All language subtitles for playing.with.power.the.nintendo.story.s01e02.1080p.bluray.x264-13_track3_[eng]

[dramatic music]

id

- Video games have come on
hard times these days,

with closeout sales,
discount prices just about everywhere.

- Atari, the people who brought
you Pac-Man, today said

it is packing up some
of its California operations

and laying off 1,700 employees.

- As the home gaming industry
in the U.S. is crashing,

Nintendo has its next big hit,
which is the Famicom,

or Family Computer, in Japan.

- [speaking Japanese]

id

narrator:
The stage was set.

The American playing field
had been leveled.

Arakawa saw an opportunity.

- One day | opened up a box
from Nintendo Japan,

and it was this little game system,

this Famicom game system,
so | plugged it in,

and it was so incredibly
awesome to play these games

that | had been playing
in the arcade,

but now | could actually
play them on my own TV.

- [speaking Japanese]

- Family computer
[speaking Japanese].

- Despite its name,

which definitely tried to convince people

that it had a sort of
a personal computer aura to it.

- [speaking Japanese].

- But really the primary draw

of the family computer,
or Famicom,

was that it was gonna play

the absolute best versions
of Nintendo's video games.

- [speaking Japanese]

- We'd actually grown up
with Atari,

but, frankly,
didn't play a lot of it

‘cause Dad was always
bringing home the new stuff,

so we had the Famicom.

He was obsessed with
bringing home the new things.

- | mean, in the early days
of the Family Com,

there were some games

my boys just loved
that were so out there.

- They end up using one
of Gunpei Yokoi's inventions,

what we now know as a, you know,

traditional video game controller
with a D-pad and buttons.

Joysticks were great
for arcade games,

and that's what all the game
consoles at home

used at that time,
but Nintendo was like,

"No, we're gonna go a different direction."

[gentle music]

id

- It may be the most
addictive toy in history

and it's definitely the
hottest thing this Christmas,

Nintendo video games.

id

- Something was missing.
- Can | play?

- Wait your turn.
- Then along came

Head-to-Head Electronic Football
by Coleco.

- Introducing the Multicron
20-function calculator watch.

- A power sweep, he fights
through for the tackle.

You pass.
He blitzes, intercepts!

- This is real competition.

narrator: Meanwhile,
Yamauchi and Yokoi continued

their cunning,
shape-shifting model

of following trends
and seizing opportunities.

One day on his commute,
Yokoi noticed the man

next to him fiddling
with an LCD calculator.

As he watched, fascinated,

the man punched buttons
in idle boredom.

Suddenly Yokoi wondered
if weary commuters

looking to pass the time
might be interested

in a portable gaming device.

- J Game Watch S

< Game watch f

< Game Watch Sf

< Game Watch Sf

f [speaking Japanese]
Game Watch f

~ [speaking Japanese]
Game Watch f

f [speaking Japanese]
Game Watch f

< Game Watch! S

00:05:03,136
[pensive music]

id

- Gunpei Yokoi was one of
the lead designers at Nintendo.

- Yokoi had another one of his,

you know,
sort of famous ideas

about how do we take
something that already exists,

that's inexpensive,
and change it up?

You know, in the way
that he had done with things

like the Love Tester
or the batting machine,

and so Nintendo
takes calculator technology

and starts making games.

- In the late '70s Nintendo
came out with the Game Watch,

which was a little pocket console
that played LCD games

and also doubled as a watch.

- Using segment display the same way

that you can see all digits
from zero to ten

just on the letter eight

if you light them up
in the right sequence.

This was before they got
into true video games.

narrator: The Game & Watch
wasn't the first of its kind,

but its cleverly-conceived

and sometimes
awkwardly-named games

were head and tails
above the competition.

- Pretty fun little games.

There was one called "Fire."

We called it
"Bouncing Burning Babies."

Horrible name, but anyway,

it was these little things
that bounced down,

and you'd have to bounce them
in a trampoline to safety.

- Yokoi-san needed a way of
moving the character around,

so he invented this directional pad,

or D-pad, with an up,
down, left, and right.

- Here's the Nintendo Family
Computer, or the Famicom.

This is actually
a really interesting one

because it's the first run
of the Famicom,

and if you--
if you were to look at most

Nintendo Family Computers,

if you looked at the controller,

the B and A buttons

would be round just like
the buttons on the NES,

but these ones are square.

The controllers are hardwired,
so if the controller breaks,

you would need to get it
professionally repaired,

and they'd install a new
controller on it for you,

which was kind of a huge pain
in the neck,

and in fact, this is in--
this is in really good shape.

I'm really--I really lucked
out when | bought this.

- Super Mario Bros,
[speaking Japanese]

- [speaking Japanese]
- [yelling]

[light music]

- The great story about Mr. Arakawa,

he's a funny guy
but also pretty reserved.

- | think his English is fine,

but | think he's a little bit shy,

and | think he would rather

have some of his other people
conduct the interviews.

- When | first got the Famicom
version of "Mario Bros,"

I'm right up against the end,
and there's Bowser,

the guy you gotta beat
to rescue the princess,

and he's at the far side
of the screen,

and I'm at this side
of the screen with Mario,

and so | finally defeated him,

and then nothing happened,

and so | went into Mr. Arakawa.

"| don't--I can't do it.
| can't beat it.

| don't Know how to do it."
He said, "Hmm, keep trying."

So | played again
and again and again.

The game wasn't finished,
and Mr. Arakawa didn't tell me.

- So the Famicom
is a big hit in Japan,

and Nintendo was like, "Well,
the next natural step here

is to take this thing worldwide,

and it's to--it's to bring it to America."

- Here's the metro weather
forecast from New York 97.

79 degrees, cloudy skies
in Manhattan this morning.

Pollen count today,
low and bearable.

narrator:
It wouldn't be easy,

but with Nintendo's
rich history as a toy manufacturer,

they might just have a chance.

- When Atari failed,

everybody thought the
financial problems of Atari

were an indictment of
the concept of a console.

- | don't think there was a question

about whether people want
to be entertained

or people wanna play,
especially then.

It was so retail-driven,
and the infrastructure,

trying to get your shelf space,

trying to get people to take inventory,

just getting back in,
getting the support

of the retail infrastructure
that you would need

was probably one of
their biggest challenges.

- Then Nintendo comes along,

and they came to my office
in 1985.

| met Howard Lincoln,

and they talked about
what they were doing in Japan

and what they wanted to do
in America, and | thought,

"Wow, you know, America has
kinda dismissed the console.

The public perception,
the business press,

you know, the financial
markets, everybody's said,

"Yeah, that's a--that was
a hula hoop. That's done."

narrator:
A gun, a robot, a floor mat.

In one of the great marketing
moves of the 20th century,

Arakawa and his sales team
sidestepped a retail market

that wanted nothing to do
with video games.

They created a line of
toy-like peripheral products

that made the whole set
seem like a game

for the entire family

that happened to have
a video game component.

Enter the Nintendo Entertainment System.

[light dramatic music]

id

- Atari Incorporated is making cuts,

but it will be employee cuts.

The video game maker says

it plans to lay off about 300 workers.

Last year the company
lost over $500 million,

laid off more than 2,000
of its Bay Area workers,

and moved part of its operation
to Taiwan and Hong Kong.

- It's easy to forget that at the time

video games were considered dead.

So in many ways,
Nintendo really had to reinvent

video gaming for the next generation.

| think a lot of people know of Nintendo

as kind of a juggernaut,
but back before the NES,

they were basically an arcade cabinet,

you know,
an arcade game producer,

and a fairly successful one at that,

but it was definitely a small company.

It was a small family-owned
business in Japan

that had a small office

in this backwater town
of Redmond, Washington.

They really didn't have
any market power, any clout.

Their probability of success was,

| have to imagine,
extremely slim at the time.

- What happened during,
you know,

during the crash of the early '80s with--

of the video game market
where the quality was so bad

and the market was flooded with it

that a consumer just turned off.

- While we were co--
very confident

that it was a successful product,

retailers had a different opinion of it.

- We had to figure out the best way
to market the system,

or | guess | should say
we should figure out

whether or not
it was even feasible.

- When we got ready to launch the NES,

it was decided that we would
launch it in New York

since that was gonna be the market

that would make it or break it,

and | took the material,
games, product,

and in a lot of cases obviously

| had to have a television there,

and the first ones
that we presented it to

was the Woolworth Company's
Woolco division,

which was like a Target,

and | started
to make the presentation,

and the buyer explained to me
right off the bat

that he would advise me
to pack up and leave.

That they had lost
so much money on Atari,

they wanted nothing to do with it.

- So one of the things
that we did to find out

whether or not kids
would be receptive

to a new video game system
was we did focus groups

both on the west coast
and the east coast,

and when we were wrapping up
in New Jersey,

the Nintendo executives
all came to hear

what the moderator had to say
about the result.

Ron Judy said to the moderator,

"Well, what kind of result
do you think

we should expect based on this?"

And the answer was, "I've never
seen a company move forward

and market a product
with this type of result."

He thought, really,
that it was pretty dismal.

- We're selling a home entertainment system.

This isn't another video game
‘cause the consumer

was definitely done with video games.

They were being sold
for 20 cents on the dollar.

We had to ensure
that we had the sell-in,

the shelf space in the retailers.

So in order to do that
after the demise

of the--what happened with Atari

and all the money
that was lost by retailers,

we had to guarantee
the sales of the product.

If the retailer put it in,
put it out, display it,

we had very expensive displays,

and if you don't sell it,
you don't have to pay for it.

[light dramatic music]

id

- So we had to come up with
a way to separate ourselves

and really to reinvigorate the market

and reintroduce this type
of product to the market.

One of the ways that
we came up with to do that

was to use ROB the Robot.

A robot seemed very futuristic

and not related to
video games in the past.

- When you get hold of the
Nintendo Entertainment System,

when you master
ROB the Video Robot

and meet the challenge
of "Gyromite--"

- They had this robot thing
that was connected to it

that | thought was kinda silly.

- And Nintendo showed off
a game-playing robot

that interfaces with the game
on your computer screen.

- Nintendo had to kind of frame
their system as more of a toy

as opposed to consumer electronics.

Hence the zapper gun, hence
the Robotic Operating Buddy,

and they kinda did
a Trojan Horse way

of getting into living rooms.

- After being rejected at Woolworth,

next big target, of course,
was Toys R Us,

which was gonna be
a very difficult sell,

and when we made
the presentation to the buyer

there along with other
executives in the room,

he said they wanted nothing
to do with the product

and they'd lost a lot
of money and what have you.

I'm very fortunate that Howard Moore,

the executive vice president, said,

"No, we are gonna take it,

and we're gonna take it in all stores."

[exciting music]

- So Nintendo comes along,
and lo and behold,

they took off.

- 81% of toy retailers believe toy sales

will increase this year over last.

Retailers' overwhelming choice
for the season's biggest hit

will be the
Nintendo Entertainment System...

- Like the Nintendo Entertainment System

with the zapper light gun
and ROB the Robot.

[children singing]

- | like the action

and entertainment
and challenge of them.

- Because they're challenging.

- Just an action-packed game,

and | like
action-packed games.

- The games you can get on it
are exactly like the arcade,

and the graphics
are almost identical.

id

- Well, if you've joined the chorus

that's saying video games
are a thing of the past,

you may have to change
your tune soon.

- This ts Nintendo,
a flashy little computer

that lets you play video games
on your TV set.

- One of the things that I've noticed

is that there's some real
beauty to moments in time,

and when the eight-bit Nintendo came out,

it was so good, so novel,
so different.

- | first played Nintendo
probably around five years old.

Family friends had one,
and we'd go over,

and we'd visit them,

and | remember just feeling
like such a cool kid

‘cause these kids were just, like,

a few years older than me,
and they had a Nintendo,

and they were teaching me
how to play,

like, "Duck Hunt" and "Tetris"
and "Super Mario Bros,"

and | so desperately
wanted my own system.

- And then watching and
yelling at the screen with me

or telling me,
"Oh, it's right there.

Oh, oh, don't miss it.
It's right there."

- It's a beautiful video game,
more levels,

more worlds,
more story-driven--

- This Mario game,
and my mind was just blown,

and | played it
every day after school,

| think, for nearly a year.

- Like, there was
a significant difference between this game

and all the other video games
| had played before.

- Your brain was having to do
less of a leap to understand

what stories are being told,

what the characters looked like.

It started something that
| still think we feel today

of the storytelling capability
of this medium.

- Because they avoided the collapse

and were continuing to develop games

that were better technology,
good technology,

some great software.

- It's been the bestselling toy in this country

for three years running.

20 million of these things now
inhabit American living rooms.

narrator: The plan worked.

Nintendos, as most kids
called them at the time,

spread like wildfire through
America's living rooms.

Now that the Trojan Horse
had gotten in the door,

what was the plan of attack?

Could they prove to be
a lasting player in the U.S.?

There was only one answer
to this question:

the games.

id

Were their eight-bit games
any better than Atari,

Intellivision,

or the arcade kings
who created the industry?

- There's much more involved
in playing the game,

much more excitement.

There's better use of color,
better use of music.

It's not just stick figures anymore.

narrator:
The answer was a resounding yes.

Not only was the technological
jump out of this world,

it was the undeniable quality,

the fun factor of those first games,

that sealed Nintendo
as the new king of video games

in America and around the world.

A new type of game had been invented.

The visual experience was like nothing
that had come before it.

Arcades came to life
in living rooms around the world.

And that was only half the experience.

[gentle piano music]

id

Koji Kondo.

You may not know the name,
but you definitely know...

his music.

[dramatic orchestral music]

id

[cheers and applause]

[playing "Super Mario Bros." theme]

id

narrator: The music.

The characters.

- Mario time!
- [evil laughter]

narrator: The charm.

The magic that Nintendo created in the 1980s

started a renaissance

and created a market out of thin air.

As with all initial success,

the logical follow-up question was:
What next?

How do you cultivate
a new brand and a new audience?

How could they turn this
new audience into a new culture?

[triumphant fanfare]

id

[playful music]

id

- The culture of Nintendo
has always been to provide

the absolute best entertainment
experience we can

but to also provide the highest
quality product we can

and then to provide
the highest quality customer service

to the people who play our products.

It's sort of our core culture.

- So when we launched the NES,

we put a questionnaire inside
that said, "If you fill it out,

we promise we're gonna
send you a newsletter,"

and the newsletter was called
the "Fun Club News,"

and the "Fun Club News"
president was Howard Phillips.

- And you're about to meet the man

at least partially responsible
for Nintendo's popularity.

He's Howard Phillips,
also known as Mr. Nintendo,

and for good reason.

An argument could be made
that Howard is responsible

for making Nintendo America's
bestselling Christmas toy.

- Howard also worked
at Microsoft after Nintendo,

so | know Howard,

and Nintendo's been very skilled

at creating relatable voices
in their markets

that people can be attracted to,

who can speak authentically
about what Nintendo's doing,

and that's not easy to do.

- If you didn't know where to go

or what to do in a particular game,
the "Fun Club News"

would give you a tip
or a hint on how to do that,

and at the time | was picked
to help out being the face

of the "Fun Club News"
as the game master,

and | knew all the games
and had played all the games

and had beaten all the games,

and so | was a logical choice
at the time.

- Here he had been
this guy in the warehouse,

and now everyone's like,
"Wow, he is great."

- | started working in the warehouse,

pushing boxes around.

| personally moved

all the "Donkey Kong" games
out of Nintendo

around the--
to around the country,

and there's about 60,000 of them

that | loaded--
offloaded from one truck

and then loaded onto another truck.

So that's how | got started at Nintendo,

but things progressed
quickly from there.

Drop that monkey.

- So once the "Fun Club News"
had reached

a subscription base
of about 600,000 consumers,

Mr. Arakawa decided
we could shift this

to a paid subscription magazine

like the ones that they had in Japan.

- But during that process
had wonderful experiences

traveling to Japan

and working with
the magazine production company,

you know, lots of lost sleep,
lots of bleary eyes,

but really fun, really fun.

- All of the maps, screen shots,

and the layouts were done in Japan,

and then all of the editorial work

and which games
we were going to cover

came from the publishing team
in the U.S.

We worked together with
our Japanese counterparts

to kinda make
this blended magazine

that was very new for U.S. players.

- The culture of Nintendo
is very conservative by nature

in the sense that they want
to be very deliberate

and contemplative
about any decision they make.

That said, they also--
there's a very strong recognition

that the Nintendo brand
means something

in the video games industry.

[light music]

id

- It's a divisive time right now,

and games can kinda help
people kinda come together

and sometimes fall in love.

- Aww, and get in fights

‘cause he beats me at this game.

Like, he just destroys me.

- Okay, maybe you should
share your little secrets.

- No. Call the Nintendo counselors.

- Nintendo Gameplay, this is Jenny.

How may | help you?

- There's a flashing heart
next to his head sometimes.

- And that's gonna make
a set of stairs here...

- Well, the final fortress
is kind of a magical maze.

- Have you ever been in the mansion
that has the eyeball in it?

- After using the stop magic,

the ghost will be vulnerable
to your normal weapons.

- You may be asking yourself,
"What are they talking about?"

They're talking strategy.
They're talking warp zones.

They're talking Nintendo.

- One free man.
- My name is Shaun Bloom.

When | started off at Nintendo,

| started off
as a basic gameplay counselor.

- The hammer is located...
- When the NES came out,

that's when they started
coming out with games like,

you know, "Zelda"
and "Super Mario Bros."

where they had these
hidden blocks that got you,

you know,
a power-up mushroom,

and in "Zelda," you know,
if you did this,

you could get this secret thing,

and that's when people
started banging their heads on walls

and going,
"How do | get through this?"

We were taking calls
on the NES, the Game Boy,

the Super NES, Virtual Boy
for a little bit, Nintendo 64.

Imagine all those systems,
all those games,

and you have to be on demand
to answer a question

about any one of them
at any time.

- Now people don't call Nintendo.

They go to YouTube,
and they just watch someone

play it all the way through for them.

- "Nintendo Power" did this
really cool thing where

if you put all of the bindings
of the "Nintendo Powers"

together, they made pictures,
so there's, like, a Mario

and a Yoshi and a Z--
and a Link and all of them.

So | have all of those
on display in my house,

super nerd.

- We would have contests
in the magazine, and we'd Say,

"Get your highest score possible,

and then take a picture

and send it into us with your score."

More than one time we would get
pictures of a smiling kid,

and then they'd write below it,
you know, "83,204."

So they would take
a picture of themselves

and send it in
and write their score down.

- For the record,
| was in fact in the first issue

of "Nintendo Power" magazine
for a high score

for "Super Mario Bros."

However, before that | was
in the last two issues

of the Nintendo "Fun Club,"

which was the precursor
to "Nintendo Power."

[snorts]
Nerd.

| think it's pretty safe
to say that Howard Phillips

was one of the very first known
kind of figureheads in video games.

You know, prior to Hideo Kojima

or Reggie or any of these
other people,

he was the first person
to kinda put himself out there,

and that was kind of,
you know, one of the first

video game celebrities
that, like, ever existed.

- The funnest part
of working at Nintendo

and working in entertainment

is getting to be face-to-face
with the people

who are enjoying
the fruits of your labor,

and that means, to me,
talking with kids or adults

who were playing the games.

It's serious business. It really is.

[gentle music]

id

- We really wanted to make sure
that we could express

the quality of the product.

Ron Judy tasked me with saying,

"We've gotta do something like

the Good Housekeeping Seal of Approval."

- "We have to have something like that,"

and so we developed
the Nintendo Quality Seal.

That idea that games
had to meet that sensibility

that we had about
the quality of the gameplay

was something that
we applied to licensees

who wanted to publish
on our platform.

- With regard to the games

that were being submitted
for approval,

we stayed--
we stayed on top of it.

There were games that were submitted

that were pretty crappy,
and some would say,

"Well, that's not an open
and free system."

At that time period,
an open and free system

would have killed the market again,

just like it had with Atari
with crappy games.

- The message that's
being sent is that

if you want to play
in the Nintendo world,

you need to play
by Nintendo's rules,

and if you don't wanna play
by Nintendo's rules,

it's gonna be
a very, very hard struggle.

- | think the development community,

they all have a horror story
about dealing with Nintendo.

- Okay, so this one--
this one, uh...

- [laughs]
Difficult to work with?

Probably very difficult to work with.

- We had the quality seal
on the products.

That was kinda the marching
orders in Japan, in Kyoto,

was that anything
that they were gonna produce

would be at a quality level
of the arcade game.

What you had to have
was a philosophy in a company,

and they had that philosophy,
and | think that's made them

different than the predecessors.

All they were really
interested in is how many

you could push out,
how fast you could push out.

They didn't care that much
about the quality of the game.

- It was such a leap over
what we'd been playing in console.

For me,
from "Pong" to 2600 to seeing

what the NES was capable of
was a pretty dramatic slope

just in terms of what
the technology was bringing.

- All the products prior to Nintendo,

the quality of the game
or the game itself

looked nothing like the image

that was on the box
when you bought the product.

Nintendo was the first one
in our products

to actually have what the game
looked like on the box.

Which also put us way ahead
of what had been previously done.

- Nintendo controlled the market,

and they had a monopoly.

| mean, it's plain and simple.

If a store wanted to sell
a competitor's stuff,

Nintendo didn't like that,
but they controlled the market.

So and--well, what can you do?

Either you had to be on board with them

or be caught without anything.

- We do everything possible
for us to maintain

the highest-quality video game product

that was delivered to the consumer.

We did everything we could
to assist the retailer

in having
the right amount of product,

not the most product.

It was the right amount.

Given how the person is going
to promote the product,

display the product,
and how much traffic,

knowing how much they can move,

you gotta help them
come with that right amount.

To overstock a retailer
is not good for anyone,

and to under-stock isn't,
but if--

we gotta make certain
the consumer gets nothing

but the best quality,

and we spent a lot of time
on both of those.

| think those were two
of the key factors to our success.

[static crackling]

- Checking inventory, restocking shelves,

replacing damaged packaging,

anything that can be done
to enhance sell-through

and turn your Nintendo space

into a place of fast-paced profit.

After all, our business is entertainment.

We believe that everything
connected with Nintendo,

even customer relations,
should be fun.

- By the late '80s,
Nintendo was the king

in the video game world.

There was no one
who could touch them,

but they weren't as open

to having other developers

and publishers

publish games for their system.

narrator: By 1988 Nintendo,
had conquered the U.S. market,

and in doing so
created a landscape

where every game released
seemed to Sell like hotcakes.

Video games were back,

and the former captain of the industry,

the company that started it all,

came knocking at their door.

- J Have you played Atari today f

- You started to see all of the companies

that had prematurely
abandoned video games

decide that they wanted to
get back in on that action

but then find that
the gaming market has been really just,

like, locked down.

Not just anybody could make games

for the Nintendo Entertainment System.

- While "Pong" was--you know,
there was copies made of it,

I'm not sure anybody

actually did
copyright infringement on it

because I'm not sure
anybody really understood yet

how the video game could be copyrighted

just as well as a movie.

- So with Nintendo's business practices

with third-party publishers,

it was a tough time,
and | say that because, one,

Nintendo really wanted
to maintain quality,

and number two,

things got so big
so quickly in the late '80s,

there truly was a chip shortage.

We couldn't make the games fast enough.

- They didn't allow anyone else
to manufacture their games.

They wanted a complete hold
on the market,

and the original reason
for that was they wanted

to control--you know,
keep bad games from coming out.

- | really think it was all about quality

and how--how are we gonna ensure

that you didn't see
what happened during--

you know, during the crash
of the early '80s with--

of the video game market.

- It felt like we were right out in front

of the whole industry

on developing this strategy
for stopping the counterfeits.

- One of the things that just

the third-party developers hated

is that they had to buy
the cartridges from Nintendo

before they were sold,

and so it wasn't even like
a royalty on what you sold.

You had to take actual physical risk.

- And this got a lot of people
worried in the game industry.

Your game had to be a cartridge,

so those cost at least
$10 to manufacture,

and then they were tacking on
another $10 license fee.

So now instead of your cost
of manufacturing being pennies,

it's gonna be $20,

and you're gonna have to buy
quantities of half a million?

That's $10 million,
so hardly anybody could

even really afford to make
these cartridge games,

and it was terribly, terribly risky,

and your merchants were
really at the service of Nintendo.

They were gonna make a lot of money.

You were probably not gonna
make a lot of money,

so really virtually all of
the game companies in America

did not make games
for the eight-bit Nintendo,

and | didn't want to either.

| mean, they would--
they would have third-party licensees

but mainly to help Nintendo
make more money,

and that's really the history of it.

| don't mean to sound like
I'm picking on Nintendo,

but if you just look
at the financial fortunes

of their third-party licensees,

it's not really a very pretty picture

of the entire history of it.

It's--it's been, you know,
more helpful to Nintendo.

This was the mood in the industry,

and we're all kinda hoping
they're not gonna make it,

and we're hoping that something
else is gonna jump beyond it,

and that's when | first heard
about Tengen.

[dramatic music]

- So Nintendo put
a security chip into the NES

with proprietary software

that had to be matched
with a similar security chip

that was on the cartridge board

of every single NES game,

and a lot of companies
were totally fine with this

even though you had to go
through this whole process

and even though Nintendo
would tell you, like,

"You can release this game
but you can't release that game."

Atari, Atari Games
initially starts playing ball.

They establish a subsidiary
called Tengen,

and they start working with Nintendo,

and they released "Pac-Man,"

"Gauntlet,"
and "R.B.1/. Baseball,"

and they also planned to release,

as a licensed Nintendo product,

a version of "Tetris,"

which they had secured the rights to.

They planned to release this
as a licensed Nintendo product.

Before Atari could release "Tetris"
as a-- as a licensed product,

they actually decided
to go their own way,

and what Atari did
was a crazy, crazy stunt

that would eventually
land them in some pretty hot water.

- What Tengen found is that
they could simply short out

a couple of the leads on the chip

and effectively bypass that security,

and then they could release
any game that they wanted,

and they started doing that.

- | was talking with Ron Judy
one day about the counterfeits,

and he said,

"Well, you know,
it's the greatest form of flattery.

"You know,
and you know you've made it

when you've got counterfeits."

- Let me put it to you this way.

If the folks who manufacture
compact disc players

in the United States
said when you bought them,

you could only play
Bing Crosby records on them,

you wouldn't buy a compact disc.

Nintendo right now is saying,
"You can buy our machine,

but you'll only play our games."

- Tengen just, like,
took Nintendo's code.

They didn't reverse engineer.

They sort of illicitly did it,

and so that is when Tengen
got sued by Nintendo.

-/n a matter of three or four months

they were able to,

one by one, contact all major retailers

and convince them or intimidate them

or induce them not to handle
Tengen products.

- Mr. Arakawa always had
the opinion that,

basically, we would fight everything.

- Tengen felt that they could
re-engineer around the patents,

and they did, and they
ultimately lost the lawsuit.

- They basically violated
their license agreement.

They didn't do
the reverse engineering

clean room correctly.

They violated the patent.

| mean, it's--
it kinda lit up the scoreboard.

narrator:
Fast-forward to 1992.

The Federal Trade Commission
cleared both companies of their charges,

and nothing much
came of the whole ordeal,

except we now know

how the court feels
about reverse engineering.

- The thing | loved about it
is a lot of people don't know

that Tengen is actually
the center point of a Go board,

and so they were giving a nod
a little bit to Atari,

which was a Go word as well.

- Put on a Walkman
and see the world in a whole new light.

- Listen to Panasonic
Platinum Plus three-piece...

- Get the fun of outdoors indoors

with Panasonic Omnivision.

- Would you rather have
a calculator or a watch?

With the Casio Calculator
Watch you have both.

[pensive music]

id

narrator:
Gunpei Yokoi,

the Nintendo
tinkerer-turned-inventor

who took Nintendo
from trading cards to toys

and eventually into video games,

was relentless
in pursuing a single idea,

a portable system

with interchangeable game cartridges,

A Nintendo for your pocket.

[game music playing]

id

- Context is so important here.

Go all the way back to the '80s.

There are video game arcades
all over the place,

and we want to carry games
with us everywhere we go,

and you can't really do that.

- Official "Donkey Kong,"
the arcade game

you can take home with you from Coleco.

- | remember my cousin
having multiple

Nintendo Game & Watch games,

but they were super rudimentary.

When the Game Boy comes out,
now you have what's,

in all practical experience,

a portable arcade console.

- | remember when the Game Boy
came out and we got that.

It was So crazy,

this novelty of holding
this little game in your hand,

and you could play games
like "Tetris"

that you were playing
on your big screen.

We had, like,
Game Boy clubs in school.

Like, that's how excited
we were about these little things.

- | think one of the fondest
memories of Game Boy

was when | first got a game,
the cartridge "Pokemon,"

and | looked at the graphics,
and | thought,

"No one's gonna want to play this.

This is crazy,"

and then | stayed up
all night playing it

‘cause it was just--
it just grabbed you

and sucked you into that game.

It was incredibly addictive.

- The Game Boy holds such
a place in my heart.

| saved up for this thing
for months.

| obsessed over that thing.

- [speaking Japanese]

- The idea that you
could hook a cable up

and play "Tetris"
against each other,

and that gameplay was
so compelling and so awesome.

You didn't care almost
that it was black and white.

Even the form factor was awesome.

It fit in your pocket.

- Introducing Game Boy.

It's portable, it's in stereo,

and its games are interchangeable.

- Now, you two are playing a game

called "Tetris," correct?

- We're going to in just a sec, yeah.

- You're going to?
You're ahead.

He's not there.
- Yeah, started.

| have to have an--
| have to have an advantage.

- | think it's really important
for parents to realize that,

that anytime in anyone's life,

they need to have entertainment,

and this is part of it,
and it's portable.

[exciting music]

id

- When they were launching
the Game Boy,

they knew they wanted a puzzle game

because the graphics were gonna be small,

and it's not as dependent
on a cute character.

So Nintendo went to the Soviet Union

in order to buy the rights
to "Tetris."

In an adjoining hotel suite,

there was someone
from one branch of Atari

trying to legally buy the rights.

In another hotel suite
is another branch of Atari

trying to buy the rights.

And Nintendo ends up winning
because they agree to pay

for the rights over
and above anyone else,

and this goes back to why
Nintendo is so profitable

and so successful as a company.

id

- It was a game that literally

anybody could pick up and play.

It wasn't gender-specific
or age-specific,

and it was addictive,

and | think that was the key reason

why Game Boy took off the way it did.

- They're the ones
that came out with "Tetris."

This is the best-selling game in history,

and how many "Tetris" clones
are out there?

-In'87 lama kid

on "Star Trek: the Next Generation,"

and | am traveling around the country

every weekend to do promotional events

to promote the show
‘cause it's still brand-new,

and the only way that | think
| got through all of that

was having my Game Boy
with me on the plane

and playing thousands of hours of "Tetris."

- If "Tetris" wouldn't have been
for Game Boy, who knows?

Sega Game Gear, Atari Lynx

might have had a little more success,

but "Tetris" really took
the Game Boy over the top.

- Nintendo always made a lot
of money on the fact

that they weren't top-of-the-line.

Their hardware and their software

was always a couple years
behind the bend,

and when the Game Boy
came out, it was monochrome.

It was the creamed spinach color,

as a competitor called it,

and one by one,
all of these competitors

came out with full-color machines

that looked great,
and their games were good,

and then 2 1/2 hours
later the batteries died.

- | was in love with the Game Boy.

The idea of a portable game player
was really fun,

and there were several games
that were very addictive.

- The Game Boy and then the DS

were really the first ways

where you could take
entertainment with you

anywhere you wanted to go.

- And it inspired
a generation of designers

to make portable games

that were as rich and as compelling

and as meaningful
as the biggest computer games

that we had available to us
at the time.

- Descendants of the Game Boy
are around almost 30 years now.

- And in some ways it ushered
in the gameplay on the iPhone.

- | don't think that we would
have handheld gaming

on our phones
if it wasn't for the Game Boy.

- Portable power.

[chime]

[gentle music]

id

- Mr. Gorbachev, tear down this wall.

[cheers and applause]

narrator: While the Cold War
was wrapping up,

another conflict was brewing,

but the stakes in this battle

were not only hearts and minds
but dollars.

Big dollars.

[dramatic music]

id

Nintendo sat atop a mountain,
a mountain they had built

that up to this point
had been mostly unchallenged.

Originally known as Service Games,

a new competitor, also with roots in Japan,

saw what Nintendo had done
in America and wanted in.

Minoru Arakawa and Mr. Yamauchi

had a four-letter problem
that wasn't going away.

- f Sega f

- And here we have
a retail display from 1991

that you can switch between five different games

and play in store a different title.

- Let's get ready to rumble!

- The new 16-bit
game machines from Sega

are challenging Nintendo.

- You get better graphics,
better animation on the screen,

just more fun to play.

- Sega!

[exciting music]

id

- Genesis, a revolutionary 16-bit system

that improves graphics,
memory, and sound.

- It's called the console wars era,

and it was a really interesting time

because it was very much
the first time

that you had
these two major companies

just absolutely going
at each other's throats

and trading barbs back and forth,

and it made--
it made the Atari versus Intellivision

comparisons of the
late '70s and early '80s

seem like a friendly game
of Horseshoes.

- So when Mattel Electronics asked me

to compare their Intellivision
games with Atari,

| gave it a try.

| compared Atari "Baseball" with Intellivision

and found Intellivision
played much more like real baseball.

- Power corrupts, and absolute
power corrupts absolutely.

| think that Nintendo,

they were a little bit drunk
on their own success

and felt that they, you know,
had the divine right of kings

to do--
[chuckles]

to do as they wished,
not understanding

that they were hollowing out
their underbelly.

- Welcome to my man cave,
lots of memories from the past.

Here's some drawings of
Barbie fashions on the--on the wall.

[gentle piano music]

id

One of the things that
the Academy of Art did,

in San Francisco,
they did this picture of me.

| guess they did this 30 years ago.

| was obviously a lot younger,
and so memories of my past,

Flintstones vitamins.

- f Yabba, dabba doo,
yabba, dabba doo f

J Flintstones vitamins
are good to chew f

~ Yabba, dabba doo,
they're good to chew f

- Whoa, I'm slipping!
- Barbie.

both: Hot news.

- J Ultra Vette's the coolest
way to cruise f

- Slime.
- Yuck.

- The Slime Monster Game
comes complete

with slime compound,
new from Mattel.

- All Mattel stuff, and then,
of course, Sega.

Well, | went on vacation
with my family,

and | was in Hawaii,
and all of a sudden Hayao Nakayama,

the CEO of Sega, shows up.

So he literally tracked me down

when | was on vacation in Hawaii,

and here | am on the beach
with my daughters in Maui,

and Hayao Nakayama
shows up in a suit and tie

and says,
"Tom, I've been looking for you.

| think you're gonna
really like 16-bit technology

for video games,

and | think you should
come back to Japan with me

and take a look at it,"
and | said,

"You're blocking the sun.
I'm on the beach here."

And so | went back to Tokyo,
left my vacation

and went to Tokyo,
and he was right.

When | saw 16-bit technology,
it blew my mind.

I'd never seen anything like this.

This was such a jump forward,

so much better
than Intellivision, Atari,

and so much better than eight-bit NES.

- During the eight-bit era,
| mean, there was Nintendo,

which controlled 90% of the market share

for video games in the U.S.,

and then there was everybody else.

- In any space you're gonna
want different companies

pushing each other to innovate,

to kind of challenge
each other to do better.

- In Japan,
Sega had actually released

its first gaming system

on the same day
as the Nintendo Famicom.

- Master System.
- Sega!

- When Sega Master System
came out,

they were laughable.

It was not as good
as the eight-bit Nintendo.

- Sega challenges you
with the ultimate video games,

games that'll blow you away,

like "Alex Kidd in Miracle World,"

and coming soon, "Monopoly."

- At some point in the early '80s,

everything went to hell.

Intellivision crashed, along with Atari,

so the video game industry
literally crashed,

and it was a disaster in retail,

so | had a very bad feeling
about the video game industry

at that point in time.

Atari was down,

Intellivision was down,
and along all of a sudden,

as | was--about the time
when | was leaving Mattel,

along comes Nintendo

and restarts the video game business.

- Sales of video games
show no sign of slowing down

as the industry heads into the '90s.

narrator:
Great slogans,

high-octane advertising campaigns,

and bombastic new 16-bit games

put Sega on equal footing with Nintendo.

But they still needed something more

to score a knockout punch.

- The Sega Genesis by no means was--

you know, lit the world on fire when it first came out.

What sold the Sega Genesis
was a year later

with "Sonic the Hedgehog."

- Last Christmas, the world
felt its first sonic boom

when "Sonic the Hedgehog 1"

sold more than 1 million copies.

- Right.

- You know, at one point
we thought that Alex Kidd

was gonna be a great
mascot character to take on Mario.

So before there was Sonic the Hedgehog,

we were relying on Alex the Kidd

to be the spokesperson
character for Sega.

Well, he just wasn't--
it wasn't popular enough.

Although it's a very good game,
it just didn't work

to take on--
to take on Nintendo,

and of course--
of course Sonic the Hedgehog did.

[theme music plays]

id

- | think it's pretty cool.
- Yeah.

- And then | get to see Genesis and all,

and I'm looking to buy it soon.

- The thing that Sega's always
had going for it is Sonic.

"Sonic" is such a cool game,
it's such a cool character,

and that character
and that game, | believe,

is the sole reason there was

a console war in the first place.

- Their franchise character,
Sonic the Hedgehog,

he had an edge.

He had spiky hair.
He had the funky shoes.

He would get bored if you sat there

and didn't play the game,
where he'd start tapping

his shoes and look at you like,
"Come on, let's do this."

- Sonic the Hedgehog
was something that was everywhere,

you know, and the idea that moving that fast,

you know, | mean, it was, like,

hard to even keep track of him.

- Sonic the Hedgehog was really Sega's

very strong answer to Mario.

Sonic was very fast,
and there was, you know,

a very quick pace to the game.

It just seemed like more
of an adrenaline push,

as opposed to Nintendo games,

which were more slow, contemplative.

- We didn't have a strong character
to take on Mario.

So when | first came to Sega,

| said,
"All right, so where's our Mario?"

and they drew up--

brought out some drawings
of different characters.

One looked like a big egg,

and another one looked like
a very ferocious--

I'm not sure what it looked like,

but it was Mr. Needlenose,

and he became Sonic the Hedgehog.

- When Sonic came out,
a lot of people don't realize this,

but Sonic the Hedgehog
became the number-one icon

in the world,
surpassing Mickey Mouse.

You look at the sales
of the Sega Genesis

before you got Sonic,

and it was like,
"Yeah, ‘Altered Beast,’ whatever,"

and then Sonic, boom.

Now Nintendo had
a real competitor on their hands.

id

- Here's the challenge.

Super Nintendo,
brand-new competitor of ours,

16 bits, we challenge them.

We think we're better than them,

but it's up to you to decide.

- It's Sega's Genesis versus Nintendo.

Sega's hitting malls across the country

with an elaborate setup
of home video games.

- Sega was also definitely friendly

to the developer community,
and the developer community

is actually where most of
the innovation comes from.

- When it was just Nintendo,

they didn't have any competition,

they did what they did,

but now that Sega was starting
to get talented developers,

people were developing games
on the Genesis first

because the tools were easier.

They were more familiar with it.

- | jumped a generation
ahead and figured out

that the Sega Genesis
was gonna come to market

before the 16-bit Nintendo
by two years,

and guess what.

It used that Motorola
MC68000 processor,

a processor that I'd already
built a lot of games for

that were on the Mac,
that were on the Amiga,

that were on the Atari ST.

All these machines had that processor.

- | can tell you when we did
"Earthworm Jim,"

we would do
the Genesis version first

and then upscale it
to the Super Nintendo.

| honestly did respect Nintendo

for restarting the video game industry

and for doing high-quality video games.

| knew Howard Lincoln fairly well.

| did not now Arakawa very well,

and he was offended by us

making fun of Nintendo
in advertising.

- What if you don't have blast processing?

- There is no Nintendo CD.

- Genesis does...
- What Nintendon'tt.

- So when | would see him at E3,

he literally would turn
and walk the other way.

We never had a--
had a good relationship at all.

- Nintendo, after having enjoyed

this tremendous worldwide
success with the NES,

was getting beaten
by the Sega Genesis,

and it put Nintendo back on
its heels for the first time

in its experience
in the video game industry.

- We proved to the world
that there could be more

than one player
in the video game industry,

and we also proved to the world

that all ages were interested
in playing video games,

from very young children
to 50, 60-year-old men.

- Because gaming is competitive,

| think there's a natural tendency

to try to pit companies
or franchises against--

your platforms against each other,

and | get it, but in the end

there's kinda room in our heart

for both Sonic and Mario.

There's no doubt about that.

- The eight-bit market
had gone so well for Nintendo,

they wanted to
hang in there and milk that thing

for everything
that they could get from it.

You go--
you go to a lot of trouble

to launch one of these consoles,

so it's really crucial for that platform

to have a long shelf life
with each owner.

Sega, of course, didn't care
about Nintendo's shelf life.

- The 16-bit system allowed
for more graphically-intense

depictions of the action
and on the screen.

- They upped the technology.

- The consumer told us
they wanted better graphics,

better sound, and better action.

| think our Success was
we did great games.

Some of the games that we did
were right up there

at the top of any video game
ever in history.

- They had some technology
that was good,

and they were different as well,

and that really began to challenge us,

and | think we still always
wanted to be the best.

- This could be
the competitor's opportunity.

When Sega decided to enter
the U.S. market,

first with the Sega Master System,

it really didn't compete
very well with the NES.

- Nintendo used improved
technology to lead

the resurgence
of the home video market.

- And then they introduced the Genesis.

- And Sega, also in the market,
sales once again--

- | love it.

- It's bigger. It has better graphics.

- And it really started heating up

and especially caught on with Sonic

when they did a great job marketing.

- The first video game character...

- Sonic the Hedgehog.

- To ever appear in this parade.

- Bigger than a sonic boom.

- Our whole philosophy
is to lead technology.

- At the time that Sega came in,

it was the first really
viable competitor we'd really had.

- People canceled vacations
so they could be able to play

the game for the first time
in the world.

-A revolutionary 16-bit system.

- It got our competitive spirit
really going because every time

they'd make progress, frankly,
it pissed us off.

- Sega is the world's
number-one game maker.

- | think I'd rather play Genesis.

- And we were not gonna have it.

- Nintendo's new console

will produce brilliant,
high-definition graphics.

- The new Super Nintendo System--

- Super Nintendo.

- Genesis is the most popular

game player in the United States.

- Twice as powerful, twice as fun.

-f Segal

- This Christmas could be Nintendo's last.

[upbeat music]

id

- You know what?

- When | was doing brand management,

people would call
and want to make a Zelda movie.

You don't know--I can't even
say how many people, every day,

"Hey, | have an idea.
Let's make a Zelda movie,"

like it's such an original idea,

and | would have to go to him
or his group and say,

"Someone called and wants
to make a Zelda movie,"

and he started avoiding me
at things like E3

so that | just couldn't ask anymore.

- Yeah, | didn't read it much, though.

- Okay, okay.

- | was in my 20s at time

and just didn't
pay much attention to it.

| was too cool.
- Yeah.

- Yeah, for a short time.
- Yeah.

- That didn't last long.

- Nintendo had this hotline
with a bunch of game counselors

who were masters
who were basically just, like,

19-year-olds with a big leaflet
over in, like, you know,

Seattle or Redmond or wherever
they were at the time,

and you could call this number
and just talk to them

and get advice on how to beat,
you know,

Ganon in "Zelda" and things like that,

and | remember calling them
on a regular basis,

to the point where | actually
became friends with one.

| can't even remember
this person's name,

but it was, like,
my surrogate therapist

to 15-year-old Cliff at the time.

- And over here
is a Singer sewing machine.

It came out around 2000,
and it sold with--

the Game Boy Color came with it,
and it had an adapter

to plug from the sewing machine
right into the Game Boy,

and the reason it did that
was it had a cartridge which had st--

It had a cartridge which had stitch patterns,

so the sewing machine could automatically

do these stitch patterns
right from the Game Boy.

- Did it work?