Tom Kalinske on His Time and Team at Sega

By Mike Mertes

Game Industry alumi interview: tOM kALINSKE

This interview was originally published in Old School Gamer Magazine, issue #35.

You can’t discuss the 16-bit console wars without talking about the impact that former Sega of America president Tom Kalinske had as Sega finally beat Nintendo and took the lead in video game market share during the 1990s. Tom had a hand in many other hot properties before and after that; if you strolled down a toy or video game aisle from 1972 to 2006, you likely experienced and maybe even purchased an item shaped by Kalinske’s leadership. After joining toy giant Mattel in 1972, Tom helped revive the dying Barbie franchise and was involved with the release of He-Man: Masters of the Universe, which ultimately led to a significant rise in profits for Mattel as He-Man spawned multiple cartoons, comics, expanded toy lines, and other merchandise. Seeking an opportunity for further career success, he joined Matchbox and helped the company become profitable for the first time in years. Though successful, Tom left Matchbox and decided to take a vacation with his family, giving him some relaxation and time to ponder his next career adventure. Little did Tom know that his next career move would come to him while he was on a beautiful Hawaiian vacation. This moment of fate would lead to his role as president of Sega of America and, later, to joining LeapFrog and several educational companies.

I met with Tom to discuss his thoughts on the console wars, his unique team, CES, E3, and some of the Sega products that helped pave the way for his later career opportunities.

No One Cares About Sega Versus Nintendo 

With as much exposure as the 16-bit console wars have had in the last 15 years, one has to imagine that Tom has been asked every question under the sun about the topic. But before Blake Harris wrote the book “Console Wars,” Tom assumed no one cared about the subject in the first place. “I think the console wars are pretty well covered. I’ve got to tell you how wrong I was when Blake Harris came up to me at the New York Toy Fair about ten years ago and said, ‘I want to do a book on the battle between Sega and Nintendo, and you are going to be a big part of that book.’ I said, ‘Well, Blake, there are probably 200 people in the world who care.’ He said, ‘No, you’re wrong. Lots of people care about that battle.’ Of course, he was right. I’m grateful to him for that insight. The book absolutely covered Nintendo versus Sega very well, to my amazement. Not only was the book on the New York Times best-seller list for a couple of months when it was first released, but it ended up getting used in a number of universities as part of either a marketing course or an entrepreneurial course in their business schools.” Following the success of the Console Wars book, it was adapted into a documentary format and made available to stream on Paramount Plus. Its popularity quickly increased, making it the most-watched documentary on the streaming service and the overall most-watched film for a month.

The Quirks of the Sega Team

Even with the information overload regarding the console wars era of video games, including books and documentaries, Tom feels one subject that isn’t appreciated enough is the team that made Sega of America what it was. “I don’t think people appreciate enough how this strange team of people that we put together, a very diverse team with diverse talents, managed to be as successful as they were as a group. We were one of the first video game companies with many women in management positions, and that had not been done before. They’re strong characters, and they’re really fun people. Many of them get written up a lot now, like Ellen Beth Van Buskirk, Diane Fornasier, Pam Kelly, and Cindy Hargrave. I remember we had product development meetings every week where Joe Miller, head of R&D, and Rich Burns, head of sales, would really go at it. Joe would say, ‘We are not going to be able to get that title out by November 1st. It’s going to slip because we need to do more work to finish it. It’s not going to be out by December 15th.’ Rich would blow up and say, ‘Now the game will be too late for Christmas!’ and they’d be screaming at each other. Later, I’d see them at a bar nearby that many of us went to, and they’d be there sharing a beer and having a good time. So it was that very unusual atmosphere where the creative and business people really liked each other and got along and still do.”

Though the years have passed and many of Tom’s team members at Sega of America have moved on from the company, Tom and the team recently got together for a Sega of America reunion at a hotel just down the street from the office where they once worked. “120 people showed up, and that was most of the company,” said Tom with amazement. A common theme played out when those attending the reunion approached Tom to catch up with him. “They came up and said, “Thank you for what you helped create.” I told them, “I didn’t do anything; I just hired you guys. You did it all. I get a lot of credit for stuff I never did, but you guys did it.”

On the subject of those who did an enormous amount of work to make Sega of America what it was, I asked Tom who he thought was one of the biggest unsung heroes during his time there. “Shinobu Toyota was my right arm, and I don’t think I appreciated all he went through until after I left the company. As you can imagine, most of the time, the senior management in Japan and the board of directors in Japan didn’t agree with what I was doing initially in the United States. So poor Shinobu had to take all this flak in Japanese because they would always be on the phone with him every night. He’d stay in the office until seven or eight at night because it was morning in Japan, and they would give him hell. ‘Why are you letting that crazy guy do all this stuff? Why are you letting him do these commercials that insult the Nintendo senior management?’ He really protected the company, and I don’t think he gets enough credit for his role in protecting the company that allowed us to do all the things that we were doing.”

Tom Is a Collector Too

Tom is no slouch when it comes to his own retro video game collection, and he also has plenty of mementos from other companies he worked for, like Mattel and LeapFrog. Walking through his game room, Tom has an extensive collection of Sega games from various consoles, all neatly tucked into an entertainment center with a classic CRT TV. Located on another side of the room is a working Sega Genesis kiosk playing Sonic the Hedgehog, a mint-looking Virtua Fighter arcade cabinet, and a Baywatch pinball machine. With a great collection of games at his fingertips, combined with his history at Sega, one has to wonder which item in his collection is one of his favorites, and he was happy to tell the tale.

“One of my prized Sega possessions is Fantasia. We had a pretty good relationship with Disney and had done the Castle of Illusion and Donald Duck (QuackShot) games. One day, we just said we were going to do a Fantasia game, and we were working with some of the staff at Disney. We turned out a gorgeous game, much like the movie is gorgeous, and we released it. In those days, we were manufacturing in Fremont and shipped about 50,000 units to retail. I got a call from the head of Disney Interactive, and he said, ‘Tom, I’m flying up in the morning. Pick me up at SFO. You’ve got to stop making that game, and you’ve got to recall it.’ I thought, what did my guys do? Did they put an Easter egg into the game where a naked lady jumps out? I had no idea. Now I’m nervous as hell, so I go pick this guy up at the airport, and he says, ‘Tom, it’s not your fault. It’s not Sega’s fault. It’s our fault. We didn’t know that before Walt Disney died, he told his nephew, Roy, “I don’t want any merchandising done on the Fantasia movie because it is a work of art, and I want it to remain a pure work of art.”‘ So we had to destroy all the ones we still had in our warehouse. All 50,000 units didn’t come back, but we got most of them back. Disney said, ‘We will make up for your lost sales and profit through favorable terms on all things going forward,’ which they lived up to. Well, I did keep a Fantasia, and it’s sitting down in my basement.”

CES and E3

“I grew to hate CES,” Tom says with a hearty laugh as I ask him what his favorite memories are from CES and E3. “At CES one year, it was raining and pouring in Vegas. Normally, CES put the video game industry in the back of the hall, and they didn’t treat us well. But that particular year, you had to go out the back door into a tent. In the tent were Nintendo, Sega, and other companies back there, and the tent had a leak in the roof and started leaking water over my Genesis consoles. I said, ‘That’s it. We’re never coming back here again. We’re going to do our own show.’”

Tom and the rest of the Sega team had already started doing preview events with their retail store customers at fancy resort areas, with the first event being held at the Silverado Resort. There, retailers could play golf or tennis, hike around the Napa Valley hills, enjoy great wine and food, and meet famous superstars like Joe Montana. While retailers were having fun at this event, it gave Tom and his team a great way to communicate and meet with their customers, especially at a time when the internet was still practically nonexistent. By the end of the event, the retailers would walk away knowing much more about Sega products and upcoming Sega marketing plans. With such positive feedback from these preview events, Tom would start to work with other game companies to form what would become E3.

“Electronic Arts bought into doing a show, and Sony, which at the time was not making hardware and was only doing software, also bought into it.” Other prominent companies like Acclaim, Konami, and Capcom would soon join in on the idea of a video game-specific show, separate from the back corner and leaky tents of CES. “We had formed the Interactive Digital Software Association because the Software Publishers Association, which we had been part of, really didn’t care about the video game industry. They cared about Microsoft and Oracle. They cared about business software; they didn’t care about us entertainment guys. So we formed the Interactive Digital Software Association, and we started E3. I had a big part in E3 initially. The retailers loved it. I know over the years, people stopped loving it. Maybe it just got too big and noisy. I know nobody’s going now, and I don’t even know if it exists anymore. But times are different, and everybody does everything online now.”

The Sega Pico and Tom’s Leap to LeapFrog

In 1993, Sega opted to release a piece of hardware that didn’t fit its typical teen-to-adult demographic. Named the Sega Pico, this laptop-looking game console focused on providing edutainment-based game titles to children in the 3-to-7-year-old age range. Much like the Genesis, the Pico used cartridges but utilized a new format resembling a book called Storyware. The games, which used popular characters from franchises like Disney, let children learn how to count, read, and pronounce words. The edutainment console launched in Japan in 1993, followed by a release in the United States in 1994. Upon its arrival in the United States, Tom Kalinske took a particular liking to it, and it became one of the products that would inspire his next career move.

When I brought up the Pico with Tom, he recalled the children’s console as a revitalizing change of pace from the typical content Sega of America was producing. He felt that it had a significant educational impact on children. “I loved the Pico. I thought it was fantastic. It was a great platform for helping kids learn to read, among other things. When we introduced the Pico, it was funny because, of course, they introduced it in Japan first, and it was somewhat successful in Japan for quite a long time. When I introduced the Pico in the United States, it was successful, and we did about $100 million in sales.” While Tom and the team at Sega of America worked to make the Pico a success, the president of Sega of Japan, Hayao Nakayama, downplayed the children’s console. “The strange thing was this: Most of my career at Sega, Nakayama let me do what I wanted to do until around the end of my time there. The Sega Pico was one of those end-of-my-time decisions where Nakayama said, ‘Come on, what are you messing around with Pico for? Do another Sonic the Hedgehog game; it’ll do $400 million instead of $100 million. You are doing so much work to do this education stuff. It’s hard. Why are you messing around with it?’ So even though they’d introduced it in Japan first, and it was successful, he didn’t want me to mess with it in the United States.” Though Tom would end up leaving Sega in 1996, the Pico continued to sell until it was officially discontinued by Sega in 1998.

Shortly after his time at Sega, Tom was offered an opportunity that would echo the work he put into the Sega Pico and take it even further. “When I left Sega, I was trying to figure out what I was going to do next, and I got offered this opportunity from Mike Milken, the financier, and Larry Ellison, founder of Oracle, who said, ‘Hey, we want to put a company together using technology to improve education.’ The first company we did was a computer training company. It was originally called CRT – Consulting, Recruitment, and Training. They later changed the name, but that was the first investment we did, and it was successful.” Shortly after that investment, Tom worked to invest in an educational company founded by Mike Wood. Wood’s son had difficulty reading, and Mike thought he could use technology to help him and other children learn how to read. Mike would develop prototypes that would eventually become the LeapFrog Phonics Desk. Tom saw that the LeapFrog platform bore many familiar features to the Sega Pico, and knowing the positive impact the console had, he now had the power to help support a spiritual successor to it, rather than watch it be held back by a company just looking for another Sonic game.

 

“We invested in Mike Wood’s company and ended up growing LeapFrog,” Tom said, going on to explain how the LeapFrog LeapPad could teach a child to read: “With the stylus, when you touched a word on a page, it would pronounce that word for you and phonetically decode that word for you, along with telling you the definition of that word.” The LeapFrog LeapPad would take things even further with compatible book and cartridge technology that could help children read and understand the words used in the story. “It would read the story to you if you weren’t old enough or accomplished enough to read yet. It was very similar to Pico, and that was one of the reasons we did it. It was because of the experience I had had with Pico. The LeapPad went on to be a very successful product.”

The Defining Moment

Tom’s passion for education would continue even after leaving LeapFrog, where he would contribute to and help form several other education-based products, services, and organizations. After speaking to Tom about his passion for education, it becomes much easier to see why he was able to help tackle Nintendo and make Sega the first company to defeat Nintendo in sales in the United States. His passion, drive, and desire to help others succeed and bring people the best possible experience, regardless of what that experience was, were central to that success. With those qualities combined, Sega of America had a winning figurehead and an inspired team that worked with him to do its best. With such a diverse and successful career, the question had to be asked: What, in Tom’s opinion, is his most defining career moment? “I’ve been so fortunate because of being involved in reviving Barbie and Hot Wheels and having He-Man and Masters of the Universe become a billion-dollar brand and, of course, the whole Sega experience. I was really happy when the market research person at Sega came into our conference room while we were having a big meeting. It was probably a Monday meeting with everybody, and she said, ‘The NPD report came out. We’ve passed Nintendo in market share!’ Everybody cheered. It was my proudest moment.”