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NintendOnline

Friday, February 13, 2004

NintendOnline

"Nintendo isn't giving online gaming a chance."

That is very likely the number one criticism Nintendo has received this generation. It is also the number one criticism that is absolutely wrong.

What many fail to realize is that Nintendo has in fact given online gaming a chance during just about every console generation since the original Nintendo Entertainment System. From investments to partnerships, the history of Nintendo's online escapades is one that spans over two decades and is deeper than the blue of the Pacific. Nintendo's online past also paints a picture of how the company, though it may say differently now, once strived to become a communications juggernaut like that of AOL Time Warner or MSNBC.

"Few have taken the jump, and they've found it to be very deep water. We're all looking at that aggressively. For anyone to deny the reality of the web is to defy gravity. The web is real and it's going to be an ever more important part of everybody's life. Discovering the appropriate business model for this sector of the business world, I think, is on everyone's lips, and we're all working at it very aggressively."
- Peter Main
former NOA executive VP of sales & marketing

Nintendo Japan

Famicom Network

It all began back in 1983 with the Japanese release of the Famicom (NES). It wasn't until 1987, however, when Nintendo first sponsored and arranged an "electronic golf tournament" using Famicoms and Disk Faxes - communicating over the telephone network - to test the possibilities of creating a regional network of Famicoms across Japan. This simple "test" proved to be a success.

It was but a year later in 1988, that president Hiroshi Yamauchi and Nintendo set about becoming a "communications" company and establishing its own "internet". The Nintendo Famicom would attach to an approximately $100 priced modem called a "Communications Adapter" - developed by Masayuki Uemura's R&D 2 team - and into a phone line. This connection created the "Family Computer Communications Network System".

Using a simple cartridge, the Famicom was essentially turned into an online enabled game system. When turned on, a menu screen would appear that resembled the main screen of "Super Mario Bros". Via the Famicom Network, Japanese children were given the opportunity to play video games (among others, Henk Roger's go game proved to be popular) against a child on the other side of Japan.

Famicom Disk System

Nintendo's president, Hiroshi Yamauchi, believed at the time that such a network would mold the future of Nintendo. Video games, Yamauchi felt, offered a limited audience and business. On the other hand, he felt "communications" could only be bounded by outer space itself.

"Other companies had sought to hook up households via telephone lines and computers, including NTT, but none had what Nintendo had: computers sitting in one third of the country's homes."
- David Sheff
writer of "Game Over: Press Start to Continue"

Nintendo had a true "Trojan Horse" on its hands. Nintendo's goal was to provide or license business and other services on its Family Computer Network. Nintendo essentially had "control" over everything - a position that gave it the ability to not only charge users for using the online service but also charge those businesses that wanted to provide product and information on the network. Had this network caught on, Nintendo would have gained its video game monopoly times two. Nintendo would have become a God and a dictator of content.

Nintendo could make commissions or fees on home banking, shopping, and airline ticketing done on the Famicom network or charge for information such as movie reviews, news, and content (all realities of our present day "Internet"). Users could even buy stamps, bet on horse races, or exercise.

That same year, Nomura Computing Center developed and operated the Nomura Securities' Famicom trading service system, which was the forerunner of the home trading service in use. In addition, over 300 banks signed up to utilize the Famicom network. Finally, the Super Mario Club was formed so that Nintendo distributors across Japan could access information about games (including reviews) online.

And the most appealing aspect of the network? Nintendo could advertise new Nintendo games and products.

In Nintendo's 1989 annual report, Yamauchi said:

"We believe that the arrival of the high-information age has brought about a new opportunity for people to consider what vital information really is, and what information they really want. By employing the Nintendo Family Entertainment System as a domestic communications terminal, utilizing regular telephone line, and the establishment of a large-scale network which to this point has been inconceivable, we plan to provide a vital supply of information for the domestic lifestyle in the fields of entertainment, finance, securities, and health management, to mention but a few... The network shows how the Famicom has outgrown its single purpose as an amusement system."
- Hiroshi Yamauchi
former Nintendo Co., Ltd. president

It's strangely ironic that Nintendo's goal once mirrored that of Microsoft. Unfortunately, there were a couple roadblocks back then. One being simple technicalities including difficulty in installing and maintaining servers. The other, a bit more difficult, was convincing adults to use the Famicom as more than a child's games machine. The last thing standing in Nintendo's way were families who didn't want their telephone lines being tied up for long periods of time.

A year or so into the program, the total number of Famicom users that signed up for the service was approximately 130,000. About 18,000 used it for the stock-brokering services, 14,000 for banking services, and 3,000 for the Super Mario Club. In total, sales of the Famicom Disk System reached a little over 2 million.

Online gaming, moreover a massive online network, was still but a dream. Yamauchi admitted this in 1991.

"It is just a matter of time. When the people are ready for it, we have the Network in place."
- Hiroshi Yamauchi

It's hard to believe Nintendo was doing all this back in the late '80s. It wasn't until 1994, however, when actual commercial use of the Internet began in Japan, rapidly increasing the number of users. And it wasn't until 1995, when the Denkatsu Club, one of Japan's first online shopping malls, opened its doors.

It appears Nintendo was simply ahead of its time.

Meanwhile, in North America, Nintendo of America president Minoru Arakawa was making his own attempt at bringing Nintendo NES Network to consumers.

Many in the North American computer industry wondered if Nintendo had the balls to step onto their territory. The NES had access to nearly 33 percent of American homes while the PC was only in 15 percent. NOA hired Jerry Ruttenbur to head the North American network, with an intended North American launch in 1990. Nintendo hoped to have 10 million users by year's end. Fidelity Investment was the first company to join the network, thereby offering customers the ability to manage their portfolios at home. In the months leading up to the launch, Dow Jones Professional Investors Report and many others signed on.

For the North American launch, Nintendo created a bundle that included a modem, keyboard, and printer. Initially, Nintendo of America decided to launch the network for the sole purpose of game playing and then add other abilities as time progressed and users became accustomed to navigating the service. The initial service would allow gamers to get game "tips", or converse with other gamers in chat rooms. In addition, games could be downloaded onto a disk drive. This was important to Nintendo. It could bypass the whole drawn-out series of transactions from manufacturer to retailer to customer, and instead transfer the completed games directly over the network and to the customer's television.

Ruttenbur however didn't receive the support necessary to properly launch the network. The network still had not arrived on the market by 1991. As a result, Ruttenbur resigned from his job, no doubt frustrated at Minoru Arakawa's (NOA president) lack of support. Was Arakawa's cold shoulder to an "online Nintendo" wise? One will never know...

Nintendo of America was given one last opportunity in September 1991, when it was approached by Control Data Corporation, a company that handled lottery in many states around the US. The company proposed Nintendo would allow the NES to connect to a network giving people from around the state of Minnesota and others the chance to play the lottery. The Minnesota state attorney general however criticized the program saying it gave children too much of an opportunity to gamble and moreover, state-supported gambling would set a bad example. Due to pressure from the state of Minnesota, Control Data terminated its lottery test in Minnesota and as a result, the Nintendo Network took one last breath and then closed its eyes of ebony forever.

A normal person might see these failures as something to better sweep under the rug or into the closet. For Yamauchi, these events did not deter him from his love affair with the communications industry. The Nintendo Famicom Network would not be the company's last attempt.

"You have to assume that network gaming of some kind is one of the things that we recognize as part of the future of the video-game business. So I think it's fair to say that we're spending a lot of time and money in areas like that."
- Howard Lincoln
former chairman, Nintendo of America

The birth of the 90s would see Nintendo hosting a global Tetris competition between Europe, North America, and Japan. And just as the Famicom had succumbed to online gaming, Nintendo's next console would not escape the prospects of an online utopia.

In early January of 1995, Nintendo and GTE Telephone Operations announced an alliance to research and develop interactive multiplayer video games that could be transmitted over interactive television networks. The first product co-developed by Nintendo and GTE would be a game for Super Nintendo called "FX Fighter", which utilized the second generation Super FX graphics co-processor chip. A version was also said to be in preparation for Nintendo's then rumored 64-bit console (Nintendo 64) and the game was also destined to run over GTE phone lines carrying interactive TV and other services. It was suspected that games through the alliance would be incorporated into GTE's "Main Street", an interactive home shopping, travel, entertainment, educational, and personal finance service.

GTE was also said to be developing games that would tie-in with existing game and sports shows. The idea was to periodically show viewers how their score ranks compared to other viewers. Robert Regan, senior vice president of programming for GTE, noted, "People love to see their names in lights." Unfortunately, someone failed to find the light switch for this vague partnership.

This deal was done primarily for research purposes, therefore there's not much of a surprise that nothing major ever came out of it. The collaboration between GTE and Nintendo quickly fell through, leaving the sole game from the partnership "FX Fighter" to release only for the PC.

After nearly half a decade of research and tests, Yamauchi and Nintendo were still at the bottom of a flight of stairs. Their goal sat impatiently at the top. Lacking a handrail (a foundation) to keep steady, Nintendo would ascend with baby steps and one day, no doubt, reach the top.



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