Back to the future: Can Nintendo become great again?

Can the release of a retro console loaded with classic games and the mobile gaming debut of Mario stop the rot?

Gareth Rees December 18, 2016

Ask a room full of people in their 30s or early 40s to name the brand that had the biggest impact on their childhoods, and many would likely give you the same answer: Nintendo. Even Steven Spielberg’s Amblin Entertainment (E.T. the Extra-Terrestrial, Gremlins, The Goonies, Back to the Future, Jurassic Park) and George Lucas’s Lucasfilm (Star Wars, Raiders of the Lost Ark) would struggle to compete with the Japanese company for prime position in the affections of the generation of video game addicts that grew up in the 1980s and 1990s.

From the launch of the Nintendo Entertainment System (NES) in North America in 1985 (the rest of the world were introduced to the NES soon after) to the early years of the 1990s, when Nintendo’s arch nemesis Sega began to mount a challenge to the company’s supremacy, Nintendo ruled the world of video games, and video games ruled the world. In 1990 the video games industry worldwide was worth $5 billion – and some estimates suggest that a NES could be found in one in three homes in North America and Japan.

Prior to the release of the NES nobody would have predicted Nintendo’s success. It had scored a hit in 1981 with the arcade game Donkey Kong, designed by the now-legendary Shigeru Miyamoto. But then came the so called “video game crash” of 1983 to 1985, which saw Atari, who controlled 80 per cent of the video game market in 1982, lose more than $500 million in 1983, and video game sales in North America, the product’s biggest market, plummet from $3 billion in 1982 to less than $100 million in 1985. The fledgling industry seemed to be floundering.

“People thought video games, consoles in particular, were dead,” says Blake J Harris, author of Console Wars: Sega, Nintendo, and the Battle that Defined a Generation. “It’s a tribute to the people that made the NES happen, and to the console and the games, that it was able to beat the stigma, chase away the ghost of Atari and change the world of video games in America.” 

In 1987, two years after the unexpected triumph of the NES in North America, Nintendo released Super Mario Bros., and the rise to cultural prominence of its main protagonist, Mario, began. “It cemented Nintendo as a global success, not just a Japanese or American success,” says Jeff Ryan, author of Super Mario: How Nintendo Conquered America. “That made them the McDonald’s of gaming.” By 1990, cumulative sales of the Super Mario Brothers series of games exceeded 40 million copies worldwide.

“The original Nintendo has a simple controller that anyone could master in a matter of minutes,” says Steven Schwartz, author of numerous books on gaming, including Compute!’s Guide to Nintendo Games and The Big Book of Nintendo Games. “And yet it didn’t significantly impact the complexity of games that could be written for the console. Even with eight-bit graphics and relatively tiny games by today’s standards, programmers stretched their imaginations and stressed the console to its limits by creating games that were engaging, engrossing, and had high repeat-play value.”

For both Schwartz and Harris the family-friendly nature of Nintendo’s games compared to those of its competitors made it unique. For Harris, this identity was fortuitously cemented during Nintendo’s battle with Sega for control of the market in the 1990s, when Sega attempted to differentiate its output from Nintendo’s by painting its rival as a company that catered to kids. “Nintendo has been that company for the past 20 years or so,” he says. “The company that is the Disney or the Pixar of video games.”

Whether Sega forced Nintendo’s hand or not is debatable, says Harris, but he believes the company has knowingly used the family-friendly tag to cement its status as an iconic brand. “I don’t think there’s anyone [working for Nintendo] saying, ‘I wish we were doing Call of Duty’. They have figured out their bread and butter and the kind of experience they want to deliver and they have embraced that.”

“Maybe to the outside world, or Wall Street, at times it feels like, ‘Come on, Nintendo. You need to grow up with the industry’, but they haven’t, and as somebody who is a consumer, who is not an investor in their company, I love that,” adds Harris “I love that whenever I buy a Nintendo product, whether it’s a console or a game, I know what I’m getting – not just in terms of the quality but also in terms of the feeling. I am going to be getting a child-like magic, something that doesn’t speak down to children but rather embraces their imagination and offers hours of fun and whimsy. In a world where everyone is trying to be everything to everyone, Nintendo is just trying to be Nintendo.”

Schwartz, on the other hand, says he lost interest in Nintendo when the Wii was released in 2006. “When the new game systems and competitors appeared – Sony and Microsoft – each system focused on additional power, speed, memory and improved graphics, designed to enable more expansive, immersive, eye-catching games. Instead of following the crowd, Nintendo believed that waving a controller in the air was a better, more involved way to play games than using a traditional controller. In retrospect, many consumers felt that the Wii was a gimmick rather than a desirable, revolutionary advance. And they were willing to forego the proprietary Nintendo titles in favour of better games and game play.”

Nintendo’s Wii is the fifth biggest-selling console of all time, having sold 101 million units worldwide. That makes it the third biggest-selling Nintendo console after combined sales of the Game Boy and the Game Boy Colour (118 million units) and the Nintendo DS (154 million units). The NES in comparison sold just 61 million units.

So despite Schwartz’s pessimism, it’s hard to argue that the Wii was anything other than a commercial success, at least in the short-term. The Wii’s successor, the Wii U, released in 2012, has proved less so. Between April and June this year, Nintendo sold just 220,000 units of the Wii U. The company has sold only 13 million units of the console since its release. According to a report on fortune.com, in July Nintendo president Tatsumi Kimishima revealed to investors earlier this year that back in 2012 a Nintendo sales representative had projected sales of 100 million units.

The success of mobile game Pokémon Go – Nintendo has a stake in The Pokémon Company, responsible for licensing Pokémon to the runaway hit’s developer Niantic – briefly led to an increase in Nintendo’s market value after its release in early July this year. But the rise was temporary: the company’s market value fell again when Nintendo informed investors that it wasn’t responsible for creating Pokémon Go. In late July Nintendo reported a $49 million loss for the first quarter of its 2017 financial year (April to June 2016).

Nintendo’s next release will be the Nintendo Classic Mini, a miniature version of the NES loaded with 30 classic games, including Super Mario Bros., Super Mario Bros. 2, Super Mario Bros. 3, Donkey Kong, The Legend of Zelda and Zelda II: The Adventures of Link.

“I think it will be enormously successful because there is something about the games from that era, especially the Nintendo games, that transcends the time that has passed and appeals to a new generation of gamers,” says Harris.

Whether the Nintendo Classic Mini appeals to anybody other than 30-somethings eager to relive the Golden Age of video games or young gaming fanatics yearning to experience a halcyon era they were not privileged to be around for, the release of the Nintendo’s latest mobile game, Super Mario Run, in Apple Inc.’s App Store in December will represent Mario’s first appearance on a smartphone.

“I don’t know if this is a sign of things to come or an anomaly,” says Harris. “It took Nintendo a while to jump into the ring, so the fact that they have is significant. But I wouldn’t be surprised if they saw a mobile strategy as cannibalising whatever they are doing with the Nintendo NX [the company’s next flagship console, due to be released in March 2017] and made future decisions based on whatever’s best for the NX.”

Ryan agrees, pointing out that Nintendo makes its money from sales of its consoles as well as its games. “The real test will come with the NX, if sales are better or worse for Mario et al being available on your phone,” he says. “They’re in big trouble if people bypass a $150 machine that plays $40 games in favour of a $4 download for a phone they already own.”