Books: a book about how Nintendo built business processes in the USA has gone to print

Bombora Publishing House announced the departure of Jeff Ryan‘s book “Super Mario. How Nintendo Conquered the World” (in the original — Super Mario: How Nintendo Conquered America). In the center of the narrative is the story of the development of the American daughter of Nintendo and the story of how the Japanese company itself was rebuilt into a gaming giant. We publish the first chapter of the book.

THE BIRTH OF NINTENDO OF AMERICA

In 1980, a session in an arcade machine cost a quarter. The production of games was much more expensive for him, but the reward was more significant than just initials in the list of records. Arcade machines have become a real gold mine. It was enough for manufacturers to update the old electromechanical games that had been collecting coins regularly for a hundred years — first cents and nickels, then dimes and quarters. One by one, reel mechanisms and dolls gave way to new fashionable “horror stories on TV” and “complex video games”. These games on vertical TV screens with their semiconductors dragged players into the world of inhuman reflexes, sweaty palms and numb fingers, and all in order to defeat a computer opponent. It seemed that a small piece of science fiction from the XXIII century was suddenly transferred to the era of shoulder pads of the 1970s.

The biggest game manufacturer at that time was Atari, which in 1972 released the first mega-successful hit called Pong. She did not stop there and after Pong she developed one successful game after another — Asteroids, Tank, Lunar Lander. In 1980, Atari introduced two incredible projects at once: Battlezone, a game about tank battles with a horizontal black-and-white vector monitor, and Missile Command about the nightmares of the Cold War, where players had to defend civilization by shooting down nuclear missiles of the Soviet Union. Hardly anyone could compete with the then Atari. The company, founded by an American hippie, earned countless millions of dollars, and ten years ago it simply did not exist yet. Everyone dreamed of at least touching her success: these aspirations stimulated the growth of the gaming industry by 5% monthly.

There was no question of surpassing Atari.

A company called Nintendo of America, which employed six people, had an important advantage over competitors: she has already been successful. There was also a disadvantage — it was successful exclusively in Japan. Nintendo, based in Kyoto, has been creating playing cards since 1894, but at some point switched to the production of toys, which it sold through existing supply channels. Many Japanese companies have already been engaged in arcade games: Pac-Man from Namco, Frogger from Konami, Bomberman from Hudson Soft and Space Invaders from Taito came out. As journalist Chris Kohler noted, the peculiarity of games from Japan was their personalization: unlike abstract moving figures, as in Breakout or Tempest from Atari, Japanese games had very schematic characters, positive and negative. If everyone was involved in games, then why not try Nintendo.

Gumpei Yokoi was one of Nintendo’s most experienced engineers. He started a long journey in the company as a worker at a machine for the production of playing cards. Once, for a joke, Yokoi designed a sliding mechanical arm. Nintendo President Hiroshi Yamauchi appreciated the joke and launched the toy for sale. By 1970, Ultra Hand had sold 1.2 million pieces, and soon it was accompanied by new developments of Yokoi: the Ten Billion Barrel puzzle, the Love Tester device and a remote-controlled vacuum cleaner that anticipated the Roomba robot vacuum cleaners.

The Japanese engineer has achieved the most notable achievements in the field of portable electronic games. One day he was traveling by train and noticed that his fellow traveler was pressing the buttons of a pocket calculator out of boredom. Yokoi came up with the idea to make a small simple toy on batteries. (As with Ultra Hand, he shared the idea with the overbearing Yamauchi just to avoid awkward silence. The engineer thoroughly understood the topic of seven-segment displays, which, thanks to the display elements that turn on and off separately, could display all ten Arabic numerals. If you draw a man with a lot of hands and highlight only two of them at the same time, such screens are quite capable of displaying game animation, and thanks to the boom of pocket calculators, they cost quite cheap. Games that worked on 200-kilogram machines and required a hundred yen per session, it turned out to be crammed into a device that fits in a pocket. It was called Game & Watch.

The first game in the Game & Watch line, Ball, was released in 1980 and was dedicated to juggling. The players watched the ball as it flew from one hand to the other, and alternately pressed the right and left buttons to keep it in the air. In game mode A there were two balls, in game mode B there were three. Five more similar games were included in the “Silver” collection, so named because of the shiny color of the case, and in 1981 the “gold” collection with an additional five games went on sale. Buyers literally swept them off the shelves, the company was actively developing new ones.

And this is only a small part of Nintendo’s success in the gaming market. In the wake of the popularity of Pong and its clones, a nondescript but successful Color TV Game 6 console was released, and next year — a sequel with fifteen games. In 1974, the company achieved success by releasing a game for the Wild Gunman light pistol. The subsequent EVR Race, dedicated to horse racing, failed in sales, but the company made up for lost time thanks to the first full-fledged game for arcade machines, Computer Othello. In order to put the production of new games on stream and arrange their release every couple of months, Nintendo formed a permanent development team, which included Yokoi. The company clearly intended to ride the wave of fashion and success of video games, devouring hundreds of yen of players in stuffy halls with arcade machines. But how easy was it to repeat the success in the home market already abroad?

Nintendo president Hiroshi Yamauchi was eager to break out of Japan and become a world leader. Yamauchi remembered well the impressions of a working trip to America in the mid-50s, where he flew to negotiate with Disney representatives about licensing their characters on playing cards. The true scale of the global entertainment industry shocked him and clearly showed how backward the Nintendo family business of producing playing cards exclusively for the Japanese market was. Yamauchi, a short and mobile man, gray-haired beyond his years, worked tirelessly all the post-war years to achieve success. But true success in the era of zaibatsu and international corporations was unthinkable without entering the international market.

In 1889, Hiroshi’s great-grandfather, Fusajiro Yamauchi, opened his first shop in Kyoto with colorful cards called hanafuda, which depicted flowers. He named the store Nintendo Koppai. (The Japanese word nintendo means “leave luck to heaven” or “we do what we can,” which hints at the element of chance that is always present in card games.) Fusajiro sold cards to gamblers who used a new deck for each hand. Over the years, Nintendo has experienced many shocks, following the turns of the Japanese economy — the collapse of defeat in World War II, the revival from the ashes in the post-war years and another crisis after the Summer Olympics in Tokyo in 1964.

Hiroshi Yamauchi was barely twenty-one when he had to take over the company in 1949 after his grandfather’s stroke. It’s time for a change for Nintendo. Yamauchi has tried many business models – rice trading, taxis, love hotels with hourly rates. None of this went off until he decided to use an established chain of stores to sell toys. The persistent desire to conduct the business of his company by his own methods did not exactly help Yamauchi find friends. He even distanced himself from his own family — the children seemed to him to be random guests who tiptoed around in the rare hours when the businessman was at home. As it happens with many family businesses, business has gradually become more important than the family for which it was once started.

Yamauchi was looking for a person to whom he could entrust the launch of Nintendo in America. But to whom? Katsuhito’s son was too young, although Yamauchi himself took over the affairs of the entire company, being even younger. The other two children are girls, Yoko and Fujiko. However, there was a long tradition in the Yamauchi family — to involve sons-in-law in the affairs of the family. Therefore, the choice fell on the spouse of the eldest daughter of Yoko. It was he who was to head the company’s division in the USA.

That’s just that he was not too eager to take up this assignment. Minoru “Mino” Arakawa was the second son of a wealthy textile family from Kyoto. Mino knew about the West firsthand — together with Yoko, he had been living in Canada for a long time, where he was engaged in the construction business as a sales representative of zaibatsu Marubeni. Arakawa spoke good English, graduated from the Massachusetts Institute of Technology and once traveled all over the United States in his Volkswagen minibus. In this, he was very different from the callous and insensitive Yamauchi, who took his daughter to his favorite geisha club for his twentieth birthday — and stayed there after his daughter went home.

Arakawa didn’t want to work at Nintendo before, but if Yamauchi learned anything from his grandparents, it was perseverance. (Hiroshi’s father left both his family and his future Nintendo presidency for another woman.) Arakawa nevertheless succumbed to persuasion and agreed to head the future division, Nintendo of America. At the same time, his wife was against it — she did not have warm feelings either for her father or for his company — but Yamauchi painted the future prospects too convincingly. In the end, Arakawa was allowed to keep his surname, which the sons-in-law of the two previous generations of the family could not boast of.

Nevertheless, Yoko’s bad forebodings were confirmed when they set off from Vancouver to New York. Their “sales channel” in Seattle in practice turned out to be two truckers named Ron Judy and Al Stone, who were supposed to buy used Nintendo arcade machines in Hawaii and then sell locally. Arakawa hired them on a commission basis before going to the east coast, and instructed them to negotiate new sales channels in the North American market. Then it was time to hit the road. They had to travel across the country to New York, which was to become the headquarters of Nintendo of America. What could have gone wrong? On May 18, 1980, the day the couple left Canada for Washington State, the eruption of Mount St. Helens occurred.

Having safely survived the disaster, the Arakawa family left the ash cloud and, having traveled three thousand miles, opened its first store in New York, and rented a warehouse across the Hudson River in Elizabeth, New Jersey. Their choice fell on New York, because the Big Apple at all times (and the current one is no exception) remained the world capital of toys. One dollar was enough to take the subway to three customers in a day without having to spend time and money on regular flights and hotels.

But things didn’t go right right away. The time difference between Manhattan and Kyoto is fourteen hours, so someone had to either go to bed very late or get up very early. Yoko didn’t speak English as well as her husband, and it was hard for her to get used to the grandiose gutter of New York – they moved in the very year when there was a mass strike of public transport, a police raid at Studio 54 and the murder of John Lennon. These events created a completely different atmosphere than in Vancouver, friendly to all Asians on the cozy Pacific coast. Arakawa felt out of place, they only had to understand the requests of the American players. In the unfriendly atmosphere of the city, the streets of which were patrolled by “guardian angels”, the idea to make a shooting game came by itself.

The players’ obsession with shooters began with the release of the extremely successful Space Invaders in June 1978 (among other things, the game caused a shortage of ten yen coins and the subject of national pride in Japan, comparable to the cult of Pele in Brazil). In 1980, Taito released a color sequel to Space Invaders, Part II. The sequel became a worldwide hit. Namco responded to the success of competitors with its Galaxian, which was released in 1979. Strictly speaking, it was still the same Space Invaders, but the enemies there could get out of the general pile and move along a different trajectory. Of course, the game became a hit. The sequel to Galaxian, Galaga, was released in 1981 and got minor improvements. As a result — another world hit.

Nintendo tried to join the general success by releasing the Radar Scope game for the home market in 1980. The trick of Radar Scope was that the opponents went down, but then retreated back to a safe place at the top of the screen. Players could not hide behind shelters, and the more shots they fired, the less rapid-fire the “laser blaster” became. And the contours of the buildings on the background created the illusion that the action takes place in the middle of skyscrapers, on which a horde of aliens swoops.

Radar Scope became Nintendo’s biggest game that year. In addition, the company could boast of the aviation shooter Space Firebird with a view from above, as well as last year’s Space Fever, a direct repetition of Space Invaders; Space Launcher (do you feel the direction of the games?), an arcade in the style of Frogger; Monkey Magic, tracing paper with Breakout; Head-on-N, a maze game with racing cars, which in Pac-Man was inferior to everyone. There was also Sheriff, a shooter in the Wild West setting. It seemed to be the perfect game for an American audience, but the strange and annoying control from two joysticks at once spoiled the whole impression.

So, a few old crafts, a game with strange controls and a proven hit. Yamauchi believed that Radar Scope had the greatest chance of success in America, and advised Arakawa’s son-in-law to focus on it. Nintendo launched the production of three thousand slot machines with the game, which then went from Kyoto to a warehouse in New Jersey. Arakawa’s task was to sell them all. If he succeeds, then Nintendo in America will have solid ground under its feet.

Assembling such a large number of machines with Radar Scope was supposed to take several months, so Arakawa began pre-ordering in advance. His first independent decision as head of Nintendo of America was the rejection of all other products of the company in favor of Radar Scope: the success of the game meant the success of the whole Nintendo. The rights to sell Space Firebird were given to Gremlin, which collaborated with many Japanese companies — Nichibutsu, Namco and Konami. Space Fever did not reach the American market. Sheriff eventually released Exidy under the name Bandido. All these games did not claim to be big sales, so no one was against it.

The problem was that the real market is not like Let’s Make a Deal: if there are goats hiding behind all the other doors, it does not mean that Yamauchi and Arakawa chose the one with a brand new car behind it. It seemed to arcade machine sellers that Radar Scope had too nasty beeping (apparently, they managed to get used to the beeping of hundreds of their machines and they no longer caused migraine attacks), and they were not too impressed with the sales figures in Japan. And did anyone need another clone of Space Invaders, only expensive and from an unknown company?

By hook or by crook, Arakawa managed to realize a thousand Radar Scope, barely covering the cost of production and delivery. But Yamauchi sent him three thousand. So two thousand vending machines were now gathering dust in a warehouse in New Jersey and aging about as fast as milk without a refrigerator. That is why Yoko, who now smoked three packs of cigarettes a day, did not want her husband to get involved with her father’s business.

It could hardly be called a success. In Seattle, Ron and Al, who went out of their way to secure at least some sales of an expensive game, were doing no better. What was left for Arakawa to justify his father-in-law’s trust? Continue to sell vending machines, getting more and more disappointing figures? Or start with a clean slate and focus on new models next year? Yamauchi would have fired him for any of these decisions. He had accumulated a lot of experience of such treatment with his relatives: he calculated the first one back in 1949, together with all the managers who had caught the previous heads of the company. What could Arakawa have done to avoid such a fate?

There was a third option: to work ahead of the curve and immediately resign in order to preserve dignity. In Japan, where the samurai sword wakizashi has always been a faithful helper to save the violated honor, such an act would certainly be appreciated. But Arakawa was doing business in America, a country where they invented breakfast cereal, an ice cream cone and a notepad for notes solely by mistake. Mistakes are the real engine of progress, not needs at all. Arakawa had an idea, unprecedented and bold, that would never take off in Japan. But even if his plan didn’t work, it was still worth trying.