strategist surfboard: All Your History: Nintendo Part 3 ? Going to War

By the late-1980s, Nintendo seemed to have sewn up the video game industry across the globe. The Nintendo Entertainment System was a staple of the American family room, and Super Mario was a household name, starring in three hit games, several cartoons, and appearing on every product Nintendo could license. But in 1987, NEC released the PC Engine in Japan, a 16-bit competitor to Nintendo?s 8-bit Famicom. A year later in 1988, Sega released their 16-bit Mega Drive console. Nintendo couldn?t rest on its laurels and remain the dominant force in video games. Ironically, Nintendo?s next big idea was a bit on the small side?

Going to War

Gunpei Yokoi?s handheld Game & Watch LCD toys was one of Nintendo?s earliest successes in the video game industry. But the future was clearly consoles, and Yokoi had been working on a portable version of the Famicom for years. The trick, of course, was creating a device that had the right mix of power and affordability. Replicating the bright, colorful animation of most home consoles would require a backlight and a big drain on a device?s battery life, not to mention pricey manufacturing costs. To keep costs down and batteries up, the system would skip color altogether. Yokoi?s final design was finished and released as the Game Boy in April 1989.

The 8-bit, two-button console took four AA batteries that lasted for at least 10 hours, all for about ninety dollars. While the Game Boy?s monochromatic, greenish display wasn?t much to look at?and couldn?t be seen at all in the dark?it gave consumers one of the most successful pack-in titles yet: Tetris, an addictive Russian puzzle game for which Nintendo had purchased the console rights. It proved to be so addictive, in fact, that Nintendo sold out its initial run of a million Game Boy units in mere weeks of its release, likely on the strength of Tetris alone. Estimates peg Tetris?s sales on the Game Boy at over 30 million copies to date.

A few months later in September, Atari released its rival handheld?the backlit, full-color, 16-bit Lynx. It didn?t stand a chance. The Lynx may have been more powerful, but?as Yokoi knew?that power came at a cost. The Lynx?s six AA batteries could only provide power for roughly half the time of the Game Boy?while selling for more than twice as much, ringing up at $190. The choice for consumers was clear, and the Game Boy was a massive success. Though Sega?s 8-bit Game Gear, released a year later, had fared better than the Lynx, the Game Boy was already a runaway train that couldn?t be caught. It easily outlasted its competition, selling nearly 119 million units in its unprecedented 14 year lifecycle.

The fact that the Game Boy boasted Nintendo?s exclusive properties only solidified its position as the handheld leader. Shortly after the system?s debut, Nintendo published Super Mario Land, a new title produced by Yokoi himself. Mario left the Mushroom Kingdom and for a place called Sarasaland. Instead of rescuing Princess Toadstool from King Koopa, Mario fought a ?Mysterious Spaceman? named Tatanga to rescue Princess Daisy. But, of course, the differences didn?t matter: Mario jumped and stomped his way to 18.4 million sales.

Other famous names appeared on the Game Boy: Yokoi brought his lonely space adventurer back for Metroid II: The Return of Samus in 1992, and Shigeru Miyamoto?s The Legend of Zelda: Link?s Awakening was published a year later. But not every Game Boy star came from the NES first. In 1992, a Nintendo-sponsored developer, HAL Laboratory, created a new platformer called Kirby?s Dream Land, which starred a flying pink puffball who could swallow up enemies like a vacuum cleaner. And just as Mario was named after Nintendo?s landlord, Kirby was named for John Kirby, the ace attorney who?d defended the company in Universal?s 1983 Donkey Kong lawsuit.

Even though Nintendo was handily winning the battle for handhelds, the home console war was heating up. Though the Famicom was king in Japan, by 1990 Sega?s 16-bit Genesis?the American name for the Mega Drive?was making serious waves. Sega had taken advantage of their competitor?s adversarial relationship with third-party developers. For years, Nintendo had held developers hostage by rationing out lockout chips, without which games wouldn?t play on the Famicom or NES. Because Nintendo sought absolute control over its products, it transformed itself into little more than a tyrant.

Jeff Ryan, author of Super Mario: How Nintendo Conquered America, explains how Sega leveraged Nintendo?s bad behavior to their benefit:

??this is one of the reasons why when Sega came out with the Genesis, so many third party developers flocked to them?just because Sega was treating their developers well and Nintendo was not. And Nintendo was able to do that because they were the only game in town?they had something like 92 percent market share. But when the Genesis came around and the Genesis started to gain speed, people realized, ?oh, finally, there?s another heavyweight contender out there. There?s someone else who can take on the Goliath.??

Sega churned out arcade ports and secured exclusive third-party releases?a side effect of a clause in Nintendo?s contracts forbidding developers from making games for other consoles. One of the most important turned out to be the very first console version of Electronic Arts? new sports franchise, Madden NFL Football, which earned huge sales during Christmas 1990. And in the following summer, Sega released their home-grown killer app: a new, high-speed platformer called Sonic the Hedgehog. Suddenly Sega had their own Mario, but one with wild hair, a ?90s ?tude, and the remarkable ability to finally threaten Nintendo?s stranglehold on the American console market.

But, of course, Nintendo had long been working on the NES?s successor. The 16-bit follow-up was released in the fall of 1990 in Japan as the Super Famicom, and in summer 1991 in America as the Super Nintendo Entertainment System. The console came with Shigeru Miyamoto?s most expansive and best-looking game yet: Super Mario World. Once again, Nintendo?s pack-in title helped move systems: according to Ryan?s book, Super Mario World sold 3.5 million copies in Japan, while in the States, gamers bought 17 million. Three days after its U.S. launch, retailers had sold out of the Super Nintendo console.

The SNES was a hit, but unlike its predecessor, it faced some fierce competition. Despite Super Mario World?s brilliance, Sonic?s rush onto the scene had suddenly made Nintendo seem?uncool. Sega seemed to represent everything that was hip and new in video games, while Nintendo looked safe, stodgy, and downright old?even though 1991?s SNES was technologically superior to 1988?s Genesis in every way. By 1992, sources estimate the Genesis had a roughly 55 percent market share over its competitor. Owning nearly half of the market after only a year was impressive for Nintendo?s second console, but it was not the dominance that the NES had enjoyed right out of the gate.

By 1993, cracks started appearing in Nintendo?s public image. A big-budget Hollywood movie based on Super Mario Bros. starring Bob Hoskins, John Leguizamo, and Dennis Hopper was released that summer?to abysmal reviews and performance. What should?ve been Nintendo?s ultimate triumph was a universally reviled public embarrassment. Today, Super Mario Bros. holds a place in cinematic history as not only one of the worst video game movie adaptations, but simply as one of the worst movies, period.

That wasn?t the only problem Nintendo faced that year. In September, Acclaim published SNES and Genesis ports of Midway?s ultra-violent arcade fighter, Mortal Kombat. But despite being 16-bit versions of the same game, the ports were anything but equal. The Genesis version featured just about every blood-spattering hit and spine-ripping Fatality from the original. The SNES port, however, was heavily modified to reflect Nintendo?s ?Family Friendly? policy. ?Fatalities? were out; tamer ?finishing moves? were in. Absurdly, brutal hits didn?t result in sprays of blood, but sprays of greyish ?sweat.? It?s estimated that the Genesis version outsold Nintendo?s by roughly four to one. The Mortal Kombat debacle helped Sega maintain the Genesis?s lead over the SNES for a while longer. And the move did seemingly irreparable damage to Nintendo?s reputation with gamers, as the company continues to fight the perception that it just makes games for kids.

But the final tally of the first true console war between the Genesis and the SNES didn?t seem to account for Nintendo?s missteps. Though Sega?s never released data, estimates tally the Genesis?s worldwide sales at about 29 million worldwide?not quite two-thirds of the Super Nintendo?s 49.1 million global sales, which it managed despite Sega?s four-year head start.

When all was said and done, the SNES simply had the better games. Sega?s ascendance forced Nintendo to allow multiplatform games from its third-parties. But?Mortal Kombat aside?the Super Nintendo?s superior hardware meant that, most of the time, games looked, sounded, and played better. Nintendo could also claim the support of one of Japan?s top developers, Squaresoft, whose Final Fantasy series, The Secret of Mana, and Chrono Trigger were SNES exclusives, and helped popularize the RPG genre in America.

And besides Super Mario World, the SNES had an impressive roster of first-party games that became industry legends. Familiar titles like The Legend of Zelda: A Link to the Past and Super Metroid appeared, not to mention launch title F-Zero, the Super FX chip-powered Star Fox, and the genre-spawning Super Mario Kart.

And that wasn?t all: Nintendo may have looked foolish with their sweaty Mortal Kombat port, but the company?s decision to buy a 49 percent stake in British developer Rareware in 1994 proved to be nothing short of genius?as was releasing one of Nintendo?s oldest properties from its closely guarded vault. That year, Rare and Nintendo released Donkey Kong Country, a platformer that had more in common with Super Mario Bros. than the 1981 arcade classic. But visually, Donkey Kong Country was like nothing else on the market. Its developers had animated pre-rendered 3D graphics as 2D sprites. The effect was a game that looked far more technologically advanced than it actually was.

Donkey Kong Country sold over eight million copies worldwide, becoming the second best-selling SNES game of all time. Donkey Kong had come full circle, having regained his rightful place as one of Nintendo?s most recognizable and profitable characters.

And like Donkey Kong, Nintendo was also regaining its position as top banana in the video game industry. Its reputation for first-class products?and its first-class ego?had seemed well-earned with the SNES?s success. But just as its haughty, prideful attitude with third-parties had allowed Sega to swoop in, Nintendo?s tradition of arrogant business decisions would prove that what goes around, comes around?

Tune in next time to see Sony come out to play?

Check out Part 1 and Part 2!