Before video games–before board games, for that matter–there were playing cards. Though a fixture of China’s entertainment scene since the 10th century, playing cards did not reach isolationist Japan until the Portuguese introduced them in the 16th century. The shogunate at the time banned the cards but as times and dynasties changed, the powers that be realized cards would remain a popular past time among the Japanese people. The early bans did influence design so that Japanese cards (namely Karuta and later Hanafuda) looked markedly different than cards around the world, in order to get around the laws in place.
Cards were therefore seen as “contraband” and often associated with illicit activities–primarily gambling. There existed few known playing card developers, as a result. One notable company got its start with cards called “Hanafuda”–popular with the infamous Yakuza–in the late 1800s; this company was Nintendo. Fusajiro Yamauchi’s cards became increasingly popular, leading to the company’s early success. Having no sons, Yamauchi later transferred leadership to his son-in-law, who took on the last name Yamauchi, as did his son-in-law’s successor, Shikanojo Inaba (yet another son-in-law). Shikanojo left his family and so never actually took over the family’s business; Hiroshi, Shikanojo’s son, was subsequently raised by his grandparents and later became head of Nintendo.
Hiroshi radically changed the company after a visit to the United States Playing Card Company. When he saw the small office it occupied, he knew to remain in cards could prove disastrous for Nintendo, and so he decided to diversify his company’s offerings. His first new venture remained in the playing card realm, taking advantage of Disney’s growing popularity. Nintendo struck a deal with Disney to feature its characters on Nintendo’s cards.
With the monetary gain from this successful product, the company started new endeavors including: instant rice, taxis, and a chain of love hotels (which may shock Western sensibilities, but such establishments are common and not quite as frowned upon in many Asian countries). From Disney to love hotels and instant rice seems like quite a big jump, but it made sense for Nintendo’s success in its home country, as the company’s vision was not quite global, yet. Most of those odd detours ended up failing after several years and, around the same time, playing cards in Japan met the end Hiroshi tried to avoid–market saturation. An assembly-line worker, Gunpei Yokoi, turned things around for Nintendo, at least temporarily with the invention of the “Ultra Hand.”
Yokoi went on to make many more toys for Nintendo, bringing the company out of the red. He moved away from novelty toys to electronic toys, starting Nintendo’s legacy in electronics. First came the “Love Tester” (a toy where a meter would tell users how much they loved each other on a scale of 1 to 100 when they held metal sensors in their hands) followed by the “light gun” a year later in 1970. It was Yokoi’s light gun invention that led to the company’s introduction to the video game world. Nintendo’s first light gun was made in collaboration with Sharp; a few years later, Nintendo developed light guns for the Magnavox Odyssey video game console’s “Shooting Gallery” game.
With this success from the light gun, Nintendo tried to create its own game using the technology in the 70s. Unable to handle the high costs associated with production, the company turned back to Magnavox and obtained the rights to distribute the Odyssey console in Japan. A collaboration on a new console, the Color TV-Game 6, with Mitsubishi soon followed. Nintendo started to look into the popular arcade game market, eventually producing the first versions of Donkey Kong and Mario Bros. in the early 80s.
Nintendo experienced great success with one of the first handheld gaming devices ever made: the Game & Watch. Released in 1980, the Game & Watch was inspired by Yokoi’s observation of a businessman killing time by punching buttons on an LCD calculator; funnily enough, many bored students still fiddle with their calculators, and some contemporary calculators actually have the option of downloading games–turning the calculators into handheld gaming devices, themselves.
After the Game & Watch came the Nintendo Entertainment System (NES), which practically saved the failing video game industry. In 1983, the industry crashed in North America, dropping from $3.2 billion in revenue to $100 million (approximately 3% of its peak revenue). This occurred for several reasons, one being the same thing that happened to Nintendo’s playing card business many years prior–market saturation. In addition, games for the consoles were mass produced, leaving the user overwhelmed, as well as making the games far from unique (there is no reason to play if the game is not special). Atari might have saved itself from failure by agreeing to back Nintendo’s new console, but it ultimately decided against supporting the company’s product.
So when Nintendo released the NES in 1985, the company took efforts to make their product different and sustainable. Firstly, it marketed the system as a sort of novelty toy, rather than an outright video game console. Secondly, it took steps with third-party NES game developers to limit the production of games to five in a year. Games like Super Mario Bros. and The Legend of Zelda helped sell the console and save the gaming industry. In the 1990s, when Nintendo experienced dropping revenues due to the competition from SEGA Genesis, it was Nintendo’s games that brought its devices to once again surpass all others.
After this resounding success, Nintendo then developed its first Game Boy product–another success. Over the years, the Nintendo 64 (N64) followed, as well as the GameCube, Game Boy Advance, Nintendo DS, Wii, and today’s new Nintendo Switch. Mario, Donkey Kong, Zelda, and Pokémon games continue in their popularity, as do their parent devices. Nintendo learned the value of targeted diversification and of great gaming software, leaving a truly remarkable impact on the video game industry. In doing such, Nintendo–though not the first on the scene–raised the gaming generation of today.
Sources: Wikipedia — History of Nintendo, Mental Floss
Not discussed in this article, but contributing to Nintendo’s success and important to note: anti-competition measures, including price-fixing.