Tedium - Trip’s Big Interactive Reset 💿

The 3DO was an entrepreneur’s big bet on a business model.

Hunting for the end of the long tail • April 20, 2024

Today in Tedium: Lately, there’s been a lot of discussion about open ecosystems vs. closed ecosystems, how locking outsiders out of your ecosystem can harm competition and degrade consumer experiences. But in the right setting and with the right competitor, it can potentially do the opposite, giving developers and consumers more options. But sometimes, even with all the right intentions in the world, the ecosystem just doesn’t work out. The execution is slightly off, or it just doesn’t work out as intended. That, ultimately, is the story of 3DO, a company explicitly designed to turn gaming into an open ecosystem, both on the hardware and software ends. Except, it didn’t really work. Today’s Tedium ponders exactly why. — Ernie @ Tedium

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$700

The initial launch price of the Panasonic FZ-1 REAL 3DO Interactive Multiplayer, the first console manufactured in the 3DO line. The price, which was later undercut by an array of alternative models produced by other manufacturers, played a clear factor in the console’s failure, but it was not the only cause of its challenges.

Electronic Arts founder Trip Hawkins, who had a different POV on how the gaming industry should work. (Dan Farber/Flickr)

The Silicon Valley game executive who felt the Nintendo model didn’t work

If you are up on your video game history, you know that, at least in the early years of gaming, a lack of standards nearly killed the video game industry. The willy-nilly nature of development on the Atari VCS (later the Atari 2600), caused by a failure to anticipate or facilitate the rise of third-party development, was a primary factor behind the 1983 video game crash.

Nintendo is credited with largely resolving this challenge by instituting a complex licensing scheme that allowed them to enforce quality control, ensuring only high-quality games saw the light of day. Nintendo made the cartridges; it charged high fees to each publisher; and it limited who could enter the industry—and how often they could publish. Sure, we still got plenty of duds and some shovelware, as the existence of the Angry Video Game Nerd more than highlights, but it largely ensured that our experiences with these consoles were positive. No video game crash with the NES.

But it’s worth noting that the Nintendo ecosystem was not the only ecosystem of its kind during this era. In the 1980s, home computer systems were a popular way to play video games, with systems like the Commodore 64, Atari 400 and 800, and Apple II maintaining interest in homes for years.

An early Apple employee, Trip Hawkins, saw an opportunity to build games and software programs for these machines, and launched the company Electronic Arts around the concept. The firm, which has a reputation today of being employed by giant teams of anonymous employees working on generic franchises like Madden, was ironically built with the goal of bringing the creator-led United Artists model to video games.

This approach, mixed with an aggressive approach to getting its products in stores, treated EA well, especially after the company chose to jump early on the Amiga, whose hardware was the strongest of its generation.

The Electronic Arts Sprobe, the reverse-engieering kit EA built to make Genesis games. (via Sega Retro)

EA, with a Silicon Valley pedigree, was a famously cutthroat company in its business dealings, something highlighted by the fact that it went out of its way to avoid licensing fees. (That’s why EA barely published for the NES, favoring personal computers instead, which didn’t require them to pay licensing fees to anyone.) The most famous example of this came when it essentially worked around Sega’s licensing fee structure by reverse-engineering the Genesis, revealing what it did to Sega, promising a legal battle if Sega sued, and convincing Sega to offer them a reduced rate in exchange for not selling its reverse engineering work to competitors.

(Bubsy-makers Accolade ultimately took on the legal battle that EA sidestepped.)

EA had a big advantage during the 16-bit era, thanks to the fact that the Genesis was similar architecturally to the Amiga. It was as if Sega had made a console just for them.

I bring this up to explain how Trip Hawkins had essentially shown his thinking around ecosystems through his business dealings before he ever started making the 3DO. Electronic Arts eventually fell into line like the rest of the industry, but in the late 1980s and early 1990s, he built an open-ecosystem company in a closed-ecosystem world.

So, when Hawkins left EA’s leadership in 1991, he essentially tried to launch a company as a direct response to the business model of Nintendo and Sega. Essentially, his bet with that new company, 3DO, was the same one EA tried to make by leaning its development efforts on the Amiga over the NES: Tight licensing controls harm innovation.

This was a surprisingly edgy stance for the video game industry in the early 1990s, at a time when memories of the horrible third-party games of the Atari 2600 were still relatively fresh, and companies like Color Dreams, Tengen, and Codemasters had failed to convince the public that unlicensed games had significant value.

But the 3DO, launched initially as an offshoot of EA, was going to twist the industry’s arm and create the kind of open ecosystem that was common on the PC, but not among video games. It was a bold bet, and one that Hawkins essentially bet his career on being right.

“I was like the father of a rebellious teenager and an infant having open-heart surgery. I felt obligated to care for the infant and knew that the teen was going to make it to adult life.”

— Trip Hawkins, explaining in the book Gamers At Work why he decided to let go of Electronic Arts, where he chaired the board until 1994, in favor of 3DO, which was unlikely to succeed without a leader like Hawkins. The effect is likely that EA lost a bit of Hawkins’ artist-friendly DNA on the way to industry dominance.

The initial model of the 3DO looks like a VCR. That’s probably not an accident. (cog_sinister/Flickr)

Trip Hawkins’ bet with the 3DO: Consoles that work like VCRs

The purest distillation of what Trip Hawkins was trying to do with 3DO appeared in the most niche of niche publications—a newsletter targeted at digital media professionals at the beginning of the 1990s. Published in 1991 in the newsletter Digital Media, Hawkins’ "Ten Principles for Establishing the Mass Market for Interactive Media" laid out his basic vision for how he felt home entertainment should evolve in the 21st century.

He pointed to the VCR, a standard that eventually won its format war, as a great example of this. At the time, he wrote, home computers and video games represented profits of just $2 billion per year, when home video was making a healthy $14 billion.

By letting one or two companies dominate and siphon most of the profits, he argued, it was limiting the upside for the rest of the ecosystem. In other words, the next system should be built around something that the entire industry can agree with—think the IBM PC, but intentional.

"Until we have an interactive media system that both meets consumers' needs and is an industry standard, that market will fall billions and billions of dollars short of its potential," he wrote.

I won’t say that every one of his “ten principles” were winners (notably, he argued that write-once optical drives, a.k.a. CD-Rs, should be made illegal by an act of Congress), but he did argue, reasonably, for a spirit for collaboration:

The interactive media market cannot be built by a single company. The business PC industry has recognized the need to move beyond the current generation of technology, and the opportunity for cooperation that is provided by the currently lax antitrust climate.

The idea turned out to be the basis upon which he built the foundation of the 3DO, an interactive platform and game console built as a mutually beneficial ecosystem. If everything worked correctly, the thinking went, everyone could profit from the agreement—the game developers, who would only have to pay a small amount in royalties while using their own CD-ROM plants; the device manufacturers, who could build consoles to their preferences; and 3DO itself, which could ensure a high-quality, consistent experience for customers.

An early 3DO commercial could coast on its way-better graphics.

The hardware-agnostic approach to the 3DO was fascinating for its time. 3DO got companies like Panasonic, Goldstar, and Sanyo on board to build for this system, whose model, if it had a direct historic precedent, was likely the MSX. And Creative, best known for the Sound Blaster, even made a 3DO add-on card for PC users who didn’t want an extra console in their living room.

The problem is, when the 3DO actually hit the market, the model was immature, and it showed in the problems that emerged.

$3

The amount, per game, that 3DO asked for in its licensing agreement with publishers. One estimate puts that total, historically, at 11.5 percent on average, or around $7 for most $60 games, with cartridge-based games even higher. So, the fact that 3DO used less-expensive CD-ROMs, combined with a lower licensing fee, meant the games were relatively cheap. The problem was, the consoles themselves were costly, and because 3DO wasn’t making them, it required the manufacturers to price them high enough that they could actually make a profit—another downside of ignoring the traditional razor-blade model Nintendo used.

Kirk Cameron, in a rare role as a purely comic actor.

Five interesting facts about 3DO

  1. The 3DO was region-free (even if the games sometimes weren’t). At a time when there was increased interest in Japanese games on video game consoles (thanks 16-bit RPGs), the 3DO stood out because it chose not to include any system-level locks preventing games from other regions from running. This didn’t necessarily mean that games built for one region were playable in another. As the 3DO Development Repo notes, not all developers made their games work universally, sometimes adding their own de facto region locks.

  2. It hosted Kirk Cameron’s first post-Growing Pains role. You may associate Cameron with his faith-based acting work these days, but there was a period where he attempted to pick more broadly appealing roles, with a role playing comic relief in the 3DO title The Horde representing one of those attempts.

  3. It was one of the few consoles to embrace a daisy-chain controller model. Plugging two controllers into the front of the device was apparently too much work for 3DO, which decided to make it so that you could plug in an additional controller into your friend’s controller, an approach also famously used by Firewire. Of course, the obvious problem with this is that if you want to mess up your fellow player, all you need to do is tug.

  4. 3DO developed its own voluntary ratings system. With the console launching around the time when Joe Lieberman was making a fuss about video game ratings, the company launched its own four-tier video game ratings system: E for everyone, 12 intended for players 12 and under, 17 for games requiring caution for kids 17 and under, and AO for “Adults Only.” The model was said to inspire the ESRB’s own later model.

  5. There was a planned sequel that almost made it to market. The 3DO was soon usurped by the PlayStation, which meant the company needed to develop a sequel. That sequel, called the M2, would have been the first video game console with a PowerPC chip (two, in fact) had it made it to market, but the console was sold off to Panasonic, with 3DO deciding it had enough of consoles. Panasonic nearly brought the M2 to market, but decided at the last minute that it didn’t want to compete against Nintendo, Sega, and Sony—and instead sold the device in niche markets that had nothing to do with video games. That’s how the YouTube channel Video Game Esoterica got a hold of one in 2022.

I mean, what other game could I mention in this section? (Faseextra/Flickr)

The game that shows why the 3DO model unfortunately didn’t work

Like it or not, the defining game of the 3DO console, even more than Gex, Wing Commander 3, or Star Control II, is Plumbers Don’t Wear Ties. The three former games highlight what the multimedia console was designed to do—bring high quality, multimedia PC-like experiences to a home console.

However, the objectively bad Plumbers Don’t Wear Ties comes up in conversations more than it probably should, for one good reason: It showed the weaknesses in the 3DO’s licensing model in plain sight. Here was a game clearly designed as a slightly interactive version of a soft-core film, of the kind Cinemax infamously aired at 3 a.m. in the mid-1990s, released as a video game, except with even lower production values than that already-suspect description implies. It was the kind of software that Nintendo’s licensing model was designed to prevent from seeing the light of day, and here it was, all over the 3DO.

The Angry Video Game Nerd covered this game more than a decade ago, which helped give it such a cult following that it ended up actually being remastered last year. Remastered!

But even the duds offered some telling opportunities for the future of gaming. Way of the Warrior, an early attempt at a Mortal Kombat-style game for the 3DO, won praise for its excellent graphics and audio, but was widely disliked for its controls, earning some notably low scores from Electronic Gaming Monthly. But it turned out to be a failure surrounded in success: The company that produced Way of the Warrior, Naughty Dog, won a significant contract from Universal, which was impressed with the game it developed as an independent studio, and followed it up with one of the defining games of the 1990s, Crash Bandicoot. Over time, Naughty Dog’s games became some of the best in video game history, notably Uncharted and The Last Of Us. While Way of the Warrior was the only game Naughty Dog ever produced for the 3DO, it is arguably the most pivotal one it ever made, because it put them in the pole position to have massive long-term success on the various PlayStation consoles.

(A few years earlier, Naughty Dog also benefited from getting early access to EA’s unauthorized development kit for the Genesis—which proves that companies on the edges eventually become some of our most mainstream players.)

Let me pose a what-if here: What if the 3DO, not the PlayStation, got a game like Crash Bandicoot? Would it have helped the 3DO find a distinct identity in the market it was trying to reach?

Like Atari a decade prior, the 3DO suffered from wildly divergent quality, as highlighted by Plumbers, but more subtly in other ways, too—particularly through a lack of console-defining standout titles. Caught halfway between interactive games and traditional video game standbys, the console struggled with an identity crisis caused in part by the looser approach to licensing. (On the other hand, some have argued that the 3DO, at least in some markets, inspired more experimental approaches by indie developers.)

That’s not to say 3DO didn’t have amazing games—it very much did. But think about the vibes that Sony, Nintendo, and Microsoft set for their consoles. Because of its approach, 3DO struggled to generate similar vibes.

There was no Mario to set the tone on the 3DO—no matter how hard Gex tried. And that made it easy for competitors to take its place.

2003

The year 3DO shut down after filing for Chapter 11 bankruptcy. (It ended up selling off its assets.) Starting in 1997, 3DO attempted to become a AAA-tier publisher, much like its one-time partner Electronic Arts, and published two popular series—Might & Magic and Army Men. One game it published, the groundbreaking MMORPG Meridian 59, is still online today in open-source form.

The thing is, looking at the 3DO in retrospect, it becomes clear that, even if Trip Hawkins’ model did not hold up in 1993 terms (which it did not), there was something to it.

The pain point he identified—that the model needs to be fair to both developers and manufacturers—is one that comes up frequently, even today.

3DO wasn’t the right solution, but it was a solution. I think the problem with the model, when broken down, is that 3DO was not positioned particularly well as a middle man. It didn’t make the hardware, or much of the software. The approach could have worked, that said, but it needed to be something closer to a nonprofit consortium managing a standard, rather than a commercial company profiting from the success or failure of the standard it was trying to build. That 3DO was a company with a stake in the platform’s success ultimately affected its motivations and market position. When the interactive television model the 3DO was built around never showed up, it was kind of hanging on a life raft by itself.

The 3DO FZ-10, the second-generation console released by Panasonic. (Evan Amos/Wikimedia Commons)

3DO wanted its model to be as dominant as HDMI or USB, but was structured to be Microsoft. It was the biggest drag on its own model. Hawkins later admitted that while 3DO was a failure, as he told Morgan Ramsay for Gamers at Work, it reflected who he was as an entrepreneur:

One thing I do know is that it was somewhat inevitable that I would do something like 3DO, because I was trying too hard to push the envelope in those days. I think many of us as younger entrepreneurs are trying to figure out exactly who we are and where our edges are, and you don’t know where the edges really are until you fall off a few times.

Later on, a few companies succeeded with a 3DO-like model, in part because they didn’t have to worry about the hardware part of the equation. (Which is basically me saying “3DO was a decade too early.”) Closest to the 3DO ideal in the modern era is Valve, whose Steam has basically evolved into a PC-centric version of what Trip was trying to build. While Valve has produced its own hardware—and with the Steam Deck, has even done so successfully—that was never the goal of the model. The goal of the model was to make it easier for publishers to sell games. And Steam had a benefit 3DO never did—internet access.

What’s fascinating though is that Trip Hawkins has never really given up his stance that the razor-and-blade model Nintendo built around was actually the problem, that Electronic Arts was best positioned to succeed during the Amiga’s salad days. Back in 2011, during a GamesBeat Summit panel and nearly two decades removed from the founding of the company that became 3DO, he basically said the exact thing that he obviously believes based on a cursory look at the career he’s forged for himself over the past 45 years.

“I think we actually had our golden age when game development was using floppy disks, and it was an open, free platform when we could all make games like we wanted to make,” Hawkins said. “Nintendo came along and software licensing came in, and we’ve been in a dark age since then.”

This was a controversial view, given the number of Nintendo fans who treasure the ground Miyamoto walks on, and received immediate pushback from analysts. (Especially because Hawkins claimed, during the same interview, that Farmville developer Zynga was an example of a company doing things right.) But in many ways, it reflects how Trip Hawkins thinks about video games—as something whose model should be favorable to creators.

For its time, 3DO’s structure didn’t make sense, but seen as the purest execution of a leader’s vision, it suddenly comes into view.

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