Against All Odds: How Nintendo Made ItBy
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Ask your oldest relative -- the one who still thinks smartphones work through witchcraft -- to name one gaming company. There's a good chance they'll answer "Nintendo." The Japanese giant's name has been synonymous with video games for decades. However, there were plenty of times when things looked less than rosy for the company, especially after the lackluster response to the Wii U following its 2012 release.
While local rivals Sony and Sega can trace their origins back to the 1940s, Nintendo was founded by Fusajiro Yamauchi way back on September 23, 1889, in Kyoto, Japan.
Nintendo started as a manufacturer of a card game called Hanafuda, which means 'flower cards’. The company was originally called Nintendo Koppai, the second part meaning 'cards' or 'playing cards' when read as Karuta.
Nintendo's Hanafuda became very popular, and their eventual use in gambling attracted the attention of the Yakuza crime organization.
In 1959, following several name changes, the firm struck a deal with Disney that would see the US corporation's properties appear on its cards, a step toward the family-friendly image Nintendo has long projected.
The success led to Nintendo being taken public in 1962.
Another name change from Nintendo Playing Card Co. to just Nintendo Co., Ltd. followed a year later. At that point, the firm began diversifying into other products: instant rice noodles, love hotels, a taxi company, and a vacuum cleaner. All these ventures failed, apart from its gaming endeavors.
With playing cards falling out of favor in Japan, Nintendo struggled in a toy market dominated by the big US players. 1966 saw the company's first comeback when it created the Ultra Hand, a simple extending arm toy that sold 1.2 million units in the country. Other products developed by Gunpei Yokoi, including a Love Tester, helped Nintendo move to the top of the industry just a few years after its stock fell 93 percent.
Stepping into the video game world
Nintendo took what's considered its first steps toward the video game industry with the release of the Nintendo Beam Gun games in 1970, the first light gun available for home use, produced in partnership with Sharp.
They used targets equipped with a sensor that would register the light from the guns and are considered a precursor to light guns that work with televisions, including Nintendo's own NES Zapper.
With video games taking off, Nintendo secured the rights to distribute the Magnavox Odyssey in Japan in 1974. A joint venture with Mitsubishi Electric produced the "Color TV Game 6" and "Color TV Game 15" in 1978—the numbers representing the machines' number of games. Both sold over a million units in the country.
In 1980, Nintendo's path toward becoming a household name around the world began with the first Game & Watch title called Ball. The handhelds were revolutionary at the time, despite each featuring only one straightforward game, and the series sold 43.4 million units across its lifetime.
But it wasn't until 1983 when Nintendo released the console that would grant it legendary status: the Famicom (Family Computer). It sold over 500,000 units within two months in Japan, and despite chip problems that caused games to freeze, necessitating a recall, the company was determined to get its machine into the US.
The NES years
Nintendo had intended to release the Famicom in the states through Atari, but the deal was called off when the latter saw an illegal version of a Donkey Kong prototype running on a Coleco console at CES 1983.
Assuming Nintendo was also negotiating with its rival, Atari walked; Nintendo was going it alone.
At the following year's CES, it debuted the Advanced Video System. But apathy toward the machine prompted a rethink. In 1985, the rebranded Nintendo Entertainment System arrived. There was a problem, though: the great video game crash.
In 1983 the US video game industry seemed oversaturated with consoles and poor-quality games, including the notoriously awful ET. The industry entered a recession so bad that revenue dropped from $3.2 billion to just $100 million in two years -- it was called the video game crash of 1983. The effects were still being felt in 1985, and plenty of people, included Minoru Arakawa, founder of Nintendo of America, wondered if video games weren't just a passing fad.
In 1985 plenty of people, including Nintendo of America founder Minoru Arakawa wondered if video games weren't just a passing fad.
But the NES didn't just survive the video game crash, rather its success helped end the market recession.
Nintendo gave the console a soft launch in New York, offering retailers the option to send back unsold machines for full refunds. It also shipped with a Zapper Light Gun and ROB, or Robotic Operating Buddy, which was supposed to substitute for a second player in a couple of compatible games. Sadly, the robot was pretty terrible. Nintendo only built ROB to distance itself from the video game crash, letting it market the NES more as a toy than a console. The NES itself was a revelation, and the company proved the doubters wrong.
Following other launches in LA, Chicago, and San Francisco, the NES went nationwide in 1986.
With a game roster that included the iconic Super Mario Bros., Metroid, and The Legend of Zelda, the console eventually shifted 61.9 million units, more than half of which were sold in the United States.
The next decade was a boom time for Nintendo. Keeping the momentum it gained from the NES wasn't going to be easy, but that's just what it did with the Game Boy—still arguably its most famous product.
Launched in 1989, the handheld and its future iteration, the Game Boy Color, sold around 119 million units combined, making it the second best-selling console of all time. It was followed by the Super Famicom (Japan) / SNES (rest of world) in 1991/1992, which built on the NES' foundations and added better hardware. It sold over 49 million units. Nintendo could do no wrong—until it did. In 1995, the Virtual Boy arrived.
Virtual bad boy
People weren't impressed by the Virtual Boy when Nintendo showed it off at CES in 1995, but the company had proved skeptics wrong in the past. This was, after all, virtual reality from Nintendo, even if it did use two 2-bit monochrome red 384 × 224 screens.
Also read: Virtual Reality Then: A Look Back at the Nintendo Virtual Boy
The Virtual Boy will long be remembered as Nintendo's biggest failure. Not only was it hideously uncomfortable, completely unportable, and expensive, but it also induced headaches and nausea and came with very few supported games. The device sold just 770,000 units across its lifetime.
With Nintendo reeling from the Virtual Boy, the company was looking for a hit.
Would the Nintendo 64 be the answer?
There wasn't a lot of faith in the machine pre-launch. The PlayStation had already launched in the US and had been available for over a year. Nintendo also made the controversial decision to keep using game cartridges instead of CDs, which prompted many third-party game developers to abandon Nintendo for Sony.
Despite arriving in a highly competitive console market in September 1999 (US), and with just two launch titles, games such as Super Mario 64, The Legend of Zelda: Ocarina of Time, and the incredible Goldeneye 007 helped the Nintendo 64 sell almost 33 million units across its lifetime. Putting it way ahead of the Sega Saturn (9.26 million), but far from the PlayStation's 103 million units.
Into the 2000s
Most of Nintendo's future products from that point forward were successes. The Game Boy Advance landed in June 2001, selling 81.5 million units, though the GameCube managed a disappointing 22 million, competing against the best-selling console of all time, the PlayStation 2.
Nintendo bounced back again with the Nintendo DS, a machine that was met with derision before launch, yet eventually became the company's best-selling games machine ever with 154 million units sold.
The DS was followed by the equally successful Wii (101 million units) with its innovative controller. Then came the less-loved Nintendo 3DS, which still managed to sell 65 million units.
That's when things went wrong again—the Wii U launched in November 2012.
There were high hopes for the Wii U, considering it was the successor to one of Nintendo's most popular home consoles of recent times. There was a lot of faith place in the unique GamePad controller and its built-in display, but few game designers made the most of its capabilities beyond using it as a map—ZombiU being the most notable exception—and it certainly didn't make the Wii U a must-have piece of tech, especially as battery life was terrible.
The Wii U did have some positives, including a few memorable games such as Super Mario 3D World and Pikmin 3, but people just didn't take to the machine the way they did with its predecessor.
The arrival of the Xbox One and PlayStation 4 a year later were the nails in its coffin. The Wii U sold a paltry 13 million units, making it Nintendo's least-successful home console.
NX switches the landscape
The early 2010s were a pretty dark time for Nintendo. The company recorded consecutive losses from 2012 up until 2014, and 2015 saw net income over the holidays fall 36 percent year-on-year.
Wii U sales, already struggling, kept falling, while 3DS sales were down 28 percent. Previews of its first entry into the smartphone game market—Miitomo—hadn't been well-received, either. Nintendo's share price was in decline, leaving one glimmer of hope: an upcoming console codenamed NX.
This was yet another occasion when Nintendo doubters were proved wrong. Miitomo, written off as a poor-looking social media/comms app that didn't feature any of its iconic characters, was downloaded one million times within three days of launching. By April 2016, that figure reached 4 million, and its in-app purchases were earning Nintendo about $280,000 per week. During that same month, Nintendo confirmed that the NX console would arrive in March 2017.
The big reveal came on October 20, 2016 when Nintendo announced the NX official name was the Nintendo Switch, at this time they also confirmed this was actually going to be a console/handheld hybrid.
What appeared to be similarities between the machine and the Wii U made many gamers wary. Its hardware wasn't a match for the Xbox One and PS4, either—game industry consultant Serkan Toto said, "Who else but diehard Nintendo fans will buy the Switch?" The apprehension saw Nintendo's shares drop 7 percent. It really was a make-or-break moment for the 127-year-old company.
The Nintendo Switch has been a stunning success.
As we all know today, the Nintendo Switch has been a stunning success. Fears of a Wii U repeat were proved wrong as the hybrid sold 1.5 million units in its first week.
Within the first year of launch, 14.8 million Switch consoles were snapped up, more than the Wii U managed across its lifespan. The figures continue to grow every year, helped by the introduction of a revised version with a longer battery life and a more affordable Switch Lite version.
Nintendo Switch sales overtook the Nintendo 64 (34 million) in April 2019 and passed the SNES (52 million) in January 2020. With the gaming industry getting an unexpected boost in 2020, sales for March doubled those from the previous year.
The Switch is closing in on 70 million sales as of writing, making it the twelfth best-selling console of all time. It's also the joint most-recent entry on the entire list—the Super NES Classic Edition (5.28 million) was also launched in 2017. Nintendo has battled against the odds on several occasions, though the rise of the Switch following the bleak post-Wii U years is arguably its most Rocky-like comeback.
Rumors point to Nintendo's next console being an upgraded Switch 'Pro' version. Whether that performs as well as the current model remains to be seen, but even if it doesn't, few companies can brush off failure and come back stronger quite like the world's most famous gaming company.
TechSpot's Against All Odds Series
Against All Odds profiles tech companies that somehow managed to succeed. When all was seemingly adverse and failure closed in, these companies ultimately made triumphant returns worth revisiting. This series is opposite to TechSpot's "Gone But Not Forgotten" articles.