In the early 1980s, America’s video game industry had collapsed, thanks in no small part to the catastrophic failure of the E.T. video game, a rushed tie-in that became an infamous symbol of overhyped flops. Amidst this turmoil, Japan’s Nintendo saw opportunity. With the 1983 release of the Nintendo Entertainment System (NES), they didn’t just find success—they became synonymous with gaming itself. If you said “video game,” you meant Nintendo.
By the end of the decade, the NES had conquered living rooms around the globe. With the Super Nintendo Entertainment System (SNES) planned for launch in the early '90s, Nintendo was riding high. But as technology raced ahead, a new format loomed large on the horizon: the CD-ROM. Cartridges, Nintendo's weapon of choice, were fast becoming relics.
Rather than risk irrelevance, Nintendo made a fateful decision.
Enter Sony: A Perfect Match That Never Was
In 1988, Nintendo partnered with Sony—then an electronics powerhouse best known for its Walkman and stereo systems—to develop a CD-ROM add-on for the SNES. The project was dubbed the “Nintendo Play Station.” It was to be the future of gaming: cartridges for now, CD-ROMs for tomorrow.
Ken Kutaragi, a Sony engineer with a keen eye for gaming, spearheaded the design. But behind the scenes, tensions brewed. Nintendo, famously protective of its ecosystem, was uneasy about giving Sony too much control over software. And so, as the world waited for the next great innovation, Nintendo made a move that stunned even its partner.
The Cold Shoulder Heard Round the World
Instead of renegotiating terms or even giving Sony a courtesy call, Nintendo ghosted them—completely. In a dramatic twist, the company announced, during the 1991 Consumer Electronics Show (CES), that it would be partnering with Sony’s rival, Philips, on the CD-ROM project. Sony executives, along with the rest of the world, learned the news live from the press release.
It was a corporate betrayal of Shakespearean proportions.
Sony had poured years of R&D and millions of yen into a joint project, only to be cast aside. But rather than walk away in defeat, Sony made a bold pivot—one that would reshape entertainment forever.
From Scorned Partner to Market Leader
What followed was perhaps the greatest revenge arc in tech history. Ken Kutaragi convinced Sony brass not to shelve their console dreams but to turn the prototype into a fully standalone system. And so, the PlayStation was born—not as a collaboration, but as a challenge.
Released in Japan on December 3, 1994, the original Sony PlayStation had a rocky start. It lacked a robust game library and suffered from limited visibility in traditional gaming retail spaces. Yet, with a built-in CD-ROM drive, a more powerful processor, and room for more immersive worlds, it had something Nintendo didn’t: potential.
Sony’s aggressive pricing, focus on cutting-edge graphics, and savvy marketing soon paid off. Within months, millions of PlayStations were sold. By 1997, Sony had surpassed both Sega and Nintendo in market share.
The Irony of Obsolescence
Meanwhile, Nintendo doubled down on cartridges with the Nintendo 64, released in 1996—a year after the PlayStation. While nostalgic millennials fondly remember Super Mario 64 and The Legend of Zelda: Ocarina of Time, the N64 was commercially underwhelming, selling only 40 million units.
The PlayStation? Over 102 million units. And when the PlayStation 2 launched in 2000—with a DVD player included—it became not just a gaming device, but a living room staple. To date, it remains the best-selling console of all time, with nearly 159 million units sold.
It was more than a console; it was a coronation.
A Legacy of Silence
Looking back, it’s hard to overstate the impact of that silent snub. Had Nintendo handled the disagreement with Sony more diplomatically, the PlayStation may never have been born. And yet, that very act of corporate caution—of dodging a difficult conversation—unleashed a competitor that has outpaced Nintendo in nearly every hardware generation since.
In an industry defined by innovation, risk-taking, and technological brinkmanship, it wasn’t a brilliant design or daring gamble that changed history. It was a missed call.
Nintendo didn’t just lose a deal. They created their greatest rival. And decades later, the ghost of that phone call still haunts the industry.
By the end of the decade, the NES had conquered living rooms around the globe. With the Super Nintendo Entertainment System (SNES) planned for launch in the early '90s, Nintendo was riding high. But as technology raced ahead, a new format loomed large on the horizon: the CD-ROM. Cartridges, Nintendo's weapon of choice, were fast becoming relics.
Rather than risk irrelevance, Nintendo made a fateful decision.
Enter Sony: A Perfect Match That Never Was
In 1988, Nintendo partnered with Sony—then an electronics powerhouse best known for its Walkman and stereo systems—to develop a CD-ROM add-on for the SNES. The project was dubbed the “Nintendo Play Station.” It was to be the future of gaming: cartridges for now, CD-ROMs for tomorrow.
Ken Kutaragi, a Sony engineer with a keen eye for gaming, spearheaded the design. But behind the scenes, tensions brewed. Nintendo, famously protective of its ecosystem, was uneasy about giving Sony too much control over software. And so, as the world waited for the next great innovation, Nintendo made a move that stunned even its partner.
The Cold Shoulder Heard Round the World
Instead of renegotiating terms or even giving Sony a courtesy call, Nintendo ghosted them—completely. In a dramatic twist, the company announced, during the 1991 Consumer Electronics Show (CES), that it would be partnering with Sony’s rival, Philips, on the CD-ROM project. Sony executives, along with the rest of the world, learned the news live from the press release.
It was a corporate betrayal of Shakespearean proportions.
Sony had poured years of R&D and millions of yen into a joint project, only to be cast aside. But rather than walk away in defeat, Sony made a bold pivot—one that would reshape entertainment forever.
Nintendo PlayStation prototype console that Ken Kutaragi keeps in his closet! photos via @kantan_japan pic.twitter.com/LOZuDaSGwf
— Genki✨ (@Genki_JPN) March 21, 2025
From Scorned Partner to Market Leader
What followed was perhaps the greatest revenge arc in tech history. Ken Kutaragi convinced Sony brass not to shelve their console dreams but to turn the prototype into a fully standalone system. And so, the PlayStation was born—not as a collaboration, but as a challenge.
Released in Japan on December 3, 1994, the original Sony PlayStation had a rocky start. It lacked a robust game library and suffered from limited visibility in traditional gaming retail spaces. Yet, with a built-in CD-ROM drive, a more powerful processor, and room for more immersive worlds, it had something Nintendo didn’t: potential.
Original PlayStation packaging at release in 1994 pic.twitter.com/T3Lf8UmJIb
— Video Game History (@VideoGameHstry) March 17, 2025
Sony’s aggressive pricing, focus on cutting-edge graphics, and savvy marketing soon paid off. Within months, millions of PlayStations were sold. By 1997, Sony had surpassed both Sega and Nintendo in market share.
The Irony of Obsolescence
Meanwhile, Nintendo doubled down on cartridges with the Nintendo 64, released in 1996—a year after the PlayStation. While nostalgic millennials fondly remember Super Mario 64 and The Legend of Zelda: Ocarina of Time, the N64 was commercially underwhelming, selling only 40 million units.
The PlayStation? Over 102 million units. And when the PlayStation 2 launched in 2000—with a DVD player included—it became not just a gaming device, but a living room staple. To date, it remains the best-selling console of all time, with nearly 159 million units sold.
It was more than a console; it was a coronation.
A Legacy of Silence
Looking back, it’s hard to overstate the impact of that silent snub. Had Nintendo handled the disagreement with Sony more diplomatically, the PlayStation may never have been born. And yet, that very act of corporate caution—of dodging a difficult conversation—unleashed a competitor that has outpaced Nintendo in nearly every hardware generation since.
In an industry defined by innovation, risk-taking, and technological brinkmanship, it wasn’t a brilliant design or daring gamble that changed history. It was a missed call.
Nintendo didn’t just lose a deal. They created their greatest rival. And decades later, the ghost of that phone call still haunts the industry.
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