On-demand entertainment is pretty standard these days, you can instantly download almost any new game at any time. But anyone over the age of 20 probably remembers going to the rental store to try and find the latest game. They probably also remember being disappointed. Rental stores only carried a few copies of each game, and if it was a hot new game, didn’t stay on store shelves for very long. Blockbuster knew this was a problem, so they came up with a solution. They teamed up with Sega of America to announce Game Factory – rewritable Genesis cartridges. Customers could choose from a variety of games, have their selection written to the cartridge, and rent the game for three days. It was a brilliant solution. But as quickly as this idea appeared, it vanished. So, what’s the story behind Game Factory? Let’s take a look. In the early ’90s, Blockbuster was the number one rental store chain in the world. They had more than 3500 locations. The company was riding high, but industry experts were concerned. They predicted that advancements in technology would push entertainment to the household. Eventually there wouldn’t be any need for brick and mortar rental stores. Blockbuster was alarmed. They searched for ways to improve the customer experience and create a sustainable business. In 1990, they came across a company called Soundsational, which had patented an on-demand music system. Customers could walk up to a kiosk, sample music albums, order albums or create custom mixtapes. They could download the album on the spot, along with the artwork and liner notes, in 10 to 15 minutes. Blockbusters saw the potential in the idea, and decided to acquire the company. The technology could potentially apply to movies and games as well. By 1993, Blockbuster was seriously investing in the idea. They teamed up with IBM to create a new company: Fairway Technology Associates, which would be responsible for creating the hardware, software and communications network for the kiosks. Soundsational was renamed New Leaf Entertainment,
as in ‘turning over a new leaf’, and would be in charge of marketing the technology to retailers, as well as working with entertainment companies to license their music, movies and games. New Leaf marketed the system as an inventory management tool. No longer would companies have to store tons of stock in a warehouse. [Customer] Hi, excuse me, do you have the new album by- [Employee] We sure do. CD or cassette? [C] How do you know you have it? I haven’t even told you the title yet. [E] We have everything!
[C] Well, you might be sold out. [E] We’re never sold out.
[C] Where am I, the Twilight Zone? At first, they pushed the concept to record companies, but reception was ice cold. Major record labels weren’t keen on distributing their music on the system. They feared it might level the playing field with smaller record companies. They also weren’t comfortable with Blockbuster handling distribution. And how would reimbursement work? With no major record labels willing to come on board, New Leaf turned to a different market. Their first thought was the film industry, but movies presented a host of technological hurdles. Creating movies on demand would be very expensive, since digitizing an entire video ate up a lot of storage space. There was also the issue of convenience. Customers would have to wait a long time for their video to be made. The next logical choice was video games. Video game rentals were a 1.5 billion dollar industry and growing, But according to experts, one-third of customers could not rent the games they wanted due to inventory issues. The hot new video games were always the first to go. The technology and concept wasn’t new. Developers wrote their games to cartridges all the time for testing purposes. In Japan, Nintendo created the Famicom Disk System, which used rewritable disks. For a fee, customers used a special kiosk to write new games to their disks. These games weren’t rentals, though. New Leaf took the idea to the two hottest video game companies at the time: Sega and Nintendo. Nintendo of America was notoriously anti-rental. They even sued Blockbuster several years prior for copying game manuals. Their anti-rental stance had softened over time, but they still declined to participate in the programme. Then, there was Sega. Sega grew rapidly during the early ’90s, eating up Nintendo’s market share in North America. Sega also had a good working relationship with Blockbuster. Sega liked the idea, but wanted to see a proof of concept before coming on board, which forced New Leaf Entertainment to reverse-engineer Genesis cartridges. When they saw the working demo unit, Sega agreed to try it out. On May 31st, 1994, Sega of America and New Leaf Entertainment announced plans to test the new entertainment software electronic delivery system. Customers could choose from a variety of titles and have their selection written to their cartridge in 30 to 45 seconds. It was named Game Factory, and would be tested in ten Blockbuster stores in Columbia, South Carolina. A nationwide rollout was planned for the fall. There were even plans to release a Game Gear version of the system. Sega of America president Tom Kalinske stated, Game Factory cartridges came in two forms: a green 16 megabit cartridge, and a blue 32 megabit cartridge. Although Sega promised thousands of titles available, initially only three companies signed up to license their games to the system – Sega, Acclaim and Virgin Interactive, which was owned by Blockbuster. The testing phase lasted through the fall and winter of 1994, but plans for a nationwide rollout dissolved on February 7th, 1995, when Blockbuster announced they were disbanding New Leaf Entertainment. So why did Game Factory fail? Well, for a variety of reasons. The first was licensing issues, which really limited the amount of games available on the system. The second was new game technology. Some of the newer Genesis games had more memory than the Game Factory rewritable cartridges, which made them incompatible. Third, was new systems. The Sony Playstation and Sega Saturn were getting ready to roll out, so Genesis title sales were on the decline. New Leaf would have had to modify the kiosk to create optical discs to keep up with the new systems. And finally, the Viacom deal. In 1994, Viacom purchased Blockbuster for $8.4 billion dollars, which gave Blockbuster access to a ton of entertainment assets. When they joined forces with Viacom, Blockbuster became less concerned that their business model was unsustainable. Together, they shifted their focus off of the kiosk rental concept. Several thousand Game Factory cartridges were made for the Columbia, South Carolina test. Before the licensing deals expired, many of the carts were reprogrammed with specific games. It’s a mystery as to what game is on the cartridge, but most of the time the cartridge won’t even work. Neither of my cartridges work, so now they sit idly on a shelf. Today, they are somewhat collectible. The green cartridge is more common, as more games could fit on the storage space. Game Factory was a great idea, given the problems people had at rental stores. But ultimately, companies weren’t ready to try out the technology. Today, on-demand movies, music and games are just a part of life. It just goes to show how far entertainment has come along. That’s all for this episode of the Gaming Historian. Thanks for watching. Funding for Gaming Historian is provided in part by supporters on Patreon. Thank you. Hey everyone, just wanted to let you know that the Gaming Historian Volume 1 is now available to order. 16 classic episodes, plus 5 hours of exclusive content. To order your copy today visit thegaminghistorian.com, or you can just click that link to the right. Thanks so much.