The next year, following the Sega-CD release, things started downhill. In order to enter the arena of 32-bit gaming, rather than release a new console, two new products came out. The first was yet another expansion for the Genesis named the 32X. This was an attempt to introduce 32-bit gaming to Sega's customer base at a lower price than the competition's new stand-alone systems (Sega scrapped the stand-alone "Neptune" in favor of this add-on). The other release was the CDX, a stand-alone portable CD player that had a Genesis cartridge port in the back. The real confusion set in though when it was reported by many in the gaming press that the 32X was not compatible with anything other than an actual brand Genesis/Sega-CD base system. In fact, word was that attempting to use the 32X on a CDX or third party Sega-CD based system could damage either or both units.

   So with almost everything counting as a separate system in regards to software sales, Sega was now supporting six platforms; the Master System, the Genesis, the Genesis/Sega-CD, the Genesis/32X, the Genesis/Sega-CD/32X (yes there were a few titles requiring all three to run), and the Game Gear (Sega's color portable). Also there were two versions of the Genesis and Sega-CD hardware, and many gamers found some of more recent cartridge games not working on the first Genesis model, and older cartridge releases not working with the new model.

   Eventually Sega U.S. began to collapsed under its own weight from having to support so many different systems, not to mention the flood of mediocre software and FMV titles coming from many third party developers. It soon became impossible for anyone to keep track of not only what games were good, but in some cases which version of a particular game was the better one since many games were getting released on two or three different Sega platforms simultaneously. The frequent question was "Why by a Sega-CD and the CD version of a game when I can get the cart game without the music?".

   Sega needed to regroup, and eventually came back with their Saturn. No it wouldn't be backwards compatible, but it promised to play all of the then hot Sega arcade titles, and it would be an all new stand-alone system, a fresh start. Unfortunately by this point, Sega fans who had already spent hundreds of dollars buying all of the previous Sega systems began to jump ship having lost faith in the company and becoming fearful that there would be a repeat of the Genesis in the Saturn who at launch was already boasting rumors of future add-ons such as a video MPEG decoder. It also didn't help when Virtua Fighter and Daytona USA came out that they weren't the "as promised" pixel perfect translations. At this time the competition was doing well, with the Super Nintendo hitting it's full stride, and the Sony PlayStation just around the corner.

   Another problem on the Saturn front is that Sega got off to a terrible start in the U.S. straight from the launch. In a panic over the upcoming release of the Sony PlayStation, Sega announced a surprise U.S. launch during the 1995 E3 show. This moved the release date up from September 2nd to May 11th. While at first there was a big run of sales by early adopters, sales quickly tapered off over the long summer months when no new software arrived outside of the original seven launch titles which were fun, but not enough to keep sales moving. And many gamers were still saving their money until September to buy their PlayStation (which outsold the Saturn in its first week of sales).

   When all was said and done, in 1996 Tom Kalinske who had directed U.S. operations since 1991, stepped down and was replaced by Bernie Stolar. The word was that after having pushed development of the failed 32X against Sega of Japan's wishes and other disagreements over management of the Saturn (which became a test case for how *not* to launch a new console platform), SoJ decided they new what was better for the U.S. market. When Mr. Stolar came on board, he began a massive restructuring of Sega of America, winding down and consolidating operations, laying off staff and putting the company together in order to launch the Dreamcast in 1999. Prior to working at Sega, Mr. Stolar had worked for Sony, helping with the successful launch of the PlayStation. One thing led to another and Mr. Stolar ended up getting fired from Sony along with a number of other executives which clearly set the groundwork for his future direction in the industry. While there are many quotes from Mr. Stolar about the situation, I think his motivation to make Sega a success can be summed up in his own words here:

"When asked if he has it out for Sony, Stolar replied, 'People say that I've been driven by vengeance in going after Sony, and I think they're probably right. I believe in winning, and I believe you have to have that kind of attitude to drive you.'"(6)

   As a part of Mr. Stolar's reorganization, in 1998 Sega of America spun off Genesis hardware manufacturing to an outside firm (Majesco), who in turn created the Genesis 3. The Genesis 3 is a smaller Genesis system (akin to the NES 2 and SNES 2 models) but it is reported to be incompatible with the Sega CD, 32X, and the Virtua Racing enhanced game cartridge. Majesco also assumed the rights to manufacture and distribute both the Game Gear and Saturn consoles and their software.