What You Can Learn From Nintendo's Weird and Wonderful 125 Years
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.
The Kyoto, Japan-based company started in 1889 by producing Hanafuda Cards, traditional Japanese playing cards that became popular in the gambling dens run by the country’s organized crime syndicates, the Yakuza. (It still makes playing cards as a nod to its roots.)
It continued making the cards for decades before the company went public in 1962. Then it did everything from being a taxi company to running hotels and to trying to compete with Lego.
Nintendo made many mistakes as it entered the modern era, but that’s what happens when you take risks, experiment and innovate. Its cowboy mentality taught it the lessons and discipline that set it up for the 1980s, when Nintendo exploded into the video game and gaming console behemoth it is known for today. Perhaps most impressively is how the company has managed to stay competitive in the always-changing, fast-paced gaming industry.
What are its secrets to longevity? Here’s a look at three things video-game industry experts say has kept Super Mario alive for all these years:
1. Find your market opportunity. Nintendo introduced its first game console, the Nintendo Entertainment System, in the U.S. market in 1985, shortly after what experts call the “video game crash” of the early 1980s. The video game market dried up considerably due to a glut of low-quality, cheap video games flooding the market. “Parents were fed up with games that were no good,” says Sean Kelly, co-founder of the Videogame History Museum, an archive of video-game memorabilia.
Nintendo saw its opening: It put a gold “Seal of Quality” on games, systems and accessories, letting customers know that the products had been tested by Nintendo and met the company’s high standards. That seal meant the products were officially licensed by Nintendo. That seal, Kelly says, helped rebuild consumer trust in video games. Nintendo didn’t just put out dozens of games; it focused on thoroughly ensuring the games it did release were of high calibler. “So Nintendo basically rebuilt the U.S. video game market by focusing on quality,” he adds. Ever since the 1980s, the company has continued to use that seal to maintain its reputation as a high-quality video-game maker.
2. Captivate your audience. One of Nintendo’s other strong suits over the years has been building game characters that both kids and adults love. Mario, the Italian plumber with the red cap who lives in Mushroom Kingdom, was one of Nintendo’s original characters. Video game players love Mario, because he’s such a simple “every day” character that can therefore be adapted to lots of different video game themes and backdrops. He’s continued to be a huge moneymaker for the company over the years, as the company uses Mario in a host of its games.
A variety of new worlds and scenarios make the most of this powerful asset. “You can find Mario in everything from a golfing simulation to a boxing match,” says Joe Santulli, another co-founder of the Videogame History Museum and owner of a video game retailer in New York. “They can put Mario in almost any game and kids will love it.”
And as with other great children’s brands such as Disney, Nintendo’s bench of characters is deep. Who doesn’t know Donkey Kong, Zelda and Kirby? And don’t forget the world of the fictional Pokémon universe.
All of these characters have had long shelf lives and helped Nintendo stay profitable through good times and bad. People who want to play games with these characters have to buy a Nintendo console. “Nintendo is so good at this kind of branding,” Santulli adds. “They just continually build on this universe of characters.”
3. Reinvent and reimagine. Over the years, Nintendo has continually put out groundbreaking products, says Liam Callahan, video-game industry analyst for NPD Group. Nintendo was the first to popularize handheld game consoles with the Game Boy in 1989. Other video game companies at the time, including Sega, tried to compete with their own versions of handhelds, but none had anywhere near the sales of the Game Boy. That was due partly because it included wildly popular games, like Tetris, and was simply a better, higher-quality product than the competition, Kelly says.
In 2006, Nintendo became the first major video game company to put out motion-detecting game console, the Wii—which helped attract a much older crowd to video games. Even Nintendo’s flops -- like the Virtual Boy console of the 1990s that failed to provide its promise of 3-D gaming -- have shown that the company isn’t afraid to try new things and be first to market. Risk taking “is really in their DNA,” Callahan says.
Entrepreneurs have much to learn from Nintendo’s 125-year history. But video game experts say the company currently faces several challenges: The company’s Wii U consoles have lagged behind competitors such as Microsoft’s Xbox360 and Sony PlayStation 3, partly due to their confusing GamePad controllers, Callahan says.
Another broader issue is that digital and smartphone games have made inroads into video game companies. Callahan says Nintendo will have to figure out how to evolve as more kids and video game enthusiasts turn to digital and social products. He says the company seems to be recognizing the need to beef up its digital offerings and has added more titles to its eShop digital games site in recent months.
Ultimately, Nintendo knows the industry well and that it’s only as strong as its next blockbuster release. The company’s long record for putting out market-changing consoles and games should only help in the long run. “They sort of look inward for inspiration instead of trying to keep up with other people,” he says.