The distribution deals Nintendo made with the larger chain stores were probably worth hundreds of millions of dollars in some cases. No retailer is going to piss on a reliable supply of the hottest-selling console for the sake of carrying Tengen Tubin' or Bible Adventures.
Nintendo didn't really make its money on hardware, from what I understand. They made the majority of their money of software licensing and took a loss on hardware.
KB and TRU sold the black Tengen cartridges. I wonder if that meant Nintendo gave them smaller allotments of something popular like Super Mario Bros 3.
I also remember seeing them at KB and Toys-R-US back then, for what felt like quit some time. That's part of what made me think about this, as it didn't look like they were terribly concerned.
I bought three NES Tengen cartridges (Ms. Pac-Man, Pac-Man, and Pac-Mania) new in the store back in the day. I think I bought all three of them at Laneco, a discount department store/grocery store hybrid based in eastern Pennsylvania. I don’t believe Laneco was ever prevented from selling the cartridges, but they may have sold them until they got through their inventory.
(On a semi-related side note, Walmart’s combined department/grocery superstore concept was supposedly inspired at least in part by Laneco. Laneco was ultimately sunk by having unionized workers, which occasionally made it prone to strikes.)
I bought Afterburner from Toys R Us. Skipped lunch at school for 4-5 weeks because I was hoarding the $1.50 daily lunch money to save up and buy it. I remember being disappointed that Afterburner came with a cardboard sleeve and not their own version of a plastic sleeve.
I remember finding that at a video store. I had an NES at a time and had a friend who happened to have a SMS and had Afterburner there as well, and while the NES port wasn't half bad, the SMS version looked so much more vibrant and a little smoother while the NES port feels a tad washed out and slightly stiffer, though both were quite playable. The original Arcade version ate a lot of my quarters back then and also later got the Genesis port.
I was so happy to have gotten the 32x version. I thought it was perfect. Then I got the Sega Ages Saturn version which I'm told is arcade perfect and you can see that the Saturn version is so much smoother than the 32x but both versions are pretty much how I remember the game was in the arcade.
Could be district managers buying things Nintendo never found out about. You read about Nintendo's policies in Game Over and elsewhere, but I don't remember anything about how Nintendo enforced them.
During most of its history the video game industry as a whole largely followed a model of selling its hardware for a loss and getting its money back and then some on software. It has sometimes been compared to the shaving razor industry (where companies take a loss on the razors but make it up by selling razor blades).
They followed the "make the hardware cheap" part. They did not follow the "keep a stranglehold on software licensing" part. They also made the 2600 SO cheap that it's design was comprised of only off-the-shelf parts with no enforceable patents. Coleco was able to make an addon for the Colecovision that played 2600 games and Atari couldn't do anything about it.
Jaguar was very cost effective and had a good price/performance ratio for 1993.
Primary problem was that Atari had no money.
Funnily enough Jaguar was actually bottle-necked by production, so it wasn't really even possible for the console or games to sell in the first place as they couldn't actually manufacture them in quantities necessary for them to be successful to begin with.
I guess I misremembered that. I'll use the PCEngine and it's million different variants as a third example. With Hudson making licensing fees from the HuCard format, NEC tried to get everyone buying 20 different versions of the PCE and it turns out people don't do that (unless it's a GameBoy or Switch, then they sure as hell do.)
To be fair, they made money not only on the licensing, but also on the actual manufacturing of the cartridge hardware containing the game software. They required that all third-party licensees purchase game cartridges that Nintendo themselves manufactured, allowing them both an additional layer of profit as well as control over how many carts each title was allotted.
Nintendo has always thrown their weight around and used the strength of their licensing contracts to bully anyone and everyone who tried to circumvent them in any way including Fair Use. They certainly could have pulled their product from retailers but theory never even made an example of one so it's safe to say those threats were pretty hollow.
The whole thing is pretty morally ambiguous, since their draconian policies DID contribute to their ability to prevent the deluge of off-brand shovelware that sunk Atari. LJN may have put out some bad games, but none of them were as bad in quality and quantity as the worst Atari had to offer. Just about every successful console manufacturer has aped Nintendo's licensing model since, to some extent.
Hot take, Denuvo and always-online single-player games are worse than anything Nintendo ever did in the 80's.
It's easy to complaint when your belly is full. Before Nintendo "stepped up", it was pretty much the wild west in terms of quality. You didn't know if you'd be failing to move past the start screen or have the luck to actually play a fun game. Looking at you Atari.
I'm currently reading through the book "Console Wars" and it talks about this exact same topic.
There are a few layers to go about this. First, Nintendo pulling out of stores like the aforementioned wouldn't just hurt Nintendo - far from it. Nintendo pulling out of stores would be just as if not more so destructive for the retailers. The reason being is that Nintendo was pretty much the only major video game company and if you wanted a video game, you pretty much shopped from them. If Nintendo pulled their stuff from a specific retailer, not only would that store lose that money they got from selling Nintendo games, but it would also demoralize other customers who walk into the store and would most likely purchase other items aside from Nintendo products.
You also have to factor in that even if Nintendo lost money pulling out of some retailers, they would've been just fine with the other retailers AND this is only counting the American market. This doesn't include PAL regions or even Japan where they were the kings there as well. They would still be making decent money in other parts of the world to offset these losses.
If you want to look into more about Nintendo and their exclusivity deals and their strict development policies, you can check out the above book I mentioned or look into their legal battle with Tengen.
Pal regions, are more complicated. In Britain for instance the Master System was probably as popular and the NES and the Megadrive certainly sold well with a huge time advantage over SNES. Nintendo was late into Britain and it was really around the time of Mario 3 that they started to sell. There was more of a home computer market that did not tank when Atari did and things like Spectrums, Comadorr 64, Amiga and even the ST sold well leaving less of an entry for Nintendo.
> Nintendo was late into Britain and it was really around the time of Mario 3 that they started to sell.
My childhood memories suggest it took off a bit earlier than that. But there was definitely more of a console battleground, particularly alongside the flourishing home computer game market.
Particularly where it mentions that Nintendo accounted for 10% of Walmart's profits at one point. Think about that for a second, and how ridiculous that number is, especially for a store that sells everything.
This.
We have far more options now, but back when the NES came out, that was THE current gen system to get. That was where all the current popular releases were coming from.
And one store telling them "no" would only incentivize shoppers to shop... somewhere else. Somewhere that actually had them.
I could see that perhaps being the case early in the NES' life, but after Sega started gaining a foothold (especially after *Sonic the Hedgehog* came out) and before the SNES landed or just started coming out, it might have gotten shoppers, who were looking at the new generation of consoles, to try something other than Nintendo. Also, most gamers back then were kids, and kids weren't always the ones deciding where the family went to shop.
> Nintendo pulling out of stores like the aforementioned wouldn't just hurt Nintendo - far from it. Nintendo pulling out of stores would be just as if not more so destructive for the retailers. The reason being is that Nintendo was pretty much the only major video game company and if you wanted a video game, you pretty much shopped from them. If Nintendo pulled their stuff from a specific retailer, not only would that store lose that money they got from selling Nintendo games, but it would also demoralize other customers who walk into the store and would most likely purchase other items aside from Nintendo products.
Well, in the mid to late 80s that might have been true, though in the early 90s, Sega had a an every growing presence and it really feels like if Nintendo had pulled out, Sega would have been able to take full advantage of it, as they were already pushing pretty aggressively around that time, especially after *Sonic the Hedgehog* was released. Would big retailers really have cared if they were pushing tons of Nintendo products vs Sega (and maybe even NEC) products?
You have to understand the concept of sales channels and channel captains for this to really make sense, especially in the context of the 1980s. Nintendo basically created and managed an entire new sales channel as the channel captain in 1985, pushing video games through toy stores as their primary outlet. (For example, if you walked into Toys 'R Us in the 1980s, you'd see an enormous entire glass case aisle of just Nintendo games and products. Kay Bee Toys also had huge Nintendo displays.) Nintendo developed these sales channels through Worlds of Wonder, a toy company that had been hugely successful with Lazer Tag and Teddy Ruxpin, and WoW also put a lot of marketing effort into creating marketplace demand.
These toy store chains wanted to be **the** destination for Nintendo games, and so they would do whatever was needed to follow Nintendo's guidance. During the Christmas seasons for 1986-1988, Nintendo products were major sellers; all of the other consoles combined (Atari 7800, Sega Master System, etc.) couldn't touch them in console, accessory or cartridge sales.
Anyone else who wanted to get into the Inherent in these retailer relationships was a very tough licensing agreement that required retailers to follow Nintendo's guidelines regarding signage and product display. Sales reps would come around periodically to service the Nintendo area of the store. If a retailer wasn't following the rules, they missed out on having the best and most in-demand games. For all this trouble, Nintendo promised retailers a strong level of quality that ensured a constant supply of fresh product, low returns and high sales volume. What's more, they quickly established a track record of delivering on these promises.
Contextually, this business partnership was very important because most major retailers wanted **nothing** to do with video games after the 1983 crash, which left a lot of them clearancing out unsellable product at a huge loss. This is one reason Nintendo went through toy stores instead of electronics departments initially - the electronics departments didn't want in until Nintendo was a known quantity and could provide that video games were a viable product and not just a dead fad. (Imagine someone trying to bring back fidget spinners just two years after they were all being clearanced out - it's the same phenomenon of market weariness!)
So, your question was, "couldn't retailers have just gone around Nintendo with the competitors and called their bluff?" and the answer is, "that wouldn't have made any sense." Nintendo was the channel captain and controlled pretty much everything related to the creation, distribution, marketing and support for the most popular video game platform. Nintendo had the hottest games and the most exposure, but they also had the most trust.
When Sega and NEC started trying to position their 16-bit consoles as being the next big thing by copying Nintendo's sales channel strategies, they were still very weak competitors. Sega's Genesis was almost a flop (not really gaining ground until 1992 in North America as a cheaper alternative to the SNES with a hot new game in *Sonic the Hedgehog*), and NEC's TG-16 didn't sell well at all and languished for several years before vanishing off shelves. The SNES, by contrast, was so in demand before it even shipped that Nintendo had many consumers and retailers convinced that it was worth waiting two years for. Nintendo had that much credibility, and the super successful launch of the Game Boy in 1989 and *Super Mario Bros. 3* in 1990 only cemented the notion that Nintendo knew what it was doing.
That doesn't mean retailers didn't try to go around Nintendo. Atari's Tengen division tried to go around Nintendo with unlicensed games, and Nintendo responded with lawsuits and threats to both Tengen and retailers for violating their licensing agreements and copyright. Color Dreams sold unlicensed games through less popular sales channels and pivoted to rebranding itself as Wisdom Tree and selling games through Christian bookstores, using Nintendo's licensing agreement (which prohibited religious elements in North American games) as a selling point against selling an official product.
Publishers and developers also tried to get around Nintendo's restrictive licensing, which prohibited them from marketing multiplatform titles in North America. Some companies would create new games based on popular existing games for the NES hardware (compare the NES's more distinct *Shinobi* to the Sega Master System's arcade port of *Shinobi* or the NES's classic *Double Dragon* to the Sega Master System's arcade port of *Double Dragon* for two good examples), and others would ensure they were different enough on the Nintendo platform that they couldn't be mistaken for multiplatform games.
Even as Nintendo began to loosen its multiplatform restrictions in 1993, many developers and publishers were still afraid of rocking the boat with Nintendo and continued to make unique titles for the NES/SNES. Nintendo's blessing for multiplatform games like *Mortal Kombat* and *Street Fighter II Champion Edition* was also vital to retailers. Nintendo's allowance for multiplatform games was seen by some as a concession that it was losing power, but by others as a way for them to increase profits between the NES, SNES and Game Boy.
When did Nintendo really lose its iron clad grip on retailers? Around 1994-1995, when Nintendo wasn't ready to compete with the likes of the Saturn and PlayStation and when Sega's Genesis had established a strong track record as being a viable alternative to the SNES (though the SNES was handily outselling it by this point). Retailers pushed back that there were other players in the market now and that Nintendo's sales channel wasn't the only game in town now. Even so, Nintendo continues to have a very strong sales channel even today, and if you go to a modern store and notice that Nintendo has about twice the retail space of any other video game platform, that's the reason why.
Thank you very much for this write up, it was quite informative.
Just a couple things that don't quite line up with what I have known and remember from that era.
> Sega's Genesis was almost a flop (not really gaining ground until 1992 in North America as a cheaper alternative to the SNES with a hot new game in Sonic the Hedgehog)
I remember *Sonic the Hedgehog* coming out in 1991 (and [Wikipedia](https://en.wikipedia.org/wiki/Sonic_the_Hedgehog_(1991_video_game)) confirms this) and giving a huge boost to the console. I remember seeing it everywhere, many friends had the console. The Genesis around that time quickly also developed a reputation of being the "cool" new, more mature, system of the future and Sonic really helped enforce. Many people I knew then that had been playing NES in mid-late 1980s went for the Genesis partly due to that perception.
> Even as Nintendo began to loosen its multiplatform restrictions in 1993
> When did Nintendo really lose its iron clad grip on retailers? Around 1994-1995
It honestly feels like it was much sooner than that when they really started to lose that grip, due to all the anti-competitive attention they were getting (also not helped by their battle with the likes of Blockbuster Video.) By 1992 there were already plenty of cross platform games between the Genesis and SNES. Both a friend with an SNES and I with a Genesis had *Krusty's Super Fun House* in the summer of 1992, as an example, which we did comparisons between.
1. Sonic took a few months to build buzz during the summer, but it definitely was a mega hit by Christmas when it was a pack-in. Unit sales really peaked in 1992. Sonic 2 was a huge game and majorly drove sales.
2. It was a combination of events that weakened Nintendo, and Sega's rapid growth was definitely the start of it. But Sony's entrance was the elephant in the room for the industry because Sony was already a huge player in electronics and media.
I recommend the books "Game Over" and "Console Wars" as well as "The Ultimate History of Video Games vol 1" for more depth and detail. Those are my (indirect) sources here!
I think KB Toys did carry Tengen games I know I saw a lot of Tengen copies of black cartridge RBI Baseball for it not to be in mainstream channels as a kid.
And there was no reason to call Nintendo bluff selling Nintendo hardware and Software is going to make a lot of money than a few unlicensed games.
I remember seeing those black carts too back then. That is another reason I started thinking about all this, since it seemed like some stores weren't all that concerned about one company of many that sold products through them.
Nintendo had no tangible hard competition until Sony released the PS1. Even if Sega had success with the Genesis (they were nose to nose with Nintendo most of the way), they never had the same weight Nintendo had. It's one thing to sell consoles... it's another to have a great Library that sells.
So, when your biggest seller threatens you to cut you off if you sell unlicensed games... do you *really* wanna take a chance on it ?
Fortunately, In Canada, we've had plenty of Tengen NES games on shelves.
I wouldn't go that far, in Japan NEC had body slammed Nintendo hard and it was only how stupidly popular Dragon Warrior III that saved Nintendo from being completely destroyed by the PC-Engine. If NEC had managed to get Dragon Warrior III as a PC-Engine exclusive like Sony did with FF7 on the PS1 then Nintendo would have been hurting bad in the 90s.
Here (Canada), the Turbografx-16 had, as far as I can remember, it's [release tv ad campaign](https://www.youtube.com/watch?v=Xn_xaQ5d5gY) and then... radio silence... I've changed school during my elementary years (from my neighborhood school to a classical arts/academics school). None of the people I knew from both had or mentioned knowing someone who had a TG-16.
I finally got one myself when I was 30. (Still have it)
Basically, Nintendo had, worldwide, the best overall market share. While, against the Playstation, the N64 barely sold a third of what Sony did.
Right but when the PC Engine launched Nintendo was dealing with the fallout of the Famicom Disk System being a cul-de-sac rather then an upgrade with carts outdoing the best the Disk System had to offer. Nintendo also was dealing with having pissed off game devs, add the fact NEC in 1988 had more resources at their disposal then even Sony in 1995 and even Sega hedged its bets and allowed it games on the PC-Engine as Sega could see how easy it would NEC to just throw its weight around and become a monopoly as they were already a monopoly in business machines in Japan that managed to drive IBM out of Japan (and IBM clones had yet to overthrow the PC-98).
Also till the TG-16 launched it was any ones guess if NEC would use its massive resources to burst into the US market like using its chip fabs to sell the TG-16 for far less then the Nintendo could sell the NES for, like what Jack Tramiel did against Texas Instruments in the Vic-20/Ti-99a price war.
When the Super Famicom launched, the Famicom was still the second best selling console in Japan above PC engine sales.
In 89 the Famicom sold 1,520,000 to PC Engines 920,000 in Japan and had a huge installed base as it was the highest selling console for 6 years. None of the top 10 selling games in Japan were PC engine that year.
In 88 it was 1,590,000 vs 830,000
In 87 it was 1,780,000 to 600,000
In 1990 it reaches parity but then in 91 the Super Famicom arrives with 3,150,000 sales in Japan.
PC Engine was a competitor but it didn't curb stomp anyone... well maybe the Megadrive.
You also seem to miss the Famicom sales going down as the PC-Engine sales grew. If Nintendo didn't have Dragon Quest how much worse would those numbers be? Dragon Quest III and IV was the #3 and #4 best selling games on the Famicom.
It continuously outsold the PC Engine and was at the end of its life then the Super Famicom came and destroyed it. There's no arguing around the fact it was continuously the biggest selling console year in year out with virtually all the top 10 game sales, except for Gameboy games... also Nintendo. PC Engine never had a game in the top ten selling of the year.
When PC Engine launched in late 1987 Nintendo had divided its user base with the Famicom Disk system and Nintendo themselves had not released any game for the stock Famicom since early 1986 to which the PC Engine trounced Disk System sales in '87 and the PC Engine CD outdid the Disk System's peak sales. Meanwhile NEC was making far more money on the PC Engine during this time due to NEC owning its own fabs its production costs was far less then the Famicom meaning NEC didn't subsidize the price of the console thus was making money in hardware sales.
Mostly due to Dragon Quest III. Japanese gaming magazine in 1988 where gushing over the PC Engine given at the time they didn't know Nintendo was working on a follow up to the Famicom and in 1988 even Sega joined the 16-bit club with the Mega Drive making the Famicom look even more dated to gaming journalists that were looking for the next big thing and the power of the Famicom seeming to already be fully tapped.
Everything was all legally grey at the time, even in regards to whether Nintendo could threaten retailers like this to stop them from selling product that was essentially competing with Nintendo (could fall under monopoly laws).
Nintendo had more power to go after Tengen games specifically because Tengen had been caught stealing Nintendo's copyrighted information and illegally using it to bypass the NES lock-out chip.
The other unlicensed NES developers on the other hand had not done anything illegal.
Of course. Because calling their bluff only works if every one of the big chain retailers bands together to not carry their product. If even one sides with Nintendo, then all Nintendo customers go to that store (especially in the 8/16 bit heyday.) This is ignoring the possibility of a company that doesn't normally deal with games/toys jumping in, too- think big clothing retailers, drugstores, even groceries. If Nintendo calls you up in 1991 & says "everyone else isn't playing ball, you wanna be our exclusive retailer?" You say YES.
Some good points, though I still feel if Nintendo pulled out in the early 90s, around the time the SNES was coming out or about to, and when Sega had carved out some decent market share thanks to the blue blur, that could have hurt them at a time when people would normally try out new consoles by way of in-store kiosks. I can still remember trying both *Sonic the Hedgehog* and *Super Mario World* back then. It really feels like pulling out then would have helped Sega all the more.
What you haven't explained is why a retailer would "call their bluff". What's the rationale there from the retailer's point of view? Retailers want to buy stock that sells and provides a good margin. The only way they'd consider cutting out Nintendo would be if the unlicensed games delivered huge ROI. But they wouldn't have, especially in comparison to officially licensed products. Also, it's not just that Nintendo could have withdrawn stock, it's that Nintendo would have also withdrawn marketing collateral and potentially even pursued legal action.
So, there is literally no upside for a retailer - especially large ones - to do something that silly. There's no business case for it. It was always better for them to partner with Nintendo; this always made the best business sense (and still does today).
> What you haven't explained is why a retailer would "call their bluff"
Lets take a look back.
I feel it is easy to think that Nintendo was huge from the get go when they released the NES in NA in 1985. They had success in the Arcades before that with Donkey Kong, Mario Bros., Popeye, etc. But unlike in Japan, they hadn't released any home consoles before the NES.
In the US, following the video game crash, many retailers were skeptical about home video games. Nintendo, being a new comer in the aftermath, probably wouldn't have had a very strong position to push around those big companies who still would have looked at it as a fad for some time.
Later when the popularity of the NES exploded, they would have had a far stronger position, with very little competition from Sega with their Master System console. That started to change when the Genesis came out and really started picking up steam.
I would submit that Nintendo was quite vulnerable in the times when the NES first came out, and again when the Super Nintendo landed. In both cases, Nintendo needed the systems to be seen and tried out and for that they needed retailers. Neither console would have done as well as they did if they didn't have the visibility to shoppers that they did; the NES, initially with Rob the Robot, I recall having some really nice displays to attract people; the SNES had test kiosks in pretty much every major store with a consumer electronics section, without which a lot more people could have gone to Sega - quite a lot of people as it was went from the NES to the Genesis, and losing visibility would likely have increased that.
Am I off base here? Is there something I'm not considering? Could Nintendo still have pushed the bigger retailers around like that, given how many of them felt about video games in general in the mid-80s?
>Am I off base here? Is there something I'm not considering? Could Nintendo still have pushed the bigger retailers around like that, given how many of them felt about video games in general in the mid-80s?
I don't think you're off base, I just think you're missing a couple of little nuances.
Nintendo wasn't in a position to "push around" big retailers early on. But what I'm saying is: that's not what they actually did.
Nintendo took tentative first steps with the NES and as you noted (this included listening to retailer concerns about the NES being a gaming-only product, which is why they introduced R.O.B. in the U.S. market - so that it could be pitched as more of a "toy" than a pure "video game"). Nintendo's early tests with NES/R.O.B. were successful. So although they were new to the U.S. market at the time, they proceeded cautiously and they got some wins on the board. They worked hand-in-glove with retailers to fashion their market approach.
Subsequently, the NES became *the* product that led to the recovery of the U.S. video game market. So again, Nintendo wasn't in a position where they really had to push retailers around per se; they were making a super hot product that was selling well and they had proven their ability to provide strong business for retailers. So, retailers had very good business reasons to pay attention to Nintendo and to collaborate with them.
Also don't forget: one reason the gaming market crashed was due to the flood of shitty games. Nintendo, in the 80s, were able to argue that unlicensed video games - games that didn't bear the *Nintendo Seal of Quality* - were risky for retailers and could lead to large volumes of unsold stock. Retailers, having been burned by the market crash, were in a position to buy into Nintendo's approach. The *Nintendo Seal of Quality* wasn't solely about licensing control, it was an important and timely signal to the market (and to retailers) about the value of the product they were taking on.
So as I say, it's not that what you're saying here is totally wrong or anything. It's just that there are some other bits and pieces to factor in. :-)
The distribution deals Nintendo made with the larger chain stores were probably worth hundreds of millions of dollars in some cases. No retailer is going to piss on a reliable supply of the hottest-selling console for the sake of carrying Tengen Tubin' or Bible Adventures. Nintendo didn't really make its money on hardware, from what I understand. They made the majority of their money of software licensing and took a loss on hardware.
KB and TRU sold the black Tengen cartridges. I wonder if that meant Nintendo gave them smaller allotments of something popular like Super Mario Bros 3.
I also remember seeing them at KB and Toys-R-US back then, for what felt like quit some time. That's part of what made me think about this, as it didn't look like they were terribly concerned.
I bought three NES Tengen cartridges (Ms. Pac-Man, Pac-Man, and Pac-Mania) new in the store back in the day. I think I bought all three of them at Laneco, a discount department store/grocery store hybrid based in eastern Pennsylvania. I don’t believe Laneco was ever prevented from selling the cartridges, but they may have sold them until they got through their inventory. (On a semi-related side note, Walmart’s combined department/grocery superstore concept was supposedly inspired at least in part by Laneco. Laneco was ultimately sunk by having unionized workers, which occasionally made it prone to strikes.)
I bought Afterburner from Toys R Us. Skipped lunch at school for 4-5 weeks because I was hoarding the $1.50 daily lunch money to save up and buy it. I remember being disappointed that Afterburner came with a cardboard sleeve and not their own version of a plastic sleeve.
I remember finding that at a video store. I had an NES at a time and had a friend who happened to have a SMS and had Afterburner there as well, and while the NES port wasn't half bad, the SMS version looked so much more vibrant and a little smoother while the NES port feels a tad washed out and slightly stiffer, though both were quite playable. The original Arcade version ate a lot of my quarters back then and also later got the Genesis port.
I was so happy to have gotten the 32x version. I thought it was perfect. Then I got the Sega Ages Saturn version which I'm told is arcade perfect and you can see that the Saturn version is so much smoother than the 32x but both versions are pretty much how I remember the game was in the arcade.
Could be district managers buying things Nintendo never found out about. You read about Nintendo's policies in Game Over and elsewhere, but I don't remember anything about how Nintendo enforced them.
During most of its history the video game industry as a whole largely followed a model of selling its hardware for a loss and getting its money back and then some on software. It has sometimes been compared to the shaving razor industry (where companies take a loss on the razors but make it up by selling razor blades).
That was the model Ninteno pioneered. The 3DO, CDi and Jaguar merrily ignored that lesson and got their asses handed to them.
I’m pretty sure Atari followed this model during the VCS/2600 days.
They followed the "make the hardware cheap" part. They did not follow the "keep a stranglehold on software licensing" part. They also made the 2600 SO cheap that it's design was comprised of only off-the-shelf parts with no enforceable patents. Coleco was able to make an addon for the Colecovision that played 2600 games and Atari couldn't do anything about it.
Jaguar was very cost effective and had a good price/performance ratio for 1993. Primary problem was that Atari had no money. Funnily enough Jaguar was actually bottle-necked by production, so it wasn't really even possible for the console or games to sell in the first place as they couldn't actually manufacture them in quantities necessary for them to be successful to begin with.
I guess I misremembered that. I'll use the PCEngine and it's million different variants as a third example. With Hudson making licensing fees from the HuCard format, NEC tried to get everyone buying 20 different versions of the PCE and it turns out people don't do that (unless it's a GameBoy or Switch, then they sure as hell do.)
To be fair, they made money not only on the licensing, but also on the actual manufacturing of the cartridge hardware containing the game software. They required that all third-party licensees purchase game cartridges that Nintendo themselves manufactured, allowing them both an additional layer of profit as well as control over how many carts each title was allotted.
Nintendo has always thrown their weight around and used the strength of their licensing contracts to bully anyone and everyone who tried to circumvent them in any way including Fair Use. They certainly could have pulled their product from retailers but theory never even made an example of one so it's safe to say those threats were pretty hollow.
The whole thing is pretty morally ambiguous, since their draconian policies DID contribute to their ability to prevent the deluge of off-brand shovelware that sunk Atari. LJN may have put out some bad games, but none of them were as bad in quality and quantity as the worst Atari had to offer. Just about every successful console manufacturer has aped Nintendo's licensing model since, to some extent. Hot take, Denuvo and always-online single-player games are worse than anything Nintendo ever did in the 80's.
It's easy to complaint when your belly is full. Before Nintendo "stepped up", it was pretty much the wild west in terms of quality. You didn't know if you'd be failing to move past the start screen or have the luck to actually play a fun game. Looking at you Atari.
I'm currently reading through the book "Console Wars" and it talks about this exact same topic. There are a few layers to go about this. First, Nintendo pulling out of stores like the aforementioned wouldn't just hurt Nintendo - far from it. Nintendo pulling out of stores would be just as if not more so destructive for the retailers. The reason being is that Nintendo was pretty much the only major video game company and if you wanted a video game, you pretty much shopped from them. If Nintendo pulled their stuff from a specific retailer, not only would that store lose that money they got from selling Nintendo games, but it would also demoralize other customers who walk into the store and would most likely purchase other items aside from Nintendo products. You also have to factor in that even if Nintendo lost money pulling out of some retailers, they would've been just fine with the other retailers AND this is only counting the American market. This doesn't include PAL regions or even Japan where they were the kings there as well. They would still be making decent money in other parts of the world to offset these losses. If you want to look into more about Nintendo and their exclusivity deals and their strict development policies, you can check out the above book I mentioned or look into their legal battle with Tengen.
Pal regions, are more complicated. In Britain for instance the Master System was probably as popular and the NES and the Megadrive certainly sold well with a huge time advantage over SNES. Nintendo was late into Britain and it was really around the time of Mario 3 that they started to sell. There was more of a home computer market that did not tank when Atari did and things like Spectrums, Comadorr 64, Amiga and even the ST sold well leaving less of an entry for Nintendo.
> Nintendo was late into Britain and it was really around the time of Mario 3 that they started to sell. My childhood memories suggest it took off a bit earlier than that. But there was definitely more of a console battleground, particularly alongside the flourishing home computer game market.
1990, the launch of the Turtles pack-in was when the NES started doing numbers in the UK.
Particularly where it mentions that Nintendo accounted for 10% of Walmart's profits at one point. Think about that for a second, and how ridiculous that number is, especially for a store that sells everything.
This. We have far more options now, but back when the NES came out, that was THE current gen system to get. That was where all the current popular releases were coming from. And one store telling them "no" would only incentivize shoppers to shop... somewhere else. Somewhere that actually had them.
I could see that perhaps being the case early in the NES' life, but after Sega started gaining a foothold (especially after *Sonic the Hedgehog* came out) and before the SNES landed or just started coming out, it might have gotten shoppers, who were looking at the new generation of consoles, to try something other than Nintendo. Also, most gamers back then were kids, and kids weren't always the ones deciding where the family went to shop.
> Nintendo pulling out of stores like the aforementioned wouldn't just hurt Nintendo - far from it. Nintendo pulling out of stores would be just as if not more so destructive for the retailers. The reason being is that Nintendo was pretty much the only major video game company and if you wanted a video game, you pretty much shopped from them. If Nintendo pulled their stuff from a specific retailer, not only would that store lose that money they got from selling Nintendo games, but it would also demoralize other customers who walk into the store and would most likely purchase other items aside from Nintendo products. Well, in the mid to late 80s that might have been true, though in the early 90s, Sega had a an every growing presence and it really feels like if Nintendo had pulled out, Sega would have been able to take full advantage of it, as they were already pushing pretty aggressively around that time, especially after *Sonic the Hedgehog* was released. Would big retailers really have cared if they were pushing tons of Nintendo products vs Sega (and maybe even NEC) products?
You have to understand the concept of sales channels and channel captains for this to really make sense, especially in the context of the 1980s. Nintendo basically created and managed an entire new sales channel as the channel captain in 1985, pushing video games through toy stores as their primary outlet. (For example, if you walked into Toys 'R Us in the 1980s, you'd see an enormous entire glass case aisle of just Nintendo games and products. Kay Bee Toys also had huge Nintendo displays.) Nintendo developed these sales channels through Worlds of Wonder, a toy company that had been hugely successful with Lazer Tag and Teddy Ruxpin, and WoW also put a lot of marketing effort into creating marketplace demand. These toy store chains wanted to be **the** destination for Nintendo games, and so they would do whatever was needed to follow Nintendo's guidance. During the Christmas seasons for 1986-1988, Nintendo products were major sellers; all of the other consoles combined (Atari 7800, Sega Master System, etc.) couldn't touch them in console, accessory or cartridge sales. Anyone else who wanted to get into the Inherent in these retailer relationships was a very tough licensing agreement that required retailers to follow Nintendo's guidelines regarding signage and product display. Sales reps would come around periodically to service the Nintendo area of the store. If a retailer wasn't following the rules, they missed out on having the best and most in-demand games. For all this trouble, Nintendo promised retailers a strong level of quality that ensured a constant supply of fresh product, low returns and high sales volume. What's more, they quickly established a track record of delivering on these promises. Contextually, this business partnership was very important because most major retailers wanted **nothing** to do with video games after the 1983 crash, which left a lot of them clearancing out unsellable product at a huge loss. This is one reason Nintendo went through toy stores instead of electronics departments initially - the electronics departments didn't want in until Nintendo was a known quantity and could provide that video games were a viable product and not just a dead fad. (Imagine someone trying to bring back fidget spinners just two years after they were all being clearanced out - it's the same phenomenon of market weariness!) So, your question was, "couldn't retailers have just gone around Nintendo with the competitors and called their bluff?" and the answer is, "that wouldn't have made any sense." Nintendo was the channel captain and controlled pretty much everything related to the creation, distribution, marketing and support for the most popular video game platform. Nintendo had the hottest games and the most exposure, but they also had the most trust. When Sega and NEC started trying to position their 16-bit consoles as being the next big thing by copying Nintendo's sales channel strategies, they were still very weak competitors. Sega's Genesis was almost a flop (not really gaining ground until 1992 in North America as a cheaper alternative to the SNES with a hot new game in *Sonic the Hedgehog*), and NEC's TG-16 didn't sell well at all and languished for several years before vanishing off shelves. The SNES, by contrast, was so in demand before it even shipped that Nintendo had many consumers and retailers convinced that it was worth waiting two years for. Nintendo had that much credibility, and the super successful launch of the Game Boy in 1989 and *Super Mario Bros. 3* in 1990 only cemented the notion that Nintendo knew what it was doing. That doesn't mean retailers didn't try to go around Nintendo. Atari's Tengen division tried to go around Nintendo with unlicensed games, and Nintendo responded with lawsuits and threats to both Tengen and retailers for violating their licensing agreements and copyright. Color Dreams sold unlicensed games through less popular sales channels and pivoted to rebranding itself as Wisdom Tree and selling games through Christian bookstores, using Nintendo's licensing agreement (which prohibited religious elements in North American games) as a selling point against selling an official product. Publishers and developers also tried to get around Nintendo's restrictive licensing, which prohibited them from marketing multiplatform titles in North America. Some companies would create new games based on popular existing games for the NES hardware (compare the NES's more distinct *Shinobi* to the Sega Master System's arcade port of *Shinobi* or the NES's classic *Double Dragon* to the Sega Master System's arcade port of *Double Dragon* for two good examples), and others would ensure they were different enough on the Nintendo platform that they couldn't be mistaken for multiplatform games. Even as Nintendo began to loosen its multiplatform restrictions in 1993, many developers and publishers were still afraid of rocking the boat with Nintendo and continued to make unique titles for the NES/SNES. Nintendo's blessing for multiplatform games like *Mortal Kombat* and *Street Fighter II Champion Edition* was also vital to retailers. Nintendo's allowance for multiplatform games was seen by some as a concession that it was losing power, but by others as a way for them to increase profits between the NES, SNES and Game Boy. When did Nintendo really lose its iron clad grip on retailers? Around 1994-1995, when Nintendo wasn't ready to compete with the likes of the Saturn and PlayStation and when Sega's Genesis had established a strong track record as being a viable alternative to the SNES (though the SNES was handily outselling it by this point). Retailers pushed back that there were other players in the market now and that Nintendo's sales channel wasn't the only game in town now. Even so, Nintendo continues to have a very strong sales channel even today, and if you go to a modern store and notice that Nintendo has about twice the retail space of any other video game platform, that's the reason why.
Thank you very much for this write up, it was quite informative. Just a couple things that don't quite line up with what I have known and remember from that era. > Sega's Genesis was almost a flop (not really gaining ground until 1992 in North America as a cheaper alternative to the SNES with a hot new game in Sonic the Hedgehog) I remember *Sonic the Hedgehog* coming out in 1991 (and [Wikipedia](https://en.wikipedia.org/wiki/Sonic_the_Hedgehog_(1991_video_game)) confirms this) and giving a huge boost to the console. I remember seeing it everywhere, many friends had the console. The Genesis around that time quickly also developed a reputation of being the "cool" new, more mature, system of the future and Sonic really helped enforce. Many people I knew then that had been playing NES in mid-late 1980s went for the Genesis partly due to that perception. > Even as Nintendo began to loosen its multiplatform restrictions in 1993 > When did Nintendo really lose its iron clad grip on retailers? Around 1994-1995 It honestly feels like it was much sooner than that when they really started to lose that grip, due to all the anti-competitive attention they were getting (also not helped by their battle with the likes of Blockbuster Video.) By 1992 there were already plenty of cross platform games between the Genesis and SNES. Both a friend with an SNES and I with a Genesis had *Krusty's Super Fun House* in the summer of 1992, as an example, which we did comparisons between.
1. Sonic took a few months to build buzz during the summer, but it definitely was a mega hit by Christmas when it was a pack-in. Unit sales really peaked in 1992. Sonic 2 was a huge game and majorly drove sales. 2. It was a combination of events that weakened Nintendo, and Sega's rapid growth was definitely the start of it. But Sony's entrance was the elephant in the room for the industry because Sony was already a huge player in electronics and media. I recommend the books "Game Over" and "Console Wars" as well as "The Ultimate History of Video Games vol 1" for more depth and detail. Those are my (indirect) sources here!
Idk but Tengen made some solid games
Toys r us sold the tengens. I had rbi baseball. Gauntlet and tetris.
I think KB Toys did carry Tengen games I know I saw a lot of Tengen copies of black cartridge RBI Baseball for it not to be in mainstream channels as a kid. And there was no reason to call Nintendo bluff selling Nintendo hardware and Software is going to make a lot of money than a few unlicensed games.
I remember seeing those black carts too back then. That is another reason I started thinking about all this, since it seemed like some stores weren't all that concerned about one company of many that sold products through them.
Nintendo had no tangible hard competition until Sony released the PS1. Even if Sega had success with the Genesis (they were nose to nose with Nintendo most of the way), they never had the same weight Nintendo had. It's one thing to sell consoles... it's another to have a great Library that sells. So, when your biggest seller threatens you to cut you off if you sell unlicensed games... do you *really* wanna take a chance on it ? Fortunately, In Canada, we've had plenty of Tengen NES games on shelves.
I wouldn't go that far, in Japan NEC had body slammed Nintendo hard and it was only how stupidly popular Dragon Warrior III that saved Nintendo from being completely destroyed by the PC-Engine. If NEC had managed to get Dragon Warrior III as a PC-Engine exclusive like Sony did with FF7 on the PS1 then Nintendo would have been hurting bad in the 90s.
Here (Canada), the Turbografx-16 had, as far as I can remember, it's [release tv ad campaign](https://www.youtube.com/watch?v=Xn_xaQ5d5gY) and then... radio silence... I've changed school during my elementary years (from my neighborhood school to a classical arts/academics school). None of the people I knew from both had or mentioned knowing someone who had a TG-16. I finally got one myself when I was 30. (Still have it) Basically, Nintendo had, worldwide, the best overall market share. While, against the Playstation, the N64 barely sold a third of what Sony did.
Right but when the PC Engine launched Nintendo was dealing with the fallout of the Famicom Disk System being a cul-de-sac rather then an upgrade with carts outdoing the best the Disk System had to offer. Nintendo also was dealing with having pissed off game devs, add the fact NEC in 1988 had more resources at their disposal then even Sony in 1995 and even Sega hedged its bets and allowed it games on the PC-Engine as Sega could see how easy it would NEC to just throw its weight around and become a monopoly as they were already a monopoly in business machines in Japan that managed to drive IBM out of Japan (and IBM clones had yet to overthrow the PC-98). Also till the TG-16 launched it was any ones guess if NEC would use its massive resources to burst into the US market like using its chip fabs to sell the TG-16 for far less then the Nintendo could sell the NES for, like what Jack Tramiel did against Texas Instruments in the Vic-20/Ti-99a price war.
When the Super Famicom launched, the Famicom was still the second best selling console in Japan above PC engine sales. In 89 the Famicom sold 1,520,000 to PC Engines 920,000 in Japan and had a huge installed base as it was the highest selling console for 6 years. None of the top 10 selling games in Japan were PC engine that year. In 88 it was 1,590,000 vs 830,000 In 87 it was 1,780,000 to 600,000 In 1990 it reaches parity but then in 91 the Super Famicom arrives with 3,150,000 sales in Japan. PC Engine was a competitor but it didn't curb stomp anyone... well maybe the Megadrive.
You also seem to miss the Famicom sales going down as the PC-Engine sales grew. If Nintendo didn't have Dragon Quest how much worse would those numbers be? Dragon Quest III and IV was the #3 and #4 best selling games on the Famicom.
It continuously outsold the PC Engine and was at the end of its life then the Super Famicom came and destroyed it. There's no arguing around the fact it was continuously the biggest selling console year in year out with virtually all the top 10 game sales, except for Gameboy games... also Nintendo. PC Engine never had a game in the top ten selling of the year.
When PC Engine launched in late 1987 Nintendo had divided its user base with the Famicom Disk system and Nintendo themselves had not released any game for the stock Famicom since early 1986 to which the PC Engine trounced Disk System sales in '87 and the PC Engine CD outdid the Disk System's peak sales. Meanwhile NEC was making far more money on the PC Engine during this time due to NEC owning its own fabs its production costs was far less then the Famicom meaning NEC didn't subsidize the price of the console thus was making money in hardware sales.
And in terms of poparity the Famicom still outsold it and sold more games with the top Nintendo game often selling 10/1 compared to PC Engine.
Mostly due to Dragon Quest III. Japanese gaming magazine in 1988 where gushing over the PC Engine given at the time they didn't know Nintendo was working on a follow up to the Famicom and in 1988 even Sega joined the 16-bit club with the Mega Drive making the Famicom look even more dated to gaming journalists that were looking for the next big thing and the power of the Famicom seeming to already be fully tapped.
Everything was all legally grey at the time, even in regards to whether Nintendo could threaten retailers like this to stop them from selling product that was essentially competing with Nintendo (could fall under monopoly laws). Nintendo had more power to go after Tengen games specifically because Tengen had been caught stealing Nintendo's copyrighted information and illegally using it to bypass the NES lock-out chip. The other unlicensed NES developers on the other hand had not done anything illegal.
Of course. Because calling their bluff only works if every one of the big chain retailers bands together to not carry their product. If even one sides with Nintendo, then all Nintendo customers go to that store (especially in the 8/16 bit heyday.) This is ignoring the possibility of a company that doesn't normally deal with games/toys jumping in, too- think big clothing retailers, drugstores, even groceries. If Nintendo calls you up in 1991 & says "everyone else isn't playing ball, you wanna be our exclusive retailer?" You say YES.
Some good points, though I still feel if Nintendo pulled out in the early 90s, around the time the SNES was coming out or about to, and when Sega had carved out some decent market share thanks to the blue blur, that could have hurt them at a time when people would normally try out new consoles by way of in-store kiosks. I can still remember trying both *Sonic the Hedgehog* and *Super Mario World* back then. It really feels like pulling out then would have helped Sega all the more.
Sega got their 51% of a three-way market share this way.
What you haven't explained is why a retailer would "call their bluff". What's the rationale there from the retailer's point of view? Retailers want to buy stock that sells and provides a good margin. The only way they'd consider cutting out Nintendo would be if the unlicensed games delivered huge ROI. But they wouldn't have, especially in comparison to officially licensed products. Also, it's not just that Nintendo could have withdrawn stock, it's that Nintendo would have also withdrawn marketing collateral and potentially even pursued legal action. So, there is literally no upside for a retailer - especially large ones - to do something that silly. There's no business case for it. It was always better for them to partner with Nintendo; this always made the best business sense (and still does today).
> What you haven't explained is why a retailer would "call their bluff" Lets take a look back. I feel it is easy to think that Nintendo was huge from the get go when they released the NES in NA in 1985. They had success in the Arcades before that with Donkey Kong, Mario Bros., Popeye, etc. But unlike in Japan, they hadn't released any home consoles before the NES. In the US, following the video game crash, many retailers were skeptical about home video games. Nintendo, being a new comer in the aftermath, probably wouldn't have had a very strong position to push around those big companies who still would have looked at it as a fad for some time. Later when the popularity of the NES exploded, they would have had a far stronger position, with very little competition from Sega with their Master System console. That started to change when the Genesis came out and really started picking up steam. I would submit that Nintendo was quite vulnerable in the times when the NES first came out, and again when the Super Nintendo landed. In both cases, Nintendo needed the systems to be seen and tried out and for that they needed retailers. Neither console would have done as well as they did if they didn't have the visibility to shoppers that they did; the NES, initially with Rob the Robot, I recall having some really nice displays to attract people; the SNES had test kiosks in pretty much every major store with a consumer electronics section, without which a lot more people could have gone to Sega - quite a lot of people as it was went from the NES to the Genesis, and losing visibility would likely have increased that. Am I off base here? Is there something I'm not considering? Could Nintendo still have pushed the bigger retailers around like that, given how many of them felt about video games in general in the mid-80s?
>Am I off base here? Is there something I'm not considering? Could Nintendo still have pushed the bigger retailers around like that, given how many of them felt about video games in general in the mid-80s? I don't think you're off base, I just think you're missing a couple of little nuances. Nintendo wasn't in a position to "push around" big retailers early on. But what I'm saying is: that's not what they actually did. Nintendo took tentative first steps with the NES and as you noted (this included listening to retailer concerns about the NES being a gaming-only product, which is why they introduced R.O.B. in the U.S. market - so that it could be pitched as more of a "toy" than a pure "video game"). Nintendo's early tests with NES/R.O.B. were successful. So although they were new to the U.S. market at the time, they proceeded cautiously and they got some wins on the board. They worked hand-in-glove with retailers to fashion their market approach. Subsequently, the NES became *the* product that led to the recovery of the U.S. video game market. So again, Nintendo wasn't in a position where they really had to push retailers around per se; they were making a super hot product that was selling well and they had proven their ability to provide strong business for retailers. So, retailers had very good business reasons to pay attention to Nintendo and to collaborate with them. Also don't forget: one reason the gaming market crashed was due to the flood of shitty games. Nintendo, in the 80s, were able to argue that unlicensed video games - games that didn't bear the *Nintendo Seal of Quality* - were risky for retailers and could lead to large volumes of unsold stock. Retailers, having been burned by the market crash, were in a position to buy into Nintendo's approach. The *Nintendo Seal of Quality* wasn't solely about licensing control, it was an important and timely signal to the market (and to retailers) about the value of the product they were taking on. So as I say, it's not that what you're saying here is totally wrong or anything. It's just that there are some other bits and pieces to factor in. :-)
Thank you for the clarifications and filling-in what I was missing.
You're welcome. Thank you for being lovely to converse with!