Not Just Kid Stuff

...In fact, by focusing his attention elsewhere, he has produced one helluva good read...

...Then, in 1976, Yamauchi negotiated a license to manufacture and sell a Magnavox system that played video games on a standard television set...

...I just want you to think about it," she replied...

...Yamauchi, Sheff insists, has never actually played a video game...

...did not wow me either...

...We can talk more about it later...

...The result was the Family Computer, dubbed Famicom, which took Japan by storm...

...Sheff has given us an extraordinary view of the strategy that has made Nintendo one of the most profitable companies anywhere...

...Forays into mass-market toys—the Ultra Hand, a wooden gadget that extended a hand's reach...

...My initial reaction to receiving David Sheff's Game Over was not really different...

...For all its market dominance, Nintendo is dealing with the most fickle of markets—kids...

...Who wanted to read yet another company story, much less one about a company that makes video games...

...The result was, as Sheff rightly points out, one of the most bizarre antitrust settlements in U.S...

...Around my son's schoolyard, Super Mario is a has-been...

...Reviewed by Marc Levinson Economics writer, "Newsweek" As the target of an endless stream of business books, I tend to yawn when another hefty volume lands on my desk...

...The book is at its best in describing the way Nintendo came to do minate the market...

...One would be hard-pressed to imagine how the company's own marketers could have come up with a better promotion scheme...

...Of all the overblown cataclysms of American industry, this isn't exactly among the more worrisome...

...On December 7, 1989, Ohio Democratic Congressman Dennis Eckart held a press conference to ask the Justice Department to investigate Nintendo's possible antitrust violations...

...2. Millions of American moms and dads, lacking the fortitude to tell their kids no, did what any red-blooded American would do—they turned to Washington for help...

...Nintendo is out, and Sega's technologically superior Genesis system is in...

...economy where they could sell goods for full price, and Nintendo itself harvested a nice royalty each time a parent surrendered to a child's pleadings and bought Super Mario Bros...

...Eckart asked with rhetorical flourish...

...the Beam Gun, using one of the first cheap solar cell batteries—quickly made the card business an afterthought...

...His company, Yamauchi decided, would be the sole manufacturer of Famicom games...

...Although not a winner, this brought Nintendo into the brand-new field of making video games...

...the Love Tester, an electronic device that measured the amount of "love" flowing between a couple holding hands...

...It makes no difference...

...I said without hesitation...

...No way...

...It does not really make much of anything...

...Profit per employee was an astonishing $1.8 million...

...Nintendo's general does know the things that matter: how to hire and motivate creative designers and game developers, how to merchandise the hell out of almost any idea, how to intimidate and even destroy whoever dares to stand in his path...

...Its machines, chips and game cartridges are manufactured by others...

...It may need it...

...Licensees could peddle their wares without fear of competition from knockoffs, retailers found video games to be one of the last segments of the U.S...

...When a small Japanese company called Hacker International figured out how to make games for the Famicom and sell them by mail, Nintendo used its clout unapologetically to have Hacker's ads rejected by a video game magazine, cutting off its access to potential customers...

...Last year, it earned more than Matsushita, the world's largest electronics manufacturer...

...Both Nintendo and Sega are scrambling to figure out how to fight the coming battle for video games served up over cable television systems, and so far Sega's deals with Time Warner and Telecommunications, Inc., have put it in the lead...

...The company's history dates back to 1889, when a Kyoto craftsman named Fusajiro Yamauchi founded Nintendo Koppai to make playing cards from the pulp of mulberry bark...

...Nintendo "enticed their way into our children's hearts," he complained, and now that the company was making game units that could be turned into low-grade computers, it could conquer parts of that industry as well...

...But don't bet on it...

...Nintendo itself is basically a design, marketing and litigation outfit, profiting from royalties while letting others bear costs and risks...

...In its own way, Nintendo is a prototype of the corporation of the 1990s...

...Atari Games, a Time Warner subsidiary and Nintendo licensee eager for a more lucrative arrangement, had been pulling more than a few strings behind the scenes...

...With millions of Famicoms in use, Yamauchi found the calling that would make him a billionaire, selling software to the people who had bought his remarkable machine...

...It wasn't Eckart's game-playing constituents alone who were upset, however...

...Cards were its sole business until 1969, the year Hiroshi Yamauchi, great-grandson of the founder, created a games department to develop new lines...

...He did so with typical panache: He told his designers that they must fashion a system far cheaper than anything on the market but with better games and better graphics, and he helped keep the cost down by negotiating a rock-bottom price with a chip supplier, Ricoh, in return for an audacious promise to buy 3 million chips...

...Companies that designed games for Nintendo of America could not sell their games outside the United States and Canada, could not release them to play on any other system for two years, and had to grant Nintendo approval of the games, packaging, artwork, and commercials...

...If you can turn a toy into a computer, what's the next step...

...history...

...After investigations by the Federal Trade Commission and state attorneys general, Nintendo changed some of its licensing practices, agreed not to try to control its retailers—and, to atone for whatever public harm had been done, also agreed to offer anyone who had bought a Nintendo Entertainment System between June 1, 1988 and December 31, 1990 a coupon good for a $5 discount on a future purchase of its merchandise...

...But Eckart knew a hot topic when he saw one...

...And then there is always the possibility that with 115 million Nintendo game machines and an untold number of competitors' units in homes around the world, this market is finally saturated...

...By 1983, having learned the business by developing hits like Donkey Kong, Yamauchi decided to conquer it...

...Fortunately, it turns out that Sheff agrees, and the games themselves are the least interesting part of the Nintendo saga...

...Stock was deliberately kept in short supply, forcing even major retailers like Toys 'R' Us to beg for shipments—and rendering them compliant when Nintendo sought to enforce practices that are blatantly illegal in the United States, such as telling retailers what price to charge customers for its products...

...Sheff's subtitle, "How Nintendo Zapped an American Industry, Captured Your Dollars, and Enslaved Your Children...

...Just the other day, my wife informed me that she wants to get our kids a Nintendo Game Boy...

...This aggressiveness, plus a special "lock-out" chip limiting the use of Nintendo-licensed games to the company's machines, made a lot of people rich...

...At year's end, Nintendo was sitting on a $3 billion cash pile...

...Developers had to sign a nonnegotiable contract agreeing to buy minimum quantities of their own games from Nintendo at a fixed price, cash in advance...

...I reminded her that we had both agreed we didn't want our kids spending sunny days blasting aliens and watching Super Mario jump around the screen...