and philantropist, who had officially joined Sega's board of directors in June of 1997 and was now serving in the largely ceremonial role of corporate chairman.  Before this, he was better known as the founder and head of CRI (CSK Research Institute), as well as his work with the Japanese government in building up Japan's high-tech business economy.   CRI had been associated with Sega for many years, and Okawa had long been appalled at how badly Nakayama and his fellow executives were running things.  "The bottom line is that Sega was too loose with its money," Okawa later recalled shortly before his death in 2001.  "No matter what I told Nakayama, he just brushed me off, saying, 'Okawa-san, you do not know the gaming business.'  What I do know is business.  [Nakayama] may have known games, but he did not know business.  As a result, Sega kept going after profit/loss and did not consider its balance sheets.  They did not think about cash flow at all."  Another quote by Okawa on the subject of Sega's mismanagement during this time is as follows:

The business management [of Sega] left me totally dumbfounded.  One of the the basics of business is that you hand over the product to buyers and receive money in return.  Unfortunately, our management personnel did not even seem to know this basic fact.  That is why their attitude has been so nonchalant, even if Sega is accumulating debt.  They have no concept of production schedules or product management on their minds. They think neither of balance sheets nor cash flow.  They know a lot about games, but they do not know how to run the company.

     On 27 February 1997, Sony dropped the price of the PlayStation to £200 in Great Britian and AU$200 in Australia.  Just four days later, on 3 March 1997, Sony dropped the price of the PlayStation to US$100 in North America.  Three days later, Nintendo CEO Hiroshi Yamauchi announced that his company would meet Sony's price; approximately two weeks later, Nintendo of America dropped the price of the N64 to US$150.  Ten days later, Sega announced plans to cut the price of its top five Saturn titles by as much as 50%.  On 17 March 1997, Nintendo officially dropped the price of the N64 to US$150, noting in passing that the company now had an installed U.S. user base of some 2 million consoles.  On 27 March 1997, rumors began circulating among videogame retailers that Sega was planning to drop the price of the Saturn to a mere US$100.
     About the same time during the month of March, several news articles ran in the leading videgame magazines of the day concerning a "special loss" that appeared on Sega's consolidated earnings statement for fiscal year 1996.  Sega was postponing its official annual statement until may due to certain high-level corporate activity which we shall shortly discuss, but already word about the figures was leaking out.  These reports were based on earlier Internet reports and confidential sources within Sega's own corporate structure. Sega would be taking a hit of US$216 million "due to problems with accumulated supplies of outdated gameplayers (i.e. 16-bit consoles and software) and losses at its U.S. subsidary."  This news was as much of a shock to Sega stockholders and supporters as it was to the rest of the videogame industry, and it was now becoming obvious to many that Sega's public relations department was going to have to lay down a lot of smoke to cover the damage - if they could at all.  Interestingly enough, that figure - US$216 million - also happened to coincide with the net total of operating losses incurred by Sega of America over the Saturn to date, as reported earlier by Sega managing director Shunichi Nakamaura back at the end of 1996.
     By April, Sony had sold 11.2 million PlayStations worldwide - 5 million in Japan, 4 million in the U.S., and 2.2 million in Europe.  Sega announced that it would meet Sony's reduction-in-price, but it was yet another cut in revenue that it simply could not afford.  Sega would now be selling Saturns at a dramatic loss, one which neither profits from software sales nor additinonal reveues from other company divisions could cover anymore.  Not that it mattered - Sony was still way out in front and increasing its lead by leaps and bounds.  It really didn't matter what Sega did anymore by this time.
     On 25 April 1997, Sega kept its first promise concerning Saturn software and began cutting the price of some of its most popular Saturn titles.  Among these were such notables as Virtua Fighter 2 and Dragon Force.  On 29 April, Funcoland became the first U.S. vendor to drop the price of the Saturn to US$150 over the objections of Sega of America.  Not surprisingly, several other retailers promptly followed suit, for they could see what was happening and were everything was heading.  On 28 May, Sega revised its forcasts for worldwide Saturn console sales, noting that it expected demand for the following year to drop to 1.9 million units - significantly down from the 4.16 million units that it had already shipped.  It also projected a loss of some 46% in revenue from Saturn software sales.
     On June 3, Sega kept its second promise and officially dropped the price of the Saturn to US$150.  Not to be outdone, Sony had already arranged with many U.S. retailers to sell their stocks of older, less reliable versions of the Playstation for a mere US$130.  By August, Sony's market share had effectively doubled, and Sony had without question taken the lead away from Sega in Japan.  Sony now dominated the videogame market in a fashion that had not been done since the late 1980s, when Nintendo had unleashed the 8-bit NES on a skeptical American audience.  There was absolutely no chance that Sega could ever catch up with Sony, nor did it have the financial resources anymore to battle Nintendo for second place.  On 23 June, NextGen reported that Sega had officially cancelled Eclipse - the planned 64-bit upgrade for Saturn.  With it, it seemed, went any hope among Saturn gamers that their beloved console could be saved.  There was only one other avenue for Sega to take on its road in the console wars.  They were forced to face the unpleasant realization that their favorite gaming system was about to go bye-bye within a matter of months, and many of them simply refused to accept the facts for what they were.
     It was now painfully obvious to anyone with eyes to see and ears to hear that the sand in the hourglass had run down for Sega.  It was out of time, out of cash, and out of luck.

     No one knew Sega's worsening financial situation better than Hayao Nakayama, Sega's CEO, for he was the one person more responsible than any other for causing it.  Since this mess was his fault, it was now a matter of corporate honor for him to resolve it.  Nakayama therefore took it upon himself to "save face," as the Japanese would say, by finding a workable solution to Sega's cash problems.  His answer?  A merger with Bandai, the Japanese merchandising giant.  He had broached the idea of merger to Bandai president Makoto Yamashina over dinner back in 1996, who also shared with his fellow executive the dream of creating a giant multimedia conglomerate to rival the likes of the Walt Disney Company over in the United States.  It was a great dream by great minds ... but could they pull it off?
     Originally founded in 1950 and having since grown to become Japan's largest toy manufacturer, Bandai is best known to the West for its merchandising of anime properties.  This was an idea that Yamashina brought with him once he assumed the company presidency from his aging father (and company founder) Naoharu, despite the elder Yamashina's objections.  Makoto Yamashima's first such success was with the granddaddy of anime sci-fi mecha shows, Mobile Suit Gundam.  Toys based on the Gundam franchise sold like gangbusters in Japan, so Yamashima continued the practice with other so-called joint properties, expanding the concept to include such live-action television shows as Kamen Rider and other similar youth-oriented fare.  Like Sega, though, Bandai was now experiencing cash flow troubles due to the economic recession in Japan that had begun to take root back in 1991.  Its most recent joint properties, the anime television series Sailor Moon and the most recent incarnation of its live-action Kyoryu Sentai Jyuranger (aka Mighty Morphin' Power Rangers) television series, were both past their prime and no longer raking in the profits.  In addition, Bandai's initial venture into the videogame market - the Bandai Pippin - was a complete failure and eventually had to be ditched altogether.  Both Nakayama and Yamashina along with their respective staffs had been in quiet negotiations during the latter half of 1996 working out the big picture of the deal, with the finer details to be finished once the planned merger date became definite.  On 23 January 1997, Sega and Bandai called a joint press conference and announced that Sega would acquire Bandai in a stock swap deal worth about ¥129 billion (US$1.09 billion).  "The idea," said Sega spokesperson Lee McEnany, " is to become the largest entertainment company from toys to theme parks to video games and music.  We want to run the whole gamut.  This merger will give us more leverage and power."
    The intial reaction of investors was rather cool on the stock markets the following day, but they eventually gave grudging support to the idea.  More news about the merger came four months later on 24 May, after both companies had released their long-delayed annual financial statements.  Sega and Bandai planned to merge their company-wide operations by 1 October according to an agreement that was to be signed the following week.  Sega's own Isao Okawa would be the chairman of the combined corporation, Sega Bandai Ltd, with Nakayama serving as its CEO.  Bandai's Yamashima would be third in line as the company president.  All that remained to do was the allocation of divisonal tasks and the elimination of redundant personnel.  "It's an extremely complex merger, because you're talking about two global companies coming together," commented financial analyst Robert Burghart of IGN Barings Securities (Japan) Ltd. for a story by New Media News.
     The signing of the Sega-Bandai merger agreement itself was to take place on 22 May.  It never happened.
     It was the middle management of Bandai, most of whose jobs were about to be eliminated (i.e. the "redundant personnel" mentioned earlier) who first raised a royal ruckus about the affair.  They got wind of it in April, and the news apparently caused such contention among the ranks of Bandai management that the company board of directors posoponed its initial decision to vote on the deal from 1 May to 22 May.  It was their hope that the additional time would permit their subordinates to settle down once they learned more about the planned merger, but the additional details apparently had the opposite effect.  No way were they going to let Sega "absorb" their company and then see their jobs eliminated, Bandai employees swore, and continued to vociferously object to the merger. The incessant resistance of Bandai middle management, coupled with growing concern from rank-and-file employees, to Nakayama and Yamashina's merger plans would eventually grow and gather strength, building to such proportions that it would spike the planned Sega-Bandai merger within days of it being carried through.  On 26 May, Yamashina is reported to have contacted Nakayama and apologized, saying, "I'm sorry, I couldn't persuade them."  On 27 May,  Bandai senior managing director Mikio Ishigami informed the press that his company was calling a special meeting of its managing directors in order to review the planned merger with Sega.  As a result, the official signing of the merger document had been delayed until mid-July.  Why?  Over 80% of Bandai's middle management "had expressed concerns about changes in the company's culture and working conditions that would occur as a result of the merger," according to New Media News.  Local Japanese newspapers were even more blunt, reporting that growing numbers of Bandai employees were dissatisified with the plans to merge with Sega.  By the next day, it was all over.  On 28 May in separate press conferences, both Nakayama and and Yamashina publically acknowledged that the merger had fallen through, although both would continue to work together along other lines.  Both blamed "cultural differences" for the failure of the merger, albeit for different reasons.  "It appears that among [Bandai's] younger-generation management class, the true purpose of the merger had not hit home and only the negative aspects were their focus," Nakayama said.  He also commented that Bandai itself "would feel rather guilty" about calling off the deal.  On the other hand, Yamashina "admitted that Bandai had run into trouble identifying exactly which synergies would have resulted from the tie-up, making it more difficult to persuade critics of the merger's value."  On 29 May, Yamashina announced his impending resignation.  On 26 June at a special stockholder's meeting, Yamashima formally stepped down as Bandai president, retaining his largely ceremonial role as company chairman while denying that his actions had anything to do with the failed merger.
     So what was the big deal?  How were the lower-level personnel of Bandai able to spike the merger?
     There were several reasons - none of them strong enough by themselves, yet when combined as a whole predicated impending disaster to the critics of Nakayama and Yamashina's plans.  First was Sega itself:  a company that had little in common with Bandai, who was already on shaky financial ground and stood to gain more from the merger than Bandai.  Second was their respective corporate cultures:  Sega had a rather loose-knit, free-wheeling management style which was largely credited to its origins as an American entepreneurial enterprise, while Bandai was a traditionally Japanese company which operated along strict Japanese cultural lines.  Third was Hayao Nakayama himself:  he was not perceived as an ideal choice to run such a large company due to the way in which he was pile-driving Sega into the ground right before everybody's eyes.  Fourth was a sudden turn of good fortune for Bandai: one of their new toy products, a virtual pet device named tamogatchi, was proving to be a big success and looked to generate sufficient revenue to make up in the near future what losses the company would incur this financial cycle.  Boil it all down to the essentials, and you come up with this inescapable conclusion - Bandai didn't need Sega.  It was the other way around - Sega needed Bandai.  Bandai may have been the one posting a loss on its books for fiscal year 1996, but it had the merchandising strength to rebound.  Sega didn't and never would.  Bandai was always the deciding partner in the merger, and both Sega's and Nakayama's future success hinged on whether or not the merger would go through.  It did not, and the rest, as they say, is history.
     On 28 May 1997, as news about the failure of the Sega-Bandai merger was breaking, the following observation was made by a number of financial market anaylsts.  The quote is from the old news archives of Dave's Sega Saturn Page.

[I]n the long-term, Sega may have more to lose from the failed merger, as it had become much harder to restructure its unprofitable game machine operation without new blood and a boost in its earnings. They said Sega's video-game machine is losing money and is unlikely to turn profitable in the future.

     Over in the West, Bernie Stolar is the man most often blamed by Sega diehards in the U.S. for the death of the Saturn.  Many reasons are cited, but they all tend to boil down to three key issues - his feud with Victor Ireland of Working Designs over Sega booth space at E3 1997, his public statement at the very same show about the future of the Saturn, and his implementation of the Five Star Games Policy.  Let us take a moment to look at these three reasons and see just what bearing they had on Sega's worsening fortunes in 1997.  In truth, the Saturn was dying long before Stolar came onto the scene, but since he is perceived by many as putting the final nails in its coffin, let us examine why this may in fact be so.
     E3 1997 was held 19-21 June 1997 at the World Congress Center in Atlanta, Georga.  The reason for the change of venue was that the show had become so big an event that it had outgrown its previous stomping grounds in Los Angeles.  The first keynote address was by IDSA president Douglas Lowenstein, who discussed the growth of multimedia and the rise of the Internet.  Lowenstein noted in his speech that official NPD research data indicated that there had been a 58% incress in console game sales, some 6 million nextgen consoles were already in the homes of U.S. gamers, and it was expected that there would be as many as 16-18 million by the end of the year.  The second keynoted address was by NBC News anchor Tom Brokaw, there to discuss the founding of his employer's MSNBC online news service.  So what does all of this have to do with Bernie Stolar and the demise of the Saturn?  Plenty, as it turns out.  There were two things that happened at E3 1997 that bore on Saturn's ailing fortunes, and both of them are connected directly with Bernie Stolar.
     The first problem for Saturn at E3 1997 attributed to Stolar was the apparently spontaneous eruption of a feud between Sega of America and software licensee Working Designs, its number one importer of RPGs.  Due to a series of events and misunderstandings concerning scheduling and booth space that still raise the ire of the principals involved, Working Designs did not get the large area within Sega's E3 booth that it had thought it was supposed to receive.  Instead, it was relegated to a small space in the back corner where hardly anybody could find them.  Victor Ireland, the president of Working Designs, had already developed a personal dislike for Sega of America president Bernie Stolar going back to the latter's days with Sony due to his brusque manner and dismissal of "non-mainstream games" (i.e. RPGs) as largely unprofitable.  He took personally the treatment his company received at E3, perceiving it to be a direct insult levied by Stolar himself, and promptly announced that Working Designs would no longer support any Sega platform so long as Stolar remained in Sega's employ.  Stolar remained unpreturbed, but Saturn RPG fans went berzerk at the news.  While Working Designs was still committed to release the long-delayed RPG Magic Knight Rayearth for Saturn, it had abruptly cancelled its work on the Saturn port of Lunar Silver Star Story Complete even though the game was reportedly nearing completion.  Instead, it was jumping ship into Sony's camp as fast as it could and would release Lunar SSC for PlayStation instead.  An upgraded and overhauled version of the highly acclaimed RPG for Sega CD, Lunar SSC had long been awaited by Saturn RPGers, so who could blame them for beside themselves now that their game had been canned?  They took Ireland at his word and vented all of their fury on Stolar for his reported behavior - even though a large portion of it was undeserved.  While it was true that Stolar and Ireland were not exactly buddies and never would be, it should be noted for the record that Ireland had already decided that Saturn was a dead system and was looking for a convienent excuse to take his company out of the Sega fold.  That infamous E3 1997 incident gave him exactly the "cause" he needed to pack up his tent take his show elsewhere - away from a man he personally detested and on to greener, hopefully more profitable pastures.  As for Stolar, he was reported to have privately expressed delight that Sega didn't have to deal with such a prima donna licensee anymore.
     The second and more damning problem for Saturn at E3 1997 was a single quote lifted from a speech that Stolar gave on 23 June 1997, just two days after E3.  "The Saturn is not our future," Stolar said without hesitation during that speech, and it was that one quote that would forever earn him the ire of the hardcore Saturn fanatics.  Stolar's quote was reprinted in a number of mainstream videogame magazines, such as Electronic Gaming Monthy, and plastered all over pro- and anti-Sega Internet sites in the months ahead.  Rant after rant, rave after rave, flame after flame, the ire continued to pour out of the Sega faithful against Stolar and what he had said, and would do so even years after it was first reported.  "For all practical purposes, [Stolar] buried the system alive while it still had a pulse left in it," noted one such Sega site.  Gamer Henry Knapp was even more blunt.  "It seems as if Sega didn't want the Saturn to succeed," he fumed in his own public rant.  These two are actually some of the milder comments that one can find in print and on the Internet that were generated by Stolar's words, but he never took it back nor apologized for his remark.  Why?  Because he was now focused on Sega's next console, and he didn't really give a damn anymore as to what happened to Saturn.  It wasn't and wouldn't make Sega any more money - but its successor might, provided it was given the proper time and effort for a successful launch.  That is where Stolar was focusing his talents and efforts:  towards Sega's potentially bright future, instead of wasting his time on its present failures.  He didn't care about the Saturn, its sales, its software, or anything about it.  What he cared about was the new console, for that repesented Sega's last chance at making a profit and climbing out of the financial hole it was fast digging for itself.  Above all else, he had faith that the average Sega gamer would eventually understand ... given time, that is.
     The third of Stolar's perceived problems was his Five Star Games Policy, which went into effect on 20 June 1997 and is often blamed for the dearth of good Saturn titles in the West.  It was put together in an effort to assure top quality, top selling Saturn games for the U.S. market.  All submissions from both Sega's own programming divisions and its third party licensees were subject to the Five Star grading criteria, which emphasized "quality over quantity."  If submissions did not receive a composite score of 90 or more, then they would have to be reworked or else they would be dropped from the release list.  It sounded good when it was first announced at E3 1997, but shortly thereafter came to be blamed by irate Saturn gamers as the reason why so many good Japanese Saturn titles never made it out of Japan.  Take Sakura Taisen, for instance.  This odd yet excellent combination of mech combat sim and romance simulation was wildly popular in Japan and had a devoted following in the U.S., yet Sega never saw fit to release the game in the West.  Saturn fans pointed to the Five Star Policy, which seemed to ensure that such a market-specific title would never see the light of day in the West - and since Stolar put that policy into place, then it was Stolar's fault.  They point to other titles left behind in Japan, such as Radiant Silvergun, considered the best shooter ever created for the platform, and then proceed to call Stolar every dirty name in the book in every language they know.  After all, hadn't he screwed up good games for the PlayStation launch back when he was with Sony?  A lot of Saturn gamers from that day still blame Stolar and his Five Star Games Policy for the dearth of good Saturn titles in 1997 and 1998, even though in truth it had very little to do with them.  It was Sega's own executives over in Japan and not Bernie Stolar who was calling the shots as to which Saturn titles would make it across the pond.  He had more pressing concerns to worry about - like ensure that the Saturn left this world with some grace while he readied Sega's next system for its eventual market debut.

    One of the few aspects of the Saturn that was often overlooked in a direct comparison with its competitor consoles was its dedicated expansion port.  Such a port could be used for various things:  Sega's NetLink module, a dedicated MPEG playback card, or a RAM expansion cart.  It was the RAM cart option that loomed large in the minds of Western Saturn owners in 1997, because they knew full well that Eastern owners already had them and were enjoying games specifically coded to take advantage of them; furthermore, Sega was letting third parties such as Capcom manufacture and sell their own Saturn RAM carts.  Fighting games from Capcom and SNK boasted faster loading times, more colors, smoother animation, and more intense action.  It was even rumored that Capcom's in-development Saturn port of Resident Evil 2 represnted such an overhaul of the PlayStation original that the RAM cart would be required.  The RAM expansion capability was something sorely missed by Western owners of Saturn's competition.  PlayStation was a sealed box that offered no expansion options save those which could be somehow grafted onto the system's ports, and that did not include system RAM expansion.  Only the N64 had a similar expansion port that could be used for additional RAM, but Nintendo's mindset on expansion port devices was typical Nintendo - if it did not have their name on it or was not manufactured at their facilities, then it would not exist.  Despite this, and the constant clamouring by Saturn owners in North America, no official Saturn RAM cart was ever released in the West.
     Why?  Because Sega knew the Saturn was dying, that's why.
     You see, Sega had been in negotiations with Capcom for several months about licensing Capcom's own RAM cart and selling it in the West under the Sega label, along with Capcom's X-Men vs. Street Fighter.  Those negotiations fell though, however, because increasing concern over Saturn's plummeting market fortunes caused Sega executives both East and West to rethink their strategy.  In their joint opinion, there was no point in releasing a costly piece of hardware to a market that was fast shrinking for the simple reason that there was no profit to be made.  Hardware is expensive and has the least profit margin in the product line.  Sega was already losing money on Saturn hardware, and stood to lose more by releasing the RAM cart in the West by every estimate they ran.  No profit, no point.  It was a simple business decision that Sega executives were forced to make time and again during this period over the Saturn and its product line due to its worsening marketing position, but this did little to assauge the growing ire of many a Saturn owner in the West.

     On 1 June 1997, Square unleashed the mother of all RPGs on the U.S. market.  Hironobu Sagauchi's love affair with the multimedia capabilities of the Sony PlayStation had finally borne fruit earlier that year in Japan, where his game had been an instant sellout.  Final Fantasy VII told a cyberpunkish story of a young warrior named Cloud and his rebel allies as they strove against the evil machinations of the Shinra Corporation.  It had everything a next-generation RPG fan could want and more - beautifully stunning graphics and cinematic sequences, a simple yet balanced game engine, and hours upon hours of gameplay.  The staff of NextGen magazine, themselves no strangers to RPG gameplay, estimated that it took them a total of almost 50 hours to play thorough the complete game from start to finish.  It was a monster of an RPG, but most importantly, it was the genre's first nextgen effort.  The 2D superdeformed characters of the past had now been replaced by 3D polygonal models.  Static overhead screen views were now replaced by dynamic camera angles; moreover, full-motion video (FMV) was used to an extent that had not been seen since Lunar 2: Eternal Blue on the old Sega CD some two years before.  Final Fantasy VII sold 2.5 million copies during its first three days on the Japanese market and was the main reason why the Sony PlayStation finally surpassed the Sega Saturn in the Japanese videogame market.  Japanese gamers were buying PlayStations for the sole purpose of playing Square's latest and greatest RPG, thus driving consle sales at a rate with which Saturn sales simply could not keep pace.  Eventually, 90% of all PlayStation owners in Japan would also own a copy of Square's Final Fantasy VII.
    Realizing a good thing when they saw it, Sony arranged with Square to have Final Fantasy VII translated into English and released in the West.  It saw its North American market debut on 1 June 1997, where its reception was even more phenomenal than it had been in Japan.  Final Fantasy VII for PlayStation was not only the console RPG of the year, it was the biggest game of the year for any platform.  Even to this day, it is considered a milestone in RPGs and one of the hallmark games of the genre.  The closest thing Sega had in its Saturn arsenal to combat the Final Fantasy VII phenomena was Grandia by GameArts another excellent RPG from the company that had brought the Lunar franchise to the genre.  It had done surprisingly well in Japan and Western gamers were loudly clamouring for its release, but both Sega and GameArts agreed not to do an English port.  More on this subject later; suffice it for now to say that Sega already knew that the Saturn was dying and could not justify the expense of such a promising proposition.  Thus, the only piece of software which Sega had that might have had a chance of dealing with success of Final Fantasy VII in the West remained behind in Japan, and the PlayStation's popularity continued its wild climb upward.

     On 19 June 1997, Sega of America had five Saturn games on the market for its much-lauded 28.8 kbps NetLink modem.  This allowed Saturn owners to surf the Internet with the included NetLink browser, as well as play NetLink compatible games directly on the Internet.  These games were Daytona USA CCE, Duke Nukem 3D, Saturn Bomberman, Sega Rally Championship, and Virtual On.  By 3 July 1997, however, Sega of Europe had already scrapped its plans to release NetLink in Europe.  It cited disappointing NetLink sales in the U.S. as the prime motivating factor in its decision.  There were only some 15,000 NetLink users all told in the U.S. market, representing a dismal figure by any estimation.  No wonder Sega of Europe changed its plans accordingly.
     NetLink is one of the few instances where a bad Sega decision was not due to autocratic management.  In this instance, it was the decision to tap a marked that really wasn't quite there yet.  NetLink was way too early and far too expensive to be nothing more than a interesting novelty.  Having the first Internet-capable console added another plus to Sega's portfolio for inventiveness, but it added nothing to Sega's constantly eroding bottom line.  In addition, many online-savvy gamers claimed that NetLink lacked the fun, challenge, and spontenaiety of Catapult's XBand network for the 16-bit console generation.  NetLink had no sports games (such as Madden NFL) and no fighting games (read Capcom fare).  In other words, it was just plain boring unless you were a Duke Nukem 3D fan, but that was about it as far as the action genre went.  Most gamers looked at NetLink, smiled and said, "That's neat, but I wish it had better games," and went right back to their Sony and Nintendo consoles.  Like so many other Sega products, NetLink was an idea that had come soon to do Sega any good in the current videogame market.

     By the time that August 1997 rolled around, with the U.S. videogame market primed for the final four months of the year and the massive amounts of revenue that would be generated therein, the handwriting was on the wall for Sega and the Saturn.  Sony, the new king of the hill, still dominated the market with a 47% share for its PlayStation.  It had the most impressive software lineup of the year, with hit titles like Final Fantasy VII raking in profits by the millions.  Not far behind was Nintendo at 40%, the largest share of the U.S. videogame market that it would ever recoup.  As Nintendo of America vice president Peter Main had correctly predicted, N64 was feeding off Saturn's corpse - even though the console still wasn't dead yet.  His numbers may have proven wrong, but his take on the initial trends had been right on the money.  Poor Sega had by now fallen to a 12% market share and was still trending downward.  It could not match the rapid-fire price changes of its richer competitors quickly enough, Saturn's year-end software library paled in comparison to what was to be had on PlayStation and N64, and what few American Sega gamers were left were for the most part bitching about the lack of good software and complaining bitterly about the way Bernie Stolar was driving their console into the ground with his recently instituted Five-Star Software policy.  It wasn't really his fault - he was doing his level best to make the best of a bad situation - but since Saturn gamers did not have the big picture at that time, they had nobody else and nowhere else to vent their rage.  As for the rest of the videogame industry, they had written off Saturn months before.  Most of the mainstream industry magazines, such as NextGen and Electronic Gaming Monthly, had already taken to calling Saturn "a dying system."  A few even went so far as to say that they couldn't wait to see the PlayStation ports of hot Saturn titles - like Grandia - that never made it out of Japan due to Saturn's failure in the West.  It wasn't so hard to believe by this point - Sony had an installed user base of 20.4 million PlayStations worldwide by the time September rolled around, and that number just kept right on growing.
     Saturn was not the only console going down the proverbial drain.  Its immediate predecessor in the 32-bit CD-ROM based console wars was about to bow out altogether.  On 3 September 1997, Panasonic formally withdrew from the U.S. videogame market.  With it went 3DO, the console that started it all, along with the planned 64-bit M2 upgrade announced less than a year before by Panasonic's parent company, Matsushita.  Trip Hawkins and his dream of a single console standard among hardware manufacturers would have to wait a while longer.  His was a vision that had proved largely unworkable amid the proprietary-minded Japanese companies that dominated the scene, and it would take at least another market cycle before some of the seeds that he had planted with 3DO began to take root.

     On 30 September 1997, Sega of America launched its last major advertising campaing in hopes of salvaging something of the season for the beleaguered Saturn.  Bernie Stolar managed to scrape up about US$25 million for the effort, which touting the Saturn's prowess and the strength of its fall software lineup.  There were the spot-on-accurate ports, of course: Manx TT, Sega Touring Car Championship, Last Bronx.  There were the Saturn-specific efforts:  Fighters Megamix, Enemy Zero, and the highly touted Sonic R - which Saturn gamers got in place of Sonic X-Treme, but that whole sordid story will be told soon enough.  There was the sports lineup:  both Madden 97 and Sega's own NFL 97 were available this time.  There were also the third party efforts:  Capcom's presence (Street Fighter Collection, MegaMan X4, Resident Evil) as well as that of id Software (DOOM, Quake) and 3D Realms (Duke Nukem 3D), among others.  Sega could rightly boast that Saturn was the only console on the market to have the uncut, uncensored versions of all three of the world's best-known first-person shooters of the day.  Stolar even managed to bring in a new advertising firm to manage the effort.  The figure was only a fraction of what his two chief competitors, Sony and Nintendo, were spending on their own fall advertising campaigns, but he knew full well that Sega did not have the extra funds to spare in order to match their efforts.  Not surprisingly, Stolar's effort was a complete failure despite his effort.
     In retrospect, the final Saturn ad campaign is largely remembered for what didn't make it into the ad copy that should have - more details the games themselves.  Most Saturn owners were offended by what they perceived as a big waste of time and mone.  It failed to make almost any impression at all on the average gamer, who was constantly being wowed by the constant barrage of TV commercials and print ad copy touting products for Sony and Nintendo consoles.  They went on spending their money elsewhere, while Sega countinued its mad spiral downwards into oblivion.  Not a single Saturn title - new, old, or otherwise, made it into the NPD TRST Top 25 Console Games list for October.  None made it in November, and there was not a single Saturn title to be seen on NextGen's list of the top 20 console games of the year.  Why?  To quote one industry observer, "A disturbing trend easily becomes apparent.  The average Saturn owner has become a bargain hunter and an NFL junkie in need of a fix - any fix."  When all was said and done, the Sega Saturn only accounted for at most 5% of total combined holiday console sales.  Sega was now unofficially in the hole - big time - and those were numbers that no corporate executive in his or her right mind could ignore for long.

     On 17 December 1997, just as the holiday season entered its final mad week of shopping frenzy, NextGen reported that Sega of America was planning to undertake "a substantial downsizing" after Christmas.  An official spokesman for Sega denied the story, but nobody believed him.  Rumors of all kinds were seeping through the cracks, and unofficial estimates of Sega's yearly profit-loss statement had the once-proud industry giant losing hundreds of millions of dollars.  The official figures would be announced at the end of the fiscal year, 31 March 1998, and they were damning.  Sega had sustained a net loss of some ¥43.3 billion (US$360.8 million) company for fiscal year 1997, and even Sega's own annual statement laid the blame squarely on the poor market performance of the Saturn.  No one knew how such massive losses would affect the fate of Sega's next videogame console, Katana, which had already been officially announced back on 8 September (and which in a few short months would be renamed Dreamcast).  One thing was certain, though - Saturn was about to go bye-bye.  It was now a matter of when, not if, and how soon the axe would fall.
     There is an old country saying here in the United States that some of you may know.  "If you can't run with the big dogs, then stay on the porch."  Sega was no longer capable of running anywhere with its better financed and better resouced competition.  Years of bad management and poor judgement had now caught up with it.  The one major videogame company which enjoyed a reputation for innovation and creativity like few others found itself hoist by its own pretard.  Sega had violated one of its own major business axioms - it had failed to properly anticipate and adjust to a changing market.  That failure had doomed the Saturn before it even launched, and it was now time for Sega to pay the price.
     1997 was the year in which Sega paid the piper.  All of its chickens were now home to roost.  Sega would never be the same after this fateful year, and the events of 1997 would pretty much dictate the eventual fate of Sega itself,  as well as its next - and last - videogame console.

The case of the missing software

     With all the negative things that were being said by almost everyone about Saturn, including Sega itself, it was no wonder that a lot of top-notch titles either never made it out of Japan or were never released at all.  While it is true that the last days of the Saturn would see some of finest games that would ever appear in its software library - Burning Rangers, Panzer Dragoon Saga, and Magic Knight Rayearth, to name but three - there were just as many more that in the opinion of its Western fans should have also hit store shelves but didn't.  The loss of some of these are frequently blamed on Bernie Stolar and the Five Star Games Policy that he implemented in mid-1997, yet in truth the reasons why none of these were released in the West have anything to do with Stolar or his policies.  Here in brief is an overview of some of the more notable Saturn titles that might have been bigger than they were or that never got out of the gates.  It is the opinion of most Saturn fans and many game historians that their presence was especially missed in the West, where Saturn frankly needed all of the help it could get.  Why were they not released?  Let's find out!

Eternal Champions: The Final Chapter

     This was perhaps the most acclaimed 2D fighting game to ever be created somebody other than Capcom or SNK.  In fact, Eternal Champions was dreamed up by none other than Deep Water, one of Sega of America's own in-house programming teams.  The Genesis version was pretty good, and the Sega CD version was spectacular but suffered from the limitations of its consoles.  Eternal Champions: The Final Chapter would have picked up on one of the loose ends from the Sega CD game - the appearance of the Infernals - and gone on to introduce new characts and an all-new tournament.
     Sega of America was already making plans to release the third and final installment on Saturn and souping up the game engine big time when their superiors over in Japan put their foot down and said "NO!"  It wasn't going to happen because they wanted Virtua Fighter - a game that had come out of their own programming stable - to be the definitive fighting game for the platform.  Not only did Eternal Champions for Saturn never see the light of day, it never even got its foot in the door.  It's a crying shame, too, because the Sega CD version received a lot of good reviews and many American gamers were looking forward to playing a spiffed-up Saturn version.  Word leaked in October 1996 that the game was indeed going to be axed, and Sega of America reluctantly confirmed that sad reality before the year was out.
     In retrospect, Eternal Champions: The Final Chapter might have been one of those regional titles that could have helped push console sales had it been given a fair chance, but it never got that opportunity.  Sega of Japan killed Eternal Champions for Saturn before one line of alpha code ever made it through a Saturn development kit.

Grandia

     In 1997, everyone knew that Final Fantasy VII was turning out to be the monster hit that had been expected; furthermore, everybody thought they knew what Saturn RPG that Sega had in its Japanese arsenal to best counter it.  This was none other than Grandia by GameArts, which was released in December of 1997 to eager Saturn gamers in Japan and was already being hailed as a masterpiece and a milestone insofar as the use of 3D environments in an RPG was concerned.  To the surprise and anger of Western gamers, though, Sega passed on Grandia in 1997 and instead opted to translated and release the first installment of its own Shining Force III series.  This seemed to fly in the face of all reason, if you were an eager Saturn gamer or RPG addict following the videogame market that year.  It was quite a different story in the corporate boardrooms of the companies involved.
     What most Western gamers do not understand is that Grandia for Saturn did not do all that well in Japan.  It may have been one helluva game, in fact the best RPG ever created for the console and one of the all-time RPG classics, but it didn't exactly take the Japanese market by storm. Grandia for Saturn only sold some 350,000 copies during its original market lifetime - large numbers for a Saturn game to be sure, but nowhere in the ballpark compared to what Square's Final Fantasy VII was doing.  That, combined with the sad reality that Saturn had failed in the West, was the reason why both Sega and GameArts agreed not to do an English language port of the game.  Their sales projections show that they couldn't make enough money off of an English language port in the West, where the Saturn market was already small and shrinking daily, to justify the expense of the translation effort.   On 10 January 1998, Sega angered RPG fans worldwide when it announced that Grandia for Saturn would never be translated into English for a Western release.  It is a grudge that both Sega diehards and RPGers hold against Sega even to this day, made all the more painful by an obviously inferior English-language port for PlayStation released by Sony approximately two years later.

Legacy of Kain: Blood Omen

     This groundbreaking action RPG casts players in the role of Kain, a formidable warrior of old who comes back from the dead as a powerful vampire in order to wreak wrath and havoc upon those who murdered him.  One of the very first games specifically designed to take advantage of the CD-ROM format, it represented not only a milestone in videogame construction but a new and novel experience in its own right.  It was released in August 1996 for the PlayStation to rave reviews, and not long after Saturn gamers heard rumors of a port for their own beloved consle.  The Saturn port, which was said to have been started shortly after the PlayStation version, was to have addressed all of the deficencies of the earlier incarnation and more.  The fact of the Saturn's 2D legacy would have made its port Legacy of Kain the faster loading and playing of the two versions, and Saturn gamers were eagerly looking forward to its release.  In fact, a Saturn port was known to have been under development as of January 1997 and rumors ran rampant that it would be released by that fall, but nothing more happened after that.  The Saturn port of Legacy of Kain: Blood Omen was quietly scrapped by Eidos long before it got anywhere near playable form.  The reason?  The Saturn was dying right before everybody's eyes, and Eidos corporate heads felt that they couldn't recoup their investment in the port.  Sad, but that's business.

Resident Evil 2

     The followup to Capcom's 1996's groundbreaking blockbuster "survival horror" hit, Shinji Mikami's Resident Evil 2 moved its monstrous escapades from the country hills right to the middle of downtown itself.  This time around, RPD rookie police officer Leon Kennedy and female biker Eliza Walker are forced to team up in order to survive a city overrun with zombies and all sorts of other horrific creatures, with the resourceful personnel of RPD STARS nowhere to be found.  The PlayStation game was about 70% complete and work had already begun on a Saturn port when Mikami personally ordered it cancelled and the game completely overhauled.  He was not happy with how Resident Evil 2 was developing, and felt that it looked and played too much like the original Resident Evil.  In addition, the character of Eliza Walker was not working in the plot as intended, and some of the game's new features (body armor/clothing that could be damaged and worn down throughout the game, for instance) were proving difficult to implement.  Capcom's RE2 team essentially started over and rebuilt the game plot and engine from the ground up, although a fair portion of the work they had done earlier eventually wound up in the new version.  As for the Saturn port (which had been announced by none other than Bernie Stolar himself on 10 January 1997), it was scrapped for two simple reasons:  there wasn't time to work on it, and the Saturn was by now obviously dying.  The planned overhaul of RE2 was going to take a significant amount of time, delaying its release by at least a full year.  Since the PlayStation version was to be released first, and work on it was already at the playable beta stage, it would be the easier of the two to retool.  Also, by the time work was complete, which would have been 1998 at the earliest, Capcom felt that the Saturn would most likely be dead (as it proved to be), so they could not justify the additional work.  Early Saturn alphas of Resident Evil "1.5," as fans now call the earlier game, are thought to still be in existence, but their fate is unknown.
     One final note for fans of the series.  As far as my research can determine, the aborted Saturn port of Resident Evil 2 would not have required a RAM cart for gameplay, as was rumored to be the case at the time.  My sources come from developers who were familiar with the Saturn and were coding for it at the time.  It would have required no more system resources from the Saturn than did the PlayStation original of its respective hardware.

Sakura Taisen (Sakura Wars)

     Perhaps the one classic Saturn game that anime addicts dearly wanted Sega to bring to the West in an English translation is the one classic Saturn game that was guaranteed never to make it out of Japan.  Sakura Taisen, i.e. Sakura Wars, combined the action-packed antics of mech combat with a delightfully entertaining dating simulation ... and therein lay its problem.  Dating simulations are quite popular in Japan due to the culture of that country, but they have almost always bombed in the West.  It didn't matter one whit that it achieved the prestigous title of Overall Game of the Year in Japan - there was simply no way that Sega was going to release such a game in a market where a sizeable audience for it simply did not exist.  To be frightfully honest though, and I know this is going to irritate a lot of Sakura Taisen fans, nobody else save them has missed its presence or that of its later Dreamcast incarnations.

Sonic X-Treme

     Without doubt, Sonic X-Treme is the saddest "lost software" story in the saga of the Sega Saturn.  You see, despite stories to the contrary, Sega planned all along to have a brand-new Sonic game for Saturn that would showcase the console's power - just as the original Sonic had done with the Genesis years before.  Sonic X-Treme, originally planned for the 32X, was to have been that game.  Its loss is due in part to its develoment team and in part to none other than Sega of Japan.
     As with the later Sonic efforts, Sega Technical Institute (STI) over in America was tasked with the latest incarnation of Sega's beloved mascot.  This time, they had the formidable job of creating the first-ever fully 3D next-generation Sonic game.  They had lots of ideas and wasted no time in throwing together executable code in order to demonstrate their ideas.  Sonic X-Treme, as was revealed to a number of videogame industry reporters and magazines at the time, looked nothing short of fantastic.  It had the look of every Sonic lover's dream - full 3D environments in which Sonic could maneuver in all directions, rich gameplay enviroments true to the series legacy, and so on.  Sonic fans worldwide were salivating as 1996 came to its end and 1997 loomed on the horizon.
     This is where Sega of Japan enters the picture.
     You see, STI also had some major problems coding Sonic X-Treme.  Even the executable alphas they created took up far too much of the Saturn's resources to ever hope to make a playable game out of theme.  The situation was so bad that Sega of America was pulling programming resources from other departments (such as Sega Sports) in an effort to overcome the obstacles.  They wanted Yuji Naka's help, but he was busy working on NiGHTS and was therefore unavailable.  Executives over at Sega of Japan were not pleased by the reports they were getting about STI's production problems, so a delegation was sent over to review their work first-hand.  According to reports, they came back appalled and reported the dismal findings to their superiors, who then relayed them to Sega CEO Hayao Nakayama and the senior corporate staff at Sega.  A short time later, in early 1997, STI was coldly informed that Sonic X-Treme had been officially canned.  STI never recovered from this debacle and broke up shortly thereafter.  Parts of Sonic X-Treme would later wind up in Sonic R, Sonic Jam, Sonic 3D Blast, and Sonic Adventure for Dreamcast a few years later.
     On 08 December 1997, Sega of America released Sonic R for Saturn to a disappointed American gaming public.  Although it received wide acclaim for its stunning graphics, it was not the 3D Sonic riot that Sega of America had originally promised.  Even to this day there are many Sega diehards who complain that Sonic R was no "true Sonic game" and deride it at every opportunity.  Overall, opinions about Sonic R remain mixed to this day.

Virtua Fighter 3

     Virtua Fighter 3, the third incarnation of Yu Suzuki's groundbreaking 3D fighting game, first hit Japanese arcades on 10 September 1996.  It immediately became the standard by which all comers were measured - partly due to the depth of its gameplay, and partly because the game's graphics (generated by the new Sega Model 3 board) shattered all previous records for polygon counts in a videogame.  Sega brought over some cabinets for display at that year's Electronics Consumer Trade Show in the U.S., and both vendors and gamers alike were wowed by what they saw. VF3, as it is commonly abbreviated, soon became the topic of much speculation among Saturn owners.  A port was inevitable - they just knew it - and rumors were already flying that such a port was well underway.  Officially, Sega kept mum, but the hype continued to build through the rest of the year and into 1997.  On 28 November, Yu Suzuki himself said in a public interview, "AM2 and myself will take full responsibility for the translation."  It was now official - VF3 was coming to a Saturn near you.
     Or was it?
     Sega kept promising a Saturn port ... and it kept getting delayed ... and delayed ... and delayed ... until it dropped off the radarscope altogether.  Sega of Japan had already started to hint that the port might be canned in early 1997, and its absence in the Saturn software section at E3 1997 seemed only to confirm this.  Sega of America did a lot of back-pedalling on these and other reports, but they (as we know) were not the ones running the show by that point.  Actually, and this was unknown to everybody until the following year, Yu Suzuki and his staff at AM2 had finished a considerably scaled-down Saturn port of VF3 by 03 July 1998, but by time Sega of Japan was dead set against releasing it.  Why?  As it was later revealed, Sega of Japan executives felt that a port of VF3 for the dying Saturn might hurt the superior port already in development for Sega's newest console - the Dreamcast.  Instead, they just kept on tweaking the game and refused to release it.  VF3 for Saturn was officially cancelled on 17 September 1998 even though Sega of Japan had the completed game ready to send to the pressing plants.  In the meantime, however, gamers got tired of Sega putting them on hold yet again and went to PlayStation for Tekken 3 instead.

Last rites

     As the horror that was 1997 ended and the new calendar year of 1998 began, Sega chairman Isao Okawa proceeded to do something he had not yet done in what up until now had been his largely cermonial role as leader of the company.  He proceeded to act in order to salvage what was still salvageable in order to keep Sega from sinking altogether.  Sega had been overwhelmed by the market dominance of Sony and the surprise resurgence of Nintendo.  Now was the time for Okawa to act.  "I changed the management, cleared the inventory, closed down unprofitable retailers, and restructured the distribution system," Okawa later recalled.  He did all of this within the space of a few short months in order to clear the decks for what would be Sega's last shot at the videogame console business.  Sega already had Katana in the development pipeline and both the money and resources had already been allocated in order to bring it to market.  It was designed to be everything that Saturn had not been, so the last thing Sega needed was the anvil of the dying Saturn still hanging around its neck.  Okawa knew this, as did Bernie Stolar over in North America, and now was the time to act on everything they had discussed and planned up to this point.

     Even as the opening days of 1998 began, knowledgeable newshounds fluent in Japanese knew that Sega had already stopped production of the Saturn back at the end of 1997.  On 8 January 1998, last year's rumor became stark reality as Sega of America, acting under direct orders from Okawa back in Japan, gave 30% of its employees their pink slips.  Both Sega of Japan and Sega of Europe underwent a similar downsizing about the same time.  Within the space of about five to six weeks, during the months of January and February, Okawa engineered a major reorganization of Sega itself.  Several of the corporation's less profitable ventures and divisions were eliminated outright, while others found their staffs and allocated resources considerably reduced.  Okawa's reorganization of Sega's internal company structure was such that division managers were now more independent than before of senior management, but as a result were more accountable for their actions.  "When you separate those divisions into their own companies," Okawa noted, "you turn them into administrators, where they have to frantically deal with delivery and collect on accounts receivable. The branching process was done to root management senses to the divisions."  The culmination of Okawa's maneuvering was shaking up the board of directors itself, with 15 of its 25 memebers either encouraged to leave or voluntarily resigning on their own.  Among their number was none other than Sega CEO Hayao Nakayama himself, who tendered his resignation on 12 January and was later replaced by Shoichiro Irimajiri on 10 February.  Okawa once again spun off the job of Sega of Japan chief operating officer, which Nakayama had also held, and gave it to longtime Sega tecnical wizard Hideki Sato.
     Okawa was reportedly not happy with the choice of Irimajiri as the new Sega CEO, but there was nobody else at the time as qualified to fill the vacancy.  "He is really good at technology, but not very good at running a business," Okawa would later comment, yet it seemed a fair enough choice at the time.  Sega was getting ready to launch a new console based on new technology in a highly skeptical market, so who better to lead the charge than a Sega executive who knew that very technology inside and out?  Beside, Irimajiri got along better with Stolar than did Okawa, for the personality clashes and market sense of both Okawa and Stolar were finally beginning to manifest themselves.  However, that is another story for another time.
     While Sega was busy arranging its internal affairs, its third parties were not waiting around for marching orders.  On 6 January 1998, Capcom officially dropped plans to release its 4 MB Saturn RAM cart in the West.  Along with it went the Saturn port of Resident Evil 2, which had already reached beta test phase.  Four days later, on 10 January 1998, Sega announced that the planned English-language port of Grandia by GameArts had also been axed.   Saturn RPG fans were besides themseves in anger at the news, but the other shoe had yet to fall.  About a week later, on 16 January 1998, Working Designs announced that it had canned the in-development English language enhanced Saturn port of Lunar: Silver Star Story and that furthermore it would not be doing any more RPGs for the platform (aside from finishing Magic Knight Rayearth, which was way behind schedule already).  Both games would instead be released on PlayStation within two years.
     On 23 January 1998, Sega of America dropped the price of the Saturn console to just US$100 and most of its software to just US$10 a pop in a concerted effort to clear its inventories of all Saturn stock.  This was again on the direct orders of Sega chairman Isao Okawa, who had told Stolar to rid Sega of America of its "useless stockpiles" as fast as possible.  Stolar readily consented.  A similar move took place about the same time in both Japan and Europe, again per Okawa's instructions.  "I told [our people that] if you're going to stockpile it, then you might as well give it away," he later recalled.  Sega had sat on these unsold Saturn inventories for so long that they pretty much wound up doing just that.  Many nationwide retailers, such as Wal-Mart and Electronics Boutique, lowered the price of the console still further to US$75 and software prices to just US$5 per title.  Virtually all of the so-called "good" Saturn titles - names like Duke Nukem 3D, Enemy Zero, NiGHTS: Into Dreams, the Panzer Dragoon trilogy, Resident Evil, Tomb Raider, Virtua Fighter 2, Daytona USA CCE, Capcom fighting games, and so on - disappered from U.S. store shelves practically overnight, while all kinds of Saturn sports games would linger on in discount bins for years afterward.  Not a single dime of profit from the great Saturn selloff evern found its way into Sega's coffers.  As a matter of fact, Sega actually lost a lot of money over the affair.  It couldn't be helped - the steep discounts necessitated by Okawa's orders had been too severe for anything of the kind; besides, any potential profits had already been lost by the products not selling in the first place.  Sega of America was going to need all the room it could get for new inventory, because the ramp-up for Sega's next videogame console had already begun.

     On  11 March 1998, Sega began distributing first-generation versions of its two Katana software development kits to interested third-party vendors.  Six days later, Sega of Japan began a new round of hirings as it beefed up its staff in preparation for the initial production run of the new console.  Three days later at the Spring Tokyo Game Show, on 20 March 1998, Sega held a joint press conference with noted videogame designer Kenji Eno, whose latest effort had seemingly died along with Panasonic's 3DO M2 upgrade the previous year.  Eno revealed that his game, D2 (the sequel to D for both Saturn and PlayStation), would in fact be completed and released - but for Sega's new console instead.  On 24 March 1998, Sega CEO Shoichiro Irimajiri formally promoted Sega of America COO Bernie Stolar to the position of president and made a number of other management changes to better support Stolar's efforts at launching Katana in the west.  On 21 May 1998, in a special press briefing hosted by none other than Irimajiri himself, Sega formally unveiled the successor to the Saturn.  No longer shrouded in secrecy, no longer hiding under the project name of Katana, the 128-bit Sega Dreamcast was demonstrated for the first time in public to a receptive audience.   It was a console of which Sega could be proud, and it was staking its future hopes and dreams on a last-chance comeback bid based on this quite remarkable system.
     By then, the curtain had already fallen on Saturn.

     On 31 March 1998, the Sega Saturn was officially discontinued in the North American market.  A few short weeks later on 15 April 1998, noted videogame retailer Electronics Boutique announced that it would no longer be importing Saturn titles from Japan.  Just over a month later, on 31 May 1998, all official Sega-sanctioned software development projects for Saturn were canned.  While Capcom and one or two other lone third-party developers decided to go ahead and finish what Saturn projects they had that were already nearing completion, the majority went ahead and bowed out along with Sega's own in-house programming teams.  For Sega fans worldwide, 31 May 1998 will be forever remembered as the day that the Saturn died.