The Second Video Game Crash!?

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In the mid-90s, war was waged in the land of games. Nintendo, Sega, Sony, Philips and Panasonic, one by one the multinationals made their trenches, took their positions and prepared for a struggle that would rage in all viviousness. Which device had the best specifications and offered the most beautiful 3D graphics? Which platform offered the most games and what is the price you have to pay for it?

Gigantic amounts of money were invested in the development and promotion of the new ‘monster machines’, while the market was not yet large enough to be profitable for all. One thing became clear, heads were on a plate. However, a precedent had already been available. You just have to look back.


After years of success, the game industry reached its peak in 1982 with a turnover of 3.2 billion dollars. The gaming market had matured and could compete with the film and music sector. With this newly acquired status, cracks also began to show. Cracks that eventually made the market collapse like a house of cards. Due to the increasing success of cardridge based consoles such as the Atari 2600, ColecoVision, Intellivision, Philips Videopac/Odyssesy 2 and so much more, the market had become saturated. The competition was already fierce and many more consoles were scheduled to be released for 1983, such as the Odyssey 3 (Videopac) and the Atari 7800. Along with a plethora of inferior games releases and increasing competition from Home Computers that had better graphics capabilities, this led to an implosion of the console market. In just one year, the market lost nearly 97 percent of its revenue. Of the 3.2 billion turnover in 1983 only 100 million remained. It would be the final blow for many consoles, including the aforementioned Videopac/Oddysey 2, Intellivison and ColecoVision. This Video Game Crash of 1983 marks as an important milestone in the history of video games.

After the Video Game Crash of 1983, the market gradually reinvented itself. With many consoles gone from the battlefield, opportunities opened up for new entrants. The most important of these was Nintendo, which would create a new gaming boom with its NES and later SNES. In addition, Sega also made itself heard with its SG-1000 and Master System. The gaming industry was led by new flag bearers who dominated the market. And by the market I don’t just mean the consumers. Developers were also heavily dependent on these gaming giants. Games were still released on cartridges. Empty cartridges had to be bought by game developers from Nintendo and Sega, which pushed up the price of the games and deterred smaller developers. In addition, as in 1983, consoles were technically lagging behind modern PCs. The SNES, market leader in the early 1990s, still relied on 16-bit hardware and 2D graphics and did not have a CD drive. Was a new Video Game Crash visible on the horizon? Maybe not just then, but it was certainly time for renewal!

Had Nintendo become complacent? Was the company resting on its laurels? Had success gone to their heads? Some companies thought so. They saw their chance and thought they could claim a slice of the lucrative pie for themselves by focusing on the new technical possibilities that were available. These were not just unknowns in the gaming industry. Ironically, in addition to a number of newcomers, it also involved companies that had been hit hard at the time of the first Video Game Crash in 1983. After likkick their wounds they wanted a new seat at the table.

In the following chapters I will briefly describe the introduction of three consoles that appeared between 1991 and 1996. All three were CD-based consoles, and all three wanted to introduce a console that could not only compete with the SNES, but surpass it with better graphics and sound. The 3D era had begun!

Philips CD-i

One of these companies was the Dutch company Philips. The company had caused a furore in the late 1970s with its Videopac consoles. These cartridge based consoles were especially popular in Europe. In the US, the company also managed to take third place in terms of sales with the Magnavox Odyssey 2. After the videogame crash in 1983, the upcoming Odyssey 3, already presented at that year’s CES, was canceled shortly before introduction. After the demise of the Videopac, Philips still tried to gain a foothold with its MSX computers in the 1980s, however far it had already shifted most of its resources to the audio and TV market. The interest form Philips for gaming was largely gone.


In 1986 Philips started developing a joint multimedia standard together with Sony and Mtsushita. This so-called CD-i had to offer a counterweight to the CD-rom. After Sony and Matsushita left the project, Philips continued the development independently. Although the CD-i was considerably delayed. The platform was finally launched in 1991 with the CD-I 205 which was sold for 1300 guilders (590 euros). After this first model, many more variants would follow. Each with minor adjustments and price differences. However, the core of the console remained the same. The CD-i used a relatively outdated 16-bit Philips 68070 CISC-CHIP with a clock speed of only 15.5 MHz. The basis for this chip was already introduced in 1979! Not much more powerful than the already obsolete NES and actually not enough to play modern 3D games. However, that’s not what the CD-i was meant for. The CD-i was far from a dedicated gaming console. It was rather an Edutainment and Video system, on which games could also be played. Dale DeSharone, former manager of the development team behind ‘Link: The Faces of Evil and Zelda: The Wand of Gamelon‘, stated in an interview in 2007 with

‘It (CD-i) was just obviously not a game system and Philips was actually very clear in telling us that they didn’t believe the market for this device was games. There was a subtle hostility toward games that I noticed from the upper echelon of execs at AIM. Philips thought that people would buy the machine for home educational purposes. This all changed after the launch of the CD-i platform because the only titles that actually sold were the game titles.’

Digital Video Cartridge slot CD-i 450. An extension card that was necessary to play certain games and movies

A number of developers pitched Philips with ideas. Philips, relying on the popularity of the most prominent Nintendo characters, commissioned several independent studios to develop games for the CD-i. The company instructed its developers to make full use of capabilities of the system. The games had to become the paragon of what CD-i had to offer make full use of its comparative advantage. The large CD-storage, CD audio, and Full Motion Video capabilities made high bit rate music and animated cutscenes possible. In some games like Zelda’s Adventure, the cut scenes are even brightened up by real live action video.


The implementation, however, accomplished the opposite of what Philips envisioned to achieve. The games where of a low standard. Besides the fact that Philips wasn’t planning to introduce the CD-i as a gaming console, this had two other reasons. First of all, the developers simply lacked sufficient development time and money. The development budgets were not high with around $600,000 per game. This was a low budget in 1991-1992. Even at the time a U.S. technical employee cost about $100,000 per year to support (salary, taxes, office space, equipment, insurance, administration costs). This was also a time when a 1 GB hard drive costs $3000. As a result, the development teams had to be kept small. Some developers therefore chose two work on several titles at once. For example, the first two Zelda games for the CD-i were made simultaneously with only a team comprising of three programmers, one audio engineer / composer, four artists, one script writer and a producer. A sharp contract to the more than 500+ developers that nowadays work for several years on only one triple A-game like Cyberpunk.

Secondly, developers had to deal with the severe technical limitations of the system. As mentioned, the CD-i was not primarily intended as a gaming console, so Philips did not opt ​​for a potent CPU and GPU during development. The CD-i hardware was also plagued by significant delays and delays, which further delayed game development considerably. Once the hardware was up and running, it turned out to be dreadfully slow and severely limited. If you look for example at the scrolling in Link or Zelda you’ll see that you can only scroll about 2 or 2.5 screens horizontally. This was dictated by the video memory available. This imposed a major constraint on game development. The levels had to be kept small, loading times were long and textures blurry. Worst of all, however, was where the input devices used for the CD-i. The controls emphasized the limitations of the hardware to produce smooth gameplay even more. The CD-i is notorious for its unintuitive controllers, which emphasizes the fact that in 1991 Philips was more a TV builder than a console developer. One controller is even crazier than the other. Especially when using the wireless and not very reliable IR controllers were virtually unplayable. It is an understatement to say that all these limitations provided a lack of immersive experience. Only the more tradition controllers, like the ones on the far right and the far left of the picture where of acceptable quality. 

selection of CD-i controllers

The limited financial budget and with the aforementioned technical challenges in mind, the developers had to get the most out of the system to produce an acceptable game. This was hard and not all developers for the system where up for it. In addition, Philips’ commitment to using the console’s CD capabilities thwarted developers’ freedom and creativity. The result was a large number of mediocre games, a significant number of which made use of full motion video, becoming a sort of middle ground between movies and games. Real 3D games, such as the FPS Atalantis the Last Resort, could not compete with games on other 3D consoles due to the limited graphics options. Have there been no gems for the CD-i? Certainly, although these often concerned 2D games, where the platform game ‘The Apprentice’, the puzzle game ‘PacPanic’ and the Full Motion Game Braindead stand head and shoulders above the rest in my opinion.

In the end the CD-i wasn’t the succes Phllips hoped for. This does not mean that Philips killed it short after its release. The CD-i stayed on the shelfs from 1991 until 1996. In the last two years, after acknowledging that games were the console’s best sold software, Philips even introduced a version that looked like a real gaming console (CD-i 450). In the advertisements for the console Philips however kept to emphasize the diversity of the software and used it as a justification for gamers that the CD-i ecosystem was here to stay and that they could for see longterm soft- and hardware support. After all, the console did not depend on games alone. In the end, these claims seemed to be unfounded. The CD-I would disappear from the gaming scene after 1996, and Philips would not return.


Two years after the launch of the CD-I, the 3DO Interactive Multiplayer (commonly referred to as 3DO) was launched. The 3DO was a line of video game consoles marketed by Panasonic, Sanyo and GoldStar between 1993 and 1994. The first iteration, the Panasonic FZ-1, was launched in the US in October 2013. The 3DO were built in accordance with hardware specifications established by ‘The 3DO Company’. This company was founded by the famous co-founder of Electronic Arts, Trip Hawkins. Hawkins literally stated that he wanted to introduce the 3DO because he saw how weak the SNES and Sega Megadrive were.

3Do from Goldstar

3DO was initially with a lot of enthusiasm. Large companies like AT&T, Time Warner and Universal Studios supported the idea. It was however Panasonic, the worlds biggest electronics company at the time, who was the first manufacturer of the 3DO. In short, the console seemed to be a serious player in the upcoming war with the anticipated Sony Playstation, Sega Saturn and Nintendo 64.

The idea behind the 3DO was comparable with the CD-i and so many other consoles introduced in the early 90’s. It wanted to overcome the limitations of using cartridges from previous generation consoles such as the SNES by introducing the gamer to the potential of CD technology. This technology brought longer loading times, but allowed for large save files and therefore richer game worlds and, supported by power-full hardware, more visual splendour in games. In addition, it was thought that the 3DO would appeal to a wide audience by letting the console not only play games, but also VIDEO- and photo CDs, making it a fully-fledged multimedia device for the living room. The digital hub for the whole family with both entertainment and edutainment. This made the idea comparable to other gaming console manufactures in the early 90’s like Philips with their limited success with the CD-i and Apple / Bandai with their totally flopped Pippin adventure. 

Controller of the Panasonic FZ-1 3DO

Idea behind the 3DO monetisation

Trip Hawkins also wanted to do away with the idea that developers, next to fee, also had to buy expensive cartridges from companies like Nintendo to publish their games on. He wanted to democratise the game industry and make the 3DO as attractive as possible for (new) developers to develop games for. The inexpensive CD-format was a godsent for developers because it was inexpensive and not an exclusive format like many cartridges. Furthermore, Hawkings deliberately kept the developer fees for the release of games on the 3DO very low. In the beginning it was only 3 dollars per game. The low fees and the lack of additional costs for developers and publishers to buy printable CD’s also opened up the possibility to lower the prices of the games for consumers. So by attracting many developers to the system to produces games and keep the costs low Hawkins hoped the console would get the necessary momentum. Essential for a totally new system in a very competitive marked.

Specifications and appearance

Panasonic FZ-1 3DO

The 3DO had very powerful hardware for its time. It had a 32bit 12.5Mhz RISC processor, two graphics processors running at 25Mhz, a CD player with 300Kbyte / s and 2MB of DRAM. It could produces 3D games an was much more powerful than other CD-based console, like the Philips CD-i. Furthermore, the console had two expansion slots for future peripherals and an additional Video Cartridge to display Video CD’s.

The console itself looks like a cross between a flat computer that you often saw in schools in the 90s (placed under your CRT screen) and a VCR. It has also some resemblance with the Apple/Bandai Pippin. From above it looks like a square, with a kind of rough top layer applied to the plastic. Combined with its antraciet/black colour, this gives the console a luxurious appearance.

The front panel is largely grooved by a retractable disc tray, on which the Panasonic logo is very prominently portrayed. Only one control port is placed under the tray. This is weird considering the ‘FZ-1 R · E · A · L 3DO Interactive Multiplayer’ even included the word ‘multiplayer’ in its name. The reason that only one controller port is available is that Panasonic has chosen to allow gamers to daisy-chain controllers. If you want to game with a friend, you plug a second controller into your own controller instead of the console.

For the sake of strength and stability, the Pippin stands on two pillars on either side. The power button and the eject button for the disk tray are placed on these pillars.

3DO concept

The company behind 3DO did not have the money or production facility to produce the 3DO hardware themselfs. Instead, hardware manufacures were licensed by The 3DO Company to produce the console. Panasonic was the first to act; Goldstar and Sanyo later followed with their own iterations. AT&T made prototypes and Samsung worked on them too, although they never saw the light of day. 

The problem with the 3DO-monetising construction was that manufacturers themselves naturally also wanted to make money from their hardware sales, making the price of the 3DO at $699, although cheaper than most CD-I’s, relatively expensive compared to other competitors. Goldstar, Sanyo, and Panasonic’s later 3DO-models were less expensive to manufacture than the FZ-1 and were sold for considerably lower prices. For example, the Goldstar model launched at $399. To boost its own sales, after just six months Panasonic decided also to drop the price of the FZ-1 to $499, leading some to contend that the 3DO’s cost was not as big a factor in its market failure as is usually claimed. Although it was not the only reason, the initial high price contributed for a large part in losing momentum for the 3DO. Subsequently, the console sold poorly. Only 2 million units have been sold from its launch in 1994 to its discontinuation in 1996. This is more than the 1 million CD-I’s, but in stark contrast to the 104 million Playstations sold. 

Limited hardware sales also meant that subsequently game sales where also lacking behind. This was certainly the case in the beginning of 3DO’s life time, because hardware changes were made by the 3DO company up to the last moment. As a result, developers were still working on their games at the launch of the console. The result was that the console had anything but a flying start. Although the fees for games where very low, the limited hardware sales deterred major developers and publishers from developing games for the console. In the end, only about 300 games were launched for the 3DO. Outside of EA’s games, these were mainly games from small developers who were drawn by the low fees per game sold. Due to the lack of experience and money of these developers, the majority of the games for the 3DO, with the exception of a few gems, are of a mediocre or even questionable quality level.

To add to the drama, due to the high losses of the 3DO company, Trip Hawkins decided in 1994 to introduce an extra imposition of 3 dollars per sold copy for software developers. That was twice the amount they had to pay before. This resulted in even less interest in development for the platform.

The End

Many argue that the final blow for the 3DO was delivered by Sony’s overwhelmingly popular and affordable PlayStation, which not only forced other CD-based gaming systems like CD-i out of the market, but ultimately killed the Sega Saturn as well. Despite the strong promotion and the potential expansion possibilities of the 3DO Interactive Multiplayer, the support of external software parties was lacking and production was discontinued at the end of 1995.

A successor to the 3DO was than already in the works, It was named ‘M2’. The disappointing sales as well as the fierce competition from newcomers Sega Saturn and the immensely popular Playstation showed the 3DO company that a successor would not be viable. The M2 technology was sold to Panasonic for over 100 million dollars. Panasonic did monetise the M2 technology and it would take until the release of the Panasonic Q for the company to produce a new console.

After their disappointing adventure The 3DO company itself first wanted to produce their own gaming console, but decided to concentrate solely on developing software and sold of the hardware branch to the highest bidder, much like Sega would do later after the disappointing sales of their Dreamcast. Ultimately, it was Samsung who won the bid and took over the personnel and material remnants. The hardware team of the 3DO continued under the wing of Samsung with the development of gaming hardware based on the M2 under the name CagEnt. 

Legacy of the 3DO

The 3DO will go down in the history books as a highly anticipated gaming console, which could not live up its high expectations. In the early days of 3D gaming, the console was unable to acquire sufficient market share. The focus was insufficiently on the release of qualitative and exclusive games. This means that the 3DO belongs in the same list as the Philips CD-i, Atari Jaguar and Apple / Bandai Pippin. 


Two years after the 3DO and already 4 years after the CD-I, a Japanese toy company Namco Bandai and the American tech giant Apple launched the Pippin. The console was introduced in 1996 and discontinued just a year later in 1997. Apple took care of the engineering and Namco Bandai the design, marketing and software support.

Apple/Bandai Pippin


The Pippin prided itself on being powered by IBM’s PowerPC architecture. The console has a 66 MHz PowerPC 603 RISC CPU. As far as pure computing power was concerned, the internals where much more powerful than the competitors Playstation (33MHz R3000), Sega Saturn (28 MHz), 3DO (12,5 MHz + 2×25 MHz) and a lot more powerful than the CD-I (15,5 MHz). In addition, the Pippin had the, for that time, respectable amount of 6 mb RAM. However, this did not result in better graphics than its competitors. Clock speeds are not always leading and this was exemplary for the Pippin. Games weren’t nearly as beautiful as those for the Sega Saturn and Playstation. If we only consider the specifications of the Pippin, it can be concluded that the Pippin was a powerful gaming console, but a slow Mac. While competitors could use a lot of their processor power for games and, in turn, fine-tune these games to make optimal use of the hardware, it was different with the Pippin. The Pippin ran MacOS and like on a PC more power is allocated for the OS than on a dedicated console. So although the OS would make future appliances on the Pippin possible as some sort of hybrid PC/Console, it also was the Achilles heel of the Pippin, because a lot of horse power was dedicated to run the OS itself. In addition, hardware and software could not be fully coordinated, because the OS was not specifically written to get the most out of the console. At this point the Pippin was in two minds: being a Mac and being a gaming console. This bipolarity wasn’t beneficiary for the quality of the images that the device produced on the screen.

Peripherals and OS

The Pippin came as a complete pakkage. In addition to the Apple Jack controller, the box also contained a dial-up modem and a number of CDs with programs, including software for browsing. With some technical ingenuity it was therefore possible in 1996 ‘out of the box’ to surf the internet with the console. A unique one! Although the number of interesting websites at the time was still very limited and the world wide web did not yet have a competent search engine in this pre-google era.

Apple Jack controller


The Pippin was a failure from the start. The price was too high, the game library too small, and the computer functionalities too limited. Where the console wanted to appeal to a broad market, it could not really satisfy any of its intended target groups. The Pippin-adventure nearly bankrupted Bandai and made Apple even more receptive to the return of its creator and spiritual father Steve Jobs. 


Nowadays, the Pippin has achieved a notorious, even mythical, status as the most flopped game console and also the on of the worst Apple product of all time. This status has contributed to the fact that the Pippin is fairly rare today and a collector, in the year 2020, can easily pay 600 euros for a working specimen in good condition. Like the console, the Pippin’s games are very expensive these days. On Ebay you will not find many Pippin games under 100 euros. The limited supply and the limited lifespan of the Pippin will also have contributed to this. 

The Pippin symbolizes the status quo within Apple in the mid-1990s. The Pippin is perhaps one of the greatest tech flops in the history of consumer electronics. The glorious stature that Apple has today, with success after success, is in stark contrast to the dark period in which Apple brought the Pippin to the market. However, this contradiction certainly contributes to Pippin’s prominent place in gaming history.

A Second Video Game Crash?

The CD-i, the 3DO and the Pippin were lukewarm received by gamers and sold moderate to bad. All three wanted to be more than a gaming console. The CD technology made it possible to integrate Full Motion Video with Games. This was the recipe to conquer the living room and win over not just the kids, but all family members. At least that was the thought. Nevertheless, all three consoles put their own focus. The 3DO on games, the CD-i on edutainment and the Pippin on connecting to the internet (and offering a cheap crappy mac to the masses).

Consumers noticed this lack of focus. The adoption of hardcore gamers failed to materialize and it was precisely this group that could act as an ambassador for more casual gamers to embrace the new consoles. Developers, initially positive about the new possibilities (and financial benefits) of CD technology, also shrank back when it turned out that the consoles sold only moderately. The development costs of triple A games did not outweigh the limited game sales on the aforementioned consoles, as a result of which the game library mainly consisted of cheap B titles. A vicious circle, which is difficult to get out of.

However, there was no real crash. Although the consoles sold poorly, the market eventually did not completely collapse. True, there was a lot of uncertainty about the future, but the market never died down. The fact that the downfall of consoles in the early 90s is characterized as ‘The second Video Game Crash’ is therefore not entirely correct. In the meantime Nintendo could rest on its laurels and was not really challenged to really innovate itself. This changed with the appearance of Sony with its Playstation. It turned out that it took more than CD technology to revolutionize the gaming sector. After all, you also need parties that understand how to market new techniques in a well-considered and innovative way. The Playstation eventually marked the end of the downfall of Video Gaming in the early 90’s and secured itself a position it has to this day.

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