For Nintendo, Existence is Crisis, and Crisis Is Opportunity

For Nintendo, Existence is Crisis, and Crisis Is Opportunity

Things look pretty dark for gaming's most venerable first party. But then, when don't they?

Wow, things are really looking dire for Nintendo! In a press event last night, the company declared a great many tidbits of information, including some internal restructuring, new mobile plans, and - oh, right - the fact that both the upcoming Legend of Zelda sequel and the upcoming NX platform won't launch anywhere on earth before March 2017. Then, for a follow-up, they went and sold off most of their 24-year majority stake in the Seattle Mariners.

It's the darkest tidings we've seen for Nintendo since, well, the last time things looked really terrible for the company. Or the time before that. Or the one before that.

Following and covering Nintendo's fortunes sometimes feels less like news reporting and more like watching a campy serial thriller that sees each episode end in an impossible situation. How will our hero overcome this latest disaster? Tune in next quarter to find out! And somehow, the company manages to pull itself out of the hole every time. Honestly, if Nintendo's story actually were a campy serial thriller, we'd probably cry foul at the way the writers' cliffhanger resolutions strain credibility.

Sony and Microsoft have locked down the hardcore gaming audience! How can Nintendo ever get out of this pickle? (By ditching the hardcore and focusing on moms and grandparents.) American retailers hate video games! How could Nintendo possibly get its NES game console into the world's biggest market? (By selling it as something other than a video game system.) And so, on and so forth. Nintendo has been around for more than 125 years, and nearly its entire life has been defined by a series of desperate existential threats, countered by unexpected responses that change the rules of the game and put the company on top... at least until the next disaster arrives.

Pop culture icon Donkey Kong only exists because Nintendo nearly bankrupted itself manufacturing arcade dud Radar Scope.

Nintendo began life as a gambling card manufacturer, and in fact its existence came about because of a crisis-based opportunity: The Japanese government had banned most forms of gambling, but Nintendo founder Fusajiro Yamauchi realized that traditional Japanese hanafuda cards were still allowed and went into business manufacturing those. Nintendo's first major crisis arrived with World War II. During those lean years, recreational pastimes such as gambling fell out of favor, so the company focused more on churning out propaganda than playing cards in order to survive.

In the 1950s, Yamauchi's great-grandson Hiroshi took over the company and began its transition from a mere maker of cards into a more daring enterprise — one whose life would be defined by turbulence. Hiroshi Yamauchi reorganized Nintendo, expanding into a variety of new markets as Japan itself rebuilt and modernized following the war. These efforts almost universally failed, but the company's core businesses of cards did well enough that Yamauchi managed to take Nintendo public... only for the Japanese public to lose interest in gambling, sending Nintendo into a tailspin that nearly resulted in its demise.

But Nintendo didn't go out of business, thanks to the creativity of an assembly line worked named Gunpei Yokoi and the clarity of Yamauchi's insight: He spotted a gadget Yokoi had designed for his own amusement and decided to convert it into a product. It became Nintendo's first true success, and its sales sent the company down the path of toy manufacturing. Nintendo's toy business did so well that it soon began to expand into new markets, including arcades: Yamauchi hatched a plan to release a light-gun shooting range installation system to sell to bowling alley owners whose businesses had cratered when Japan's brief bowling craze ran its course. Alas, no sooner had Nintendo manufactured its expensive and elaborate installation systems — but, unfortunately, before they had begun sales and distribution — the OPEC oil crisis struck. Japan, nearly 100% dependent on imported oil, was hit particularly hard, and pricey novelties like its Laser Clay Shooting System became unsalable. Having gone all-in on this venture, Nintendo found itself at the precipice of ruin again.

And, once again, the company's leaders put their minds together to salvage a disastrous situation, converting the Laser Clay Shooting System into a series of smaller, more affordable arcade installations and a line of consumer light gun toys. These projects became wildly successful, giving Nintendo the capital to expand into the video games market and producing a number of iconic pre-video game concepts: Duck Hunt and Wild Gunman.

Nintendo DS, the second best-selling game system of all time, came about as a hasty retort to the PlayStation Portable.

Nintendo's early video game ventures would prove even rockier than their previous business efforts, with a new crisis emerging on a seemingly annual basis. But from each crisis emerged a brilliant new cornerstone of the company's business:

  • Nintendo overestimated the appeal of its Space Invaders clone Radar Scope, but a young designer named Shigeru Miyamoto came up with a conversion kit to transform thousands of unsold units into a new game called Donkey Kong.
  • Sales of the Game & Watch handheld line dipped quickly after its early success, but that simply encouraged Nintendo to create a proper home console, the Famicom, which became the core of its business.
  • U.S. retailers didn't want to carry the Famicom after losing so much money on unsold Atari 2600 games, so Nintendo created a toy robot to interact with the console and pushed the package as a novelty toy item that also incidentally played video games.
  • New 32-bit consoles capable of pushing polygonal 3D graphics threatened to bury the Super NES, so Nintendo pushed Rare's Donkey Kong Country as a technological breakthrough on par with PlayStation.
  • Virtual Boy's failure could have been the ruination of Nintendo's handheld line, but they seized on an inventive new Game Boy RPG called Pokémon that almost singlehandedly kept the company in the black for years.
  • PlayStation Portable rendered Game Boy Advance instantly obsolete, so Nintendo created the strange, underpowered DS handheld and completely sidestepped the PSP's market.
  • Sony and Microsoft had the console market in a hammerlock with their high-definition systems, so Nintendo created a device capable only of standard-definition resolution but whose intuitive controller made it an instant hit with millions who would otherwise never have touched a video game.

Crisis has been the story of Nintendo's life; innovating to survive disaster has been Nintendo's standard response, like a drought-stricken tree constantly twisting its roots in search of untapped water sources. You can look back as far as Internet archives allow and find people making grim predictions of Nintendo's imminent demise. Just a few days ago, video game photo archivist Evan Amos uncovered a review from way back in 1986 in which future Electronic Gaming Monthly editor Ed Semrad foresaw the swift failure of the then-new NES at the hands of the superior SEGA Master System and Atari 7800. His wasn't an inexplicable perspective; Nintendo's console lacked either the hardware power of SEGA's machine or the brand power of Atari's. Semrad couldn't have known about Nintendo's undocumented early history then, nor could he have seen the future, so how could he have known about the company's remarkable knack for cheating death?

One of the most successful and most enduring game franchise of all time, Pokémon, came into the world on Game Boy, a system earmarked for retirement and kept Nintendo's financials look rosy as the N64 and GameCube sold successively worse than their predecessors.

In this day and age, though, it seems rather short-sighted to simply write off Nintendo as it faces down yet another threat to its continued existence. To be sure, the current malaise that looms over the company may be its most potentially dangerous situation ever. While the NX delay doesn't have the immediacy of the financial crises that threatened Nintendo's survival in the ’60s, ’70s, and early ’80s (thanks in large part to the staggeringly huge amount of money the company has saved up during its prosperous years), the bigger issues of a changing gaming market that has made Nintendo's reliable fallback positions untenable demands some massive changes. Worse, most of the leaders who guided the company through its greatest crises have passed away: Yokoi in 1997, Yamauchi in 2013, and Satoru Iwata last summer. It's all well and good to point to Nintendo's history as proof of their ability to weather any crisis, but without the architects of its slippery durability around to come up with an unlikely solution to its latest challenge, the future is a bigger question market for Nintendo than ever before.

And yet, something tells me Nintendo will survive, somehow. The form it takes next may not be one that fans like, but these days it seems that's simply the nature of video games. Hardly anyone thrives in today's games industry by clinging to the business model they used 10 years ago, and Nintendo has always been the most chimerical and adaptable of all game makers. Honestly, if the NX does turn out to be what fans want and expect, it'll probably go quite badly for Nintendo — much as the Wii U's attempts to cater to core gaming audiences did. Looming disaster inspires creativity at Nintendo, and the company's best and most innovative products have always appeared in its darkest hours. And it doesn't get much darker than right now.

Who knows, maybe this really is the end for Nintendo. Something tells me it's not, but that the company's next mutation will sacrifice fan enthusiasm in favor of long-term survival. I'd say we'll know soon, but since Nintendo won't be showing off their new console at E3 this June, it seems as though we won't know soon. All the more time for speculative think pieces and unfounded forums arguments, then! Truly, we live in the best of all possible worlds.

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