Japanese Restructuring of Imagination:
The Video Game Empire
Japan History
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Research Report
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Background
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Abstract


 

     During the Meiji Restoration, a small company that manufactured playing cards was formed in Japan.  Influenced by the fast paced, big business, military controlled Japan of that time, this small company, known as Nintendo, went on to dominate the world in technologically enhanced entertainment: video-gaming.  Nintendo's history parallels that of Japan's in 100 years.  This report analyzes the history of video games to discover why, today, Japan controls this enormous industry throughout the world.

Historical Background

    The Meiji Restoration (1868-1912) was Japanís reaction to Matthew Perry and western technology.  Japan realized they were primitive compared to the rest of the world.  Japan modernized itself very quickly by clamping down on the work force and creating powerful businesses that controlled Japan's advances.  After Japan had modernized, they believed themselves to be more powerful than the nations around them.  They began a campeign of occupying eastern nations under the illusion of liberating them from Western powers.  This time in Japan's history was a harsh, military controlled powerhouse Japan.

Research Report


    Playstation 2, Dreamcast, Game Cube, Nintendo 64 and Game-Boy Advance are the items on every child and teenagerís wish list.  These are video game consoles that control the market on home-video games throughout the world.  These systems are impossible to ignore.  They affect the minds, imaginations, and thumbs of the youth of the world.  These small boxes transform a household television into a gateway to infinite worlds and fantasies.  They create magnificent stories, relieve aggression, and while demanding concentration, exist for leisure.  One thing they have in common is that they are all made in Japan.

    The Playstation 2 is made by Sony, Dreamcast is made by Sega, the other 3 are made by Nintendo.  These companies, along with those that make games to play on them, influence the whole world.  How did this industry become so powerful?  Why is it controlled by Japan?  Video games did not originate in Japan; Japan took advantage of the market in the early stages.  Because of Japanís different ideas on business ethics, these companies stood above others to dominate the market.

    The first video game ever created was created at MIT.  A new member of the Tech Model Railroad Club, Steve Russel, decided to create an interactive program.  In 1962, computers filled whole rooms and hackers wrote programs just to write programs.  Steve Russel, utilizing the brand new monitor, created a space fighting game with scientific laws (such as gravity and inertia) integrated in it.  Russel left the game in a drawer for anyone to use and expand upon; computers were too expensive for the game to be worth anything, so Russel left it un-patented.  It was called Spacewar.  (Kent 17-20).

    A defense contractor, ten years later, created a game called Odyssey.  It was based on two, player controlled paddles that moved up and down to bounce a ball back and forth across a screen.  He sold this to Magnovox and was awarded patents on it. (Kent 21-23)

    Nolan Bushnell played Russelís Spacewar endlessly.  Bushnell had come from a pinball background, so he made Spacewar into a quarter machine (now an arcade game) and called it Computer Space.  This game failed, but Bushnell partnered with Ted Dabney to start a company called Atari.  The word comes from a Japanese game, Go.  Their first game was Pong.  It came out the same year as Odyssey and was basically the same game.  Magnavox sued them, but Atari settled out of court, Magnavox accidentally let them off with a deal that made Atari the leader in arcade games.  Atari had started with each of the partnersí $250.00 and in ten years became a $2-billion-a-year company, the fastest growing company in US history.

    In 1973, Atari went international with Atari Japan.  Within a year they decided to sell it to Masaya Nakamura, founder of Namco, which started as a coin-operated business.  This began the video game industry in Japan.  Namco had trouble with imitators.  Any game Namco released was copied by someone else.  Breakout was a popular game sent to Namco by Atari, but it was soon imitated by the Yakuza, or the Japanese mafia.  Namco started making the game itself to keep up with itís dangerous competitors and became one of the largest game companies in Asia.  Before this, Japan relied on the US for Arcade games, but now Namco made its own.  In 1979, Namco created the greatest grossing arcade game of all time, Pac-Man.  (Uston 140).

    Taito was another Japanese company that made arcade games.  In 1978 it made Space Invaders.  This game caused a shortage of 100yen coins in Japan, the mint had to print more because of the popularity of this game.  (Kent 116).  Taito had opened an operation in the US and Namco made a partner of Midway in the US.  Both Pac-Man and Space Invaders made a huge splash in the US market.  Japan was now a large competitor in the arcade business.  But the arcade business soon became secondary in what was developing in America, home video game consoles.

    The Odyssey had been around since 1972 as a game to connect to a household television set, but it was basically one game.  Atari had developed a home version of Pong in 1974.  In 1977 a revolutionary home console was developed: the Atari VCS/2600.  (Hart).  This console was developed to accept cartridges (games sold separately).  Every console could play every game, you needed only to buy each cartridge.  People had become bored of home consoles because they had only one game in them, with the Atari 2600 they could have an arcade selection at home.  Other US companies followed suit by making their version of a cartridge system.  Unfortunately, there was a video game decline in the US in 1982.  (Kent 278).

    As these early cartridge systems died out, Japan picked up the slack.  Sega, or Service Games, established in 1954 by an American, decided to make a console with the now cheaper and faster chips.  Sega created the Sega Master System in 1984, which sold well for a short time before another Japanese company rose as the undisputed leader. (Hart).

    Founded in 1889 (during the Meiji Period), Nintendo was a playing card manufacturer.  The name means, ďLeave luck to heaven.Ē  During the late 1970ís, Nintendo decided to infiltrate the US market and created Nintendo of America.  In 1985, Nintendo released the NES (Nintendo Entertainment System) in the US after releasing it as the Famicom in Japan.  They cut corners in producing it and spent the money, instead, on advertisements.  It hit both markets very hard.  The NES would become the highest selling system in history, and also the most notoriousĒ (Hart).

    Nintendo didnít rise to the top because it had the best product; Nintendo fought its way to the top using a different strategy.  Hiroshi Yamauchi, President of Nintendo, used devices such as intimidation, scare-tactics and price-fixing.  Nintendo consciously used less RAM and inferior graphics chips in order to cut costs.  They sped production to get the systems to the market which resulted in a third of them being defected.  Because the market was slow, competitors were cautious in advertising, but Nintendo launched an extravagant advertising campaign that swept the consumers.  By 1986, Nintendo controlled 90% of the market.  (Provenzo 18).

    Before the NES, game designers could produce any games for any system after they purchased equipment to make them.  Yamauchi changed this free market by installing a key chip into the NES and patenting it.  Thus, designers needed explicit permission to create each and every game.  They placed strict rules on game designers that forbid them from working with other companies.  Nintendo produced over one hundred games a year while competitors could only make a dozen.  (Provenzo 24).

    Nintendo also limited the amount of each product.  It didnít fill orders completely and didnít supply for the demand, thus making the games more desirable.  Then Nintendo lifted its return policy.  Itís previous 90 day return policy was no longer accepted because there were few defaults.  If a company refused Nintendoís rules, they lost over 20% of their profits by losing Nintendo.  (Hart).

    Near the end of its reign, Nintendo held fixed prices on the system and game, not allowing the price to drop.  Electronics gradually reduce in cost as technology improves.  The NES and itís games hardly dropped in price.  Yamauchi also slowed development of any improved systems.  The improved systems came, though, and threw Nintendo from its throne.

    Nintendo was born during the Meiji restoration.  It is interesting that in most of Japanís history, they lagged behind the rest of the world in technology.  For most of the history of Nintendo, it lagged behind the gaming industry, making playing cards.  A swift kick opened its eyes.  As Matthew Perryís forceful opening of Japan showed Japan that it needed to modernize, Pong kicked down the doors of old-fashioned gaming in Japan.  Nintendo saw this new gaming style and Ďleft luck to heavení in redeveloping itself, modernizing itself to compete with the rest of the world.  Once Japan had modernized its military, it began to strike; equally, Nintendo struck hard on the market with kamikazes of advertisement.

    Nintendo shared the business etiquette with that of the Japanese in the restructuring period. During the Restoration, Japan sped production and allowed the laborers to suffer.  Nintendo sped production of its NES and it suffered from defects.  Japan had Keiretsu, companies that were tightly woven with the government and controlled many smaller companies under it; they suppressed competition.  Nintendo was tightly knit with its game designers, allowing them to not work with its competitors.

    Both Japan and Nintendo were successful for a time, but their superiority ended similarly.  Japanís militarization ended with the rest of the world showing it that it was, in fact, inferior.  Nintendoís reign ended when other companies showed Nintendoís inferiority.  Neither suffered beyond repair, they both kept going.  Nintendo was born in the Meiji Period and represents its own Meiji restoration.

    Nintendo did not suffer long.  NEC, another Japanese game company, created a more powerful console; Sega created the Genesis.  Both would have wiped out Nintendo, but Nintendo signed an agreement with NEC.  The Sega Genesis became the leader in the market for a time.  The battle for dominator of the home video game was a fierce battle, but it took place in Japan.  The US no longer held ground in the home video games.  Nintendo eventually left NEC to bankrupt itself (NEC had no game designing experience and couldnít compete against Sega).  Nintendo created a slightly better system than Sega, the Super NES, but could not regain control.  Sega and Nintendo were even in the market. (Kent).

    Video games began with a curious MIT student.  He just wanted to show it could be done.  What he did not foresee was that the industry would surpass any other type of entertainment.  The US market was thirsty for these games; and it still is.  Nintendo was the first to realize how big of a market home video gaming was.  Atari made it possible, but the US couldnít compete with the business strategy of Hiroshi Yamauchi of Nintendo.  Just recently has Microsoft plunged into the battle that still rages, but those results have yet to be tallied.  Japanís rapid and furious growth during the turn of the century depended on the strength of itís corporations.  Business was hard on the workers.  Nintendo grew up in this time and new how to compete.  The Japanese business ethics conquered the video game industry that America had started.

Historical Significance

    As the Eastern nations modernized, they went through a series of industries, a relay industrialization based on cheap labor.  It begins with light manufacturing and moves to heavy manufacturing, chemical industry, autos, electronics, and on.  Japan was the first to begin this process, and they went through it quickly.  Video games are an example of Japan's electronic manufacturing.  Japan went through these stages quickly and has now exceeded America in some areas of technology.  Japan, which was one of the backward Eastern nations until the mid 19th Century, is now equal in technology to the West.

References

    Darley, Andrew.  Visual Digital Culture Surface Play and Spectacle in New Media Genres.  New York: Routledge, 2000.

    Hart, Sam. A Brief History of Home Video Games.  Geekcomix.  April 10, 2002.  <http://www.geekcomix.com/vgh/>

    Hunter, William.  The Dot Eaters Videogame History 101.  <http://www.emuunlim.com/doteaters/>  1998, William Hunter.  April 10, 2002.

    Kent, Steven L.  The Ultimate History of Video Games from Pong to Pokemon and Beyond.  New York: Prima Publishing, 2001.

    Provenzo, Eugene F. Jr.  Video Kids Making Sense of Nintendo.  Cambridge, Massachesetts: Harvard University Press, 1991.

    Sheff, David. Game Over: How Nintendo Zapped an American Industry, Captured Your Dollars, and Enslaved Your Children. Random House, 1993.

    Uston, Ken.  Mastering Pac-Man. New York: Signet, 1981.

    Videotopia.  <http://www.videotopia.com/>  1998, The Electronics Conservancy, Inc.  April 10, 2002.

Web Resources

http://www.emuunlim.com/doteaters/ -
    A guide to the history of video games complete with timeline.  Many pictures in all aspects of video games.

http://www.videotopia.com/ -
    A site about an actual place that explores the video game history with the actual video games.  Contains many pictures of arcade games.

http://www.geekcomix.com/vgh/ -
    A history of the video game industry complete with pictures of the systems and some games.  These consoles are separated by Generations.  Includes essay on Nintendoís business ethics.
 
 

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