“The ballpark figure of Nintendo’s Mario sales is $12 billion. If each one of Mario’s gold coins was worth a million dollars, to collect that much moola he would have to knock his head on a coin block for almost three and a half hours.”
– Super Mario, page 2
Super Mario follows the story of Nintendo’s entry into the video game market and then into the United States, through the lens of its title character, Super Mario. Jeff Ryan dazzles with great anecdotes and fun trivia that will entertain any video game fan. He also provides a high-level overview of the tactics Nintendo used to shift from underdog to top dog of the video game industry.
In 1972, Atari was the biggest game maker with its smash hit Pong. For a company that didn’t even exist 10 years prior, it was raking in untold millions and contributed to the video game industry’s growth by a 5% monthly expansion rate. The thought of overtaking Atari was inconceivable. Whoever would have predicted that a six-person start-up called Nintendo of America would ride out the 1983 video game recession that killed Atari to become the video game industry’s darling?
Don’t Duplicate, Innovate
“This was America, the land where the ice cream cone, the microwave, and the Post-it note were all botched engineering projects salvaged into worldwide sensations. Failure, not necessity, was the mother of invention. Arakawa had an idea, a cavalier and audacious one–something that would never fly in Japan. Even if the new plan didn’t work, though, it would be a game changer.”
– Super Mario, page 17
Throughout its history, Nintendo has climbed to the top and stayed there due to creative and innovative thinking; by zigging when their competitors zag. One way they’ve done this is by making the most of seasoned technology. In fact, that’s how Mario was born.
In 1980, Nintendo’s president, Yamauchi, sent his daughter and son-in-law, Minoru Arakawa, to the U.S. with 3,000 cabinets of its best selling game in Japan, Radar Scope, in hopes of breaking into the American market. It wasn’t working – most arcade vendors weren’t willing to buy an expensive Space Invaders knock-off from a company with no track record.
Arakawa came up with the brilliant option of creating a conversion kit for Radar Scope, which would create a new game and prevent thousands of arcade units from going to waste. Staff artist Shigeru Miyamoto was up to the task and created Donkey Kong, featuring the now well-known stubborn gorilla and Jumpman, who you may know more fondly as Mario. DK generated $180 million in its first year of release, and $100 million in its second.
What made DK so successful was its addiction quotient. It featured an irregular reward schedule –what earned you points changed on each level and you could score additional points due to speed. Similar to a slot machine with a slight house advantage, this was a winning formula for generating gamer addiction. Furthermore DKprovided an engaging narrative – Jumpman trying to save Lady from Donkey Kong, which was missing from previous arcade hits that were merely scoring games.
GEM # 1
Know Your Market Better Than Your Competitors
“A fraction of the Game Boy shelf space was allotted to whatever high-price, high-quality, high-weight competitor was out there. They never caught on, despite years of marketing and many solid games.”
– Super Mario, Page 106
In its early years, Nintendo made significant amounts of money with its Game & Watch franchise. One of Nintendo’s most skilled inventors, Gunpei Yokoi, attained success in portable electronic games – with his idea of making small games that could be powered with watch batteries. By 1989, however, the franchise was winding down – consumers weren’t interested in buying a whole system to play only one game.
Yokoi began brainstorming a handheld gaming system with removable cartridges to allow for multiple gameplay – the Game Boy. He knew that price would be important to consumers, so he didn’t include features like backlight or colour. This was an important decision because these features drained battery time, which was of utmost importance to consumers. Each Game Boy also came with earbud headphones, which served the dual purpose of providing a private gaming experience as well as saving precious battery life.
Atari and Sega both released competing handheld gaming systems that had colour screens, backlights, and better graphics, but they also came with a hefty price tag and gobbled up battery life. Though the Game Boy had huge room of improvement, Yokoi’s intimate understanding of what was important to consumers made up for its shortfalls and ultimately led to its success. The Game Boy would go on to sell an incredible 118 million units.
GEM # 2
Swim in the Blue Ocean
“The current gaming market, to use another business-book analogy was a red ocean, awash with blood and sharks. Nintendo had spent too many years being bitten by those sharks: time to take their more deserving Wii console into the blue ocean of an untapped market.”
– Super Mario, Page 245
In the mid-2000s, the video game industry was intensely competitive – Microsoft and Sony’s rivalry had already destroyed Sega and had their sights set on Nintendo with the release of Xbox 360 and PlayStation 3. The Xbox 360 and PS3 competed on technology – boasting about frame rates, picture quality, etc. Nintendo purposefully took itself out of this arms race. Nintendo had already been burned in the past (e.g. GameCube) by trying to keep up with their flashy competitors, so they took on a different strategy with their next console release.
Miyamoto had a distinct goal in mind when designing the Wii: make moms happy. Moms had an uneasy relationship with video games. These consoles absorbed their children and often drew in their husbands also, yet moms were usually in charge of buying these consoles and their associated games.
Each Wii console was sold with Wii Sports – a game that could be enjoyed by the whole family and promoted fitness, which moms definitely approved of. By replacing the traditional controller with the Wiimote, the Wii offered an innovative new interface that appealed to a vast market that had previously stayed away from video games. Wiis became regular fixtures in assisted-living facilities and nursing homes. Cruise ships, malls, and theme parks have Wii zones.
Nintendo let Sony and Microsoft fight over the already saturated hard-core gamer market. The Wii sold out every month for three years straight after its 2006 release. More than 84 million Wiis have been sold at record speed. Its creator, Shigeru Miyamoto, received the Innovation Award for Consumer Goods from The Economist.
Super Mario: How Nintendo Conquered America provides a fresh perspective on business strategy. Although Nintendo is widely regarded as a highly successful company, you don’t find much written about them in most business literature. Perhaps it’s because they’re a Japanese company, or maybe because they’re “merely” a video game company. Regardless, Nintendo’s story offers valuable lessons that can be translated into other industries.
Additionally, Super Mario provides an entertaining story-telling of Nintendo’s and Super Mario’s rise to success. I guarantee you’ll be itching to play Super Mario 3 on SNES by the book’s end.