Two of the biggest names in entertainment went head-to-head at the Los Angeles Convention Center.
Both unveiled new video games consoles that would launch against each other in a matter of months.
One company was the current market leader. But it had stumbled en-route to E3, and was on the back foot after a series of poor strategy and business decisions.
And so its rival, the underdog Sony, was able to steal the show in emphatic fashion, with a new machine that was $100 cheaper than its rival.
Meanwhile, Nintendo barely even showed up.
The year was 1995.
"In 1991, CES put us in a tent. You had to walk past all the porn vendors
to find us. I was furious with how CES treated the video games
industry and I started planning to get the hell out."
- Tom Kalinske, Ex-Sega America boss
During the many interviews MCV conducted at E3 last year, one question we always ended up asking was simply: So what have you made of the show?”
The answers were pretty much identical.
It felt like a throwback to the old E3s,” said PlayStation Europe chief Jim Ryan.
It was great to have a ‘what are they going to do, what are we going to do.' It was very energising.”
EA chief Andrew Wilson was equally as excited: I had an absolute ball. Because there was an energy at the show that we haven't had for years. And that's pretty special.”
There were two men at E3 last year that were feeling particularly nostalgic.
Tom Kalinske and Steve Race may not be household names in the games industry today, but back in 1995 they were the industry's Phil Spencer and Andrew House. Race was the man charged with introducing PlayStation into a sceptical marketplace. Meanwhile, Kalinske – CEO of Sega America – was tasked with launching the Sega Saturn.
I went to E3 last year and I said to the guys I was walking around with: ‘You know, this show is kind of back to like it was when we started it,'” Kalinske tells MCV.
It is because of the competitiveness of the hardware systems. It generates a lot of excitement.”
And competitive is certainly what the games industry was at the first E3 in May 1995. But to truly appreciate the drama that surrounded that show, we have to jump further back in time, to when Kalinske joined Sega in 1990.
Back then Sega was a $70m business in the US. But when Kalinske took control he made Sega America a $1.5bn business in just three years. And with the help of Sonic and some cheeky advertising, he turned the firm's Genesis console (or Megadrive to you and I) into the biggest games machine in the country in 1993 – eclipsing the Super Nintendo.
Kalinske was certainly an influential man and not just at Sega, but in the US video games industry as a whole. He was instrumental in the creation of the US games industry trade body, he was part of the team that introduced the first age ratings system, and he was there at the birth of the Electronics Entertainment Expo.
Back in the early 1990s we always used to show at CES in Las Vegas,” recalls Kalinske
We were there alongside the guys that were showing their new automotive speakers, or their new computing systems, or TVs, or telephones, or what have you.
And the CES organisers used to put the video games industry way, way in the back. In 1991 they put us in a tent, and you had to walk past all the porn vendors to find us, to find Nintendo and ourselves and the third party licensees.
That particular year it was pouring rain, and the rain leaked right over our new Genesis system. I was just furious with the way that CES treated the video games industry, and I felt we were a more important industry than they were giving us credit for. So I started planning to get the hell out of CES.”
Sega launched its own independent show in 1992, where it invited third party publishers to the Silverado Country Club to show off its titles to retailers. It was a huge success, and the following year Sega went even bigger, and even invited its arch nemesis Nintendo to exhibit But they didn't show,” laughs Kalinske. We were just so competitive back then.”
Meanwhile, as Sega began its slow transition away from CES, the US games industry was embroiled in a heated debate over violent video games. The US Senate was worried that Mortal Kombat was damaging the minds of children, and called for an age ratings system to be introduced for games.
We at Sega had our own rating system,” says Kalinske (pictured right).
We started that in 1992 and it was very much like the ESRB one we have today. And I said to the industry, we need an industry-wide rating system and we need an industry association to police it.
At the time the software publishers association, in our opinion not just mine, wasn't doing an adequate job in representing the video games industry. They were more concerned about PC software. It took a while but I finally got us all to agree to start the IDSA – the interactive digital software association. The next step was to adapt an industry rating system. And then to create an industry show – because we were important enough to have one.
To get it going initially, Sega lent the IDSA $300,000 and so did Nintendo. We financed the association, we financed getting the rating system going and we financed the first E3.”
"Ken Kutaragi saw what we had and said let's jointly market a single games console – The Sega/Sony hardware system."
- Tom Kalinske, Ex-Sega
May 1995 and the very first E3 made its debut at the Los Angeles Convention Center. And much like this year's show, it was awash with new hardware.
But with the 3DO struggling and Nintendo's new Ultra 64 (or N64 as it became) delayed until the following year, eyes were firmly fixed on the battle between PlayStation and Sega.
But these two juggernauts weren't always rivals.
Sony came to us after they had been rebuffed by Nintendo,” remembers Kalinske.
They had wanted Nintendo to use some technology that they had, and Nintendo instead chose to work with Philips. That really annoyed Sony. Olaf Olafsson [Sony Electronic Publishing President] and Micky Schulhof [President of Sony America] came to my office and said: ‘Tom, we really don't like Nintendo. You don't like Nintendo. We have this little studio down in Santa Monica [Imagesoft] working on video games, we don't know what to do with it, we'd like Sega's help in training our guys. And we think the optical disc will be the best format.'
Well I agreed with them, I thought CDs would be the next format as well. But in those days nobody knew how to programme on optical discs. So I said, Ok. Let's combine our efforts. Let's finance Imagesoft, and let's finance this little developer called Digital Pictures, which seemed to be furthest along in knowing how to programme on optical disc.' And they financed three titles from Digital Pictures and we did as well.
So our relationship with Sony was very close and very tight. We together worked a lot of these things out. And Sega of America and Sony were both convinced that the next platform had to use optical discs. We had been working on this CD ROM attachment to the Genesis [Mega CD], which we knew really wasn't adequat