Last time we were here we talked about the great video game crash of North America where, due to an oversaturation of consoles, a flood of bad repetitive and boring games, combined with customers being fed up with how expensive the games were compared to the low quality, the market crashed.
At the time people thought that video games were just a “fad” or were going away, only to be played on a computer maybe, or at an arcade, but the home video game market fell by 97 % and that’s massive.
But one company continued making games in Japan, where the crash didn’t hit. How did this one company come to totally dominate the market in the U.S. and beyond? Today we’re going to talk about ways to make and become a successful company, especially in a dead or dying industry.
That company is Nintendo.
Nintendo was founded in 1889 as a toy and playing card company and for a while worked as a game developer, making games like Donkey Kong and Mario Brothers. What set Nintendo apart from other companies was their interest in innovation in how players played or experienced games. Rather than make games that were “solve this maze” as had happened before, they took over the market so well that people called all video games “Nintendo”.
How did they accomplish this?
1: Rebranding- In North America, video games had a bad reputation in 1985, so Nintendo did not call their “Family Computer” a video game machine, they called it the “Nintendo Entertainment System” or NES. Nintendo also made the console look more drab and plain, like a VCR, rather than colorful.
Nintendo also sold the NES in toy stores, not electronic stores, to get away from the bad publicity of the previous failed consoles that caused the video game crash. This is not a video game computer, this is a toy for entertainment! Nintendo also made “no risk” deals with stores, meaning that if the game console didn’t sell, the store would get their money back and Nintendo would get the inventory and sell it somewhere else.
Nintendo could afford to do this as they had already sold 2.5 million NES machines in Japan.
2: Putting limits on game companies: One of the biggest problems with the game industry before 1983 was that anyone could make any game and sell it for any machine. They could copy games from each other and just have several companies make the same game. Companies could make games for a dozen different game consoles. Literally the “dogfood” game was programmed in a weekend!
Nintendo put strict rules on who would make their games and what they could make.
A: A game company can only make 5 games per year. – This means that a company had better make the 5 best games they can, otherwise it’s a waste of their time and their money if the game is bad. The Quaker Oats company made 14 games in one year before 1983! Some companies who wanted to make more games broke apart into different companies, and that’s fine, but they still could only make 5 games and are now racing with other companies to make the best games they could. Competition helps make new products!
B: Nintendo made lockout protection on their games. – this means that Nintendo sells the computer chips that go in the games. If a company wants their game to actually work, they need to buy those chips from Nintendo BEFORE they even make the game. Whoa, better make a good game with those chips!
C: Nintendo seal of quality. – Even if you managed to make a game without the first two steps, you would still have to send it to Nintendo to get the official “Seal of Quality” and it quickly became clear that if a game did not have that seal, it was probably some hacked together garbage.
With these limits, game companies were usually forced to make quality titles for the Nintendo and Nintendo kept a strong grip on who was making games for them.
But Nintendo didn’t just make NES consoles…
3: Innovation of hardware. – Before the invention of the CD or disk, games were blocky objects with physical chips inside of them. Nintendo was aware that more data storage space could mean that games could be played faster and be more complex, so they set to work making improvements, especially in making the chips smaller.
Meaning that in 4 years games went from this:
To this on the same NES:
Nintendo also made lots of cool ways to play games in new ways. They had a light gun that shot things in Duck Hunt, a “Power Pad” that you could run on, a piano to learn piano, and even the Power Glove that didn’t work too well, but was an early version of the Kinect.
4: Letting designers make games they want to make. The Chase the Chuck Wagon dog food game was made over a weekend by someone who didn’t want to make it. No wonder it was terrible, but Nintendo, who started out making hand made playing cards, didn’t do that. Why make a person who excels at telling stories make a racing game?
That’s the guy that made Final Fantasy, a franchise that is still around today.
This man made The Legend of Zelda. So many of what we see as “classic” video game characters came from Nintendo and are still being made, like Metroid, Street Fighter, Zelda and Link, Mario, Final Fantasy and Dragon Quest.
But Nintendo had the smart idea to hire these people and let them build the games they want to build for Nintendo. This means that if you’re a company working with Nintendo, Nintendo is already making amazing games and you have to do better to keep up, meaning that there are even more great games to play!
5: Culture of Games: Nintendo took off like a rocket because they made a culture of gaming and often a lot of what they did was free (usually when it was new) or was partnered with others that Nintendo believed in. But Nintendo had all the control over their product, meaning everything needed to be approved.
Nintendo also had a slogan, usually involving power, a popular word in the 1980’s
“Now you’re playing with Power!”
There was Nintendo Power a magazine. The Super Mario Brothers Super Show that was on TV, eventually it was a movie. There was cereal, bed sheets, wall paper, you name it!
This is basically what Disney does. Make franchise characters and market them. But with video games, because there are so many, something might be popular or not, but you have so much to choose from and so many people making quality products, it’s no wonder Nintendo sold 1.8 million consoles in their first year.
In this way Nintendo dominated the market for years and is still one of the most well known video game companies today!