The 3DO Interactive Multiplayer was originally conceived by The 3DO Company, founded in 1991 by Electronic Arts founder Trip Hawkins. The company's objective was to create a next-generation, CD-based video game/entertainment standard which would be manufactured by various partners and licensees; 3DO would collect a royalty on each console sold and on each game manufactured. To game publishers, the low $3 royalty rate per game was a better deal than the higher royalties paid to Nintendo and Sega when making games for their consoles. The 3DO hardware itself was designed by Dave Needle and R.J. Mical, starting from an outline on a restaurant napkin in 1989. Trip Hawkins recalled,

I'd actually known those guys for a while and we are kindred spirits ... and it turned out that they had already started working on designing a next generation system and they had made some very important decisions that were the same decisions that I would have made (architecture and approach). Rather than me start a brand new team and starting from scratch it just made a lot of sense to ... join forces with them and shape what they were doing into what I wanted it to be.[6]

The 3DO Company lacked the resources to manufacture consoles themselves, and instead licensed the hardware to other companies for manufacturing. Trip Hawkins recounted that they approached every electronics manufacturer, but that their chief targets were Sony and Panasonic, the two largest consumer electronics companies in the world. However, Sony had already begun development on their own console, the PlayStation, and ultimately decided to continue work on it rather than sign with 3DO. Panasonic launched the 3DO with its FZ-1 model in 1993, though Goldstar and Sanyo would later manufacture the 3DO as well. Companies who obtained the hardware license but never actually sold 3DO units include Samsung, Toshiba, and AT&T, who went so far as to build prototype AT&T 3DO units and display them at the January 1994 Consumer Electronics Show

Licensing to independent manufacturers made the system extremely expensive. The manufacturers had to make a profit on the hardware itself, whereas most major game console manufacturers, such as Sega and Sony, sold their systems at a loss, with expectations of making up for the loss with software sales. Some sources claim that 3DO was priced at $699, far above competing game systems and aimed at high-end users and early adopters. Hawkins has argued that 3DO was launched at $599, and not "higher myths that are often reported."] In a later interview, Hawkins clarified that while the suggested retail price was $699, few retailers sold the system at that price. Goldstar, Sanyo, and Panasonic's later models were less expensive to manufacture than the FZ-1 and were sold for considerably lower prices. For example, the Goldstar model launched at $399. In addition, after six months on the market, the price of the FZ-1 had dropped to $499,] leading some to contend that the 3DO's cost was not as big a factor in its market failure as is usually claimed.

The launch of the platform in October 1993 received a great deal of attention in the press as part of the "multimedia wave" in the computer world at the time. Return Fire, Road Rash, FIFA International Soccer, and Jurassic Park Interactive had been slated for launch releases but were pushed to mid-1994 due to the developers' struggles with the then-cutting-edge hardware. Moreover, the 3DO Company made continued updates to the console hardware almost up to the system's release, which resulted in a number of third-party titles missing the launch date, in some cases by less than a month, because the developers weren't left enough time to fully test them on the finalized hardware. The only 3DO software available at launch was the third-party game Crash 'n Burn.

The system was released in Japan in March 1994 with an initial lineup of six games. The Japanese launch was moderately successful, with 70,000 units shipping to 10,000 stores.

Price drops announced in February 1996 were perceived in the industry to be an effort to improve market penetration before the release of the promised successor to 3DO: the M2. Heavy promotional efforts on the YTV variety show It's Alive and a stream of hinted product expandability supported that idea. To assure consumers that the 3DO would still be supported, the M2 was initially announced as an add-on for the 3DO. It was later revealed that the M2 would be an entirely separate console, albeit one with 3DO backward compatibility. Eventually, however, the M2 project was scrapped altogether.

The 3DO system was eventually discontinued at the end of 1996 with a complete shutdown of all internal hardware development and divestment of the M2 technology. 3DO restructured themselves around this same time, repositioning their internal software development house as a multi-platform company supporting the PlayStation, Sega Saturn, and computer platforms.

The higher quality of later CD-ROM based systems that emerged in the mid-90s, the uneven quality of the games, and the initial high price point are all considered to be among the many issues that led to the 3DO's demise.

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