Sega CD
Released in 1988, the Genesis (known as the Mega Drive in Europe and Japan) was Sega's entry into the fourth generation of video game consoles. In mid-1990, Sega CEO Hayao Nakayama hired Tom Kalinske as CEO of Sega of America. Kalinske developed a four-point plan for sales of the Genesis: cut the console's price, develop games for the American market with a new American team, continue aggressive advertising campaigns, and ship "Sonic the Hedgehog" with the Genesis as a pack-in game. The Japanese board of directors initially disapproved of the plan, but all four points were approved by Nakayama, who told Kalinske, "I hired you to make the decisions for Europe and the Americas, so go ahead and do it." Magazines praised "Sonic" as one of the greatest games yet made, and Sega's console finally took off as customers who had been waiting for the Super Nintendo Entertainment System (SNES) decided to purchase a Genesis instead.
Sega
In January 1994, Sega began to develop an add-on for the Genesis, the 32X, which would serve as a less expensive entry into the 32-bit era. The decision was made by Nakayama and widely supported by Sega of America employees. The 32X would not be compatible with the Saturn, but Sega executive Richard Brudvik-Lindner pointed out that the 32X would play Genesis games. Sega released the 32X on November 21, 1994 in North America, December 3, 1994 in Japan, and January 1995 in PAL territories, and was sold at less than half of the Saturn's launch price. After the holiday season, however, interest in the 32X rapidly declined.
Sega released the Sega Saturn in Japan on November 22, 1994, at ¥44,800. "Virtua Fighter", a faithful port of the popular arcade game, sold at a nearly one-to-one ratio with the Saturn console at launch and was crucial to the system's early success in Japan. Sega's initial shipment of 200,000 Saturn units sold out on the first day, and was more popular than the PlayStation in Japan. In March 1995, Sega of America CEO Tom Kalinske announced that the Saturn would be released in the U.S. on "Saturnday" (Saturday) September 2, 1995. However, Sega of Japan mandated an early launch to give the Saturn an advantage over the PlayStation. At the first Electronic Entertainment Expo (E3) in Los Angeles on May 11, 1995, Kalinske gave a keynote presentation in which he revealed the release price of US$399 (including a copy of "Virtua Fighter") and described the features of the console. Kalinske also revealed that Sega had shipped 30,000 Saturns to Toys "R" Us, Babbage's, Electronics Boutique, and Software Etc. for immediate release. The Saturn's release in Europe also came before the previously announced North American date, on July 8, 1995, at a price of ₤399.99. Within two days of the PlayStation's American launch on September 9, 1995, the PlayStation sold more units than the Saturn had in the five months following its surprise launch. Within its first year, the PlayStation secured over 20% of the U.S. video game market. Sega also underestimated the continued popularity of the Genesis; sales of 16-bit games and consoles accounted for 64% of the market in 1995. Despite capturing 43% of the dollar share of the U.S. market and selling more than 2 million Genesis units in 1995, Kalinske estimated that Sega could have sold another 300,000 if they had been prepared for the demand.