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

by Steven Kent

  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.

  The Pitfalls of Success

  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.

  Here to Stay

  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

  Nintendo’s most important message was game quality. According to Lincoln and Arakawa, the game companies of the Atari age had gotten sloppy and released too many identical games. To prevent this, Lincoln created very strict terms that gave Nintendo unflinching authority over the licensing agreement that publishers had to sign to make games for the NES. American companies such as Activision and Electronic Arts, which did not have to deal with these restrictions when they made games for personal computers, took a wait-and-see approach with the NES.

  When Nintendo of America first began marketing the console, the only licensees making games for the system were Japanese companies. These companies reaped tremendous benefits during the first year that the NES was out. The first three games that Capcom released for the system—1942, Ghosts ’N Goblins, and Commando—all sold over one million copies. By 1987, several U.S. firms recognized the value of doing business with Nintendo and signed licensing agreements.

  There were a lot of myths that were built up over the years about how Nintendo was arrogant and Nintendo had a really restrictive licensing program and all of that. But from our point of view, these guys were all making a ton of money.

  Atari Games got all upset because they felt that they weren’t getting enough games, so they illegally reversed engineered the NES and copied our security chip. We got in a lot of litigation with them, so all of this stuff was kind of cumulative.

  When we set up this third-party licensing program in 1986, we came up with a program by which we identified ways that we could control the quality of software that was going to reach the market. We said two things. We said, “If you want to be a third-party licensee, you have to agree that you will only publish five games a year on our system, and you have to agree that the games will be exclusive to the Nintendo Entertainment System for a period of two years.” From our point of view, those clauses worked as a quality control mechanism.

  —Howard Lincoln

  Over the next decade, Lincoln learned that controlling third-party games was not as important as having a healthy library of original games. When a company named 3DO launched a highly sophisticated game console in 1994, Lincoln commented that he was not worried about 3DO as a competitor because it did not publish its own games. When a reporter later asked why he’d been so confident, Lincoln responded, “The first-party games are the products that differentiate your hardware.”

  The Home Game Company

  With more than 60,000 units sold in the United States, Donkey Kong was Nintendo’s biggest arcade hit. The arcade industry began its long collapse the year after Donkey Kong was released, and Nintendo’s arcade fortunes eroded quickly. Nintendo released Donkey Kong Junior in 1982 and sold only 30,000 machines, 20,000 Popeye machines (also 1982), and a mere 5,000 copies of Donkey Kong 3 (1983).*

  In 1982, Universal Sales made arcade history with a game called Mr. Do! Instead of selling dedicated Mr. Do! machines, Universal sold the game as a kit. The kit came with a customized control panel, a computer board with Mr. Do! read-only memory (ROM) chips, stickers that could be placed on the side of stand-up arcade machines for art, and a plastic marquee. It was the first game ever sold as a conversion only. According to former Universal Sales western regional sales manager Joe Morici, the company sold approximately 30,000 copies of the game in the United States alone.

  In 1983, Nintendo released the VS System, a line of arcade games with double-screens on which two players could face off against each other or play alone. In 1987, Nintendo replaced the VS System with Play Choice 10, a line of arcade machines that worked like a jukebox with ten interchangeable boards. All of the games for Play Choice 10 were modified versions of NES cartridges.

  Despite the strategic move away from creating original arcade games, Lincoln and Arakawa did not take the arcade business lightly. Play Choice 10 had great marketing potential. They could prerelease highly anticipated games on Play Choice 10 to build public awareness with negligible development costs. Wealthy from home game sales, Nintendo remained the largest advertiser in RePlay, a magazine that tracked the arcade business, for years after the company stopped developing arcade content.

  With its software development focused on home games, Nintendo began churning out the most detailed and diverse game lineup ever seen in the consumer market. In 1987, Nintendo released three extremely significant games.

  The Legend of Zelda

  Nintendo’s biggest game in 1987, The Legend of Zelda, was created by Shigeru Miyamoto, the same man who created Donkey Kong and Super Mario Brothers. By this time, Hiroshi Yamauchi, the president of Nintendo Co. Ltd. in Japan, recognized Miyamoto as a rare talent upon whom his company’s future would depend.

  The Legend of Zelda was a role-playing game in which players helped a young elf boy named Link explore a huge territory as he fought monsters, collected treasures, and explored dungeons. The ultimate goals of the game were to defeat an evil monster named Ganon and rescue Zelda, the princess of Hyrule. Before you could do that, however, you had to locate pieces of a magical tablet called the Triforce that were scattered across a vast playfield. In many ways, The Legend of Zelda was Miyamoto’s most brilliant game. It combined a well-thought-out fairy tale with perfectly crafted game mechanics. It was also Miyamoto’s first free-roaming game. Unlike Super Mario Bros., a side-scrolling game in which players could move only forward or backward, The Legend of Zelda was played from the top-down perspective, allowing players to move the hero in any compass direction.

  When the first prototypes of The Legend of Zelda arrived in the United States, Minoru Arakawa was not sure how people would respond to a complex game with text windows in it. He worried that perhaps the game was too complicated for American audiences. To test this out, he had several employees try the game. In order to give the game a fair chance, Arakawa arranged for Japanese-speaking workers to sit with American employees and translate any Kanji that appeared in the text boxes.

  It was all in Japanese, which made it really hard to play, but it was just so compelling that we kept playing it and playing it. The way the game mechanics worked, the fact that it did this great thing with that sword … It had great mechanics. Typical of Miyamoto, it had puzzles. You would come across things that would be on the island or behind a door or whatever, and you could see them, but you couldn’t have them.

  —Howard Phillips

  As he tested The Legend of Zelda on his employees, Arakawa noticed a disturbing trend. Most American workers who played the game did not warm up to it instantly. They all ended up giving the game high marks, but Arakawa noticed that some people needed as much as ten hours before they understood the game and enjoyed it.

  The Legend of Zelda was a different kind of game and, also, it took a long time until people really liked the game. I hoped people would be patient enough and understand that it was a different game and enjoy it, and I was worried at the time.

  —Minoru Arakawa

  Housed in a shiny gold cartridge, the American version of The Legend of Zelda required more megabits of storage space than any other game released for the NES up to that point,
and it came with an internal ten-year battery, enabling it to store three players’ progress so that they would not have to start again after every game. The Legend of Zelda was the first game to include an internal battery. It also came with more documentation than earlier games, including a thick instruction booklet that identified most of the monsters and weapons in the game and a large fold-out map of the fantasy land of Hyrule. As a final precaution, Arakawa added a toll-free telephone number that players could call if they needed help with the game.

  The game was so different that we were afraid that people couldn’t figure out how to play and [would] give up, so we put the 800 telephone number in the game [booklet] so that they could call us for free and we could answer any questions about the games.

  We released the Legend of Zelda on June 27, 1987. All of a sudden, the telephone started ringing. We hired four people to answer questions over the telephone, and those four people were busy all the time, so we increased from four to five, 10, 20, 40, 50, and we ended up with 200.

  —Minoru Arakawa

  Customers called nonstop and asked questions about more than The Legend of Zelda—they wanted to know about every game. To cover the calls, Arakawa expanded his telephone bank to ten full-time operators, but it wasn’t enough. He continued expanding the telephone operation, running ads in the help-wanted sections of the Seattle Times and the Seattle Post Intelligencer for people who “want to play games for a living.” By 1990, more than 200 people were working on the help lines, and the toll-free number became too expensive to maintain. Expecting to reduce the number of calls, Arakawa approved the suggestion to keep the help center as a free service but eliminate the toll-free number. Throughout the 1990s, the help center continued to maintain a staff of 200 operators, fielding an average of 100,000 telephone calls, 3,500 e-mail messages, and 1,900 letters per week. During the holidays, the staffing grew to 500 operators fielding as many as 250,000 calls.*