The NES - Why did it Win?

How did Nintendo's First Console Grab & Keep 80% of the Late 80's Console Market?

Last week on AtariAge someone asked why Atari Corp released the XEGS when they already had the 7800. Well, that conversation naturally evolved into the same-old "why did Nintendo win" debate. Someone brought up a new idea: Nintendo's first party games attracted people to the system, that 3rd party titles had little effect on their success, & neither Atari nor Sega were able to offer anything to attract consumers in such high numbers. There's nothing wrong with the first part of that assesment; I agree that Nintendo's first party-games were part of the reason for their success, but I also believe the answer's more complex, & that we can't so easily discount the presence of 3rd party titles. As such, let's examine the original Nintendo's history, from the release of the Famicom to the late 80's, to see what Nintendo did to win.

Last time we covered Nintendo in Japan; today we'll look at their rise in the U.S.

Nintendo in America

While the Japanese video game market was booming in 1984, the U.S market was collapsing. Home computers were more versatile, more powerful, &, by the mid-80's, they were as inexpensive as most game systems. Moreover, the video game market was oversaturated; there were too many games, too many systems, & too many small companies jumping on the bandwaggon. These two factors, the oversaturation of games & the avaliability of affordable computers, virtually killed any U.S. competitors Nintendo would've faced. So there's the first reason for Nintendo's success; they were entering an open market from a position of relative strength.

Second factor, Nintendo had an early-mover advantage. Atari, the largest video game producer in the early 80's, was in turmoil; they were split into two sepperate companies, & weren't in a position to launch a console in 1985. Nintendo was able to test-market the NES while Atari Corp was still trying to figure out who-owned-what. When Nintendo released the NES nation-wide in 1986, Atari & Sega were just beginning to test market their systems. By the time Atari & Sega were able to release their systems across the country Nintendo had grabbed most of the market.

Third, Nintendo was able to lock-in retailers. Nintendo's early success in the market attracted retailers who wanted to sell the NES. Atari had dismanteled much of their dealer network in the early 80's; they thought they had too many stores competing with eachother. The new Atari Corp had trouble attracting dealers because their presdient, Jack Tramiel, had been the president of Commodore, where he gained a bad reputation. Sega's U.S. distribution partner did a pooor job marketing the Master System in the U.S. The Master System actually did well in Europe & South America, where Sega partnered with different companies.

Fourth, Nintendo was able to lock-in a large stable of 3rd party developers. Nintendo already had relationships with Japanese developers, & their early success in America attracted U.S. developers. Nintendo signed these companies to two-year exclusiveity contracts; by the time the developers were able to release their games on other systems, the games were already old-hat.

That last reason's the most commonly-cited reason for the NES' success, but the poster at AtariAge made a good point: Why did Nintendo's first party games outsell 3rd party games? Were Nintendo's games simply better? And why did 3rd party companies stick with Nintendo if their games had trouble competing against Nintendo's games? I'd like to take some time to explore these questions & maybe find some answers. But I think I'll need another article to do that: I've already beed working on this an hour, & I need some time to relax. Tune in next time for the 3rd article in this series.

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