Love hotels, Disney, distribution failure, and “the original App Store.”

A thread about how Nintendo played a 130 year long game, and won.

Today, Nintendo has the best-selling console on the planet, and a market cap of $60B. Mario & friends are bigger than Spotify and Twitter, all on the heels of disastrously low sales of their Wii U console.

But they got their start in 1889, selling hand-painted playing cards.

Nintendo's playing card business boomed, becoming the biggest in Japan through WW2 under founder Fusajiro Yamauchi.

When he passed in 1949, great-grandson Hiroshi took over at just 22 years old.

To grow the company, he decided to expand in America. But it didn't go as planned.

After exploring partnerships with the United States Playing Card Company, Yamauchi was shocked at how they could operate out of a tiny office.

He realized Nintendo had been thinking too small. He had to expand their vision.

So in 1959, Nintendo partnered with… Disney.

Licensing Disney's IP allowed Nintendo to expand the age of their audience, create new types of games, and increase demand.

They sold over 600,000 packs in a single year, and in 1962, went public.

At its lowest, Nintendo traded at $.57.

Today: $58.74. Over a 100x increase.

Here’s where it gets weird. Flush with cash, Nintendo decided to experiment with various new business models:

-Love hotels (seriously)
-Taxis (what?)
-Instant rice (why?)
-Vacuum cleaners (stop)
-Robotic toy arms (OK)

That last one, the “Ultra Hand”? It sold +1M units.

Classic startup mentality. Throw everything at the wall and see what sticks. They pulled the thread:

-a "love sensor"
-pitching machines
-tabletop games
-electric congas

And most importantly, light beam guns.

Nintendo's entry into the light gun market led to a product partnership with the first ever commercial video game console, the Magnavox Odyssey, in 1972.

In 1974, Nintendo purchased the right to distribute the Odyssey in Japan.

One step closer to developing their own console.

But Nintendo understood by way of its work with Disney, that they would need to lean heavily on IP to succeed in the burgeoning console marketplace.

Enter: Donkey Kong, Princess, and Jumpman (who we now know as Mario).

With fast success in the arcade game industry, Nintendo set to work on portable devices, introducing the Game & Watch in 1980.

It sold a cold 43 million units.

Now, it was time to go big. Time for the Famicom.

Just one problem: Nintendo was still new to American audiences. They needed a partner, and Atari wanted in.

They made a deal, but Atari’s CEO was forced to resign after unloading shares prior to a disappointing earnings call.

The deal fell apart, and Nintendo was stuck with tech it couldn't effectively distribute. So they regrouped to launch the NES on their own—this time with a “Seal of Quality.”

That seal might sound meaningless by today's standards, but it was a move of sheer genius. Here's why:

At the time, competing consoles imposed little QC on 3rd party devs.

Nintendo, however, limited devs to releasing only five titles within a year. On top of that, ONLY games that earned a seal could be sold.

A closed ecosystem. The NES was effectively the original App Store.

Sales? 62M units.

Since, Nintendo has demonstrated similar resilience and strokes of genius. The Game Boy, DS, Pokemon Go, Wii, Switch, even theme parks.

They've carved out a defensible business in fam-friendly mobile gaming, IP licensing, & price accessibility.

They rule.

Nintendo loosely translates to “putting your faith in the gods."

To those building today, I challenge you to take audacious risks. To test, fail, and find what sticks. To view your stumbles as opportunities to reorganize.

To put your faith in the gods, and play the long game.