In 1983, the burgeoning North American video game industry experienced the tail end of its gold rush years, resulting in an economic crash caused by an oversaturation of products from which it did not recover until 1985. At a time when many professionals and consumers considered video games to be a fad that had come and gone, Nintendo of America boldly released the Nintendo Entertainment System (NES), reviving interest in the once-dead industry. Nintendo’s creation of a cultural juggernaut was no accident: company president Hiroshi Yamauchi learned from the mistakes of his predecessors and established a series of business reforms and ploys that ensured success against a wave of skepticism. Changes to the traditional aesthetic design of electronics and an emphasis on “gimmicky” accessories allowed Nintendo to market their system not as a video game console, but as a toy. Furthermore, in an attempt to stymie the glut of shoddy games that had collapsed the industry several years prior, Nintendo introduced a mandate of quality control and a lockout chip that prevented NES games from being sold without their explicit approval. Nintendo’s final strategy to convince retailers to take a chance was their irresistible offer to buy back any unsold systems, making the proposal risk-free. The effects of these revolutionary tactics still resonate in the standard practices of today’s video game industry.
In order to understand the obstacles that Nintendo had to overcome in the American market, a brief overview is necessary of what is popularly referred to as the North American video game crash of 1983. Following the success of coin-operated arcades (in which Nintendo itself had profited greatly with the hit game Donkey Kong), devices began to inundate the home video game market (Kent 160). Consumers were faced with offerings from Atari, Bally, Coleco, Emerson, Magnavox, Mattel, Milton Bradley, Radio Shack, Sears, and Zircon International, all vying for attention—in some cases, with more than one model of machine. As the country was in the midst of “Pac-Man Fever,”1 business executives made a show of their hubris, believing that “they could sell anything as long as it came packaged as a video game,” according to writer Steven L. Kent in his comprehensive book The Ultimate History of Video Games (235). With workloads divided into single-programmer teams contracted to devise and author games in a matter of weeks, quality suffered; this mentality resulted in the now-legendary disposal of millions of surplus Atari game cartridges into a New Mexico landfill (Kent 236-240). The reputation of video games in America had been sullied and a multitude of companies were bowing out, but Nintendo, made confident by their success in Japan, was determined to succeed in the West. Following a dismal showing of an early version of the NES at the 1985 Consumer Electronics Show in Las Vegas, Nintendo regrouped and devised a strategy to overcome the reticence of the public (Kent 287).
After being told repeatedly that video games were finished, Nintendo gave their system a visual makeover to disassociate it from the games industry in any possible way. Nintendo made the decision to market the NES as a toy rather than a video game system, so two accessories were added to the package as a diversionary tactic: a small robot named ROB and a toy gun called the Zapper. ROB, the Robotic Operating Buddy, didn’t actually have any impressive functionality and interacted with only two games throughout the lifespan of the system. Video game historian Frank Cifaldi gave an account of ROB’s arrival at the American headquarters of Nintendo in his 25th anniversary retrospective:
“The robot made a horrible grinding noise, as it very slowly moved from one position to another. Those present in the room couldn’t help but laugh. . . . Jokes spread around the office about offering a conversion kit to turn the robot into a desk lamp” (5).
Although the employees who were present during the launch of the NES now confess to ROB’s primitiveness, the robot represented the technological fascination of the time as toys themselves (such as Teddy Ruxpin) were becoming increasingly robotic (Kent 288). The Zapper was a “light gun” that eventually received significantly more software support than ROB, allowing customers to create an immersive virtual shooting gallery—not a video game, but a toy gun game (Kent 287-288). Nintendo put ROB and the Zapper front and center in their launch marketing, giving the console itself the least important position in the trio.
Other more subtle changes also contributed to setting the NES apart from its pre-crash predecessors. Consoles of the late 70s and early 80s were top-loaders (i.e., software cartridges were inserted into slots located on the top side of the systems), as was Nintendo’s own console in Japan; in America, however, the system was changed to be front-loading like a VCR, complete with a door that hid inserted cartridges from view. Also important was the futuristic gray chassis that eschewed the wood paneling that was so prevalent during the pre-crash era, further evoking a sense of high-end audio/visual equipment (Sheff and Eddy 163). Even the controllers were changed from the joysticks and number pads of old, utilizing a cross-shaped directional pad that Nintendo had designed and patented in the late 1970s (Kent 279). The distinction between a video game system and a toy was a loose one, but this “Trojan horse” tactic lent credibility to the NES.
Another factor of the crash that Nintendo knew had to be avoided was the deluge of subpar (and sometimes inappropriate) games. Atari and its competitors, not anticipating the arrival of sophisticated third party software developers, had left their consoles wide open to anyone who desired to write and sell games. System manufacturers had counted on making the bulk of their profits off of games rather than hardware, but their lack of security had led to a diversion of income into unaffiliated companies (Kent 193). Another disaster that had been permitted by this openness was the widely-publicized Custer’s Revenge protests in 1982: Custer’s Revenge was just one of several crudely explicit unauthorized Atari games, in which the Civil War’s General Custer must navigate a battlefield to unabashedly rape a Native American woman (Kent 226-227). Nintendo was convinced that it had to exert complete control over the quantity, quality, and profits of all compatible games; they requested their engineers in Japan to develop a “lock-out chip” exclusively for use in the Western market that would prevent any unlicensed software from running (Sheff and Eddy 161).
With the lock-out chip in place, Nintendo curated its library by instituting an authoritarian licensing program under the banner of the Nintendo Seal of Quality. Former chairman Howard Lincoln recounted,
“We said, ‘If you want to be a third-party licensee, you have to agree that you will only publish five games a year on our system.’ . . . From our point of view, those clauses worked as a quality control mechanism” (qtd. in Kent 351).
Nintendo’s cautionary restrictions discouraged publishers from once again rushing shoddy games to market.2 Without a rating system yet in place, the Seal of Quality also acted as a censor board to prevent another Custer’s Revenge from occurring; games were subjected to a rigorous review process, removing anything that might be considered offensive—even from games developed by Nintendo itself overseas—to a degree that seems paranoid today (Kent 363). These restrictions, enforced by the NES lock-out chip, ensured that Nintendo’s reputation and bank account did not suffer.
Despite all of Nintendo’s plans and assurances, convincing retailers to take a chance on a new foreign company was proving difficult; Nintendo responded with a relentless campaign of sly marketing and appeasement, culminating in an unheard-of offer of 90 days credit on all merchandise. At the time of the American NES launch, refined showstoppers like Super Mario Bros. had not yet been introduced, making the product a tough sell to retail buyers still reeling from the ’83 crash. In support of their “not a video game system” aesthetic, Nintendo invented a new vocabulary for their sales pitches, as explained in David Sheff’s thorough history Game Over:
“No-no’s included the use of the term video game; this was an entertainment system. Software was never to be described as game cartridges, another word associated with Atari. At Nintendo they were game packs. The NES itself wasn’t a console but a control deck” (167).
Nevertheless, booking meetings with retailers became so difficult that Nintendo even resorted to hiring professional athletes to make appearances at mall demonstrations: “They stood next to Mets stars who were signing autographs and tried to get passersby to listen to their spiel” (Sheff and Eddy 166).
Eventually, repeated failure to attract the attention of retailers forced Minoru Arakawa, president of Nintendo’s American branch, to go against the advice of senior president Yamauchi and take a leap of faith on the quality of his product: Arakawa extended an offer to buy back any unsold merchandise after ninety days, a move that could have ended in disaster for the fledgling company. The proposition was entirely risk-free for the stores and demanded minimal involvement: Nintendo delivered the products, set up the store displays, and trained employees; they would return three months later to either give or receive a check. Retailers finally accepted the Nintendo Entertainment System onto their shelves, and of course the buy-back offer did not bankrupt the company, as the system gradually became a nationwide sensation (Sheff and Eddy 165-166).
The NES went on to sell 34 million units in America over the course of its lifespan, defying expert opinion at the time of its launch and ushering in a new iteration of the video game industry that encompasses the globe today (“Consolidated Sales”). Although the success of the NES once again validated video games in their own right, allowing the industry to focus purely on games for many years, the advent of internet connectivity has once again turned gaming consoles into jack-of-all-trades entertainment systems: these devices now tout online marketplaces with video and music for sale and rental, along with streaming services such as Netflix. Nintendo also revisited their toy-centric Trojan horse approach with 2006’s Wii console, generating an unprecedented level of mass appeal with their motion sensing “gimmick.” The Wii was much derided by veteran gamers for its inaccuracy and impracticality; however, its record sales numbers prompted competitors Microsoft and Sony to follow suit with their own motion sensing accessories. On the security front, today’s consoles are locked down more than ever before, as the software licensing instituted by Nintendo remains the industry standard; unlicensed commercial software is unheard of, and any consoles that customers hack for the purposes of running “homebrew” software are swiftly blocked by the manufacturer through firmware updates or (in extreme cases) through banning that customer from further online access. With the increasing complexity of both software and hardware, quality assurance is now a small industry in itself, as manufacturers work closely with developers to ensure that all software passes a minimum level of “certification,” sometimes pushing back release dates. Retailers continue to receive buyback options from video game publishers, mirroring other media industries, but an increasing emphasis on pre-orders (often accompanied by incentives for consumers to do so) is making the threat of surplus inventory less likely.
How Nintendo, a Japanese company, came to America during the height of late 20th century anti-Japanese sentiment and turned a dormant industry into an empire is nothing short of extraordinary. President Yamauchi, emboldened by the success of his arcade hit, often betrayed a sense of naivety about the difficulties of breaking into the distinct home market; this, however, merely instilled a greater sense of tenacity in his attempts to deflect the stigma of video games. Yamauchi and Arakawa both displayed a cunning and risky business sense that was perhaps aided by their foreignness, for they had not been present in America to witness their industry collapse firsthand, arriving to find only war stories. A new industry sprung up around Nintendo, and while their business decisions are often criticized for overt conservatism, the company’s bottom line continues to trump that of their competition. Whether new directions will eventually leave this trailblazer behind in the wake of a new industry metamorphosis remains to be seen, but there can be no doubt that the lives of millions were forever changed by a robot, a laser gun, and a little gray box.
1. “Pac-Man Fever” is a song by musical duo Buckner & Garcia. At the time of the video game crash, the single had gone gold, reaching the #9 slot on the Billboard charts (“Pac-Man Fever (song)”). (Return to article)
2. Nintendo’s annual limit on games was eventually circumvented for two exceptional publishers—Acclaim and Konami—by issuing additional licenses under fake company names (Kent 422-423). (Return to article)
Cifaldi, Frank. “In Their Words: Remembering the Launch of the Nintendo Entertainment System.” 1UP. IGN Entertainment, 21 Oct. 2010. Web.
“Consolidated Sales Transition by Region.” Nintendo. Nintendo, n.d. Web. 9 Dec 2012.
Kent, Steven L. The Ultimate History of Video Games. New York: Three Rivers, 2001. Print.
“Pac-Man Fever (song).” Wikipedia. Wikimedia Foundation, 18 June 2012. Web. 7 Dec. 2012.
Sheff, David, and Andy Eddy. Game Over: Press Start to Continue. Wilton: GamePress, 1999. Print.