Interview With Tom Kalinske, Former CEO of Sega of America

Jay Romano
Sep 5, 2017 · 11 min read

Back in April 2016 I had the distinct pleasure of speaking with Mr. Tom Kalinske on all things gaming. Mr. Kalinske has been the CEO of Mattel, Sega and Leapfrog over his illustrious career. Tom was also kind enough to come out to Vanderbilt to speak to a group of business school students on his career in both Toys and Video Games. We’ve gotten to know each other and I have to say having spoken with him multiple times he truly is a great guy. Tom is also one of the key protagonists of Blake Harris’ Console Wars, which I would highly recommend to anyone interested in the Sega/Nintendo rivalry. With the recent fervor for Sonic returning, I thought it would be nice to share our d. I was particularly impressed with the passion he had for the brands he worked on. Feel free to comment with your thoughts if you’re interested.

(Tom Kalinske and Sonic the Hedgehog. Credit: nytimes.com)

JCR — What common threads and trends did you spot over the years? How did you identify market growing potentials, not only in Sonic but in other brands you worked on?

TK — Each one’s a little bit different I think of those examples, of course the classic one for me that really started everything was Barbie. I have to say that I don’t remember if this is in Console Wars or not but when I was at Mattel and I was a Product Manager, the founder of the company, Ruth Handler, walked into my cubicle and said, “Barbie sales declined last year. The company is down to $42 million in revenue. The Wall Street analysts say it’s over for Barbie, my retail buyers say it’s over for Barbie, my sales force say it’s over for Barbie, what do you think about that?” I said, “Ruth that’s the stupidest thing I’ve ever heard, Barbie will be around long after you and I are gone.” She said, “That’s what I wanted to hear! I’m going to talk to [Kalinske’s boss] to put you on the Barbie brand.” A few weeks later I was made the Marketing Director for Barbie.

I had asked [Handler], “What makes Barbie great?” This is back in 1973, she said, “Well, with Barbie a girl can imagine to be anything she wants to be.” I said, “Ruth, that’s fantastic, I’m going to use that in all our communications” and I did while I was at Mattel over the next 17 years. I either myself used it, the agency used it, or the marketing people used it in all communications. The point of all that was with this doll, children could imagine anything they wanted to be, and it became the cornerstone of strategy for us because we did a number of Barbies that were themed to different things. I did President Barbie in 1976, I did Astronaut Barbie sometime in the 70’s, obviously we did Teacher, Doctor and even did Lawyer Barbie, but that [Lawyer] didn’t sell. I did all these different themes way back then and special fantasy play Barbies way back when as well. The common theme there was “Be anything you want to be”. Interestingly, a number of years after I left they stopped using that line and sales started declining. I noticed that this year they began using it again though.

That same kind of theme, this “use your imagination”, was really an important part of He-Man and the Masters of the Universe as well. As I’m sure you’ve noticed He-Man looks exactly like me (laughs), but that came out of research again. We researched all these different themes of male action figures, whether it was regular things like policemen and firemen to Marvel characters to DC characters to space — Star Wars was taken by Hasbro so we couldn’t do that. This heroic figure, a big fantasy figure emerged as the winner. Once again it was because he was heroic, very muscular, and he was a good guy. He was going to do good things. He was going to thwart the enemy, Skeletor in that case, and save his world, which was Eternia. So again, the same kind of thing, imagination/imagination play.

When I went to Sega and we were searching for a new character as described in Console Wars, we didn’t have a lot of choices. Right from Day 1 we began working on Sonic — we did change it in the U.S. compared to what the Japanese originally wanted the character to be: we removed the big fangs he had, [love interest], the rock band. When we smoothed him out we made him a friendlier character that everyone could identify with, but you also might have noticed, he was kind of a smart ass. Part of this was the original plan was that he was the smart ass kid next door who you really liked but he got away with a lot of stuff but he was still fundamentally a good guy. That’s part of Sonic’s personality and from my toy experience as soon as we saw Sonic, just as we had done with Masters of the Universe we started planning a television show. In 1991 I remember meeting with Haim Saban about doing a television show and that evolved into several meetings with ABC executives and then later with Andy Heyward who was running DIC Productions and we ended up doing both a network television show and a syndicated television show which had never been done before where you had both a network television show and a syndicated television show for a kids’ property on at the same time. That obviously made the character all that more popular and was great marketing for us obviously. Overall, the general theme is imagination play and being able to identify strongly with the characters.

(The fastest thing alive. Credit: denofgeek.com)

JCR — After the success of Sonic the Hedgehog 1 and 2, what did you find to be the biggest hurdle working at Sega?

TK — Well in your head you know it’s really hard to continuously have a big break game from the character. After that the big struggle was how do we get the team to come up with an even better Sonic. It was really hard work. At the same time we are working on Sonic CD as we knew we had to learn how to program for CD-Rom as that was the storage medium of the future, so we’re working on that too. So it was really difficult, and if I remember correctly, we were not able to fully accomplish it. We ended up taking the next effort the team was working on and dividing it into two games [Sonic the Hedgehog 3, Sonic and Knuckles]. It was originally one game and we divided it into two, which was necessary to release on time for the business, but probably didn’t make for the best product, and I think that was the challenge. Going forward in time, shortly after I left Sega, I don’t think subsequent Sonic games have matched the quality of what we had while I was there. It’s not because of me, but just because it’s so hard to do, to maintain that quality level. One thing I will hand to Mario is that they’ve done a really good job of that for the most part. There’s a few turkeys they got out there too but for the most part they’ve done a good job at it.

Once you build a successful franchise or brand, whether it be a Barbie, or a Masters of the Universe, or a Hot Wheels, or a G.I. Joe or a Star Wars, or a Pokemon, or a Mario, you have to work really hard to screw it up. It will withstand an awful lot of abuse by the folks running the brand.

(A nice photo op for Kalinske. Credit: spokesman.com)

JCR — Having gone from Toys to Video Games, how did you learn to adapt to the culture of a product set you were unfamiliar with and grow the industry over time?

TK — Well do remember that Intellivision Group originally worked for me so I had some exposure at Mattel on video games. Of course it was completely different technology, it was 2-bit technology, which we marketed to the teen market. Also remember the original handhelds that we did at Mattel we marketed to adults, we did not market those to children. They were originally marketed as Father’s Day gifts so I had some understanding of the business. What really knocked my socks off was when I saw the difference [between the Intellivision and Genesis]. I had not been playing video games for a long period of time in between and all of a sudden I see 16-bit technology and I was used to Intellivision’s technology and holy cow was this really a wonderful surprise. Then when I looked at what Nintendo was doing, it seemed obvious to me that I had to shift the business, lead Nintendo positioned for younger children and go after teens and adults with Sega. You might say well yeah you’re doing all this sports stuff for adults but you’re also doing Sonic the Hedgehog, which was certainly for kids as well as teens and adults and that’s true; but, if you are marketing to teens, the younger brother is going to come along. To me it was all a natural transition.

I always did believe and I always tell marketing students this — you should know more about the industry when you enter into a role than anyone else in the company. You really have to study the industry and become an expert in that industry. For a while I was that when I first entered the video game industry. Today I’m certainly not, but back then I was.

(Home of the Hedgehog, Sega. Credit: Segabits.com)

JCR — Sonic the Hedgehog has certainly seen better days on the console. Now it seems to be moving toward mobile. Do you think this is an experiment, or a long-term change, and do you agree with the strategy?

TK — Well I’ll tell you, it’s so hard for me to figure out what they’re doing. I actually made an effort last year to get to know Sega as it exists today in the United States. So I visited their operation here in San Francisco, Sega Networks. I thought that meant they were working on networks, but that’s their mobile operation. So clearly they are moving towards mobile operations. Then I went down to LA to what is now Sega of America, and that’s now mainly a licensing arm. They are licensing the character out for products, comics and what have you. Over in Orange County there’s Atlus, which is a game development company. The interesting thing to me was none of these parts seem to communicate with one another and I don’t quite understand how you can have a cohesive strategy in the United States if you don’t have these parts all in sync. Now Sega of America in Burbank has a very strong licensing team with really smart people, but they’re not the ones doing the development. In that same office was the team working on the Sonic movie, so I did see a little bit of that work going on and hopefully we’ll see a better movie out of [that group].

If I were running it, I think you would have to have some mobile products out because so many people are using tablets or iPhones today, no question about it, you have to do something there. But I also would have Sonic still on consoles, and I would have him on more than just the Nintendo consoles, which freaks me out by the way. Given my relationship with Nintendo wasn’t so good, it’s hard for me to accept Sonic’s on Nintendo, going to the Olympics together in Rio.

(A more recent version of Sonic… Credit: seganerds.com)

JCR — Say you’re back at Sega today, how would you fix Sonic?

TK — (Laughs). I have to get [my team] back in order to do it I’m afraid. It’s not me, you got to have the right team, and boy, that was such a special team. If I can’t get them, it would be really hard to recreate that same kind of intelligence and feeling for the product. That’s what it comes down to, I mean if you get the right people that really understand the character working on it I am sure they can come up with a great Sonic game. It takes time, it doesn’t happen overnight, but I’m sure they could do it. I just don’t understand how they’re operating today, but I’m no longer an expert in the video game business so I’d have to learn all these new things. I’d have to learn about Steam and other methods of distribution. I’m still a guy who believed in selling packages at retail and so much of the business has gone away from it, so much is now direct download and certainly an awful lot of it is still online. So I’d have to get back immersed in that if I were entering that role again. But to come back to where I started, it’s all about having the right team.

JCR — Well I’d advocate for a reunion.

TK — Laughs. The crazy thing is I’m still close to most of those guys. Interestingly 3 of the key members of the team were female back then when there were few females in the video game industry. I keep in touch with Al [Nilsen] and Shinobu [Toyoda] as well.

JCR — I think it’s just waiting to happen then

(Kalinske has focused on educational entertainment as well. Credit: sega-16.com)

JCR — What’s your leadership style? How do you get a team to buy into the character, get on the same page and become that big of a success?

TK — Back in those days I was a lot tougher than I am today. I’m just a nice guy today but all my former colleagues say, “Gee you’ve mellowed a lot.” I didn’t notice this but apparently I wasn’t very mellow back then. I was pretty ferocious about going after Nintendo. It’s kind of nice when you have this one enemy to go after and form a strategy around. It’s singular in nature. We’re going to do everything we can to harm our competition and we’re going to do the best things we know how to do ourselves to make sure we make a great product. It’s sort of fun to be on the attack mode all the time. Whether that’s in advertising, or in PR events, or you know the brilliance of Al [Nilsen] doing a shopping mall tour where we introduced the Super NES before [Nintendo] introduced it, where we had teens come in and play Super NES and also play Genesis and then say “OK, which one do you like better?” We won those about 80 percent of the time. My leadership style would be to sit and collect the best ideas we had. Everybody would throw ideas out and we’d discuss them, and then often we would go with the craziest of those ideas. I don’t know whether that’s inspirational or not, but I did push them pretty hard: to be original, to be creative, and to be different. I think it comes out in the stories.

I always said that if we’re doing things that our competition can do we don’t have a strategy. Strategy is when they can’t fully copy what you’re doing. I think we certainly accomplished that most of the time.

JCR — I really like that, if you’re doing things that the competition can do, we don’t have a strategy.

If you enjoyed this post, I would recommend following Mr. Kalinske on Twitter at https://twitter.com/ThomasTkalinske

Jay Romano

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Slalom Consultant, Inside The Gaming Suite Author, Vanderbilt MBA, and a Tufts Alum. Always happy to discuss anything entertainment related.