Lecture+17+Notes

= __Lecture 17 Notes__  = ===For the Fall 2010 Discussion Board, Click [|HERE] ===

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 * American video-games dying around 1983 – still strong elsewhere in the world
 * American companies couldn't stay alive with only foreign markets
 * Foreign companies didn't have problems – Nintendo continued to do well after crash
 * May 1983 – Nintendo released new video-game console in Japan – Famicom
 * Famicom - “Family Computer” – unlike any previous video-game console
 * More powerful – power did not come only from central processor
 * Famicom used 6502 processor – had been used in many home computers
 * 6502 almost identical to 6507 processor used in Atari 2600/VCS
 * Years passed – technology improved – Nintendo able to get more power from 6502
 * Prices came down – able to add in extra components to further power
 * Famicom used separate graphics processor – Picture Processing Unit (PPU)
 * More RAM than previous consoles – allowed system to address more on-screen pixels
 * Biggest difference – controller – previous systems like VCS used joysticks
 * Joysticks uncomfortable for long play-times – tended to break with heavy use
 * Intellivision used dial-pad to replace joystick – not very intuitive
 * Nintendo – plus-shaped control pad developed by Gunpei Yokoi for Game and Watch
 * Used plus-shaped pad for Famicom controller (eventually called the D-Pad) – more comfortable than joysticks
 * 2 Buttons on right side of controller – start and select buttons in center for other functions
 * Controller eventually replaced joystick as symbol for video-games
 * Famicom released in Japan – few months of strong sales – customers reported problems
 * Systems would crash/freeze under certain circumstances
 * Reports came in right before Japanese New Year – busiest time for Japanese toy market
 * Nintendo engineers frantically search for problem – found a faulty chip used in Famicom
 * Problem could have killed Famicom – like faulty systems killed Adam Computer
 * Problems turned into example of Nintendo loyalty to customers
 * Hiroshi Yamauchi – Nintendo President – recalled entire first shipment of Famicom
 * Notify customers/retailers – Nintedo paid for returned/replaced units – cost Nintendo a fortune
 * Yamauchi felt protecting Nintendo name was vital – didn't care what it cost
 * Second shipment had no problems – Famicom quickly became huge success for Nintendo
 * Over 500,000 Famicom consoles sold in first 2 months after release to stores
 * Tremendous sales in japan – Yamauchi wanted to try selling Famicom in US
 * Remembered difficulty breaking in US with arcade games
 * Knew successful products in Japan did not mean successful products in America
 * Nintendo had small presence in US – Nintendo of America – mainly due to Donkey Kong
 * Yamauchi felt this presence not enough to get Famicom properly marketed and into stores
 * Another problem – American video-game market dying out
 * “Video-game” became dirty word to retailers – they didn't listen to suggestions of new video-game products
 * Nintendo needed consumer-representation in America to help with problems
 * Yamauchi felt best company to turn to was Atari
 * Atari still biggest name in video-games in 1983 – still had biggest market-share
 * 1983 – Yamauchi asked Nintendo of America VP Howard Lincoln to contact Atari
 * Called about 4 months after Ray Kassar announced Atari's poor yearly-earnings
 * First big sign of trouble of American market – also caused scandals for Kassar
 * Kassar still on board when Lincoln called – Kassar facing problems/fighting for his career
 * Kassar saw Nintendo deal as possible way to save his career
 * Lincoln authorized by Yamauchi to offer Atari the license to sell Famicom everywhere but Japan
 * Atari would release Famicom under own label – Nintendo got royalties on every sold unit
 * Nintendo would also have unlimited ability to make/sell software for the consoles
 * Deal very straight-forward – Kassar saw it as a no-lose deal for Atari
 * Nintendo unaware – General Computer already making 7800 ProSystem for Atari
 * Deal with Nintendo put Atari in unique situation – being in direct control of competitor
 * If 7800 sold well, Atari could kill Famicom world-wide
 * If 7800 did not sell well, Atari could remain profitable via Famicom
 * Nintendo had no idea Atari planned to potentially kill Famicom outside of Japan
 * Kassar asked for meeting with Nintendo to discuss deal details
 * President of Nintendo of America (NOA) – Minoru Arakawa – and Lincoln (NOA VP) – flew to CA
 * Arakawa and Lincoln given royal treatment at Atari
 * Meeting included top executives from Atari and Warner – Manny Gerard and Steve Ross
 * Took time to demonstrate system and negotiate prices – deal took about a week to finalize
 * Both Kassar and Yamauchi anxious to get things done by end of week
 * Final contract written up – deal started to fall through last minute from unlikely problem
 * 1983 Summer CES – Coleco demonstrated version of Donkey Kong on Adam Computer
 * Atari representatives saw it – were outraged
 * Coleco owned rights for Donkey Kong on video-game consoles
 * Atari had previously purchased rights to Donkey Kong on home computers
 * Kassar called Lincoln in a rage – Nintendo had to fix things with Coleco or deal was off
 * Lincoln called meeting that night with Arnold Greenberg – President of Coleco
 * At meeting Yamauchi burst into room and began yelling at Greenberg
 * Started in high-pitched mono-tone and worked up to screaming tirade
 * Swung arms and pointed directly at Greenberg – yelled entirely in Japanese
 * Greenberg most likely didn't understand a word of it – still shaken
 * Perhaps Yamauchi remembered how quickly Greenberg backed down from Universal
 * Perhaps he was actually angry – either way, Yamauchi threatened Coleco with law-suit
 * Said Coleco had to immediately stop showing/selling Donkey Kong for Adam Computer
 * Greenberg backed down – turned out that he actually had grounds to fight Nintendo/Atari
 * Atari had purchased rights to floppy-disk versions of Donkey Kong only
 * Adam Computer version played on cartridge – still Greenberg backed down
 * Coleco out of the way – deal with Nintendo/Atari still never went through
 * Ray Kassar fired from Atari the next month – successor didn't pursue deal with Nintendo
 * Not difficult to imagine how different industry would have been if deal went through
 * Possible Atari would have killed Famicom release in American and elsewhere – no Nintendo console may have existed outside of Japan
 * Deal did not go through, however – Famicom did not come to America in 1983
 * Continued to sell very well in Japan – sales grew through 1984
 * Nintendo sold more than 3 million Famicom consoles within first 18 months of release
 * 1985 – Yamauchi felt it was again time to try entering American market
 * No attempt at partnership again – market and sell entirely through Nintendo of America
 * Arakawa – decided January CES 1985 best place to unveil Famicom to America
 * CES huge show – larger companies often spent over $5 million at the time on promotion
 * Arakawa and Nintendo only had small booth in corner of show-floor
 * Arakawa and Lincoln agreed that Famicom name would not appeal to America
 * Re-named machine for US market – Advanced Video System or AVS for short
 * Showed basic Famicom unit – re-labeled AVS
 * Showed with computer keyboard, music keyboard, and 25 games
 * Reaction at show pitiful – most thought Nintendo insane – video-game consoles dead
 * Only video-games made in 1985 were for home computers
 * Some commented that AVS games were high-quality – no one placed any orders
 * Retails simply not interested in re-entering video-game console market
 * Nintendo realized had to market Famicom not as video-game console in America
 * Turned to previous big hit for company – Light Guns
 * Earlier success with Laser Skeet Ranges – also arcade division had successes
 * 2 big video-arcade shooting games – Hogan's Alley and Duck Hunt
 * Decided to add light gun to Famicom – called “the Zapper”
 * System could now be marketed as home shooting-arcade – not home video-game console
 * Second device added to Famicom to make it less like video-game console
 * Robot Operating Buddy – ROB
 * Developed by Gunpei Yokoi's Research and Development Team Number 1 at Nintendo
 * R&D1 was/continues to be responsible for most major hardware innovations at Nintendo
 * ROB not fantastic innovation – though technology fairly advanced – ROB could “see” on screen
 * Still just a plastic robot toy – only worked with 2 games – Gyromite and Stack-up
 * ROB added almost no play-value – only there to show Famicom as more than video-game
 * Planned to show newly-amended Famicom at 2nd CES of 1985 in June
 * Arakawa and Lincoln again changed name – no longer AVS
 * New name – Nintendo Entertainment System – NES
 * Nintendo console named Famicom in Japan – would be named NES in America and elsewhere
 * Also redesigned casing – Famicom in Japan somewhat rounded – bright red in color
 * Thought this design would be looked-down-upon in US as only a toy
 * Redesigned unit to a basic grey box – thought it might seem more like a computer
 * Arakawa had larger booth at summer CES – still tiny compared to other booths at show
 * Positioned ROB as main attraction for system
 * Retailer more receptive to idea of robot and gun games than they were to video-games
 * Number of buyers expressed interest in NES – end of show, no one actually placed orders
 * Arakawa disappointed no sales made – didn't give up
 * Wanted to gauge public perception in US - hired marketing firm to hold focus groups
 * Yong kids brought in to play NES – Arakawa watched behind one-way glass
 * Overwhelmingly the kids said how much they hated the system
 * First time at Nintendo of America – Arakawa ready to back away from a project
 * Called father-in-law Yamauchi – said American video-game market truly dead
 * Advised him to give-up bringing Famicom to America – Yamauchi refused
 * Saw how well Famicom did in Japan – convinced it could do the same in US
 * To prove this – told Arakawa to find toughest market in America and sell NES there
 * Nintendo of America decided NYC toughest market
 * Arakawa led small team of 30 Nintendo of America employees to NJ warehouse
 * Had $5 million advertising budget – everything else about NES operation very small
 * 1st shipment of NES units arrived from Japan
 * Shipment sat in warehouse until Nintendo could convince retailers to buy/sell NES
 * Retailers – no interest in looking at video-games – wouldn't dedicate store-space to them
 * Members of Arakawa's sales-force told to avoid using term “video-game” with retailers
 * NES was strictly referred to as an “entertainment system”
 * Gail Tilden – employee brought in to do marketing – did incredible job with NES ads
 * Tilden's ads set tone for all Nintendo advertisements well into the 1990's
 * Retailers still hesitant to purchase NES to sell in stores
 * Arakawa used very risky proposal to sell NES to stores – even went against Yamauchi
 * Arakawa told his sales-force they could say that Nintendo would guarantee all NES units
 * Nintendo would pay for any units the stores wanted to return
 * Would also handle all transport of NES into stores and set up all displays
 * Would even buy-back and unsold merchandise if retailers wanted them to
 * 500 retailers signed on with Nintendo due to this proposal
 * NES officially went on sale in US for the holiday season of 1985
 * Did not do as well as Famicom – managed to sell 50,000 units – half of first shipment
 * Enough to prove Yamauchi was right – American video-game market not dead
 * Most of 500 retailers agreed – decided to continue carrying NES after season was over
 * February – Nintendo of America decided to expand NES sales to Los Angeles
 * Arakawa continued offer to fully support all merchandise and set up displays
 * Nintendo's relative success in NYC made LA retailers more apt to buy NES
 * Retailers continued buying NES even thorough typically slow spring and summer seasons
 * NES only selling moderately well – but willingness of retailers to support NES positive
 * Arakawa felt this was an indication of future success for NES
 * Decided sales should be expanded to include Chicago and San Francisco
 * Japan – Nintendo about to have another huge arcade video-game success
 * Once again from Shigeru Miyamoto – creator of Donkey Kong
 * Miyamoto enjoyed character design – also enjoyed developing new worlds for characters
 * Donkey Kong featured carpenter named Jumpman – took center-stage in later games
 * Jumpman took on name Mario – Minoru Arakawa had given him that name
 * Miyamoto called Jumpman Mario in next game – Donkey Kong Junior
 * Gave Mario a brother – Luigi – in next game – 1983 Mario Bros.
 * Also made them plumbers, not carpenters for Mario Bros.
 * All games featuring Mario were single-screen up to this point – small worlds
 * 1985 – Mario's world became much bigger with Miyamoto's Super Mario Bros.
 * Super Mario Bros. – Mario and Luigi in huge world scrolling past single-screen size
 * Not first to have scrolling screen – Defender and others had scrolling screen earlier
 * Super Mario Bros. first game to be dubbed “Side-Scrolling Game”
 * Term coined by Arnie Katz – editor of magazine Electronic Games
 * Super Mario Bros. had Mario run, swim, and jump through colorful worlds
 * Worlds populated with walking mushrooms called Goombas, flying turtles, etc.
 * Mario defeated enemies by jumping on them – threw fireballs after getting power flowers
 * Goal was to rescue princess from evil dragon named Bowser
 * Main draw of game – bright, cartoony graphics – sense of humor – engaging game-play
 * Also took Warren Robinett's concept of hidden surprises – “easter eggs” – to new level
 * Super Mario Bros. featured entire hidden worlds for players to find
 * Players kept playing Super Mario Bros. to find all the secrets Miyamoto put in the game
 * Game big hit in Japanese arcades – even drew attention in dying American arcades
 * End of 1985 – Nintendo converted Super Mario Bros. to cartridge for Famicom
 * Almost identical to arcade – proved Famicom much more capable than previous systems
 * Even far surpassed rather accurate ColecoVision version of Donkey Kong
 * Nintendo began packaging Super Mario Bros. with Famicom units – very successful
 * Yamauchi decided same would work with NES in American market
 * Took a few months for American cartridge to be made
 * End of 1986 – Super Mario Bros. ready to be packaged with NES
 * Same time Nintendo of America ready to start selling NES on nation-wide basis

Mario Bros.

Nintendo's Famicom

Super Mario Bros.

History of the NES