by Steven Kent
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
The Test
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 Competition
We 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
Hitting It Big in the Big Apple
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.
The Return of Jumpman
Shigeru Miyamoto, the man who designed Donkey Kong, built the game around two main characters. One was the eponymous villain, a giant ape that stole a woman and hurled barrels at the man trying to save her. The other was Jumpman, the chubby, mustachioed carpenter who leaped barrels, climbed ladders, and saved the day. Over time, Jumpman underwent an interesting evolution.
The first step in Jumpman’s evolution was a name change—he became Mario in his next outing, a game called Donkey Kong Junior. Next, Miyamoto gave Mario a brother named Luigi and converted him from a carpenter into a plumber in the 1983 game Mario Bros. Up to this point, Mario always appeared in small games in which you could place the entire field of play on a single screen. That changed in 1985, with the release of Super Mario Bros.
Super Mario Bros. took Mario out of his single-screen setting and placed him in a huge, vivid world. Instead of simply climbing ladders and moving around on platforms, players now controlled him as he ran through a seemingly endless, brightly colored countryside filled with caverns, castles, and giant mushrooms. The landscape was much too expansive to fit on a screen. In this new game, the camera followed Mario as he ran forward through his two-dimensional world. Arnie Katz, editor of Electronic Games, dubbed it a “side-scrolling” game.*
The goal of the game was to help Mario rescue a princess from a dragon named Bowser. To do this, players had to fight or slip past walking turtles, flying turtles, and little mushroom-shaped men called Goombas.
Super Mario Bros. contained several elements that attracted attention. It had bright cartoon-like graphics, fast action, and a sense of humor. It also took Warren Robinett’s concept of hidden “Easter eggs” to a new level with entire hidden worlds.* Most people continued playing Super Mario Bros. to find all of Miyamoto’s Easter eggs long after they finished the game. If players knew where to look, they could find free men and coins hidden in mid-air, not to mention beanstalks that took Mario into the clouds, mushrooms that made him big, flowers that enabled him to spit fireballs, and stars that made him invulnerable. Super Mario Bros. did very well in Japanese arcades and attracted some attention to the failing U.S. arcade industry.
By the end of the year, Nintendo engineers succeeded in creating a home version of Super Mario Bros. for the Famicom. This product defined the difference between games for the old Atari systems and games that could be played on Nintendo cartridges. Although the home version of Super Mario Bros. was not identical to the arcade game, it was an extremely close approximation.
By the end of 1985, Nintendo began packaging Super Mario Bros. with the Famicom. This marketing move was so successful in Japan that Yamauchi and Arakawa decided to do it in the United States. It took a few months to create an American version of the game, and the cartridge was available by the time Nintendo of America went national—the end of 1986.
A Partner
Although 1985 was not a great year for video game sales, it was an excellent year for the five ex-Atari executives who had started a toy company called Worlds of Wonder. The head of the company was a man named Don Kingsborough, a former Atari vice president, who decided to start his own business when he ran across an invention that he believed would be a surefire hit as a toy.
There were a lot of former Atari guys putting together this company called Worlds of Wonder. I didn’t really know Don all that well…. He was really on the domestic side of the business, and we had very little interaction.
I joined Worlds of Wonder as the executive vice president of marketing and then eventually the managing director of international. You know, we started the company up literally around Don’s swimming pool.
There were some guys from Disney who did the talking presidents. They wanted to do this talking teddy bear. Well, he was not nearly the incarnation that we finally brought out. When I first saw him, I called him Biafra bear because he was like this little skinny bear that looked like he needed fattening up. He looked like he was a refugee from Biafra or someplace.
—Steven Race, former director of international marketing, Worlds of Wonder
Building off the original animatronic technology, Kingsborough and company designed a plush teddy bear with a tape recorder built into its back. Children could place tapes in the recorder, and the bear’s mouth would move as it appeared to tell stories and talk. The bear was named Teddy Ruxpin.
Once they had their product, the founders of Worlds of Wonder next set out to build a sales force. They could have tried to hire salespeople from within the toy industry but instead decided to go with people they knew who would be aggressive. They hired ex-Atari sales representatives.
We hired most of the old Atari reps to represent us because we knew that if we hired the toy reps, we’d have to go through channels. These guys ran Atari.
When it came to selling Teddy Ruxpin, they went right over everyone’s head and got right in to see the senior people. All the key retailers we showed Teddy Ruxpin to, to the man with one exception, all just melted and said, “Holy shit, this is it! This is it. This is the product this year.”
—Jim Whims, former executive vice president, Worlds of Wonder
Teddy Ruxpin was the toy sensation of the 1985 holiday season. Stores could not keep it in stock; public demand was too great. The following year, Worlds of Wonder came out with another major hit, Laser Tag. With these two products, the company became a major player in the toy industry and an attractive partner to Minoru Arakawa, who wanted a marketing partner to distribute the NES.
They approached us in 1986. They approached us. Kingsborough and Arakawa got together with Howard [Lincoln] and the senior management team and [they] said, “Listen, Whims and Bradley come from the video game business. You obviously have a strong relationship with the retailers, both with Teddy Ruxpin and Laser Tag.”
The rumor was that Toys “R” Us gave
us a $100,000,000 order at Toy Fair that year…. Actually, they did; it wasn’t a rumor. With that type of clout, we were able to work closely with the buying community to ensure that Nintendo didn’t get put on the back burner and that, in fact, it was a priority for the buying community.
—Jim Whims
The offer Arakawa made to Kingsborough bore no resemblance to the one he had made to Atari. The Atari offer involved licensing—Nintendo would allow Atari to manufacture the NES and sell it as an Atari product. Arakawa wanted Worlds of Wonder as distributor. He simply wanted Worlds of Wonder representatives to market the NES, along with Teddy Ruxpin and Laser Tag. He hoped that being associated with the two hottest toys on the market would open doors to stores such as Sears, and he was willing to pay a fee for the help.
As former Atari employees, Kingsborough and many of his executives were very familiar with the NES. They had seen it launched as the Famicom in Japan, and most of them agreed that it was much more powerful than prior console systems. With this in mind, Kingsborough accepted the offer.
I will always remember the first sales meeting we had where we introduced the Nintendo 8-bit to the sales force. Arakawa came down, and we had the Nintendo people presenting the product, and we said, “This is a product we’re going to be supporting on a nationwide basis.”
Everyone was sitting in the bar after dinner that night, and these guys who had been Atari’s three biggest reps grabbed me and said, “Can we talk to you?”