Saturn's Distant Orbit

GameSpot News has received reports from reliable sources at third-party development houses that Sega has prepared, and is on the brink of executing, a highly choreographed exit strategy for the Saturn console system it introduced some two years ago.

Our sources have reported that Sega intends to cease hardware manufacture and software development for the Saturn by Christmas of this year, releasing only as many games as are necessary to clear out remaining inventories of Saturn hardware.

As is so often the case, the numbers tell the tale. Based on TRST data from the first quarter of 1997, sales of Saturn software in the United States have been abysmal in comparison to those of Nintendo 64, PlayStation, and even Super Nintendo games.

The top 25 games sold through to consumers in the first three months of 1997 (as opposed to raw numbers of copies sent to stores) reached 849,000 at #1 (Super Mario Kart 64), fell to 523,000 for #2 (Super Mario 64), and went down to 58,000 by #25 (Super Mario Kart for the SNES). The highest-rated PlayStation game, Tomb Raider, sold 143,000 in the first quarter of 1997 and was ranked #9, behind Donkey Kong Country 3 for the SNES (#8) and ahead of Donkey Kong Country 2 for the SNES (#10). Sega's Saturn had no games in the top 25, meaning that even the best US Saturn game was purchased by fewer than 58,000 consumers in the first three months of 1997.

Estimating that Sega or its developers might pocket $20 per game sold for the Saturn, a company could make $1.15 million if its title even approached the 25th best-selling title on that list, but that's just not happening for most companies: Only EA's John Madden Football and a couple of other games have been profitable Saturn investments. Considering that game development, marketing, and overhead budgets often come to over $1 million per title, the US Saturn market is just too risky, even for Sega at this point.

True, Saturn sales in Japan have been better, but Sony dominates the Japanese market now, and even Nintendo has had problems on its home turf. According to Famicom Tsushin (Famitsu) magazine, of the current top 30 Japanese titles, Saturn games account for only five, Nintendo 64 games for only two, and PlayStation games for 21.

The company appears ready to begin to dispose of present stocks of Saturn consoles, games, and peripherals. Clearly, as that strategy relies upon continued consumer confidence in the Saturn, Sega will most likely follow both their own 32X example and Ted Hoff's Atari Jaguar example, advising consumers that several big titles are on the way while lowering prices and quietly cutting production runs on upcoming games.

The big titles, namely the 3-D action titles Sonic R, Azel: Panzer Dragoon RPG, the Afterburner sequel Sky Target, and perhaps a conversion of the company's newly popular Japanese baseball game, Pro Baseball Greatest Nine '97, would be spotlighted alongside a few third-party titles such as Capcom's Resident Evil 2, Marvel Super Heroes, X-Men vs. Street Fighter, and/or Technosoft's Thunder Force 5.

Sega might opt to release some of the more promising third-party titles under its own label, as Nintendo did with Street Fighter Alpha 2 for the SNES and Mega Man 6 for the NES when those systems were in their waning days. Third-party developers such as Capcom would thus be spared the risk of poor sales and associated manufacturing and marketing costs, and Sega benefits from the release of quality software that otherwise might not have been sold.

Whether Sega will formally announce the abandonment of the Saturn any time soon is doubtful, though it is clear from our sources that as of Christmas the machine will not be Sega's primary home market concern. Ideal as it is for translations of older Sega System 18, 24, and 32 arcade games, the Saturn could conceivably live for another few seasons as a low-powered alternative to a more expensive new machine.

GS News will continue its coverage of Sega's new system tomorrow.