Most profitable investments – Nintendo

In the 1970s, computer games were rather a kind of curiosity. Primitive and clumsy, they were considered to be children’s toys and they were not much attention was paid to them. People considered the development of computer office and business techniques to be the future. Hiroshi Yamauchi, an owner and head of a small company Nintendo, producing hanafuda (a Japanese card game) accessories, was fascinated by the growing market for slot games. Nintendo, and thus Yamauchi quickly made a fortune, investing in games.

A couple of interesting facts about Nintendo and an investment in consoles:

• The early market for consoles and slot machines was a very insecure investment. The US market already had its favourite – Atari, a company which also manufactured personal computers in the 1970s. Additionally, computer technology was changing incredibly fast and it was not clear what exactly would catch on in the market. There was also risk accompanying attempts at developing new technology – there were fears that the larger company would do it faster and, as a result, the newly manufactured equipment would be one or two years behind Atari products at the outset.
• Nintendo started with the production of slot machine and Atari 2600 console games. It was a standard back then – because of loopholes in the license law, practically everyone could produce console games without any license from a given console manufacturer.
• Nintendo made a name for itself during the great computer game crisis in 1983. It was treading on thin ice, as the market bottomed out in the years 1983/1984. The reason for this was a crop of unlicensed games – very low-quality titles, sometimes even impossible to be played. Combined with low advertising outlays and their very high prices (assuming it was a product aimed mainly at children), it generated great losses, especially for Atari. The new Nintendo console – Nintendo Entertainment System (NES) – known in Japan as Famicom – practically on its own brought an end to the collapse in 1983.
• NES sold over 60 million copies, allowing its creator to make a huge fortune. In 2010, Yamauchi’s net worth was $2.1 billion, which may not have made him one of the richest people in the world, but certainly one of the few whose company was mentioned as the one that put an end to a collapse in an entire market segment.

Hiroshi Yamauchi died in 2013, but today’s thirty- or forty-year-olds most certainly remember his greatest achievements – games such as Donkey Kong, Super Mario Bros or Metroid, as well as Nintendo consoles, including the portable Game Boy. Apart from making an obvious contribution to the development of games and consoles, Nintendo’s products are very much rooted in Japanese and American pop culture, thus being the topic of more and more new references, movies or reissues for fans of retro gaming.