Nintendo Saves Gaming: How to repair an emerging industry’s reputation
From 1983 to 1985, the video game industry’s value fell from $3.2 Billion to $100 million. With an overcrowded market and low quality games, the demand for new games tanked. Retailers were hit hard, having to sell gaming inventory at large discounts.
Activision, a game publisher, saw great success at the beginning of the gaming craze. After splitting from Atari due to some revenue-sharing disagreements, they released several quality games, cementing themselves in the industry as the gold standard. Other companies saw Activision’s success with customers and wanted a piece of the action. By 1983, third party publishers flooded the market with subpar games. The idea was volume over quality. Consoles like Atari didn’t have any quality control measures for games on their consoles, so there were no barriers to making hundreds of cheap games.
On the other side of the Atlantic, Nintendo was making great strides in the Japanese market with their own gaming console. Seeing how well they had done in Japan, Nintendo wanted to expand its console, Famicom, to the U.S. This wouldn’t come easy as American retailers, who had suffered significant losses from the gaming crash of ’83, were not so keen on letting video games back in their stores. Nintendo had to differentiate themselves from the consoles and video games Americans were used to.
Nintendo’s solution was the Nintendo Entertainment System, a more generalized name that avoided words like gaming. Trying to set themselves apart, Nintendo renamed every aspect of its gaming experience; gamepads were changed to cartridges, and control desk to console. Their entertainment systems was also aesthetically different: with every NES came a robot that interacted with gamers, making the entertainment system look more like a toy than a gaming console.
Nintendo still had to regain retailers’ trust in order to sell them their product, so they offered to buy any unsold consoles from retailers. Nintendo additionally established stamps of approval for games, regulating the quality of games and limiting game publishers to 5 games per year. This enabled merchandisers to discern between good and bad games. The strategy revived the gaming industry and placed Nintendo at the top. By 1991, Nintendo sold 30 million consoles, and by 2004, over 60 million consoles.
Perhaps DLTs can learn from gaming’s rocky start. After a wave of ICOs , similar to the wave of third party games in 1983, caused a bubble in the cryptocurrency market, many lost their investments and their trust in the technology. This tarnished blockchain’s reputation, and DLTs are now seen by many as an archetype of inflated value. It might take some rebranding to reintroduce this technology into the mainstream market. Just like Nintendo was able to revitalize the gaming industry, however, so too can companies in the DLT space help recover the mainstream excitement around DLTs.