In addition to using “withered” technology, Nintendo also pioneered a new and now frequently adapted business model for third-party licensing. In the second generation of video games, that which saw the aforementioned crash, hardware manufacturers did not control their platforms’ supply of games. They could not ensure that a minimum standard of quality was met (like a game actually being functional) nor could they ensure that store shelves were never overloaded. As Yamauchi described it, “Atari collapsed because they gave too much freedom to third-party developers and the market was swamped with rubbish games”. Nintendo’s response in this new era they were forming was the birth of a strict licensing system as well as the now very-familiar Nintendo golden sunburst that is the official “Seal of Quality”.
Nintendo also limited the number of titles that third-parties could release for the NES each year to five. Atari never actively engaged third-party developers, but while Nintendo welcomed their involvement they had to adhere to Nintendo’s terms. As this rule did not exist in Japan, some enterprising third-parties, like Konami, started North American shell subsidiary corporations – in Konami’s case this was the Ultra Games label, as they had begun releasing more than ten titles a year for the Famicom.
The “Seal of Quality” signified that a game or accessory had been evaluated and approved by Nintendo for use on its console. In 2008, Sid Meier, the designer behind such hits as Civilization, cited Nintendo’s “Seal of Quality” as one of the most important innovations in the history of video games; stating that it “helped counter the flow of bad games that had drowned so many previous video game consoles” and protected consumers from shovelware. The Seal was meant to convey excellence in workmanship, reliability, and entertainment value. Whether it actually did is debatable, but at the very least it helped to instil in customers the appearance of quality in video games – something that was sorely missing in the years leading up the crash.
To further control third-party output of NES software, Nintendo used lockout chips to prevent both piracy and the use of unlicensed games. All licensed cartridges were to be manufactured by Nintendo and paid for in full beforehand, with publishers absorbing the risk for unsold copies. Out of this came the well-known drama with Tengen (a.k.a. Atari Games), which we may explore at a later date, and unfortunately, region locks.
These were revolutions that would ultimately help Nintendo see success, but to first launch in North America they still had to prove this to consumers and retailers. Perhaps curious given everything we’ve looked at thus far, but at one point Nintendo first approached Atari to help launch their system in terms of marketing and logistics. What was then known as the “Advanced Video Gaming System” would have been released under the Atari name. Luckily, the contract fizzled out as Nintendo granted Atari’s competitor Coleco rights to produce a port of Donkey Kong. Nintendo went on to market the system on its own.
In doing so, Nintendo came up with the now iconic and nostalgic “black box” design concept. Earlier game libraries featured exaggerated and highly detailed artwork as covers that did not accurately represent the look and quality of the game, especially concerning multiplatform titles. From a marketing and retail standpoint, the contents of games were being misrepresented. Nintendo’s strategy was to regain retailer and consumer confidence by delivering a platform whose qualities were clearly defined and evident. And Nintendo’s black box sprite box art designs for their earlier NES titles helped to convey that message. The pixel artwork was simple, eye catching, and honest. All eighteen launch titles adhered to this design. The consumer knew what they were getting – alleviating potential confusion.
Early on in the NES’ lifespan, Nintendo also placed a genre-identifying logo on the bottom left of their titles to explain what “series” a game was a part of – Sports, Action, Arcade, Education, Light Gun, Programmable, Robot, and Adventure. Coupled with the black box designs, and an official Seal of Quality stamped on the box, consumers could get a more accurate picture of what a game would be like than they could before. The information we get from the Internet today was not available to consumers back then. Through these design choices and efforts like the Nintendo Fun Club or Nintendo Power, Nintendo was able to educate and engage consumers better; while simultaneously marketing themselves and both their software, of course, as well as that of third-parties.
To win over the retailers, Nintendo set up what can only be described as a SWAT team dedicated at targeting retailers for support. No doubt, it was a tough sell. Aggressive telemarketing, shopping mall and trade show demonstrations, and even R.O.B. the Robot caught the eye of retailers but they were still weary of placing what was truly a video game system on their store shelves, regardless of how it was marketed. In response, Nintendo offered a risk-free proposition to retailers: Nintendo would be responsible for all store setup and marketing as well as accept returns of any unsold inventory. With enough retailer support and consumer interest following a successful market test in New York City, Nintendo proceeded to expand throughout North America.
And the rest is history.
Nintendo had success in Japan with their Game & Watch and Arcade releases, but wanted to enter the home market with the attractive economics of having software separated from the hardware. They devised and adhered to a series of core principles in designing the Famicom and revolutionized the controller. When it was time to expand into the Western market, Nintendo didn’t just localize the Famicom. They redesigned it. They rebranded it. The built the NES. Not only did they market themselves, but they also marketed the entire industry. Nintendo was video games. Nintendo saved video games. They convinced Western consumers and retailers that the industry wasn’t dead.
The effects of the NES can still be felt today. They changed the relationship of console manufacturers and third-party developers, ultimately leading to more higher quality titles and helping to improve the attitude of a public that had ground weary of video games. They addressed the problem of software glut and oversaturation. The NES’ success accelerated the Japanese dominance of the video game industry for many years. Countless prominent game franchises originated on the NES including Nintendo’s own Super Mario Bros., The Legend of Zelda, and Metroid, as well as Capcom’s Mega Man, Konami’s Castlevania, and Square-Enix’s Final Fantasy and Dragon Quest.
For die-hard Nintendo fans like myself, it’s safe to say it’s been a bumpy ride in recent years. There have been some questionable decisions to say the least. But, one only needs to look back not too far in time to see where a lot of that mentality started, for better or for worse. One thing is for sure – without the NES, the industry would not exist as it does today. It addressed every issue that existed in the industry and salvaged it. The NES is important. If you didn’t grow up playing it, you should make every effort to reconnect with its massive library and experience what those of us in the know did. Nintendo, almost miraculously, against all odds, did absolutely everything right with the NES.