Much has been written about how the N64, for all of its amazing games and technological advancements, was something of a misstep for Nintendo – especially after a decade of amazing success with the NES, Game Boy and SNES.
Nintendo famously decided to go with expensive cartridges rather than adopt cheaper (but easily-to-pirate) CDs, a choice which cost it the support of more than one third-party publisher, with former staunch ally Square being perhaps the most notable example. Shiny’s Dave Perry was vocal about the fact that he wouldn’t support the system at the time, but the loss of Square’s support hurt Nintendo more keenly. The company’s Final Fantasy RPGs had been million-sellers on the Famicom and Super Famicom, but the relationship between the two companies broke down in spectacular fashion in the mid-’90s, with Square linking up with Sony for the seminal Final Fantasy VII, a title that was originally intended for Nintendo hardware.
Another previously loyal company that dramatically cooled off its relationship with Nintendo during the N64 era was Capcom. One of the earliest supporters of both the NES and SNES, Capcom’s titles had played a huge part in the success of Nintendo’s home systems. Games like DuckTales, Mega Man, Final Fight, Breath of Fire and – of course – Street Fighter II had turned both consoles into must-have platforms for series gamers all over the world, but the company would support the N64 sporadically at best. In fact, only three Capcom games ever made it to the 64-bit console: Resident Evil 2, Mega Man Legends and Magical Tetris Challenge.
What caused this massive rift between two firms which had previously enjoyed so much success? Well, the answer isn’t all that shocking – it’s largely the same reasons that so many other third-parties flocked to the PlayStation (low costs and a larger userbase) – but, as was touched upon during a recent Retronauts podcast on the Street Fighter Alpha series, the straw that broke the camel’s back was the remarkable SNES port of the second Alpha game, which launched very late in the lifespan of the console.
Back in the days of the SNES, third-party manufacturers had to place orders with Nintendo (and Sega, for that matter) for physical cartridges and would have to estimate how many copies they would need before placing an order. If you overestimated the order and found that the game was a flop, Nintendo wasn’t going to refund you the cost of producing those cartridges – and the temptation would always be to place a big order just in case, because the production turnaround on millions of cartridges could be quite a lengthy one.
Speaking to Polygon as part of its excellent Street Fighter: An Oral History series, former Capcom USA customer service manager Justin Berenbaum explained the situation with Street Fighter Alpha 2 on the SNES, which flopped at retail and left the publisher with a warehouse full of unsold stock:
I was involved with finding third parties to take the games that were sitting in the warehouse off our hands, because at that time the cost of goods on a Super Nintendo game — especially because these games required so much memory — was anywhere between 25 and 40 bucks a cartridge. So if you overmanufactured by a hundred thousand cartridges, you’re sitting on $4 million to $5 million in inventory cost. And I do remember the warehouse, because the shipping warehouse was right next to the Capcom offices. And I remember the warehouse was just being loaded with pallets and pallets of the game. […]
It was part of Berenbaum’s job to dispose of that unwanted inventory, and he explains that Capcom was forced to indulge in some unorthodox practices to shift the cartridges because Nintendo’s policy wouldn’t allow for returns:
I remember dealing with some companies that we would ship them to, and then they would guarantee to ship them out of the country so they didn’t get resold back into retail. That was a really common practice back then. […] This was, like, a legitimized gray market to sell off stock without destroying the retail market in the U.S. […] They would sell it to distributors who promised to take it south of the border. And back then, it was all gray market south of the border, for the most part, but they needed content. So we sold at a loss, but they were contractually obligated — if those units came back into the U.S., they would be fined. That’s one of those dirty secrets that nobody really talked about. […]
We cut these deals for a pallet full or two pallets full for these companies. And they were good deals because they were cash in advance, so we didn’t ship until the [wire transfers] would come through. And then literally, they would show up with a box truck, and we’d load the pallets onto the box truck and they’d drive them off.
Sony’s use of CDs avoided such issues; not only were CDs cheaper to produce and therefore avoided the issue of having millions of dollars sitting in a warehouse unsold, the quicker turnaround on CD duplication meant that publishers could afford to do smaller print runs of games to see how they fared at retail before ramping up production when they knew they had a success on their hands. That approach wasn’t possible with cartridges, which were more complicated to produce and (as was the case with Street Fighter Alpha 2) often featured special (and expensive) chips that were intended to augment the power of the host system.
Of course, by the time the GameCube came along, Nintendo and Capcom had fully made up, and Capcom even created a series of system exclusives for the platform, which initially included the likes of Resident Evil 4 and Viewtiful Joe. But it’s clear that the bond between the two allies was significantly weakened during the N64 era, and the saga of Street Fighter Alpha 2 on the SNES had a part to play in that.
What makes all of this so interesting is that the SNES port of Street Fighter Alpha 2 was a staggering technical achievement. Granted, it pales when compared to the Saturn and PlayStation versions, which were released around the same time, but given that the console was six years old by this point, it’s a very respectable effort – and one that deserves a better legacy than being the title which (briefly) soured the relationship between two massive gaming firms.