History of the Nintendo Entertainment System

Bolstered by its success in Japan, Nintendo soon turned its attention to foreign markets. As a new console manufacturer, Nintendo had to convince a skeptical public to embrace its system. To this end, Nintendo entered into negotiations with Atari to release the Famicom outside Japan[10] as the Nintendo Enhanced Video System.[11] Though the two companies reached a tentative agreement, with final contract papers to be signed at the 1983 Summer Consumer Electronics Show (CES), Atari refused to sign at the last minute, after seeing Coleco, one of its main competitors in the market at that time,[8] demonstrating a prototype of Donkey Kong for its forthcoming Coleco Adam home computer system. Coleco had licensed Donkey Kong for the ColecoVision home console, but Atari had the exclusive computer license for the game. Although the game had been originally produced for the ColecoVision and could thus automatically be played on the backward compatible Adam computer, Atari took the demonstration as a sign that Nintendo was also dealing with Coleco. Though the issue was cleared up within a month, by then Atari's financial problems stemming from the North American video game crash of 1983 left the company unable to follow through with the deal.[12]

Nintendo Advanced Video System accessories as showcased at the Nintendo World Store.[13] Clockwise from the left: data recorder, keyboard, joystick, Zapper light gun, controllers.

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After the video game crash of 1983, many American retailers considered video games a passing fad, and greatly reduced or discontinued the inventory of such products.[14] Nintendo president Hiroshi Yamauchi said in 1986, "Atari collapsed because they gave too much freedom to third-party developers and the market was swamped with rubbish games."[15] After the deal with Atari failed, Nintendo proceeded alone, reconceiving the Famicom console with a sophisticated design language as the "Nintendo Advanced Video System" (AVS).[16] To keep the software market for its console from becoming similarly oversaturated, Nintendo added a lockout system to obstruct unlicensed software from running on the console, thus allowing Nintendo to enforce strict licensing standards. The software carries the Nintendo Seal of Quality to communicate the company's approval.

Nintendo's product designer Lance Barr, who would continue with the company for decades, retooled the Famicom console with a sleek and sophisticated design language. The toy-like white-and-red color scheme of the Famicom was replaced with a clean and futuristic color scheme of grey, black, and red. The top and bottom portions are in different shades of grey, plus a stripe with black and ribbing along the top, and minor red accents. The shape is boxier: flat on top, and a bottom half that tapered down to a smaller footprint. The front of the main unit features a compartment for storing the wireless controllers out of sight.[16] To avoid the stigma of video game consoles, Nintendo issued prerelease marketing of the AVS as a full home computer,[17] with an included keyboard, cassette data recorder, and a BASIC interpreter software cartridge.[18] The BASIC interpreter would later be sold together with a keyboard as the Family BASIC package, and the cassette deck for data storage would later be released as the Famicom Data Recorder. The AVS includes a variety of computer-style input devices: gamepads, a handheld joystick, a 3-octave musical keyboard, and the Zapper light gun. The AVS Zapper is hinged, allowing it to straighten out into a wand form, or bend into a gun form. The AVS uses a wireless infrared interface for all its peripherals, including keyboard, cassette deck, and controllers.[19] Most of the peripherals for the Advanced Video System are on display at the Nintendo World Store.[13]

The system's first known advertisement is in Consumer Electronics magazine in 1984, saying "The evolution of a species is now complete."[20] The AVS was showcased at the January 1985 Winter Consumer Electronics Show in a reportedly "very busy"[19] booth headed by Nintendo of America's president Minoru Arakawa.[16] There, attendees acknowledged the advanced technology, but responded poorly to the keyboard and wireless functionality.[17][21][19][8] All of the more than 25 games[22] demonstrated were complete, with no prototypes.[19] No retail pricing information was given by Nintendo,[19][22] reportedly seeming to "test the waters" with potential distributors, in an unpredictable market.[19] Still wary of video game consoles from the crash, distributors did not apply and retailers did not place orders.[8]

Although Nintendo's Gail Tilden had reported sales of more than 2.5 million units of the Famicom across the previous 18 months yielding a 90% market share in Japan by the beginning of 1985,[22] the American video game press was skeptical that the AVS could have any success in North America. News Wire reported on January 12, 1985, "It's hard to believe, but a Japanese company says it intends to introduce a new video-game machine in the United States, despite the collapse of the video-game industry here."[22] The March 1985 issue of Electronic Games magazine stated that "the videogame market in America has virtually disappeared" and that "this could be a miscalculation on Nintendo's part".[23] Roger Buoy of Mindscape allegedly said that year, "Hasn't anyone told them that the videogame industry is dead?"[24] Video game historian Chris Kohler reflected, "Retailers didn't want to listen to the little startup Nintendo of America talk about how its Japanese parent company had a huge hit with the Famicom (the 1983 Asian release of what became NES). In America, videogames were dead, dead, dead. Personal computers were the future, and anything that just played games but couldn't do your taxes was hopelessly backwards."[25] Computer Entertainer openly rebuked the media after attending a humbly optimistic June 1985 CES, "Can another video game system buck the trend and become a success? ... Perhaps if the press can avoid jumping all over the Nintendo system and let American consumers make up their own minds, we might find out that video games aren't dead after all."[26]

R.O.B. (Robotic Operating Buddy). Although it ended up having a short product lifespan, R.O.B. was initially used to help market the NES.

Nintendo really needed to come up with a point of difference, and some way of getting the retailer to believe that the consumer would embrace this as a different and newer form of entertainment. ... We spent a lot of energy not calling it a videogame in any way.

— Gail Tilden, Marketing manager of Nintendo of America[16]

At the June 1985 Summer CES, Nintendo returned with a stripped-down and cost-reduced redesign of the AVS, having abandoned the home computer approach.[16] Nintendo purposefully designed the system so as not to resemble a video game console, and would avoid terms associated with game consoles, with marketing manager Gail Tilden choosing the term "Game Pak" for cartridges, "Control Deck" for the console, and "Entertainment System" for the whole platform altogether.[16] Renamed the "Nintendo Entertainment System" (NES), the new and cost-reduced version lacks most of the upscale features added in the AVS, but retains many of its audiophile-inspired design elements, such as the grey color scheme and boxy form factor. Disappointed with the cosmetically raw prototype part they received from Japan, which they nicknamed "the lunchbox", Nintendo of America designers Lance Barr and Don James added the two-tone gray, the black stripe, and the red lettering.[16] To obscure the video game connotation, NES replaced the top-loading cartridge slot of the Famicom and AVS with a front-loading chamber for software cartridges that place the inserted cartridge out of view, reminiscent of a VCR. The Famicom's pair of hard-wired controllers, and the AVS's wireless controllers, were replaced with two custom 7-pin sockets for detachable wired controllers.[17]

Using another approach to market the system to North American retailers as an "entertainment system", as opposed to a video game console, Nintendo positioned the NES more squarely as a toy, emphasizing the Zapper light gun, and more significantly, R.O.B. (Robotic Operating Buddy), a wireless toy robot that responds to special screen flashes with mechanized actions.[14] Although R.O.B. successfully drew a stream of retailers to Nintendo's Summer 1985 CES booth to see the NES, they were still unwilling to sign up to distribute the console.[8]

In a show of strength and confidence by a company that rejected positions of weakness, an intense direct campaign ensued by a dedicated 12-person "Nintendo SWAT team" who relocated from Redmond.[16][27] The team included Nintendo of America's president Minoru Arakawa, Tukwila warehouse manager and game tester Howard Phillips, Redmond warehouse manager and product designer Don James, product designer Lance Barr, marketer Gail Tilden, her boss Ron Judy, and salesperson Bruce Lowry.[16] Having failed to secure a retail distributor in the last year, the team would deliver the NES debut itself. This began a series of limited test market launches at various metropolitan American cities prior to nationwide release. Instead of the traditional business of test launching at a cheaper mid-sized city, Arakawa boldly chose New York City with a $50 million budget.[16] Only with R.O.B's reclassification of the NES as a toy, telemarketing and shopping mall demonstrations, and a risk-free proposition to retailers, did Nintendo secure enough retailer support there of about 500 retailers in New York and New Jersey. As the bellwether toy retailer and key of New York City, the grandest and most important site was a 15 square foot area at FAO Schwarz.[16] This had a dozen playable NES displays surrounding another giant television, featuring Baseball being played by real Major League Baseball players who also signed autographs in order to anchor the curious audiences to a familiar American pastime among all the surreal fantasy games.[28]

In a huge gamble by Arakawa and without having informed the headquarters in Japan, Nintendo offered to handle all store setup and marketing, extend 90 days credit on the merchandise, and accept returns on all unsold inventory. Retailers would pay nothing upfront, and after 90 days would either pay for the merchandise or return it to Nintendo.[25][13] At Nintendo's unprecedented offer of risk absorption,[25] retailers signed up one by one, with one incredulously saying "It's your funeral."[29]

The Nintendo Entertainment System then consisted of the Deluxe Set and an initial library of about 16 games which were chosen by playtester Howard Phillips.[16][25][28] Each Deluxe Set consists of a Control Deck console, two gamepads, R.O.B., the Zapper light gun, and the Game Paks Gyromite and Duck Hunt.[30] Sources vary on the library of test launch games, but they include these 16: 10-Yard Fight, Baseball,[28] Clu Clu Land, Duck Hunt, Excitebike, Golf, Gyromite, Hogan's Alley, Ice Climber, Kung Fu, Pinball, Soccer, Stack-Up, Tennis, Wild Gunman, and Wrecking Crew.[31][26][25][30][28] The first test launch was in New York City on October 18, 1985, with an initial shipment of 100,000 Deluxe Set systems.

Headquartered in a Hackensack warehouse oozing with EPA hazards "something like 'rats and snakes and toxic waste'", the SWAT team worked every day even through Christmas Eve 1985, in what Don James called "the longest and hardest I ever worked consecutive days in my life"[16] and what Howard Phillips called "every waking hour ... at the crack of dawn ... seven days a week".[32] President Arakawa joined them at the warehouse and at retail stores, once running a TV up a flight of stairs just to follow in the whole team's footsteps.[33] While unloading their products into stores, the Nintendo of America crew was confronted by strangers who resented any Japanese-influenced company in a time of international trade issues and cheap Japanese clones of American products. A security guard reportedly said, "You're working for the Japs? I hope you fall flat on your ass."[25] Gail Tilden said, "I remember one woman coming up to me, and I don't know what sparked her to do this, but she came up to me and said, 'Nintendo. That's a Japanese company, right? ... I hope you FAIL!'". Retail staff resentful of the disastrous video game market rolled their eyes at Nintendo staff, with one manager looking at Nintendo's inventory and saying "Somebody told me I've got to sell this crap." The first sale came soon and quietly, of a Deluxe Set and the 15 additional games, to a gentleman who the team later realized was employed by a Japanese competitor.[16]

Sales were not high but encouraging throughout the holiday season,[16] though sources vary on how many consoles were sold then.[8][34] In 1986, Nintendo said it had sold nearly 90,000 units in nine weeks during its late 1985 New York City test.[35][36][37] In January 1986, an independent research firm commissioned by Nintendo delivered a survey of 200 NES owners, showing that the most popular given reason for buying an NES was because children wanted R.O.B. the robot—followed most strongly by good graphics, variety of games, and the uniqueness and newness of the NES package.[35] R.O.B. is credited as a primary factor in building initial support for the NES in North America,[8][35] but the accessory itself was not well received for its entertainment value. Its original Famicom counterpart, the Famicom Robot, was already failing in Japan at the time of the North American launch.

Nintendo added Los Angeles as the second test market in February 1986,[16] followed by Chicago and San Francisco,[25] then other top 12 US markets, and finally nationwide in September.[38][31] Nintendo and Sega, which was similarly exporting its Master System to the US, both planned to spend $15 million in the fourth quarter of 1986 to market their consoles;[15] later, Nintendo said it planned to spend $16 million and Sega said more than $9 million.[37] Nintendo obtained a distribution deal with toy company Worlds of Wonder, which leveraged its popular Teddy Ruxpin and Lazer Tag products to solicit more stores to carry the console.[14] The largest retailer Sears sold it through its Christmas catalog and the second largest retailer Kmart sold it in 700 stores.[37] Nintendo sold 1.1 million consoles in 1986, estimating that it could have sold 1.4 million if inventory had held out.[39] Nintendo earned $310 million in sales, out of total 1986 video game industry sales of $430 million,[40] compared to total 1985 industry sales of $100 million.[41]

For the nationwide launch in 1986, the NES was available in two different packages: the fully featured US$249 Deluxe Set as had been configured during the New York City launch, and a scaled-down Control Deck package which includes the console, two gamepads, and Super Mario Bros.[31]

In early 1986, Nintendo announced the intention to adapt the Famicom Disk System floppy drive peripheral to the NES by late 1986,[31] but the need was obviated by the proliferation of larger and faster cartridge technology, and the drive's NES launch was canceled as well as the original being discontinued in Japan.

The NES was also released in Europe and Australia, in stages and in a rather haphazard manner. Sweden received in system in September 1986, while the rest of mainland Europe received the system in different months of 1987, depending on the country. Italy, the United Kingdom and Australia all received the system in 1987, where it was distributed by Mattel as a 'Mattel exclusive product'.[42] In Europe, the NES received a less enthusiastic response than it had elsewhere, and Nintendo lagged in market and retail penetration (though the console did see more success later on in its life). The NES did outsell the Master System in Australia, though by a much smaller margin than in North America.[43]

In South Korea, the hardware was licensed to Hyundai Electronics, which marketed it as the Comboy from 1991. After World War II, the government of Korea (later South Korea) imposed a wide ban on all Japanese "cultural products." Until repealed in 1998, the only way Japanese products could legally enter the South Korean market was through licensing to a third-party (non-Japanese) distributor, as was the case with the Comboy and its successor, the Super Comboy, a version of the Super Nintendo Entertainment System.[44]

After the collapse of the Soviet Union, this technology was tried to be introduced in two ways. The first was the original NES available from local distributors.[45] The second much more popular was an unlicensed Taiwanese hardware clone named the Dendy produced in Russia in the early 1990s. Aesthetically, it is an exact duplicate of the original Famicom, with the color scheme and labels altered. The hardwired Famicom controllers were omitted in favor of removable controllers which connect to the front of the unit using DE-9 serial connectors, identical to those used in the Atari 2600 and the Atari 8-bit family of computers.[46] All games sold in Russia for Dendy are bootleg copies, not the original Nintendo cartridges. In 1994, Nintendo signed an agreement with the Dendy distributor under which Nintendo has no claims against Dendy and allows the continued sale of games and consoles.[47]