Nintendo’s problem wasn’t so much that the AVS was a bad system, but more that the American home video game industry was struggling. After several years of impressive growth, in 1983 sales of video game consoles and cartridges suddenly collapsed without warning. Video game manufacturers, caught completely off guard, lost hundreds of millions of dollars as inventory piled up in warehouses, never to find a buyer. Atari’s loss of $536 million prompted Warner Communications to sell the company in 1984. Mattel sold off its version, Intellivision, the same year and shut down their entire video game division. Many other companies went out of business.
GOODBYE VCS, HELLO PC
Meanwhile, computer technology had finally advanced to the point that companies were able to manufacture and sell home computers at prices that families could afford. By 1982 a computer called the Commodore 64 could be bought for as little as $200, which was $100 less than the cost of an Atari 5200.
Why buy just a game system when you could buy a whole computer—which also played video games—for the same price or lower? Just as the video game industry had evolved from dedicated Pong-only games to cartridge-based multigame systems, game systems were giving way to the personal computer. Stand-alone video games were dead…or so most people thought.
Girl crazy: Dartmouth was the last Ivy League college to go coed. (It held out until 1972.)
Hiroshi Yamauchi, the president of Nintendo, didn’t see things that way. His company didn’t make personal computers and he didn’t know much about the American market. But Famicom game systems were selling like crazy in Japan, and he didn’t see any reason why they shouldn’t also sell well in the United States. So what if the company didn’t receive a single order at the Consumer Electronics Show? He told his American sales team to keep trying.
WORD GAMES
Nintendo’s American sales team was headed by Minoru Arakawa, who also happened to be Yamauchi’s son-in-law. Arakawa had to keep trying. He didn’t have any choice—he was a member of the family.
One of the problems the AVS was up against was that retailers had been badly burned by the video game crash of 1983. They weren’t about to put any more nonselling video games on their shelves. Arakawa decided that the best way to proceed was to conceal the fact that the AVS was a video game. He couldn’t do that while it was still called the Advanced Video System, so he renamed it the Nintendo Entertainment System, NES for short.
He added a light pistol and some shooting games, so that he could say it was a “target game.” (Guns and target games still sold well in toy stores.) Then he added the Robot Operating Buddy (ROB), a small plastic “robot” that interacted with a couple of the games played on the NES. “Technologically speaking,” Steven Kent writes in The Ultimate History of Video Games, “ROB offered very little play value. It was mostly a decoy designed to prove that the Famicom was not just a video game.”
DEJA VU
With a new name, a light gun, and a robot, Arakawa was sure the NES would sell. He rented a booth at the Summer Consumer Electronics Show and set the ROB out in front, where everyone could see it.
He didn’t get a single order.
Why didn’t retailers want to buy? Were consumers turned off too? Arakawa didn’t know for sure, so he set up a focus group where he could watch young boys—Nintendo’s target market—play NES games. Observing the scene from behind a two-way mirror, Arakawa heard for himself how much the kids disliked the NES. “This is sh*t!” as one kid put it.
Household tip: Ketchup cleans copper. Apply the Heinz, wait a minute, and rinse. Voila!
ONE MORE TRY
Arakawa was ready to throw in the towel. He called his father-inlaw, told him the situation was hopeless, and suggested that Nintendo pull the NES out of the U.S. market. But Yamauchi refused to hear a word of it. He didn’t know much about the Consumer Electronics Show and he didn’t know much about focus groups. One thing he did know was that the Famicom was still selling like crazy in Japan, so why couldn’t it sell well in the United States? There was nothing wrong with the NES—he was certain of that.
Yamauchi told Arakawa to test it one more time—in New York City. This time Arakawa left nothing to chance. There were about 500 retailers in the city, and Arakawa and his staff visited every one. They made sales pitches, delivered the game systems, stocked store shelves, and set up Nintendo’s in-store displays themselves. They made plans to spend $5 million on advertising during the Christmas shopping season, and—without permission from Yamauchi—promised retailers they would buy back any game systems that didn’t sell. And they never, ever referred to their video game as a video game. The NES was an “entertainment system.”
IS NINTENDO THE NEXT ATARI?
With the buyback guarantee, retailers had nothing to lose, so they agreed to stock Nintendo, even though they didn’t think it would sell. They were wrong—more than 50,000 games sold by Christmas, prompting many stores to continue stocking the NES after the holidays. Arakawa launched similar tests in Los Angeles, Chicago, and San Francisco. The NES sold well in each city.
In 1986 Nintendo expanded its U.S. marketing push nationwide and sold 1.8 million game consoles, and from there sales grew astronomically. They sold 5.4 million consoles in 1987 and 9.3 million in 1988. By 1990 American sales of the NES accounted for 10% of the entire U.S./Japan trade deficit.
But if there’s one thing that video game makers have learned the hard way, it’s that staying ahead in the business can be a lot harder than getting ahead. For all their successes, Nintendo has made their share of blunders, too. They clung to the NES a few years longer than they should have, on the assumption that its market dominance would allow it to keep ahead of its rivals. They were wrong.
What do baby humans have that baby rattlesnakes don’t? Rattles.
When a rival company called Sega introduced their Genesis system in 1989, Nintendo ignored it, even though the Genesis was twice as powerful as the NES. They shouldn’t have—Genesis introduced a character called Sonic the Hedgehog, an edgy, anti-Mario character who appealed to older kids and adults the same way that Donkey Kong’s Mario had appealed only to kids. In late 1991, Nintendo introduced SuperNintendo, but it was too late. Sonic’s appeal, combined with six years of waiting for Nintendo to update their system, helped Sega get a toehold in the market…and outsell Nintendo.
SONY’S PLAYSTATION
But Nintendo’s biggest mistake of all came in 1992. The industry was gearing up for yet another generation of game systems—using CD-ROM disks instead of cartridges. CD-ROMs were cheaper to make and stored more than 300 times more information than a Super NES cartridge, allowing for much more sophisticated graphics.
Nintendo had no experience with CD-ROMs, so they made plans to partner with Sony Corporation to make the new system. But there was a problem—Sony had already announced plans to introduce its own game system (Play Station), and Nintendo executives were worried about revealing Nintendo’s technological secrets to a competitor as large and powerful as Sony. So what did they do? For some reason, Nintendo waited until the day after Sony announced the partnership. Then they made an announcement of their own: they were ditching Sony and partnering with the Dutch electronics giant, Philips.
REVENGE!
Though the company had lost ground to Sega in the U.S. market, Nintendo was still the world leader in video game sales, and many Sony executives were reluctant to challenge Nintendo’s dominance. The consensus: scrap the Play Station project because Nintendo will wipe it out. But Sony CEO Norio Ohga was so furious at being humiliated by Nintendo that he almost singlehandedly forced the company to continue work on the project.
The ball that drops in Times Square every New Year’s Eve is named the “Star of Hope.”
The Sony Play Station was introduced in Japan in 1994 and in the United States in 1995. Nintendo eventually scrapped its CD-ROM–based system and introduced the Nintendo 64, yet another cartridge game system.
BRAVE NEW WORLD
The Nintendo 64 wa
s a blunder of Atari proportions. Compared to the Play Station, it had poor sound, poor graphics…and poor sales. By August 1997, the Play Station had surged past both Sega and Nintendo to become the industry leader. Sega, which spread their resources over too many game systems at once—Genesis, Saturn, and another one called Dreamcast—fell to a distant third and in January 2001 got out of the hardware business altogether. Today they only make game software.
Nintendo’s decision to stick with cartridges for the Nintendo 64 continues to haunt them today. When Sony introduced the Play Station 2 in 2000, they were careful to make it “backward compatible,” so that virtually all 800 of the Play Station 1 games could be played on the new station. Extra bonus: Because the PlayStation 2 uses a DVD player instead of a CD-ROM player, you can also watch movies on it.
The Nintendo Game Cube, introduced in 2001, is another story. It uses a mini DVD-ROM system that doesn’t play movies and isn’t compatible with Nintendo 64 game cartridges. That means Nintendo 64 owners have no incentive to buy the Game Cube, because their old games will be just as obsolete whether they buy Game Cube or PlayStation 2.
Even worse for Nintendo is the new kid on the block: the Microsoft Xbox. Considered even more technologically advanced than the PlayStation 2, Xbox is giving both Nintendo and Sony a run for their money.
FORTUNE-TELLING
Who will be the next Atari? Will Nintendo’s game systems slip to third place behind Sony and Microsoft, or even disappear entirely? Will the PlayStation 2 stay on top, or is the Xbox the new king of the hill? What comes next?
Stay tuned—if there’s one thing to be learned from the video game industry, it’s that the game is never over.
Odds that an American worker won’t tell their spouse after they receive a raise: 36%.
BURIED TREASURE
When Uncle John read this article by David Wallechinsky in The People’s Almanac, it immediately made him want to pack his bags and head for the hills to find all the lost loot. But, of course, he’s not really going anywhere, so he thought he’d share the info with you. (If you find any treasure, don’t forget who told you about it.)
LOST, BUT NOT FORGOTTEN
There are billions in lost treasure scattered throughout the United States. That’s the educated guess of one old treasure hunter, and many of his colleagues think that that’s a conservative estimate.
For one, there’s loot buried by robbers like Jesse James and Ma Barker “until the heat died down” but never recovered because the robbers were shot or hung before they could retrieve it. There are also gold mines whose owners died without revealing their locations, now hidden by the camouflage provided by the passage of time. And there are misers’ hoards, lost caravans, and caches of pirate loot hidden from coast to coast. These bonanzas really exist, and finding one would be the fulfillment of a dream shared by thousands.
TREASURE HUNT
No matter where you live, there’s a pretty good chance that some sort of treasure lies lost and forgotten nearby. Getting information about it may involve spending time reading stacks of ancient newspapers to find stories about people who died without revealing where they’d hidden their coins, or legends of old silver mines in the hills that few take seriously anymore. The public library will have listings of books under “Treasure Trove” and “Treasure Hunting” that may offer a lead. Librarians are usually glad to dig up stories about local hoards from their often-overlooked collection of pamphlets and newspaper clippings.
World-famous treasures like the Lost Dutchman Mine or Jim Bowie’s lost silver mine are so well known that they’ve been searched for by untold thousands of people. Since they haven’t been found yet, an amateur’s chance of finding them is mighty slim. But then again, anyone can be fortunate. All it takes is a little more brains, a little more work, or a little more luck than the rest of the treasure seekers.
In ancient Rome, wedding guests wished a bride good luck by breaking the cake over her head.
BECOMING A TREASURE HUNTER
The most successful treasure hunters have the heart of a Sherlock Holmes but they also carry a metal detector. The less expensive models will find lost coins and watches on a sandy beach, while the better ones can detect masses of metal buried deep under the earth. A detector is a necessity for serious treasure hunting.
Remember—gold, silver, jewels, and money aren’t the only valuables lying around waiting to be discovered. Even if that old abandoned mine doesn’t have any gold left, it may yield ancient lanterns, vintage guns, or patent medicine bottles. A single old coin can provide a fortune that will last for years. Good luck… and happy hunting.
MONTEZUMA’S LOST TREASURE CARAVAN
More than $10 million in gold and jewels from the Aztec monarch’s treasury was buried somewhere north of Mexico City to prevent it from being stolen by the Spanish. Best evidence is that it’s near either Taos, New Mexico, or Kanab, Utah.
How It Got There: The Spanish came to the New World to find gold and set about their task with a single-mindedness that would have made Scrooge blush. Rape, pillage, and murder were standard business practices, despite the fact that the vast majority of the Indians they met were friendly and willing to trade huge amounts of gold for small trinkets.
Greed completely conquered common sense, and the Spaniards truly killed the goose that laid the golden egg. Rather than trade peacefully for gold, they enslaved the Indians and forced them to work their own mines, and they stripped sacred temples of their solid-gold ornaments, which they melted down into ingots and shipped back to Spain. (Much of that gold ended up on the ocean floor when the galleons sank in heavy seas.) As a result, the Indians revolted, hid their gold, and fled from their conquerors.
Montezuma’s Revenge: In 1520 the Aztec ruler Montezuma learned that Cortés and his gold-crazed troops were heading toward his capital, now Mexico City. Knowing that there was no hope of peaceful coexistence with the Spanish, Montezuma immediately stripped his buildings of their gold, silver, and jewels and sent this treasure by caravan to the north, to be buried until the plague of Spaniards had passed. Unfortunately, Montezuma didn’t survive the onslaught. There’s no record of the treasure ever having been recovered, so it’s likely still hidden where it was buried over 450 years ago. The question, of course, is where.
One account says the caravan went 275 leagues north from Mexico City, then turned west into high mountains, where the gold was hidden in a cave in a huge canyon. There’s some question of just how long a league is, but the best guess seems to be that the caravan ended up somewhere in the Sierra Madres.
Other versions say the caravan went much farther north, into present-day Arizona, New Mexico, or Utah.
Previous Searches
• The July 14, 1876, issue of the Taos Weekly New Mexican reported that a young Mexican arrived in town to look for the treasure. Some townspeople went out with him because he seemed to have special knowledge of where to look.
Searching among the rocks in the mountains outside town, he scrambled up a cliff ahead of the rest of the party. After a long silence, he called out that he’d found a cave “filled with gold and lit into the blaze of day with precious stones.” At that moment, according to the newspaper account, a powerful wind blew him off the cliff. He was dashed against the rocks below and didn’t live to reveal the location of the cave. No one else has ever found a trace of it.
• Kanab, Utah, came into the story in 1914, when a prospector named Freddie Crystal rode into town. He told a wealthy rancher named Oscar Robinson that he’d researched the Montezuma legend while in Mexico and found an old book that gave him a solid lead. The book had drawings of symbols that Montezuma’s men had supposedly inscribed on the rocks in a canyon near Kanab. Crystal figured he could find the treasure…but he needed money.
It was common for a businessman to outfit a prospector under an agreement to share any wealth discovered, so Robinson agreed to do just that. Crystal and his string of packhorses trailed off into the mountains and
weren’t seen again for eight years.
By 1922 the town had almost forgotten about the prospector. So they were surprised and excited when he came ambling back out of the mountains saying he’d found the treasure. They got even more excited when he said he needed a lot of help to get it out.
Bullish: When the stock market dips in Pakistan, people sacrifice goats to bring it back up.
The citizens of Kanab migrated en masse into the mountains with Crystal. There, in a canyon on White Mountain, they found strange symbols carved into the cliffs that matched those found in the book. Nearby was a giant tunnel that had been carefully sealed long ago. The townspeople attacked the tunnel with a zeal that matched that of the original conquistadors, but day after day they found nothing. After three months, everyone gave up. Crystal was never seen again.
How to Get There: Taos is in northern New Mexico, about 60 miles northeast of Santa Fe. Ask local residents to point out Taos Peak. Kanab, Utah, is just north of the Arizona border, on Highway 89, about 90 miles east of Interstate 15. Ask local residents for White Mountain and the canyon with the symbols carved in the rocks.
MAXIMILIAN’S MILLIONS
Emperor Maximilian of Mexico (1864–1867) sent at least $5 million in gold, silver, and jewels out of the country when he learned that he was about to be deposed. His men were robbed and killed, and most of the treasure was buried in Castle Gap, Texas.
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