All was not well in the House of Mario. Nintendo’s latest home video game console, the GameCube, failed to find the same kind of dominance the company had enjoyed in the ‘80s and early ‘90s. While the company’s name was once synonymous with video games, Nintendo’s missteps and inability to change with the times had left it with a battered reputation. It was seen as out of touch and geared only towards Pokémon-loving kids. Gamers who considered themselves “serious” or “hardcore” turned up their noses at Nintendo’s offerings, and the result was a severely reduced market share. Their one-time rival, Sega, left the console business altogether to focus on software, a business shift many critics thought Nintendo should follow.
But reinvention was a part of Nintendo’s DNA. Though it may have had a tin ear when it came to listening to fans, Nintendo always heard the beat of its own drummer loud and clear. Soon, the company would outsell its competition, and find its way back into the good graces—and living rooms—of gamers the world over…
Hiroshi Yamauchi had been the president of Nintendo since 1949, molding and shaping the company for more than half a century. Under Yamauchi’s leadership, Nintendo grew from a regionally successful playing card company into a global entertainment powerhouse. But shortly after the GameCube’s 2001 launch, Yamauchi knew it was time to step down. His son-in-law, Minoru Arakawa, retired as president of Nintendo of America in 2002. Yamauchi had basically bullied him into taking the position back in 1980, but he’d succeeded masterfully despite their rocky relationship. Though many thought Arakawa would succeed his father-in-law, it seemed the former Nintendo of America president was happy to leave the industry altogether after 22 years.
These two men shaped Nintendo’s two-decade transformation, and whoever followed would have their work cut out for them. By 2002, the GameCube was running third in the latest console war, beaten in worldwide sales by Sony’s PlayStation 2 and Microsoft’s first video game effort, the Xbox. For the vacant seat at the top of Nintendo of America, Yamauchi appointed Tatsumi Kimishima, the former head of the company’s Pokémon division—though Kimishima would be supplanted by Reggie Fils-Aime a mere four years later. For his own replacement, Yamauchi appointed Satoru Iwata, the president of Nintendo second party developer, HAL Laboratories.
Since acquiring a majority stake in the studio, Nintendo enjoyed a healthy relationship with HAL, which was responsible for some of Nintendo’s biggest franchise successes. Kirby, Earthbound, and Super Smash Bros.—all came from HAL Laboratories, and proved to be worthy additions to Nintendo’s lineup. In 2000, Yamauchi brought Iwata over from HAL to become Nintendo’s head of corporate planning. Unbeknownst to Iwata, Yamauchi had hired him to see if he could be a worthy successor. In 2002, after stepping down as president—but staying on as chairman of Nintendo’s board of directors—Yamauchi kept a close watch on Iwata to see if he was right.
Iwata’s first true test came in November 2004. The company was rolling out a new twist on an old favorite: the handheld Nintendo DS console. Standing for “Dual-Screen,” the DS took its design cues from a popular iteration of Gumpei Yokoi’s old Game & Watch LCD toys, which featured two screens packaged in a hinged, clamshell design. But instead of simply giving players a case of double vision, the DS’s bottom half was actually a touch screen. This opened the door for developers to create all new ways to interact with games—an innovation devised by Yamauchi before his exit. And the DS included a Wi-Fi adapter, meaning that gamers could play online and even browse the web at Wi-Fi hotspots. After years of flirting with online connectivity with the original Famicom, the SNES’s Japan-only Satellaview, and the limited GameCube broadband adapter, Nintendo finally went all-in.
The DS’s solid core of features and its new wave of casual-minded games, like Shigeru Miyamoto’s smash hit Nintendogs, helped make the DS a tremendous success among longtime gamers, businessmen with time to kill, and—most significantly—girls and women. It proved to be a true successor to the Game Boy brand’s legacy. Despite competition from Sony’s handheld, 2005’s PSP, the DS has sold over 152 million units worldwide to date.
But dominating the handheld market was simply Nintendo maintaining the status quo. After all, the Game Boy managed to last for over 12 years with barely a threat to its place in gamers’ pockets. The true battle for video game supremacy was being waged at home.
In the fall of 2005, Microsoft launched its second console, the Xbox 360, selling out initial shipments due to overwhelming consumer demand. Sony, which had gotten a year’s head start with the PlayStation 2 to dominating effect, was planning to release the PlayStation 3 in November 2006. Meanwhile, Nintendo would be launching its own new console—codenamed the Revolution—a few days after that. History, it seemed, would be repeating itself.
And even worse, as gamers and journalists learned more details about the console—its simple, remote, its gimmicky motion controls, and its baffling new name, the Wii—the reaction was wasn’t revolution, but confusion. What was Nintendo doing? Jokes about the Wii’s name were inescapable in North America and the UK.
But as the Wii’s release date drew near, excitement about Nintendo’s new console began to grow among the gaming media. And, more importantly, people who’d never thought of themselves as gamers at all were the most excited of all. More than anyone else, they were picking up on what made the Wii special.
The system promised a brand new way to play video games, a claim Nintendo had already fulfilled once with the DS and its unique touch screen. While Microsoft and Sony pushed the technological envelope in terms of audio-visual spectacle, the Wii stripped the gaming experience down to basics. Every console generation to this point seemed to slap more buttons and analog sticks onto an increasingly convoluted controller—the idea of actually “playing” a game was lost amid the complexity.
Speaking of complex, Sony’s PlayStation 3 was suffering for the reasons its predecessor had excelled. The system didn’t just play games and DVDs: it included an expensive, built-in Blu-ray player and online connectivity. Its beefy hardware specs were powerful and impressive—but resulted in sticker shock, costing $499 for the most basic model.
The Wii was puny by comparison, but with an equally puny price of $249 to match, not to mention always-on Wi-Fi capability of its own. The Wii also boasted backwards compatibility with the GameCube’s library, as well as a robust online store full of classic titles from its earlier systems, not to mention plenty of games from the Sega Genesis and NEC’s TurboGrafx 16. So what if the Wii wasn’t in high definition? Most people still hadn’t upgraded to HDTVs. And so what if it couldn’t play DVDs? Everyone already had a DVD player in their living rooms. Though its online gaming options weren’t nearly as sophisticated as those found in the PS3 and Xbox 360, the Wii offered enough bells and whistles for the casual gamers just looking to fun.
By the time the Wii and PS3 launched in November 2006, people had received Nintendo’s message loud and clear. The Wii sold out immediately, and became that year’s hottest Holiday gift. For months after its release, the Wii was difficult to find all around the world, despite the company manufacturing 1.6 million units a month throughout 2007. By 2008, Nintendo began manufacturing 2.4 million units a month in an effort to keep up with how quickly the system was selling out worldwide.
Nintendo was simply unable to meet the overwhelming demand that had emerged for the console, which was finding its place in living rooms and senior rec centers all around the country. The Wii was being touted by the media as a new way to stay active and healthy, somewhat dubious claims Nintendo never promised, but never dispelled either. By September 2007, not even a year after its release, the Wii overtook the Xbox 360 in worldwide sales, boasting 9 million units sold to Microsoft’s 8.9 million. Meanwhile, the PS3 lived up to its name, taking third place with 3.7 million units sold.
The Wii had quickly turned Nintendo’s fortunes around, transforming what was once perceived as Nintendo’s weakness—an emphasis on family fun—into its strength. People were fascinated by the seemingly low barrier to entry to using the Wii—anyone could pick up a Wii remote and figure out how to play. The concept was best illustrated in the Wii’s pack-in title, Wii Sports, which featured five different motion-controlled, sports-inspired mini-games, ranging from bowling to boxing to baseball.
To swing the bat, all you had to do was swing the remote. To return a serve in tennis, just do your best Serena Williams impression. These were video games people could understand intuitively, no complicated instructions required. Wii Sports was so successful that it broke the record for highest-selling video game of all time—a title previously held by Super Mario Bros. for 18 years. To date, Wii Sports has sold nearly 80 million copies.
But while the Wii was undoubtedly a hit with a newly emerging class of casual gamer, many “hardcore” gamers were placated with another launch title: The Legend of Zelda: Twilight Princess. Finally, Nintendo made good on its long unfulfilled promise of a more mature Zelda. While Twilight Princess offered familiar gaming trappings, like moving Link via the nunchuck controller’s analog stick, it also featured motion controls for attacks. Swinging the Wii remote made Link slash with his sword. The innovative controls were a hit, and Twilight Princess had sold 5.8 million copies by 2011, earning several Game of the Year awards. Was Nintendo just for kids and moms? Hardly.
Mario took his time showing up on the Wii, finally appearing in Super Mario Galaxy a year after the system’s launch. But it was worth the wait: Galaxy was an instant smash. Like Super Mario 64 had done before it, Galaxy brought a new and exciting gameplay mechanic to the franchise, The action was set in space on small, interconnected planets each with their own gravitational pulls. The new gravity-based platforming felt fresh and different, but Mario still felt like Mario. And best of all, there wasn’t a water hose in sight. Super Mario Galaxy sold over 10 million copies by March 2012, and earned several Game of the Year awards in 2007.
But as popular as the Wii had become with gamers and old folks alike, developers weren’t all quite as enamored. As the system matured, it became clearer that only Nintendo fully understood the secret recipe that made the Wii so appealing. Many third-party games couldn’t figure out how to successfully utilize the console’s motion controls. Other games didn’t even bother, and the Wii was plagued with endless shovel-ware and half-baked, underpowered ports of other titles. One developer working at EA famously announced at the Game Developers Conference in 2007 that the Wii was nothing more than “two GameCubes stuck together with duct tape.”
But no matter how upset developers might have been, the numbers didn’t lie. By September 2012, the Wii had sold 97.18 million units, while the PS3 and Xbox 360 were neck-and-neck with roughly 70 million units sold for each. The system was a hit, and Nintendo was back on top. After 17 years of steady declines in the console market, Nintendo managed to surprise everyone by finding a new way to compete with its rivals: don’t compete at all. The Wii could never stand up to the horsepower of the Xbox 360 and PS3, but neither competitor could boast the Wii’s intuitive and unique motion controls—though they tried. In 2010, both Sony and Microsoft launched their own takes on the Wii’s motion-based gaming, the PlayStation Move and the Xbox Kinect. Once again, Nintendo had transformed the industry, and its rivals were scrambling to keep up.
Nintendo was king of the hill once more. After five years of enjoying its reclaimed market dominance, the company planned to wow the world once again with its latest device, a giant leap in handheld gaming technology over its wildly successful DS console. What could go wrong?
In a word: everything.
Tune in next time for Nintendo to start seeing red…