Upon its original release in 1988, the Sega Mega Drive was seen as a competitive video game console and noticeably more powerful in many aspects than its major rivals, the Nintendo Entertainment System and PC Engine. By 1993 the roles had reversed, with consoles such as the Super NES, Neo Geo, Atari Jaguar and 3DO Interactive Multiplayer having the edge over Sega's console. Though the Sega Mega-CD had kept some of these problems at bay, the device had not performed as well as intended, and Sega needed a new leapfrog to catch up with its rivals.
Having experienced enormous success during the early 1990s, Sega had numerous hardware development projects underway, some using System 16 arcade technology, others being completely fresh ideas (such as the Sega VR which ultimately failed to be released). On January 8, 1994, Hayao Nakayama, then CEO of Sega, ordered his company to produce a new 32-bit video game console to take the company forward, the result being Project Mars, one of four 32-bit projects taking place during 1994 (the others being the Sega Saturn, Sega Jupiter and later Sega Neptune consoles).
Project Mars had came into existence when Hideki Sato and some other Sega of Japan engineers travelled to North America to collaborate with Sega of America's Joe Miller. Initial plans were drawn up to produce a brand new Sega Mega Drive console with double the colours and a lower cost. Miller saw this as a terrible idea and suggested instead it become an add-on to the Mega Drive, in so doing, earning the title of "father of the 32X".
The Mars project would instead involve a unit which could be attached to the Mega Drive similar to the Power Base Converter, allowing the system to play a new set of upgraded games (which became more advanced as more colours and 32-bit processors were introduced), while maintaining backwards compatibility with Mega Drive software and peripherals. Mars would be produced at Sega of America, independently from the Saturn and Jupiter projects.
But it was the Sega Saturn which had caught the public's attention, and this rumoured 32-bit/64-bit successor to the Mega Drive was officially announced at Winter CES 1993 (though it would take many months for playable titles to be produced). For over a year it was expected that the Saturn would take over the reigns in late 1994, with the unseen Sega Jupiter acting as a cheaper alternative - a cartridge-based console with similar specifications, but incompatible with CD-based games without extra add-ons. The Saturn was set to run both cartridge and disc-based software, though the more expensive cartridge support was later dropped when it became clear that CD technology was the best way forward.
However, while Jupiter was quietly cancelled, Sega of America shocked the gaming world by revealing its own 32-bit Mars system, now known as the Sega 32X, at its first specially planned press-only Sega Gamer's Day event in June 1994. Sega promised 32-bit gaming by the end of the year, with the Saturn being put on hold until technology prices and software support had caught up.
The video-gamer public first got a glimpse at the Summer CES 1994. At this point, the 32X was primarily envisioned as a system which would extend the life of the Sega Mega Drive and provide revenue while the installed userbase of the Sega Saturn slowly grew. Fundementally, however, very few developers saw potential in the add-on, knowing that the more powerful Saturn (and PlayStation, and the Nintendo Ultra 64 as it was known then) was coming within twelve-to-eighteen months.
In an effort to win over journalists, Sega of America organised a party, though much of the gaming press were disinterested in the games on show and instead turned their attention to escaping Sega's choice of music (only to find the buses that took them there weren't due back until the end).
During development, the European model was known as the Mega Drive 32.
The 32X was first released in mid-November of 1994 in North America, at a price of $159.99 - $10 more than originally planned and without the expected bundled game. Only a few hundred thousand consoles had been produced for North American distribution, yet orders were in the millions, and as was customary for the time, the add-on was initially well received by the gaming press.
350,000 consoles were shipped in North America in the first three weeks (200,000 of which were sold, half of which during the Thanksgiving weekend alone), with the number rising to 300,000 just before Christmas and 600,000 by early 1995. Within two months of sale, Sega claimed the 32X had out-sold the much-hyped 3DO (although the claims were disputed), and the console seemingly showed much potential for the months and years which followed.
But games were being rushed to market and frequently came with errors in programming. Users began to realise that the 32X conversion of Doom was lacking many levels, and its audio quality wasn't doing justice to the original musical score. Complaints trickled in from consumers claiming that their 32X was not working with their Genesis or television, forcing Sega to give away adapters, and the complications of the Sega Mega-CD 32X setup failed to win over hearts and minds.
While early titles tasked with defining the 32X, such as the arcade conversions of Star Wars Arcade, and Virtua Racing Deluxe succeeded at first, doubts were cast over the next wave of first party titles, starting with the panned Motocross Championship and conversions of the aging Space Harrier and After Burner (as After Burner Complete). Then, a drought, with comparitively little on the horizon for the second half of 1995, and only limited support from third-parties.
As early as January, consoles were being returned to major retailers. There were also questions to be asked about the publicised-but-ultimatelly scrapped Sega Neptune project, set to combine the 32X and Genesis systems into one. At a proposed retail price of less than $200 complete with pack-in game (set to be the 32X port of Virtua Fighter), the Neptune represented far better value for money than the combined cost of a new Genesis system ($100), 32X ($150) and the standard price for a 32X title ($70).
Then there worries that Sega would be abandoning the 32X within the year in favour of the Saturn, now with its late 1995 release date seemingly set in stone. With the promise of 3D gaming exchanged for enhanced Mega Drive conversions (mirroring the problems witnessed with the Sega CD), 32X sales plummeted and failed to receover.
Adding salt to the wound, many big titles were also cancelled within months of the system's launch. A publicised 32X version of Ecco the Dolphin was scrapped early on, and multi-million dollar projects such as Shadow of Atlantis failed to surface (despite being advertised on the console's box). 3D texture-mapped Metal Head was delayed past the launch window, and while hopes were raised with Virtua Fighter (and to a lesser degree the Sonic the Hedgehog spin-off Chaotix), a superior Saturn version was already widely anticipated.
Sega had planned for 20 32X (and CD 32X) games to be released between launch and March 1995, rising to 100 by December. Two thirds of this figure never made it to market, though several projects transferred over to the Saturn.
In the US the console was dropped to $99 in September 1995, with bundles retailing for $139.
300,000 32X consoles had been sold by the first half of 1995, 400,000 going into Christmas and rising to about 700,000 32X consoles by the end of the year. It is unlikely many more were sold in 1996 before the platform was scrapped.
Japan received their 32Xes in early December, and problems emerged instantly - the Sega Saturn had been released in November, so any plans for the 32X to keep the fledgling Mega Drive console relevant in this region were dropped instantly.
Due to this awkward release schedule, in Japan the 32X was largely ignored, much like the Mega Drive and Mega-CD before it, except this time Sega themselves (not just the consumer) were apathetic about the project.
270,000 consoles are thought to have been sold in Japan.
The 32X arrived in Europe around the same period as Japan, and in the United Kingdom sold for a challenging £169.99. As a result, Sega decided to offer a £50 discount on games with the console, however, the offer came in the form of rebate vouchers which were difficult to take advantage of. Later the system dropped to £99.99, matching the price of the Sega Mega-CD during this period.
Just like its North American counterpart, the 32X was initially popular, with orders exceeding one million, but not enough were produced, and shortage supply problems arose. But like elsewhere on the planet, questions began to be raised about its long-term prospects, and the system was discontinued within eighteen months.
In Germany the price dropped to 199,-DM on October 10, 1995.
In Australia the 32X was announced initially at $399 AUD, the price dropping to $299 and then coming back up to $349 before launch.
The 32X saw a release in other markets such as Brazil, South Korea and the complex "Asian" region, and with a small handful of special bundles, may have been distributed more widely than the Mega-CD, even if far fewer units were sold.
By mid-1995 Sega executives realized their blunder but 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, and even though the 32X add-on was a 32-bit system, the games weren't taking the full advantages of system's capabilities and were not compatible with the Saturn hardware. Many games were 2D, rushed or slightly upgraded Mega Drive/Genesis titles, and many chose to skip the 32X completely, citing its expensive price.
Store shelves became littered with unwanted Sega 32X systems, and prices for a new system dropped as low as $19.95 in the US. Sega planned to redeem themselves with their last console project from 1994, the Sega Neptune (which would have been a Mega Drive and 32X in one), but by the time a prototype was developed, the Saturn was due for release in the west, and it was presumed unprofitable.
To make matters worse six games were released as Sega Mega-CD 32X games, making use of both the Sega Mega-CD and 32X add-ons so that they could benefit from CD quality audio and increased graphical capabilities. With all these Sega consoles on the market (Mega Drive, Mega-CD, 32X, Mega-CD 32X, Sega Saturn, Game Gear and even the Master System) customers were often left confused as to which software would work with which machine/add-on.
By the end of its lifespan there were 34 games released for the 32X, six of which are Mega-CD 32X games. Romance of the Three Kingdoms IV: Wall of Fire was the only Japanese exclusive game. In October 1995 Hayao Nakayama demanded that all 32X projects be discontinued to focus resources entirely on the Saturn, however the technology would be later be recycled in the form of the Sega Picture Magic.
The 32X ceased production by 1996 worldwide, the last game to be released being Spider-Man: Web of Fire. The 32X badly damaged Sega's reputation, which was further tarnished when the Sega Saturn failed to compete with the Sony PlayStation/Nintendo 64 outside of Japan. It is often said Sega never truly recovered, and hence ultimately left the console business altogether. The Sega 32X fiasco is now considered one of the most badly planned console releases of all time.