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 (55 page)
Rosen advocated that manufacturers and distributors start manufacturing and selling kits to the operator, allowing them to convert older games without having to purchase completed cabinets. According to Rosen, the idea stunned the audience and some people booed him. “My speech was considered blasphemy,” he later wrote of the event.
In the late 1970s Bluhdorn asked Rosen to join the Paramount Group, and his headquarters were moved to the Paramount studio lot. Barry Diller, the chairman of Paramount, and Michael Eisner, the president of Paramount, joined the Sega board, and Rosen joined the Paramount board.
In late 1981 Rosen proposed that Gulf & Western buy out the minority shareholders, including himself. The decision was to buy out the minority shareholders. Rosen agreed to stay on as corporate advisor, and was there to see the collapse of the coin-op and consumer markets a few months after the buy-out in 1982. In 1983, however, about one year after the crash of the arcade industry, the oil giant started looking for ways to get out of the video game industry. Gulf & Western sold Sega’s U.S. assets to Bally/Midway, then con
tacted Rosen and offered him the opportunity to buy back the Japanese operation for $38 million. Rosen put together a team of backers and assumed control of the company in March 1984. After the buy-back, Hayao Nakayama, one of Rosen’s backers, became CEO.
Having witnessed the crash of the arcade industry, Nakayama decided to diversify Sega’s activities to include home products. Nintendo had already launched the Famicom, so Nakayama turned his attention toward America.
The New EmpireI just love playing Mario on my Atari.
—Yasmine Bleethe, actress on
Baywatch
Every dog has its day, and this one is having a big day.
1—Trip Hawkins, founder, Electronic Arts
It can carry a glass of water to you, or a glass of milk, or whatever, so it’s really hot.
—Ernie Anastos, former anchorman,
WABC-TV Eyewitness News
Nintendo began marketing the Nintendo Entertainment System (NES) in 1985 with a single sales territory—New York City—and 100,000 game consoles. By the following Christmas, the NES could be found in stores coast to coast and in 1.9 million homes. With a new sense of confidence, Nintendo president Minoru Arakawa sponsored a survey called the North Pole Poll as he prepared for the 1986 holiday season. In the survey, children were shown the toys that retailers considered to be their top prospects and asked to choose a favorite. Some of the candidates included Rambo action figures, Teddy Ruxpin, Barbie, and baseball gear. The number one pick was the NES.
To publicize the results, Nintendo’s PR firm produced a video news release about the survey and sent it to television stations across the country. Scores of news shows ran the story, including WABC TV in New York City. The problem was that while an ever-growing body of children knew about Nintendo, the message had not yet reached most adults. When
WABC Eyewitness News
anchors Ernie Anastos and Roz Abrams discussed the story on the air, they clearly had no idea what the NES was or even how to pronounce the name Nintendo.
The segment began with Nintendo’s prepackaged video release about the North Pole Poll. Once the clip ended, Anastos tried to sound knowledgeable as he said:
“Nine-tendo
, that is the high-tech video entertainment system.”
“I think that is part of
Nine-tendo
, there,” agreed Roz Abrams, pointing at a Robot Operating Buddy (ROB), which came bundled in the deluxe NES package.
“Let’s see if we can push this button here,” said Anastos. He flipped the power switch on the back of the robot and it began rotating its arms to the right in a slow and grinding motion.
Assuming an air of expertise, Roz leaned forward and pushed the robot’s arms down. “It’s part video game, part computer, part everything, and it goes up and down and all around, and if you have all of the pieces….”
“It can carry a glass of water to you, or a glass of milk, or whatever, so it’s really hot,” added Anastos.
NES sales increased exponentially as Nintendo began its national sales campaign. According to Nintendo’s internal records, the company sold 1.8 million
game consoles in the 1986 fiscal year, 5.4 million in 1987, and 9.3 million in 1988. In 1989, Nintendo changed its fiscal year from September–August to March–February, leaving the company with a seven-month fiscal year in 1989. During that seven-month period, Nintendo sold 5.3 million game consoles, and another 7.6 million in 1990.
Nintendo’s earnings soared as well. In 1987, Nintendo sold more than $750 million worth of games and hardware in the United States. That figure more than doubled in 1988 to $1.7 billion. By 1990, Nintendo had sold more than 350,000 cartridges worldwide. Nintendo sales alone accounted for one-tenth of the Japanese-American trade deficit.
Aware of the complexities that their company’s success might bring, Arakawa and Howard Lincoln hired two outside firms—McCann-Erickson and Foote, Cone & Belding—to handle advertising. Arakawa hired a public relations firm, too—Hill and Knowlton. The largest PR firm in the world at the time, Hill and Knowlton represented the nation of Kuwait just before and during the Gulf War.
As the NES gained prominence, Nintendo became a lightning rod for protests from several groups. One challenge Hill and Knowlton’s account executives faced was trying to help Nintendo create a positive image at a time when Americans were becoming increasingly upset about the Japanese–American trade imbalance.
That was a time when Japanese influence in American business was really picking up, and there was a certain animosity toward Japanese companies. You’d call reporters in certain quarters and they’d basically say, “Three strikes and you’re out.” Strike one was that the video game industry was supposed to be dead; two was that they’d never heard of a company called Nintendo before; and three came when they said, “Oh, so they’re Japanese!”
—Richard Brudvik-Lindner, former group supervisor and head of Nintendo of America Account Team, Hill and Knowlton
Protests came from all directions. Educators and parents complained that Nintendo was distracting children from their studies, a 1989 study stated that Nintendo was partially to blame for a 10 percent decrease in the cardiovascular
fitness of American schoolchildren,
2
and Jewish groups protested that the outline of the third dungeon in a game called
The Legend of Zelda
was an inverted swastika. When a Seattle-based group called Families for Peace protested outside Nintendo headquarters during the 1987 holidays, Hill and Knowlton executives had to scramble to preserve their client’s reputation.
Families for Peace decided they were going to protest against the war toys that Nintendo was creating and shipping. Nintendo had their little Zapper light gun and, of course, a lot of the games involved shooting or things of that nature.
That was a big test for Nintendo because they were a Japanese company and Arakawa hadn’t faced protest before…. Mr. Arakawa didn’t have a cultural reference for how to deal with this. Howard Lincoln had a legalistic way of dealing with it, but it wasn’t going to do much for them in terms of their public persona, especially at that critical juncture. He took a very lawyerly, legalistic approach. We convinced them that what they needed to do was really soften Nintendo’s image at the time, so we went out and bought a whole bunch of Christmas trees and lights and decorations. We bought some white plastic sheeting that we put over the Nintendo sign at the entrance, and we put these Christmas trees up and covered up the name.
We had to cover the name because we assumed there would be news cameras. Here was this crowd of families marching up and down in front of Nintendo…. Families for Peace. There were moms pushing strollers with babies, holding signs that said, “No guns,” and “Nintendo breeds war.”
—Richard Brudvik-Linder
In an effort to create a softer image, Arakawa turned to Howard Phillips, one of Nintendo’s first employees. Phillips, the company’s product analysis manager, was Nintendo’s most skilled video game player. He was energetic, enthusiastic, and a natural evangelist for video games. Though he was originally sent to the New York launch to work in the warehouse, he proved more valuable as a salesman and product demonstrator.
Phillips made the perfect spokesman for Nintendo not only because of his skill as a gamer and his enthusiasm, but also because of his appearance. With short red hair and a youthful demeanor, Phillips had the bright smile and the wholesome countenance that Nintendo needed to counteract bad publicity.
Dressed in bow tie and jacket, Phillips went on publicity tours, judged contests, became the president of the Nintendo Fan Club, wrote columns for the
Nintendo Fun Club News
—the forerunner to
Nintendo Power Magazine
—and eventually starred in a
Nintendo Power
comic strip called “Howard and Nester.”
Phillips played along as Nintendo and its PR firm portrayed him in a slightly nerdy fashion. His relaxed mannerisms made him instantly likable, and he knew how to build on his own affability by making himself open and approachable. In 1986, Nintendo began promoting him as “the man who plays games for a living.” The campaign lasted until he left the company in 1991. During that time, he became somewhat of a luminary. “I wasn’t as big as a movie star, but I was as recognized as the actors in network television shows. I was probably as recognized as the guy from
McGyver.
” Near the end of Phillips’s time at Nintendo, one survey found that 59 percent of boys between the ages of nine and eleven could identify him.
We were not convinced that video games had a long life. We knew that if the market was flooded with poor quality video games, it’d blow up overnight.
—Howard Lincoln, chairman, Nintendo of America
Although they conceded that Nintendo had done better than expected during its national launch, many journalists and toy industry analysts believed that the resurgence of video games would be little more than a brief fad. This put Nintendo in a dangerous position. Parents would not spend $80 purchasing an NES for their children if they believed the video game craze was ending, and buyers for the big retail chains might refuse to carry Nintendo products if the industry was shaky. In a pamphlet called
The Facts on Home Video Games
, Howard Phillips listed four insufficiencies of older game systems that might have led to their demise:
Limited in graphics and depth of play
Played at their best only in arcades
Restricted to few colors
Constrained by poor audio qualities, with a limited variety of sound effects
Nintendo spokespeople often attempted to distance their company from Atari when dealing with the media, a difficult task considering that its sales force was comprised of Atari salespeople. They began spreading the message that Nintendo had analyzed Atari’s mistakes. In a 1986 interview on the Financial News Network, Nintendo of America director of sales Bruce Donaldson stressed inventory management and system security as the reasons Nintendo would last longer than Atari had.
Very important to the Nintendo System, at this point in time, [is that] it cannot be what we refer to as “reverse engineered.” Nobody can buy a unit, from an engineering standpoint, take it into [his] factory, and figure out how to make software. There are security codes built into our entire system.
—Bruce Donaldson, former director of sales, Nintendo of America
Donaldson was mistaken. A British software development house called Rare Ltd. reverse engineered a Famicom in 1984. And in 1988, engineers at Salt Lake City–based Sculptured Software reverse engineered the NES to create their own game authoring equipment, then created a thriving trade selling NES development kits to other software developers. Other companies such as Tengen, the home game division of Atari Games, invented technologies to disable the security chip that Nintendo embedded in the NES to lock out unlicensed games.
We were very concerned about the quality of the games. If we didn’t come up with good quality from our associates, we thought that we might go like Atari. So we really had to be strict with our quality screening system.
—Minoru Arakawa