The PlayStation Gambit
“Summer already?” Yoo Jae-won muttered as he opened the window and felt the humid heat riding the breeze. May had flown by in a blur of Japanese business, and June had been swallowed by follow-up work. His sense of time had grown hazy, but the warm wind through the window reminded him of the season. In San Francisco, even July rarely climbed above twenty-five degrees, but this was Deokjin-ri—his hometown—and the early-July heat was unmistakable.
“University entrance is right around the corner.”
Once summer ended, the word “university student” would be added to his identity. It wouldn’t change much in practice, yet it still felt like a significant milestone. Not that Yoo Jae-won had any intention of living a typical campus life. Making friends, going on group dates, even collecting a few F’s—those were experiences most freshmen enjoyed, but he had zero interest. Once ID Group’s revenue hit the trillions, making genuine new friends became impossible. He had grown too accustomed to questioning everyone’s motives the moment they approached him.
So at university, he would likely spend more time with professors than with students.
“No, not ‘likely.’ It’s already decided.”
His university plans were already detailed in the master plan he had painstakingly created. Achieving every item on that list would only benefit him.
“At least American universities keep you so busy studying that you don’t have time to fool around.”
In Korea, people said getting into university was the end of the struggle. Unless you completely abandoned studying, graduating was almost guaranteed. America was different. Admission was only the beginning; earning the diploma was the real challenge. Especially at a top engineering school like Stanford, the workload was notorious. Classes were difficult, reports were endless, and students had no time to look elsewhere.
After indulging in a brief daydream about university life, Yoo Jae-won returned to his computer. ID Group had been built on an online foundation from the start, so nearly every task could now be handled through automated systems. The efficiency was a blessing, but it came with a drawback: no matter how quickly he cleared his inbox, new messages piled up the moment he stepped away.
Only minutes after clearing his inbox, the summer scent drifting in from the window had barely registered before new messages began arriving again—from ID Investment, ID Technology, and ID High Tech alike. To keep things simple, he had created short tags for each division. Yoo Jae-won started with the H-tagged reports from ID High Tech.
“They’ve already finished SSL?”
SSL stood for Secure Sockets Layer—a protocol that encrypted data packets to enable secure communication. It would make safe online payments and internet banking possible. Eugene Kaspersky, the Russian expert recruited for the project, had been placed in charge, supported by a small team of S-Class developers pulled from ID Technology. The early days had been rocky, but the talent and full corporate backing had produced results.
Yoo Jae-won immediately replied, instructing them to install SSL on Nextcom’s mainframe for larger-scale testing and to send the protocol to Tim Berners-Lee at the W3 Consortium for standardization. Whoever controlled the core security technology for online commerce would see the money flow in automatically.
“Heh. There’s no rule saying we have to give it away for free just because we standardize it. We can offer it free at first, then monetize later.”
His grin was wicked, but he had no intention of becoming a predatory company. He planned to keep the technology free through the internet’s growth phase until the 2010s.
Another email arrived while he was still reading. The sender was from the ID Technology Redmond team.
“A new software development proposal? I can’t not open this.”
Many emails awaited his attention, but the word “new” drew his cursor like a magnet. The message contained a brief summary and an attached IDW file. The proposal was to develop image and video editing tools. The idea had been sparked by the second patch for Android 1.0, released in February and June. The February patch included image formats and video codecs Yoo Jae-won had created, while the June patch added preset files optimized for those codecs. Because those tools were designed for professionals rather than general users, they were difficult to operate. A graphics-interface editing program would therefore give them a competitive edge in creative tools.
The IDW file was far more detailed. It showed rough interface mockups and listed the features the program would include. Yoo Jae-won had expected something on the level of Paint, but the proposal was for a full Photoshop equivalent. The video editor was equally ambitious—not a simple Movie Maker, but a professional-grade editing suite.
Creative software represented a substantial market. Demand had exploded in the twenty-first century as individuals began broadcasting over the internet. Yoo Jae-won had originally planned to acquire existing companies once they matured, but developing the tools in-house from the start was also appealing.
“Who’s the proposer?”
He checked the name of the person who had connected the new high-performance image format and video codec to creative tools.
“Justin Abrash?”
The name was unfamiliar. That was actually a good sign. Anyone who could envision an entire creative suite just from seeing the codecs was clearly talented. The more such people ID Group had, the stronger its foundation would become.
At the same moment, Sony’s top executives were gathered in Japan for a critical board meeting. The central issue was how to respond to the economic crisis that had struck Japan in May. The collapse of the real-estate bubble had triggered a stock-market crash, which in turn caused massive non-performing loans. Banks that were already fragile failed despite government support. As banks collapsed, companies shut down, and Japan’s economy plunged into another deep recession.
Thanks to the massive foreign reserves accumulated from trade surpluses since the 1980s, Japan did not need to request IMF bailout funds, but the real economy was devastated. New hiring plummeted, consumption contracted, and corporate revenues collapsed. The government was scrambling for emergency measures but had no effective solutions. Companies faced the same problem, yet one straightforward option existed: large-scale restructuring. They began preparing mass layoffs to slim down bloated organizations. Japan’s lifetime-employment myth would begin crumbling in 1992.
Sony was no exception. The board had already decided on major restructuring, and most new projects were slated for cancellation.
“Next item?”
At President Norio Ohga’s weary question, the executive in charge of the meeting stood up.
“Project PS.”
A murmur swept through the room. Like the projects already canceled, this one had also been controversial. Most executives believed it should be scrapped as well—the outlook was uncertain and success was far from guaranteed. A minority, however, remained optimistic, arguing that a year of effort should not be wasted.
“Let’s hear it directly,” Norio Ohga said, and the room fell silent. In Japan’s rigid corporate culture—even at technologically advanced Sony—the president’s word was law.
“Yes, sir. We’ve summoned the PS project leader.”
A moment later, a solidly built man in his late thirties entered the conference room. Because the product was a game console, a relatively young chief engineer had been chosen as team leader.
“President, executives—good afternoon. I am Ken Kutaragi, leader of the PlayStation Project Team.”
Sony’s ambitious project was the development of a next-generation game console using CD media, which Sony had co-created with Philips. To increase CD adoption, Sony had explored various applications, and games were one of them. A CD could store 650 MB—far more than cartridges—and manufacturing costs were much lower. Although read speeds were slower, the price advantage outweighed that drawback. Sony wanted CD to become the standard medium for game consoles. Since Sony’s own technology was involved in CD production, mass production of game CDs would also generate substantial royalties.
The partnership with Nintendo had been nearly complete when Nintendo blindsided them. The previous year, Nintendo had announced a new CD-based product and revealed it had signed with Philips instead. Nintendo had simply disliked the revenue split Sony demanded. Switching to Philips for a cheaper deal was one thing; doing so the day before the announcement was a betrayal of trust between companies.
Afterward, Sony approached Sega about jointly developing the next-generation console. They had already reached a satisfactory CD licensing agreement, and Sega’s Mega CD had received a positive reception. Yet Sega also rejected the proposal, asking why they should cooperate with a company that knew neither hardware nor software development.
Humiliated by both companies, Sony’s executives had decided to develop the console independently. That project was PlayStation. The codename had originally belonged to Nintendo’s CD-based machine; after Nintendo’s betrayal, Sony had taken the name for itself, determined to succeed where Nintendo had failed and exact revenge.
Now the economic crisis threatened to cancel PlayStation as well.
“Are we really going to back down like this? Sony will become a laughingstock for life.”
Ken Kutaragi did not offer optimistic forecasts about market potential or future profits. Instead, he reminded everyone of the humiliations Sony had suffered since the previous year. The effect was immediate—Norio Ohga’s forehead vein visibly throbbed.
“Hmm. Is there a way?”
Instead of canceling the project, Ohga asked the heavy question, his tone implying that failure to provide a solution would have consequences for Kutaragi.
If Kutaragi had been bluffing, he might have faltered, but he was both confident and clever.
“Yes, sir. The current trend in the American computer industry is 3D gaming. Dedicated chips that accelerate 3D graphics now allow ordinary PCs to render smooth 3D scenes previously seen only on workstations. Equipping PlayStation with a 3D acceleration chip would give it a level of differentiation no existing console can match.”
“Adding a 3D chip? That will raise the unit cost. In this economy, who will buy an even more expensive product?”
“When has Sony ever done business looking only at the domestic market? Japan may be struggling, but overseas markets are not.”
Although the company was in difficulty, it was not on the verge of bankruptcy. Domestic demand was weak, yet overseas sales remained strong. Sony’s Walkman was especially popular in the recovering American market. Even expensive 3D accelerator cards starting at three hundred dollars were selling briskly; professional-grade cards priced at nine hundred ninety-nine dollars were also moving in noticeable quantities.
“That’s not all. The Glide X2 3D library is already complete, and thousands of freely usable models are available on the Nextcom developer channel—hundreds more added every day. Most importantly, because the development environment runs on PCs, game developers can work with maximum efficiency.”
Kutaragi continued praising the 3D acceleration chip. As both an engineer and a gamer, he had already purchased a high-performance PC with a 3D accelerator card. He had not only played games but also created simple titles using the provided examples. The C-language-based environment was easy to use, yet the results were impressive—far more efficient than traditional console development tools.
“Glide X2? Isn’t that something ID Group made?”
An executive familiar with technology trends spoke up, and the room grew noisy again. Only a year earlier, most Japanese people had viewed ID Group as a company run by an absurdly young man named Yoo Jae-won. Even after acquiring Microsoft and dominating PC operating systems and office software, the impact in Japan had been limited because the PC-98 series still dominated. ID Group’s reputation had grown significantly only after it released a highly efficient Japanese input method that dramatically increased document production speed.
But this year, perception had shifted dramatically. ID Investment—led by Yoo Jae-won—had ruthlessly exploited Japan’s attempt at a soft landing, and the media portrayed the company as a villain that had single-handedly plundered the Japanese economy.
“Director Yamamoto, surely you don’t believe the media’s claim that ID Group alone destroyed our economy?”
Kutaragi spoke without hesitation. If PlayStation were canceled, he would have no work left. With R&D budgets already being cut, his department was also facing layoffs. He had been on long-term assignment for over a year, and as a game specialist he was first in line for dismissal.
“In conclusion, the performance of the 3D acceleration chip and the productivity of the 3D library are proven. The only drawback of 3D games is their large file size, but that can be solved with the CDs we already possess. And are we the only ones who know this?”
The room fell silent once more. Everyone’s eyes turned to Norio Ohga.
After roughly a minute, Ohga spoke.
“Proceed. But if we start, we must crush Nintendo completely.”
“Yes, sir!”
Kutaragi answered briefly. Once the president had decided, lengthy explanations were unnecessary. He bowed deeply and left the conference room, his steps quickening. Almost running back to his team, he announced that the PlayStation project would continue.
“Waaah!”
The team members, who had feared their unit would be disbanded, erupted in cheers. Leaving them to celebrate, Kutaragi sat at his desk, launched the word processor, and began drafting a detailed proposal. It was time to deliver results.