The Famicom rules the world! - (1983 -89)

The N.E.S. !

Nintendo's era of greatness when they had nearly complete control over the videogame industry of the world with their Famicom (NES)! This is if you ask me the most interesting part of Nintendo's history.

1983	The Famicom is out in Japan!

They built a new production plant in Uji city. Nintendo also established Entertainment Centres Ltd. in Vancouver in B.C, Canada. Now Nintendo of America´s authorized capital was raised to 10 million dollars. In July Nintendo listed stock on the first section of the Tokyo Stock Exchange. However, the one thing that players all over the globe will associate with this year is the launch of the Family Computer (a.k.a. Famicom, or the NES as it was named when launched abroad) in Japan and sold in 500.000 copies in the first 2 months mainly because of the low price but also because it didn't had any real competitors on the market. The console was sold for around $100 ($25 more than it was intended to in the first place, still it was less than half the price of the competitors' machines). The stores didn't get any high profit by selling the machines but Yamauchi convinced them that the real profit would come with the games.
 
Disaster struck!
After selling good for a couple of months disaster struck just before the toy industries busiest season (the Japanese New Year). Some customers complained that some games freezed when they were played on some Famicoms. Nintendo's engineers searched like maniacs to find the fault. It was one of the chips that was malfunctioning. After having an meeting with Masayuki Uemura, Gunpei Yokoi and Hiroshi Imanishi, Yamauchi decided to recall all the systems still on the shelves sending them to their plant in Uji to have them corrected, although that it would cost Nintendo millions of dollars.
 
Nintendo is planning for the American release of the Famicom.
When Yamauchi saw how good the Famicom sold in Japan he started planning for the American release of the console.
However due to the video game crash that reached it's peak in early 1984, Nintendo had a difficult time releasing the system in America. During this crash the market was flooded by mediocre games and e.g. Atari games were sold for 10% of the suggested retail price. As a result the market for video games was almost dead. To prevent the same thing from happening to the NES , Nintendo planned to include (and also did) a software licensing program, the famous Nintendo Seal of Quality, so Nintendo would only license games that met their minimal standards of quality. Atari's fault was that they hadn't been able to control that the games from the third party developers were good enough. This was as a matter of fact a part of Yamauchi's plan. He knew that if Nintendo released their system when the video game market was as good as dead, there would be no competition and if successful their NES would be the only choice for gamers around the states...
 
The Nintendo / Atari deal
    What few people know is that one of the first companies that Nintendo turned to, for help in the American launch of their console was Atari. Nintendo approached Atari, who by then had a BIG share of the American video&computer -game market. Nintendo were ready to sell Atari the rights to distribute the NES everywhere outside Japan. They were so close to an agreement that they actually planned to sign the papers on C.E.S. in June the same year.
    However when Atari saw that Coleco demonstarted a (unlawful) prototype of Donkey Kong for their home computer Adam on the C.E.S. they refused to sign the deal since they assumed that Nintendo was also forging a deal with Coleco. After learning why Atari decided not to proceed the deal, Hiroshi Yamauchi called for a meeting with Arnold Greenburg, president of Coleco. When the meeting assembled, Mr. Yamauchi threatened a lawsuit against Coleco that would "leave nothing of the company".
    You might speculate what would have happened if Atari hadn't seen that Donkey Kong protype and actually signed the deal. The worst case scenary would that they would just have abandoned the Famicom. This way they would have elimiated one possible oponent on the video game / home computer -market and their own 8-bit system, the Atari 7800 ProSystem with backwars compability with the current library of Atari 2600 CVS games would have had a much better chance of success...
    Atari was in fact a doomed company when they were negotiating the deal with Nintendo. They were loosing the incredile amount of $2 million - Daily. The only thing that kept the already crashed company from going bankrupt was the fact that 20% of the company was owned by Wanrer Communications, which now is Time Warner.
Thanks to Reinhart for clearing some things up about the Nintendo / Atari deal.
 

The coin-operated game 2 player game Mario Bros is also released.

Facts and Stats.
According to figures provided by Nintendo of America, video game sales this year are $3.2 billion.

Games of importance released this year: Pinball NES , Nintendo / Mario Bros ARCADE , Nintendo

1984	The Famicom and it's games brings Nintendo more money that they had ever dreamt of!

Famicom Mania!
Nintendo earns more money this year than they had ever done before: The Famicom sells very good in Japan and Nintendo's games for the system is very coveted by the customers. The kids even camps outside stores to get their hands on the new games before they gets sold out!
     Now Nintendo got another problem: They didn't have the time to develop and manufacture all the games that the players wanted. (around 1984 -85) This is when Yamauchi splited his employees into the R&D1, 2, and 3 groups and started to recruit new hand-picked designers to created games for Nintendo. He put Gunpei Yokoi in charge of the first R&D team, Masayuki Uemura for the R&D2 and Takeda Genyo in charge for the R&D3 team. Instead of making loads of pretty good games Yamauchi wanted Nintendo instead to release 2 or 3 extremely good games that would sell millions of copies. This way Nintendo spent several millions per game in advertisment etc, which was very dangerous for the company because if the game didn't sell it was just wasted money...

The big "N" Developed and started selling a unique 2 screen coin-operated games called "VS. System". and released the third game in the Donkey Kong series, Donkey Kong 3 that didn´t sold good at all and after that Nintendo stoped making Donkey Kong games. Nintendo tried desperately to get a retailer to release their NES in the US but it was hard because of the big "video game crash" earlier that year.

Facts and Stats.
According to figures provided by Nintendo of America, video game sales this year are only $2 billion, $1,2 billions less than 83!

Games of importance released this year: Punch Out Arcade , Nintendo / Excite Bike NES , Nintendo / Donkey Kong 3 ARCADE , Nintendo / Mike Tyson´s Punch Out ARCADE , Nintendo

1985	The NES is announced for a US release

On the Consumer Electronics Show in January that year the Famicom was announced to be released in the US together with 25 games. At the Winter Consumer Electronics Show in July Nintendo renames the console: Nintendo Entertainment System (NES) and drops the games released with the console to 20. The NES was now set to a release in the late summer (which didn´t happen). In december that year they test released the NES in the New York area only and the console sold in around 90,000 units. Super Mario Bros is released in Japan and takes the land's gamers by storm selling huge amounts of copies (world wide it has sold in 40 million copies, much thanks to that it was often sold together with the machine).

Facts and Stats.
According to figures provided by Nintendo of America, video game sales this year are $800,000,000 (compared to $3,2 billions in 1983!).

Games of importance released this year:Gauntlet NES , Tengen / Golf NES , Nintendo / Tennis NES , Nintendo / Wrecking Crew NES , Nintendo / Super Mario Bros NES , Nintendo / Arm Wrestling ARCADE, Nintendo

1986	The NES is released worldwide!

Nintendo begins shipping the Nintendo Entertainment System (NES) and 15 compatible cartridges to the US (The NES is launched nation-wide in the USA). They hired Worlds of Wonder (the maker of Teddy Ruxpin and Laser Tag), to help market the NES nationwide. The system outsells it's competitors ten-to-one in the states. The NES is also released in Europe this year. Nintendo also started selling the Famicom Disk System in Japan which stored the games on disks instead of cartridges. They also began installing special Nintendo Disk System vendoring machines called Disk Writers in the shops enabling them to reuse the disks. The Disk Drive was later abandoned, mainly because of the fact that it made it much easier for pirates to make illegal copies of Famicom games when they were on disks but also because no companies were making games for the format due to the horrifying licensing agrement Nintendo had for the machine.

The first of the Metroid games is released in Japan for the Disk Drive format. The game wasn´t popular at all but Nintendo decided to release it in the US and Europe anyway which was lucky for them because abroad it became a real blockbuster! The japanese SMB2 (a.k.a. Lost Levels) was also released.

Facts and Stats.
According to figures provided by Nintendo of America, video game sales this year are $100,000,000.

Games of importance released this year:Kid Icarus NES , Nintendo / Super Mario Bros 2 (japanese) NES , Nintendo / Donkey Kong NES , Nintendo / Donkey Kong jr. NES , Nintendo / Mario Bros NES , Nintendo / Donkey Kong 3 NES , Nintendo / Metroid NES , Nintendo / The Legend of Zelda 1 NES , Nintendo / Solomons Key NES , Tecmo / Ghost 'n Goblins NES , Capcom / Goonies NES , Konami /

1987	The NES is going strong!

Nintendo sponsored a "electronical golf tournament" that were arranged using Famicoms and Disk Faxes communicating over the telephone network to test the possibilities to make a network of Famicoms in japan. The NES became the number 1 most sold toy in USA and Zelda 1 became the first stand alone game to sell in over 1 million copies (SMB1 had exceeded that limit earlier but as it often came with the NES/Famicom it doesn't count).The sequel to Zelda 1, Zelda 2 - The Adventure of Link is released for the Famicom. Gunpei Yokoi presented a prototype of the Game Boy for Hiroshi Yamauchi who predicted that it would sell in 25 million copies it's first 3 years on the market.
    This year NEC releases their PC-Engine and markets it as more powerful than the NES.

Nintendo vs. Blockbuster
Nintendo sues the Blockbuster video rental chain for photocopying NES manuals for use with rented NES games. Nintendo won and Blockbuster was forced to include the original manuals with their games.
 

Facts and Stats.
This year 4.1 million American homes buys some sort of Video game system. Three million of these are Nintendo systems and the remaining are Atari and Sega systems. According to figures provided by Nintendo of America, video game sales this year are $430,000,000.

Games of importance released this year:/ Final Fantasy 1 NES , Square / Castlevania 1 NES , Konami / Zelda 2 -The adventure of Link NES , Nintendo / Wizards and Warriors NES , Acclaim / Mega Man 1 NES , Capcom / Mike Tyson´s Punch Out NES , Nintendo / Rygar NES , Tecmo / Section Z NES , Capcom / RC Pro Am NES , Rare / Salamander/Lifeforce (88) NES , Konami / Goonies NES 2 , Konami / Dream Factory: Doki Doki Panic NES , Fuji / Nintendo

1988	Super Mario Bros 2 (European version) is released and Tetris is released worldwide!

The first number of the big Nintendo mag, Nintendo Power were published by Nintendo of America in July. Nintendo also developed the Hands Free Controller. The NES now had around 60 - 70 titles released.
The US and European SMB 2 is released (which wasn´t even a real Mario game at all from the beginning but a weird game called Dream Factory: Doki Doki Panic, read more about that here) and ended up selling in 10 million copies world wide.
Minoru Arakawa (the NOA president at the time) saw the Russian game Tetris on an arcade exhibition in July and realized that this was the game to sell their Game Boy. Over seven million Nintendo Entertainment Systems (NES) are sold this year in the US. This year Tetris is released worldwide!
When Apple´s president Michael Spindel got the question which is the biggest threat to Apple he answered "Nintendo!"
 

Legal problems : starring Atari Games
Place: U.S. District Court in San Fransisco
On December the 12:th this year Atari takes Nintendo to court accusing Nintendo for having an illegal monopoly on the video game industry which they should have achieved through illegal practices such as price fixing, monpolistic business practices and the use of computer chip lockout technology to disallow unlicensed developers to sell NES games. Atari wants $100 Million from Nintendo. Meanwhile Atari finds a way to bypass the lockout chip in the NES (by emulating the chip.). Later Rakawa meets with Atari employee and friend of Arakawa, Hideyuki Nakajima who blames others at the company for the actions taken and suggest a compromise, that Atari remains a Nintendo licensee whilst they still can manufacture their own games (including the bypass chip). Arakawa didn't accept.
After hearing about all this from Arakawa Lincoln shook his head and says "I thought to myself, you have no idea what you have taken on: a tiger who will skin you piece by piece".
In Februari 1993 the Federal Trade Comission clears Nintendo of all the antitrust charges (Including Atari's).
 

Nintendo sues Camerica
Nintendo claims that Camerica violates Nintendo's patents by making the wireless NES Advantage clone the Freedom Stick. Nintendo won and Cemrica had to stop selling their joypad.

Facts and Stats.
According to figures provided by Nintendo of America, video game sales this year are $1.1 billion. The third of the japanese and US homes had a NES! That´s only half as many as the ones that had a VCR! 20% of the gamers are women. This year Nintendo has 85 -90% of the video games market in both the USA and Japan!

Games of importance released this year:/ Blaster Master NES , Sunsoft / Track 'n' Field NES , Konami / Super Mario Bros 2 (western) NES , Nintendo / Faxandu NES , Hudson / Gunsmoke NES , Capcom / Bubble Bobble NES , Taito / Metal Gear NES , Konami / Wizards and Warriors 2 NES , Acclaim

1989	The Game Boy is out and Mario is more popular than Mickey Mouse and Nintendo gets massive "trial trouble"! The Genesis is also released in the USA.

The Game Boy is released in Japan with the game Tetris and later Super Mario Land 1 (SML1 sold in 14 million copies world wide). Studies in the US showed that Mario now was as widely known than Mickey Mouse and Bugs Bunny! Nintendo Power becomes the largest paid-subscription magazine in it's age category.

The Super Famicom is announced
The sequel to the Famicom (The Super Famicom a.k.a. Super SNES) was announced and was at first meant to be backwards compatible with the Famicom/NES.

The Wizard
Universal Studios began showing a movie named "The Wizard" in USA which was a movie starring Fred Savage, Bean bridges and Christian Slater. The whole plot of the movie was that Fred Savage´s character´s little brother competed in a Nintendo World Championship competition and his brother won it all! The audience followed him through the tournament and in the final a new game was introduced for the competitors to play: Super Mario Bros 3
This way the kids got to see a preview of the new Mario game even though the game itself wasn't going to be released until the next year. This resulted in an enormous 'hype' around the game and soon all the kids was talking about this new amazing Mario game they had seen in the movie. When the eagerly awaited game at last was released it sold in incredibly 18 million copies world wide (and grossed $500 million!) which makes it the most sold stand alone video game ever!
Nintendo did not only benefit from the free exposure they got with the The Wizard, Universal Studios also paid Nintendo big licensing fees for the rights to use Nintendo's characters/games in the movie.
Outcome: Nintendo actually made some money at the same time as they got free promortion for their SMB3 without doing a thing...

World of Nintendo shops
Nintendo opened World of Nintendo boutiques all around in USA. Here kids could try out new games and buy all sorts of Nintendo products.

The PC-Engine and the Lynx is released
NEC releases the PC-Engine in America under the name the TurboGrafx-16 (for $189.95). The machine didn't have so many companies backing it up with games though and it's CD periphial (sold for $400.00) didn't  change it either. This year Atari releases the handheld video game system (with a color screen!) Lynx for $179.95. Atari released a handful of great games for the Lynx but as the system was far more expensive than the Game Boy most of the players bought a Game Boy instead.

Tengen releases unlicensed NES games
Through Atari's newly invented bypass chip that let them bypass Nintendo's lockout chip, Atari begins releasing games that  have not been licensed  or approved by Nintendo under the label, Tengen. "Tengen" releases games like: Shinobi, Alien Syndrome, and Afterburner for the NES. Other games released by Tengen later on are: Fantasy Zone, Gauntlet, Klax, Ms. Pacman Pac Man, Pac Mania, RBI baseball and Hard drivin'. Despite Nintendo's efforts and the fact that the games didn't have the "Nintendo Seal of Quality" the sold good (about $40 million a year). The fact that Tengen still was a Nintendo licensee made it much easer for them to distribute their software.

This has the consequences that Nintendo almost immediately sues Atari for patent violations. They claimed that Atari violated the "Racketeer Influenced and Corrupt Organisation Act "(R.I.C.O.), by creating Tengen as a front company in order to defraud Nintendo. but "The big N" was unable to stop them and dropped the suit.

Apart from the lawsuit Nintendo tried many more ways of trying to defeat Atari/Tengen.
On shows like the CES held that same year, Tengen wasn't allowed to market their products in the big "Nintendo booth" where all the Nintendo licensee had their booths which took up the larger part of the area but was forced to have their booth outside where all the "non Nintendo" companies had theirs. Nintendo also started to threaten to sue the crap out of the reatailers which held Tengens products.

Soon Atari sought and won a preliminary injunction that stopped Nintendo from threatening their retailers. However that injunction didn't last to long becuase when Nintendo appealed the decision was reversed! Consequenlty Nintendo could continue to intimidate their retailers.
Some retailers were taken care of in court and but many times it wasn't necessary. Some minor threates we sufficient. At the end of an meeting with the retailer the Nintendo represant could say something like this: "We really like to support you as long as you support us, and we aren't to happy with the fact that you are carrying Tengens products..... Now let's talk about tha software allocations. How many Super Mario Bros 3:s did you say you wanted...".
The retailers couldn't do at thing! If Nintendo would cut the supply of all the new hot NES games for that retailer they would loose huge amounts of customers. Nintendo's products just was too important for the retailers!

Tengen also releases Tetris for the NES and another trial takes place where Nintendo sues Tengen for not having the legal right to sell Tetris. Nintendo managed to prove that they had got the license from the games original creator, the Russian mathematician Alexei Pajitnov, and that Tengen licensed it from a European company named Mirrorsoft who didn't have the right to issue licenses, because they didn't own the game; they just licensed it themselves. Nintendo won and Tengen had to recall all their Tetris games from the shops! Mirrorsoft also had to pay for damages.

The Genesis is released in the US
Sega Enterprises Japan releases the Genesis (know as the Mega Drive in Europe) in USA for  $249.95. It came bundled with the arcade game Altered Beast. They marketed the Genesis as a true arcade experience that's much better other home game machines (like the NES!).

Facts and Stats.
Nintendo had placed a video game system in 21% of American homes. This year  Nintendo sold: 9.1 million Nintendo Entertainment Systems (NES) and 50 million NES games. According to figures provided by Nintendo of America, video game sales this year are $2.3 billion.

Games of importance released this year:/ Ghost and Goblins NES , Capcom / Super Mario Land GB , Nintendo / Battle of Olympus NES , Nintendo / Tennis GB , Nintendo / Tetris GB , Nintendo / Alleyway GB , Nintendo / Mega Man 2 NES , Capcom / Final Fantasy Legend GB , Square / Teenage Mutant Ninja Turtles NES , Konami / Snake Rattle and Roll NES , Rare ? / Lolo NES , HAL / Shadowgate NES , Kemco

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