The following is an excerpt from Replay: The History of Video Games by Tristan Donovan.

It should have been a coup. On May 28, 1991, at the Consumer Electronics Show in Chicago, Sony proudly revealed that it was working with Nintendo to create a version of the Super NES with an in-built CD drive. The two Japanese companies had been working together in secret on the project, tentatively titled the Nintendo PlayStation, since 1989 and with the hype about CD-ROM reaching fever pitch, Sony’s announcement should have been a highlight of the trade show.

But behind the scenes, all was not well. Since agreeing to the alliance, Nintendo had become increasingly nervous about Sony’s intentions, fearing that it wanted to use the project to muscle in on the games business. Nintendo’s paranoia was justified. Ken Kutaragi, the Sony engineer who initiated the whole project, saw the partnership as the first step to achieving his dream of getting Sony to start making game consoles.

Suspecting as much, Nintendo decided to strike first. The day after Sony gave its announcement, Nintendo announced it was dropping Sony and was now working with its Dutch rival Philips instead. Sony was shocked at the public humiliation Nintendo had inflicted on it. But if Nintendo had hoped to push Sony out of the games business the move backfired.

Sony’s president Norio Ohga was furious and, egged on by Kutaragi, decided to seek revenge by creating Sony Computer Entertainment, a new division headed by Kutaragi that would take Sony into the game console business. The result was the Sony PlayStation, a console that married the two biggest technological developments for video games in the 1990s: CD storage and state-of-the-art 3D graphics.

In retrospect, the coming together of CD and 3D seemed like a logical next step for consoles but, when Sony first began trying to get game makers interested in its 3D system in 1993, opinion in the video game business was divided. At the time most of the breakthroughs in 3D graphics had yet to happen. Doom wouldn’t be released until the end of the year and, even then, the monsters within id Software’s 3D world were created using 2D images. The first 3D graphics cards for PCs had yet to appear and even in the arcades – the natural home for the latest in video game technology – game developers were only just starting to explore the visual approach.

Many concluded that Sony’s promises of advanced 3D hardware within the PlayStation would simply mean the company’s console would be expensive and, therefore, unpopular. The price problem would only be emphasised when, in October 1993, Panasonic launched the first game console based on Trip Hawkins’ new 3DO hardware standard. The 3DO was born from the Electronic Arts founder’s belief that the dominance and power of console manufacturers such as Sega and Nintendo was bad for the video game industry. “I looked out towards the mid-1990s with the concern that the industry could not advance with cartridge systems and restrictive licenses,” said Hawkins. “The PC of the time was not a good alternative and none of the console companies had a vision that was constructive for consumers of devleopers.”

He concluded that there needed to be a VHS of video games: a common hardware platform for developers to create games on that would be manufactured by a range of companies rather than one corporation. In 1991 he quit Electronic Arts to make the idea real by forming the 3DO Company. “The purpose of the 3DO was to advance the game industry through 3D graphics, multimedia capabilities, optical disc mass storage and liberal licensing models,” said Hawkins. “The 3DO was trying to push media back in the direction of more open and democratic licenses, where the costs were very low and nobody tells you what kind of game you can or cannot make.”

Panasonic was the first company to buy the manufacturing rights to Hawkins’ system and in October 1993 it launched its 3DO console, the FZ-1, amid widespread media fanfare. Consumers, however, baulked at the $699.95 price tag that resulted from its advanced technology.

“The realisation that the 3DO was not going to be a success came in stages,” said Hawkins. “The first arrow was poor 1993 holiday sales. In 1994 it was a big set back that all the developers who had welcomed our charitable $3 license fee per game were flocking to competitors with bad licenses and $10 fees. It was like the collapse of a union. If developers had been able to stick together they would have had collective bargaining power and could have permanently shifted the value chain.”

One of the competitors developers were flocking to was Sony, which was finally starting to persuade the industry that it really could deliver on its promise of an advanced 3D games console with an acceptable price tag.

Ironically, one of the big reasons for the shift in developer opinion was a game developed by rival console maker Sega: Yu Suzuki’s 1993 coin-op game Virtua Fighter. Having pushed the use of hydraulics in coin-op video games to the max with his 1990 360 degree-motion air combat game R360 — G-Loc Air Battle, Suzuki began exploring 3D visuals after seeing Atari Games’ Hard Drivin’. He decided to create a 3D driving game of his own but, rather than re-creating the contemplative pace of Atari’s driving simulator, he set out to make an exhilarating Formula 1-style racing game. The result, 1992’s Virtua Racing, used an expensive graphics microprocessor created by military contractors Lockheed Martin to move its Lego-like polygons around the screen at breakneck speed. It was an impressive and popular evolution of Hard Drivin’, but Suzuki had bigger plans for his next 3D project.

One of the key objections to 3D graphics that developers had been raising with Sony was that while polygons worked fine for inanimate objects such as racing cars, 2D images were superior when it came to animating people or other characters. Virtua Fighter, Suzuki’s followup to Virtua Racing, was a direct riposte to such thinking. Released in November 1993, it featured fighters built out of polygons. The characters may have resembled artists’ mannequins but their lifelike movement turned Suzuki’s game into a huge success that exploded claims that game characters couldn’t be done successfully in 3D or that people would not warm to them.

But while it was Sega that had proven the full potential of 3D, it was its newest rival – Sony – that capitalized on it. Sega had been wary of basing its successor to the Genesis console, the Sega Saturn, on 3D graphics and instead initially built a system that offered some 3D capabilities but was primarily a 2D graphics powerhouse. Sega’s caution meant that Sony had the upper hand when it came to 3D visuals. Teruhisa Tokunaka, chief executive officer of Sony Computer Entertainment, even went so far as to thank Sega for creating Virtua Fighter and transforming developers’ attitudes to the PlayStation.

Soon Sony was winning over developers across the world. Japanese arcade firm Namco became Sony’s first big-name supporter when it decided to abandon Nintendo and throw its weight behind the PlayStation. Namco’s reproduction of its 3D arcade racing game Ridge Racer became one of the PlayStation’s flagship games when it launched in Japan in December 1994.

None of this, however, was enough to put Sega out of the race. Sega still had its bank of popular arcade hits at its disposal and was an established player in the console business. Indeed, when both the Saturn and PlayStation launched in Japan in late 1994, it was Sega who took the sales lead thanks to the home version of Virtua Fighter. Within months of its launch the Saturn was fast becoming Sega’s most successful console in Japan.

Tristan Donovan is a British non-fiction author and writer. His books include Replay: The History of Video Games, Fizz: How Soda Shook Up the World, Feral Cities: Adventures with Animals in the Urban Jungle. His latest book is It’s All a Game: The History of Board Games from Monopoly to Settlers of Catan. He is also the writer for Wondery’s “Business Wars” podcast series “Nintendo vs Sony.”