On January 8, 1994, Hayao Nakayama, then CEO of Sega, ordered his company to make a 32-bit cartridge based console that would be in stores by Christmas 1994. This would at first be named "Project Jupiter", but after Sega found CD technology cheaper, they decided to modify it instead of dropping the cartridge project (that would be called "Project Saturn"). Hideki Sato and some other Sega of Japan engineers came over to collaborate about the project with Sega of America's Joe Miller. The first idea was a new Mega Drive/Genesis with more colors and a 32-bit processor. Miller thought that an add-on to the Mega Drive/Genesis would be a better idea, because he felt that gamers would not buy an improved version of the Mega Drive/Genesis. And so, this project was codenamed Project Mars, and Sega of America was going to shape the project.
The 32X was primarily envisioned as a system which would extend the life of the Sega Mega Drive/Genesis and provide revenue while the installed userbase of the Sega Saturn slowly grew.
The video-gaming public first got a glimpse at the Summer 1994 CES in Chicago. The console was unmasked as the 32X, with a price projection of $170 (USD), at a gamers' day, held by Sega of America in September 1994.
The 32X hit the market in North America in November 1994, during the same month the Sega Saturn was released in Japan. Many industry insiders speculated that the 32X was doomed from the beginning as the Sega Saturn hardware was widely regarded as more powerful than the 32X and had the support of many Japanese third party software developers (a necessary resource required for any gaming platform's long term success) which the 32X was sorely lacking.
Only 500,000 consoles had been produced for North American consumption, yet orders were in the millions. The console allegedly had numerous mechanical problems. Games had been rushed for the system in the run up to Christmas 1994. Some early games came with errors in programming, causing crashes and glitches on certain titles. Other games required leaving out parts in order to make the Christmas deadline; for example, the 32X version of Doom is missing seven levels present on the PC and even the Super Nintendo version; plus, Doom for the 32X was criticised for having worse sound than the Super Nintendo version. some consumers complained that their 32X was not working with their Mega Drive/Genesis or television and Sega was forced to give away adapters.
Since this was an expensive add-on system, Sega decided to offer a £50 discount on games with the console in Europe. However, the offer came in the form of rebate vouchers, which were difficult to take advantage of. Just like its North American counterpart, this console was initially popular. Orders exceeded one million, but not enough were produced, and supply shortage problems arose.
By mid-1995, the time the Sega executives realized their blunder, it was too late. Developers and licensees had abandoned this console in favor of what they perceived to be a true 32-bit console, the Sega Saturn. Even though the 32X was a 32-bit system, the games did not appear to take full advantage of 32 bit processing; many games were rushed and produced in 2D. Many were just slightly-enhanced ports of Genesis or old arcade games such as Space Harrier. In reality, as stated by Steve Snake, creator of NBA Jam, NBA Jam T.E. and Mortal Kombat II, these games were seriously pushing the limits of the console even though they looked like minor enhancements. He cites that people were expecting far too much from it, and over-hyping from magazines had helped to hurt it.
Customers perceived the Sega Saturn, Nintendo 64, and the Sony PlayStation as the true next-generation consoles, due to their rich launch titles and 3D graphics. Also, customers perceived that Sega abandoned the 32X despite promises to the contrary, due to the launch of the Saturn.
Store shelves became littered with unwanted Sega 32X systems, and prices for a new one dropped as low as $19.95 (some have claimed that video game exchange stores became so filled with 32X systems, the stores refused to accept the console--even at no cost). Sega planned a console named the Sega Neptune, which would have been a Mega Drive/Genesis and 32X in one. However, by the time a prototype was developed, the Sega Saturn was going to be released, and Sega canceled the Neptune.
The last game released for the 32X in North America was Spider-Man: Web of Fire (1996). The last ever 32X game was Darxide, released only in Europe, which had been intended by Frontier Developments to be a launch title for the ill-fated Neptune. Both these games now command a high value from collectors — but especially Darxide (up to $1000) due to its scarcity, reputation and auspicious creator (David Braben, co-writer of the groundbreaking game Elite). Nevertheless, it is exceeded in rarity by the European PAL versions of the games Primal Rage and T-Mek. For obscure reasons a mere handful of copies of these games are known to be in circulation - with T-Mek being so scarce that until a copy surfaced on eBay in late 2005, it was widely held that the PAL release was only a rumor. The appearance of a copy has fueled speculation that other rumored but unconfirmed PAL games may also exist, in particular BC Racers.
For many years prior to the 32X, console makers promised devices like the 32X (for consoles such as the ColecoVision, Intellivision II, and some Atari systems) that would extend and enhance the original system. Sega's 32X effort lacked the software titles and 3D capabilities the gaming community demanded; the add-on technology represented a dead end, ultimately punishing early adopters. Ignorant of the idea that console systems' primary strength is in standardization, Sega had created three different platforms (the Sega Mega Drive, and the Mega-CD/Sega CD and the 32X add-ons) all under the same banner, stealing valuable shelf space from itself and confusing both vendors and consumers in the process. The entire episode demonstrated that producing such add-ons is likely to have detrimental effects on a system's brand marketing strategy.
The final nail in the coffin for the peripheral came in October 1995, when Sega's CEO, Hayao Nakayama, ordered that the 32X and other Sega consoles be cancelled in order to focus its limited resources on the Saturn system.
The Sega Neptune was a two-in-one Mega Drive/Genesis and 32X console which Sega planned to release in 1994 or 1995. The proposed retail price for the unit was US$200.
Sega had admitted how expensive and problematic the 32X was,so it was decided to make a combined version of the Mega Drive/Genesis and 32X; however, by the time a prototype came out, the Sega Saturn was ready for release. Sega felt that consumers would not be interested in the Sega Neptune, so the project was scrapped. There are several prototypes, and at least one was declared to work.
Electronic Gaming Monthly used the Sega Neptune as an April Fool's Joke in its April 2001 issue. The issue included a small article in which the writers announced that Sega had found a warehouse full of old Sega Neptunes, and were selling them on a website.
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