| | JANUARY 202519Nintendo had Second ThoughtsOn second thought, Nintendo's president Hiroshi Yamauchi began to critically view Sony's motives, believing that the company was using their collaboration to establish a presence in the profitable video game market.It foresaw that Sony might profit from CD game sold with its SNES add-on, which went against its strategy of having all the Famicom software to itself. Additionally, it was also aware that Sony had previously revealed plans about relying on its music and film division to develop a software lineup that went far beyond primitive cartridge games.Yamauchi realized that he could be developing a rival rather than a partner. The fact that Sony was already the only provider of the SNES audio chip and had made programmers utilize a costly Sony development tool to use it correctly fed well to Yamauchi's doubts.Nintendo Cuts Ties With SonyFinally at CES 1991, Nintendo revealed that it had inked a contract with Sony's rival for a comparable SNES disc add-on, just one day after Sony had announced its SNES agreement.Sony Was Furious & Kept that Fighting Spirit BurningEnraged by the ruthless betrayal, and at Kutaragi's request, the CEO formed Sony Computer Entertainment, assigning Kutaragi to lead it. For years, Sony worked on many game consoles, but only tasted success with the exception of the PlayStation, which turned into Nintendo's worst nightmare.But the Tables Had TurnedSony made a wise decision by making it easy for developers to create games for their console, but even PlayStation had some challenges at first because no one was aware of its potential. The company simplified the development process.Sony's PS1, or PlayStation, in 1994 was a huge hit.With its better 3D visuals, the PlayStation emerged as the go-to platform for developers looking to advance technology. Nintendo, meanwhile, jumped right into reality after their agreement with Philips went so badly that they even abandoned the plan to enter the CD-ROM market, keeping their cartridges instead.The gamble that Sony took paid off brilliantly. With more than 100 million devices sold globally, the PlayStation became the industry leader in gaming by fusing developer-friendly regulations with technological innovation. A series of events that made Sony one of the most powerful companies in the video game business were unintentionally started by Nintendo's betrayal.In retrospect, Nintendo made a monumental strategic error when it decided to sever its connections with Sony. Nintendo was still a dominant force, but it had unintentionally produced its most formidable rival, bringing in a new era of gaming that was characterized by the popularity of the PlayStation.
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