Feature: Hiroshi Yamauchi - The Man Who Made Nintendo
Posted by Damien McFerran
We pay tribute to the former Nintendo president, who died today
Earlier today, we reported on the sad news that former Nintendo president Hiroshi Yamauchi had passed away at the age of 85. For many younger Nintendo fans, the name might not mean anything — Yamauchi's time in charge lasted from 1949 to 2002, and Nintendo's recent glory years have been presided over by his successor and current Nintendo president Satoru Iwata.
Those who have been introduced to the company via its wildly successful DS and Wii consoles won't be familiar with the man who took his grandfather's playing card company and transformed it into one of the world's most recognisable brands, restoring battered confidence in the ailing video games industry in the process. To say that Yamauchi is the most important person in Nintendo's 124 year history is no overstatement or exaggeration; this ruthless yet savvy businessman was behind all of the company's key moves during the '80s and '90s and was instrumental in the creation of the domestic video game market as we know it today. The most remarkable thing is that Yamauchi was famously disinterested in games — he rarely played them and prefered to entertain himself with the more civilised Japanese board game, Go.
It's often said that to be truly successful in business you need to first experience adversity, and that is certainly true of Yamauchi. Forced to quit his university studies and take the reins at Nintendo when his grandfather suffered a stroke and was unable to run the company, Yamauchi's early years at the firm were testing. He didn't make things easy for himself, however; before accepting the position he had his grandfather remove all other family members from the staff — presumably to make his power absolute — and was faced with an aggrieved workforce which believed him to be ill-suited and too inexperienced to assume rule. Yamauchi responded in his typically bold style and fired the ringleaders who convinced other staff to go on strike, thereby restoring order.
Early in his career, Yamauchi displayed his keen eye for business. Under his command, Nintendo became the first Japanese company to produce Western-style plastic playing cards and in 1959 signed a deal with Disney to create themed decks intended for family use. This venture was such a success that Nintendo soon dominated the playing card industry in Japan, a move which ironically resulted in Yamauchi becoming dissatisfied with the company's singular stance. When he visited the biggest manufacturer of playing cards in the US he was struck by the fact that the company operated out of a small office; it was a depressing illustration of just how small the market was in global terms. Upon his return to Japan, he decided that Nintendo's future lay elsewhere and not in the industry it now controlled.
Like all seasoned businessmen, Yamauchi has had more than one encounter with failure, and his first occurred when he tried to diversify Nintendo's business interests. The infamous "Love Hotel" chain — where amorous couples could rent rooms by the hour — is possibly the best known of these ventures, but Yamauchi also dabbled in bowling alleys and taxi firms. These all proved to be disastrous, bringing the company to its knees. Nintendo — and Yamauchi himself — would be saved by the genius of Gunpei Yokoi, a lowly engineer who created gizmos during his spare time for his own personal entertainment. On a routine walk around the factory Yamauchi is said to have spotted Yokoi fooling around with his latest invention, a retractable claw which could be used to grab nearby objects. Seeing the potential of the product as a child's plaything, Yamauchi marketed it as the "Ultra Hand". Launched on the Japanese market in the sixties, it sold over a million units and convinced the Nintendo president that the company should move into creating toys.
Yokoi would become instrumental in Nintendo's success during this period, creating a wide range of unique toys which made good use of his degree in engineering. However, these triumphs were minor in comparison to the next phase of Nintendo's history — a phase instigated by the Nintendo president. During the late '70s Yamauchi been watching developments in the US with interest, noting that cheap, mass-produced electronic devices were slowly becoming commonplace in the home. One such application of this technology was video game consoles, and although he wasn't a fan of gaming himself, Yamauchi could see that this new medium was going to be incredibly popular. Nintendo released the Color TV Game 6 in 1977 and started to produce its own coin-op titles. These found favour in Japan but gained little attention in North America, and it wasn't until Shigeru Miyamoto's Donkey Kong that the firm had its first Western success.
Nintendo's next product would come to define the company and created a legacy which endures to this very day. The Family Computer — or Famicom for short — launched in 1983 and became the must-have product for Japanese men, women and children alike. It wasn't all plain sailing, however — when it was discovered that an early batch of the consoles had a manufacturing defect, Yamauchi displayed the business acumen which would typify his career — he ordered a complete recall of every console at Nintendo's cost, claiming that to ignore the problem would damage the company's reputation. The procedure was expensive and many other firms would have simply chosen to ignore the issue, but Yamauchi knew how important it was to maintain the company's reputation with the general public.
It is said that during the Famicom era, Yamauchi hand-picked titles for the format and had an incredible degree of hands-on control over the system's library — a remarkable situation when you consider his complete lack of experience and dislike for video games in general. He was able to spot which titles would sell and which ones wouldn't, and this intuition — along with strong-arm tactics which forbade Famicom developers from releasing their games on rival platforms — allowed Nintendo to effectively own the home console market in Japan. Although Nintendo was king of the hill in its homeland, Yamauchi knew that the bigger prize lay on the other side of the Pacific Ocean. Against all odds — and the advice of many experts in the US toy industry — Nintendo launched the Famicom as the Nintendo Entertainment System in 1985. Again, without Yamauchi's vision and drive this momentous event would simply never have taken place; he was utterly convinced that the console could be a success, despite the fact that the North American market was still reeling from the video game crash of 1983 and that toy stores had a very dim view of gaming systems. Nintendo — and Yamauchi — persevered, and the rest is history.
The commercial breakthrough of the NES allowed Nintendo to gain a valuable foothold in what was the most lucrative market on the planet. Nintendo of America — operated by Yamauchi's son-in-law Minoru Arakawa and Howard Lincoln — was simply the only game in town if you were an American kid in the late '80s and early '90s, and the console gave the industry some of the most iconic games of all time, including Super Mario Bros. 3, The Legend of Zelda and Mega Man. Rivals Atari and Sega struggled to compete thanks to Nintendo's depth of third-party support. Firms such as Capcom, Konami, Square, Taito, Namco and Enix all put their weight behind the console and were handsomely rewarded with bumper sales as a result.
The SNES followed, and although the system faced stiffer competition from Sega's Mega Drive / Genesis, it was still the most popular system of its time in terms of worldwide sales. During this period, Yamauchi's foresight proved invaluable once again; he could see the benefit of working with 3D visuals and fostered Nintendo's relationship with UK studio Argonaut — a partnership which would create the Super FX chip and give the company vital experience in the realm of 3D. Speaking exclusively to Nintendo Life, Argonaut founder Jez San gives a fascinating insight into what it was like negotiating with the great man. "I met with him at the start of Argonaut's relationship with Nintendo," he says. "I used to hear stories from my friend Henk Rogers about what a formidable and intelligent Go player Mr Yamauchi was. Even before I met him, I expected he'd be the most powerful — not to mention scary — man I'd ever met. I was right. On the day of our first encounter I was taken into his meeting room and they sat me down in the centre of the room on a chair, on my own. The others stood to the side. The room was very hot, and I was soon sweltering. I wasn't used to the humidity in Kyoto, but I was fully suited and this room felt much more than 30 degrees — I suspect it was deliberate ploy to intimidate the new 'Gaijin'.
"He entered the room like some kind of Mafia or Yakuza boss, and said — via his daughter Yoko, who was acting as translator — that they wanted to learn how to make 3D games and wanted to sign up Argonaut to do three such games for Nintendo. At the same time we would hold classes and teach Nintendo's developers how to make 3D games. He only asked one question: 'How much do you want?' It was at this point I know I could ask practically any amount, so I thought of the biggest number I could possibly think of, which was 'One Million Dollars' (without little finger in mouth, Dr. Evil-style) but then I got greedy and doubled it. I told him $2 million and instantly he said 'Yes, OK'. And that was it. the meeting was over.
"I knew straight afterwards that he would've said yes no matter what I asked for. I'm sure if I had said $10 million or $20 million, he probably would've agreed. I was almost kicking myself with the 'low' figure I had asked for, despite it being more money than I'd ever seen in my life! Later that day I got back to my hotel and got a call from my brother in England, who pointed out that $2 million had just turned up in my bank account! In the west, everything is a long-winded legal negotiation and games contracts are milestone-based with most of the value being held up until you've finished making the games and dangled as a carrot to get it done. In Mr Yamauchi's case, it was all done on trust and honour, and barely even a handshake. Nintendo had sent the full value of the deal before we'd even signed the contract. That certainly made me want to deliver on our promises and give Nintendo all of our attention."
From business deals to selecting products, Yamauchi's hold on the company was absolute. He had input into almost everything Nintendo did, and would often have the final say on the various products the company released - right down to the finest detail. "He named my debut game, X for the Game Boy," recalls Dylan Cuthbert, another former Argonaut developer who worked on the SNES title Star Fox and eventually joined Nintendo himself. "He suddenly called Yoshio Sakamoto in the early hours of the morning — at home I think — and said, 'You are going to call it X', and that was that."
Yamauchi presided over what many continue to view as Nintendo's golden era, but the release of the Virtual Boy in 1995 was his first real stumble. The brainchild of Gunpei Yokoi, the console was a commercial failure and had little in the way of software support. Rumours persist that Gunpei wasn't ready to release the machine, but Yamauchi was convinced it would succeed on the name alone and instructed him to hurry it to market in order to plug the gap between the SNES and Nintendo's next console — the Nintendo 64 — which was some way off. It is here that Yamauchi displayed his less appealing side; according to reports, Yokoi was treated like an outcast within the company because of the Virtual Boy's failure. He would leave Nintendo not long afterwards to work with Bandai on the WonderSwan handheld — a rival for the Game Boy. One of Nintendo's most important employees, Yokoi was tragically killed in a road traffic accident in 1997.
By the time the Nintendo 64 hit store shelves, Nintendo's grip on the industry it had helped create was slipping. Yamauchi would later admit that he instructed Nintendo's hardware engineers to make the console difficult to program for, with the aim being to attract developers of only the finest talent. This reasoning was based on the understanding that Nintendo was still the biggest draw in town and that it would be inundated with studios keen to work on the new platform — but by the mid-'90s, Sony's PlayStation was the market leader and Nintendo no longer held the same kind of control over developers and publishers that it did during the NES and SNES eras. By sticking with expensive cartridges — which allowed Nintendo to exercise the same draconian licensing tactics it used so successfully in the 8 and 16-bit days — the company pushed away many of its most loyal partners, including Capcom and Square.
The GameCube would be Yamauchi's final throw of the dice as Nintendo president. Designed as a games console first and foremost — an edict which came from the president himself, who was skeptical of Sony and Microsoft's attempts to create an all-in-one media device for the living room — the system was attractive, had a fantastic controller and (possibly most importantly of all) was cheaper than its rivals despite offering the same kind of power. While it wasn't the commercial hit that Nintendo expected, the GameCube is cited by many as the quintessential games console — the compact and playful design (complete with carry handle) combined with some amazing first-party software have earned the system the adoration of a generation of players. It's a fitting tribute to Yamauchi, who always saw Nintendo as a maker of toys first and foremost.
After stepping down in 2002, Yamauchi remained on Nintendo's board of directors until 2005. Despite his apparent greed and desire to earn as much money as possible during his years with the company, he refused to take the retirement pension offered to him, insisting that Nintendo could make better use of the funds. In his later years he was generous with his vast wealth, helping to build a cancer treatment center in 2010. During his tumultuous career Yamauchi gained his fair share of detractors and ruffled a few feathers with his business practices, but his impact on the industry is almost immeasurable. Without Nintendo, video gaming would not be in the position it is in today, and without Yamauchi, there would simply be no Nintendo — at least not in the form we know and love today.
Ultra Hand, TV Game 6 and Popeye cards image credit: Beforemario.com