Authors: Steven Kent
The Ultimate History of Video Games: From Pong to Pokémon and Beyond—The Story Behind the Craze That Touched Our Lives and Changed the World (46 page)
It was incredible penetration for a single product.
We had an advantage—we’d been working on an arcade product. We just took that expertise and transferred it directly to the Sinclair Spectrum.
—Chris Stamper
Toward the end of 1983, Hochberg visited Tokyo. While there, he saw a Famicom and instantly recognized it as the future of video games. He purchased a console and sent it to the Stampers to get their reaction.
The Stampers were not immediately impressed. Nintendo had not begun exporting Famicom from Japan at the time, and the Stampers were not convinced that they wanted to deal with the Japanese market. They preferred to work on computer games. At the time, it seemed as if computers were the only viable market for electronic games. With a little prodding from Hochberg, the Stampers agreed that they would design games for the Famicom system if Nintendo started shipping to the United States and Europe.
In order to make games for the new system, however, they needed to obtain system specifications, schematics, and a license to make games from Nintendo. As an arcade owner, Hochberg was familiar with Nintendo of America. He made an appointment with Minoru Arakawa and flew out to Redmond, Washington, to propose a partnership.
I contacted Nintendo and found out that they were not completely interested in sharing the technical specs with us. My question to Mr. Arakawa was, “Why?”
He said, “You have to prove that you have the technical expertise,” which was not a bad answer.
Chris spent a good deal of time, practically six months, reverse engineering the hardware and then proceeded to do for me an audiovisual display, very simple but utilizing graphic and other capabilities of the hardware that would show what we could do. We really weren’t interested in giving Nintendo a product; we were interested in giving Nintendo a view of what could be done.
When I sent that off to Nintendo, Mr. Arakawa said, “I like what I see. Now please do a game.”
But he still did not give us the technical specs at that point.
—Joel Hochberg
Joel came to me and I said, “If you are so good, why don’t you make a game without tools?” It was a good test.
—Minoru Arakawa
I reverse engineered the NES. I had an understanding of the coin-op hardware that was out there, so I had a very good idea what the Nintendo actually contained.
We got about 99 percent correct. There were just a few things we didn’t know about. But the interesting thing was the stuff that we discovered in the machine that was not documented. That instantly gave us an advantage that other developers didn’t have.
—Chris Stamper
We decided to test the American market in New York. Everybody thought that we were going to die, that it was suicide.
—Minoru Arakawa
By the summer of 1985, Nintendo of America president Minoru Arakawa had become convinced that Americans no longer had any interest in video games. When he called Hiroshi Yamauchi to recommend pulling out, however, Yamauchi refused to consider the idea. He didn’t care about CES shows or focus groups. The Famicom was flying off shelves in Japan, and as far as he was concerned, the NES would sell just as well in America.
To prove this, he suggested testing the NES in the toughest market in America. That market, everyone agreed, was New York City.
I don’t know who came up with the idea of starting out in New York. It was clear that New York would be the toughest market; New York was the entertainment capital. Mr. Yamauchi made the comment, “Well, then, it would be a really fair test because if you could do a good job in New York, you could pretty much do anything anywhere.”
—Howard Lincoln
*
For a full account of the design and launch of Famicon, read
Game Over
by David Sheff. Mr. Sheff’s book is a 400-page account of the history of Nintendo from 1889 to 1994 and offers a thorough account of the Nintendo story.
*
Two medical conditions were later attributed to prolonged use of the Nintendo controller. Thousands of people developed calluses on the tips of their thumbs. The second and more serious condition was sore wrists, a condition later dubbed “Nintendonitus.”
*
Nintendo sold the video game console rights to Coleco. Atari purchased the home computer rights for the game.
*
In fact, for many years, people organizing the CES treated video game makers like the industry’s ugly stepchildren. Computer game and video game companies eventually formed their own trade show, the Electronic Entertainment Expo (E3).
**
One year a company called 3DO hired the San Diego Charger’s cheerleaders to appear in its booth. A few reporters described this as gratuitous, because 3DO did not publish a football game that year.
The Seeds of CompetitionWe visited Activision at that time. Greg Fischbach was the head of their international department, so he attended the meeting. After the meetings we tried to sell Greg Fischbach on why he wanted to become a licensee.
Later we found that Fischbach reported to the president or chairman of the company that Activision should not get involved with video games.
—Minoru Arakawa, president, Nintendo of America
This also wraps back to another story that they [Howard Lincoln and Minoru Arakawa] love to tell about a memo that I wrote when I was at Activision. After having met with them sometime in 1986, I sent a memo to Jim Levy (president of Activision) saying the business, in essence, doesn’t work because there’s no margin in it.
They never knew about the existence of this memo until several years later when it came out in a court case.
—Greg Fischbach, former vice president of the International Group, Activision
The last vestiges of the Atari VCS era had crumbled by the beginning of 1985. Jack Tramiel, the man who purchased Atari from Warner Communications one year earlier, had already announced his intention to concentrate on home computers instead of video games. By the end of 1985, Coleco had abandoned the Adam Computer and squandered its Cabbage Patch Doll earnings just to stay afloat.
Against this tumultuous backdrop, Nintendo sent a small team of executives and seasoned employees to spearhead the American launch of the Nintendo Entertainment System (NES) in New York City.
*
Everything about Nintendo’s New York test marketing efforts seemed small, except the $5 million advertising budget.
The effort began with Nintendo of America president Minoru Arakawa personally leading a group of thirty employees to the small New Jersey warehouse he had leased through the end of the year. The group included Ron Judy, one of the two entrepreneurs who had been with Nintendo of America from the beginning; Don James, who had been with Nintendo of America since its early New York days; and Gail Tilden, who was in charge of advertising.
We sent a number of our employees back to Hackensack. We rented houses for them or we rented apartments. And we also had an apartment in New York City, but the warehouse was in Hackensack.
—Howard Lincoln, chairman, Nintendo of America
We sent thirty or forty people from Redmond [Washington] to New York. Most of them were married persons, and they left wives or husbands behind. They were there for three or four months.
—Minoru Arakawa, president, Nintendo of America
The first shipment of NES systems arrived in a neat stack that barely took up half of the trailer on which it was transported. The boxes were stored in the warehouse, and the team began the arduous task of trying to get retailers
to accept Nintendo’s products. Most store owners did not want to look at video games, let alone waste floor space selling them. In fact, team members were cautioned not to use the term
video game.
The NES was to be sold as an “entertainment system.”
At this point, the biggest selling points for the Nintendo Entertainment System were the Zapper gun and the games
Duck Hunt
and
Hogan’s Alley.
Some retailers also liked the Robot Operating Buddy and some of the early arcade translations, like
Donkey Kong, Baseball
, and
Tennis.
When Nintendo went to New York,
Super Mario Brothers
, which would become the linchpin during the national launch of the NES, had not been introduced.
As often was the case with Arakawa, he surrounded himself with exceptional people. Whether visiting the headquarters of major chains or stopping by the manager’s office of a local shopping mall, Judy and the rest of the team were tireless. The advertisements Tilden arranged with a local advertising agency were so effective that they set the tone for Nintendo ads well into the next decade.
Even so, most of the 500 retailers who sold the NES that Christmas might not have taken the merchandise if it were not for a risky offer made by Arakawa himself—a money-back guarantee. Going against the wishes of Nintendo Co. Ltd. president Hiroshi Yamauchi, Arakawa authorized his sales force to say that Nintendo would buy back any merchandise that retailers wished to return. The only thing retailers provided was floor space. Nintendo lugged in the merchandise, set up the displays, and bought back any unsold product.
We rented a truck so that we could deliver orders, and we let people order the systems risk-free. We did the merchandising. We trained their people. We did everything. Then we really spent a lot of money on TV.
—Minoru Arakawa
They shipped it in the New York area in the Christmas of 1985. And it worked. I mean, they sold through. And they sold through with the little robot thing that they had attached, much to everybody’s surprise.
I think one of the gutsiest things Arakawa ever did was to take the inventory risk with respect to the launch of that product.
—Greg Fischbach, president, Acclaim Entertainment
The Nintendo team’s hours were exhausting. Team members approached retailers and demonstrated the system to customers by day, then delivered products and set up displays by night. One night, two team members went to deliver a merchandising display at a Macy’s store in an area that Howard Philips described as a scary part of town. While Philips went into the store to arrange for the delivery, his partner remained outside to guard 19-inch televisions that would be used in the display. While he waited, a knot of aggressive young men gathered around. When Philips returned, he found his partner nearly frantic but still guarding the televisions.
After three months of exhaustive work, the Nintendo Entertainment System could be found in hundreds of stores throughout the New York area, including FAO Schwartz and Toys “R” Us.
I went home to New York to spend Christmas with my parents that year. I went to Willoughby’s, a camera shop on 32nd Street, to buy some film for my father, and there were all of these kids, these boys huddled around this counter at the shop. I went over to see what they were looking at, and it was a new video game system from Nintendo.
—Tom Zito, founder, Digital Pictures
The NES was not a smash hit, but Nintendo did manage to sell 50,000 units, about half of the systems that had been shipped from Japan. It was enough to prove Yamauchi’s point that video games were not dead. Amazingly, a large percentage of the retailers that carried the NES decided to continue carrying it after the holidays.
In February, Arakawa expanded his test to Los Angeles. But this test had none of the urgency of the one in New York. Nintendo continued its policy of offering to buy back merchandise and provided displays for stores, and reports of the company’s success in New York made Los Angeles retailers more receptive than their New York counterparts had been.
The success of the Los Angeles test is best gauged in terms of the number of stores that accepted Nintendo’s offer. Spring and summer are typically slow times for toy retailers, many of whom expect to incur small losses throughout the year, then cover their losses with highly profitable holiday sales. A large
number of local department stores, electronics stores, and several toy stores began carrying the NES at that time. Though the system only sold moderately well, Arakawa interpreted retailers’ willingness to stock his product as a sign of future success and expanded his test to include Chicago and San Francisco.
