Nintendo — Company History

The obsession with breaking out of a family workshop, inherited at twenty-two

In September 1889 Yamauchi Fusajiro (山内房治郎) began manufacturing hanafuda — Japanese flower playing cards — in Shimogyo-ku, Kyoto. The Yamauchi family were merchants who ran Haiko Honten (灰孝本店), a cement dealership, and the cards started as a sideline. The manufacture and sale of hanafuda had been licensed only in 1886, and demand for gaming implements that had lived in the shadow of gambling was just coming into the open. With the help of an old acquaintance, the tobacco king Murai Kichibei (村井吉兵衛), Fusajiro put his cards on the nationwide tobacco distribution routes of Murai Brothers & Co., widening his outlets at a stroke. In the last years of Meiji he also took up the manufacture of Western-style playing cards, and before the war those products spread widely both inside and outside Japan. In 1933 the adopted son-in-law Yamauchi Sekiryo (山内積良) founded Yamauchi Nintendo & Co. and succeeded as the second-generation head, and in November 1947 Marufuku Co. was established, beginning the postwar reorganisation into joint-stock form. Making cards remained handwork that never really left the craft stage, and Kyoto was well suited to that hand manufacture.

In 1949 the second-generation president Yamauchi Sekiryo died suddenly at sixty-six. His grandson Yamauchi Hiroshi (山内溥) took over as president at twenty-two, while still a student at Waseda University, and joined Nintendo in December of that year. Yamauchi later recalled his state of mind on inheriting the company at that age: I was seized with a formless rage. (Nintendo Shoho no Himitsu 任天堂商法の秘密, 1986). On taking office he began by tidying up the corporate form: in September 1949 the company was renamed Marufuku Karuta Hanbai Co., and in March 1950 Nintendo Karuta Co., after which it took over from Yamauchi Nintendo & Co. the manufacture of karuta cards including the Daitoryo (President) brand. In July 1951 the name changed again, to Nintendo Kotai Co. On the production side he avoided full-scale capital spending, holding back both plant extensions and hiring for increased output — a policy Yamauchi later named as the single biggest reason the company came through its crises.

The ceiling of the playing-card trade, seen from an 80 per cent share

In 1953 Nintendo began mass production of the first plastic playing cards made in Japan. In July 1957 it committed to bulk exports to South America, putting its products outside the domestic market. In October 1959 it developed a board-laminating machine and an automatic cutter in quick succession, mechanising hanafuda manufacture and converting a method that had depended on handwork into modern volume production. In the year to March 1962, sales by product were $827,778 (¥298m) for Western playing cards, $491,667 (¥177m) for karuta and hanafuda and $111,111 (¥40m) for everything else — the mainstay had already shifted to Western cards. In the same year the playing-card plant had 156 employees and production capacity of $1M (¥370m), standing alongside the karuta plant with its 202 employees and $583,333 (¥210m).

In November 1959 Nintendo obtained exclusive domestic sales rights from Disney Productions for character playing cards, and from 1960 it opened up wholesaler and department-store routes across the country through television commercials, which it put in earnest from that year. Running a TV commercial to advertise something as trivial as playing cards was, at the time, utterly outside common sense, Yamauchi said of the period (日経ビジネス Nikkei Business, 30 May 1983). In January 1962 the shares were listed on the second section of the Osaka Stock Exchange and on the Kyoto Stock Exchange; by about 1963 the domestic share of Western playing cards had reached roughly 80 per cent, and in 1964 the company was counted, as a firm that made money, among Kyoto's neat little companies. In October 1963 the name was changed to Nintendo Co., dropping the playing-card trade from the corporate name. Yet what Yamauchi had seen on a study visit to the United States in 1956 was that even the largest playing-card maker in America ran a business of limited size, and the ceiling on a single-product company showed up as the stagnation of card sales from 1964.

The paradox of choosing play alone, after losing every diversification

In 1960 Nintendo set up Daiya Kotsu (ダイヤ交通) and entered the taxi business. In June 1961, jointly funded with Omi Kenshi, it established Sanyo Foods (サンオー食品) and put on sale an instant rice reconstituted by pouring hot water over dried grain, together with character-branded furikake rice seasoning. The furikake grew within a year of launch into a product selling $277,778 (¥100m) a month, competing with Marumiya's Noritama. The instant rice, however, drew complaints that the flavour escaped, and the manufacturing machinery was sold to Nissin Food Products. Yamauchi also branched out into prams and copying machines, but all of them lacked continuity with the technology and the distribution built up in card manufacture, and by 1969 every one had been withdrawn. Yamauchi Hiroshi looked back in later years: Playing cards and karuta stopped selling, so little by little I was driven by the need to do something else and set about transforming the business, (Nintendo Shoho no Himitsu, 1986), describing this period as a state in which nothing whatever could be done (Nikkei Business, 30 May 1983).

Losing every diversification hardened a policy of never going outside entertainment: in 1966 a shift to becoming an all-round indoor-games company was settled internally, and Nintendo grew out of being a card specialist into a general maker of indoor amusement goods. After mechanical toys such as the Ultra Hand and the Kosenju SP light gun (光線銃SP), it extended in 1973 into the commercial Laser Clay Shooting System, but sales of that fell from $5.9M (¥2bn) in the year to March 1975 to $445,205 (¥130m) in the year to March 1976, and in 1974, compounded by the oil shock, profit dropped by nearly 50 per cent year on year. Even so, development of electronic games continued: the company entered the video-game business in 1977 and found its footing in the Invader boom of 1978. The Game & Watch, launched in 1980, sold more than thirty million units cumulatively, and by 1982 Nintendo stood as the top maker with more than 50 per cent of the pocket electronic-game market (読売新聞 Yomiuri Shimbun, 12 September 1982).

In July 1983 Nintendo launched the Family Computer — the Famicom — at a unit price of $62 (¥14,800). It held the machine below the low-priced personal computers that cost more than $126 (¥30,000) and below the $104 (¥24,800) at which Atari of the United States had entered, and adopted a structure that recovered its return through separately sold ROM cartridges. It developed in-house a dedicated custom LSI to handle graphics and the running of the games, contracting the manufacture out to Ricoh. To mass-produce, it put up a new plant in Uji, Kyoto in November of the same year; Yamauchi recalled that the situation, in which failure would leave the capital investment unrecovered, had been a choice between the corporate reorganisation law, or the Famicom. In July of that year the shares were listed on the first section of the Tokyo Stock Exchange, and revenue grew from $104.3M (¥23bn) in the year to August 1981 to $274.1M (¥65bn) in the year to August 1983.

Software that invented a use, and revived hardware past its prime

In 1992 Nintendo restarted the joint development of a CD-ROM unit for the Super Famicom with Sony, agreeing on a form in which Nintendo held the licensing rights over software houses. Even so the conflict did not dissolve — Sony wanted to open the standard and widen the market, Nintendo to hold the standard and manage it — and Nintendo stepped down from the joint development and shelved the development plan itself. I am no match for a gambler; I decided I would get out, Yamauchi said of the decision (Nikkei Business, 9 October 1995). On the judgement that what users wanted was not the performance of the hardware but the fun of the software, it chose cartridges rather than CD-ROM as the storage medium for its next-generation machine, and released the Nintendo 64 in June 1996 alongside Super Mario 64. Shipments three months after launch, at the end of September 1996, came to only 1.16 million units, leaving it well behind the PlayStation, around which more than 500 software houses had gathered.

Pocket Monsters, released in 1996 as software for the Game Boy, brought in a form of play in which two Game Boys were linked by a communications cable to trade the characters inside the game. A handheld already mature turned back into a product that sold, through an invention of use in software, and annual Game Boy unit sales reached 17.45 million in the year to March 2001. The rollout widened into three pillars — game software, a card game and a television anime — and nationwide broadcast of the anime began in 1997. In April 1998 Nintendo established Pokémon Center Co., which handled retail, jointly with Game Freak and Creatures. Overseas, Nintendo of America acquired the rights for the entire world outside Japan and Asia, and spent just under $22.9M (¥3bn) in initial costs to stage the boom. The rights, scattered across the companies involved, were later gathered into a single company by reorganising it as The Pokémon Company.

On 31 May 2002 Yamauchi Hiroshi handed the presidency to Iwata Satoru (岩田聡), a programmer thirty-two years his junior who had come from HAL Laboratory, and stepped back to become a director and adviser. Iwata, forty-two on taking office, was the first appointment from outside the founding family, ending four generations of Yamauchi family management, adopted sons-in-law included. Yamauchi had stated plainly the previous year that there would be no hereditary succession, explaining that no one within the family was suited to it. Under Iwata, the Nintendo DS, launched in December 2004, adopted a twin-screen layout and touch-panel controls, and Brain Age (脳を鍛える大人のDSトレーニング), released in 2005, widened the customer base to adults and the elderly. In 2006 it put out the Wii, a home console with motion controls, and the two hits took consolidated revenue to a record $19.7B (¥1.84tn) in the year to March 2009.

The price of two parallel lines, and a new machine launched from a corner

Neither the successor to the DS nor the successor to the Wii reached the record of the generation before it. The 3DS put glasses-free stereoscopy in front, but it lacked a use-expanding killer title on the order of the DS's Brain Age, and its cumulative unit sales stopped at 75.94 million against the 154.02 million the DS had sold. The Wii U could not overturn the reception that it was no more than a Wii with a GamePad attached, and finished at 13.56 million against the Wii's 101.63 million. Taken year by year, even at its peak in the twelve months to March 2016 the Wii U managed 3.38 million units, barely a tenth of the 25.95 million the Wii had recorded in the year to March 2010. At results briefings, president Iwata Satoru gave repeatedly as his reflection that the value of the Wii U had not been conveyed adequately, and that the effort had fallen short.

From its peak in the year to March 2009, consolidated revenue fell for eight straight years, shrinking from $19.7B (¥1.84tn) to $4.4B (¥489bn) in the year to March 2017. In the years to March 2012 and March 2014 it dropped into net loss as well. In 2015 Nintendo concluded a capital and business alliance with DeNA and settled a policy of deploying its own IP on smart devices too. In July of that year Iwata Satoru died suddenly at fifty-five. Following the death of Yamauchi Hiroshi in 2013, the company had lost two leaders in a short span. His successor, Kimishima Tatsumi (君島達己), was a practitioner from the accounting and legal side, neither a game developer nor a member of the founding family, and his tenure as president lasted only the two years to the end of fiscal 2016.

The paradox of a success reproduced by an organisation without an indispensable figure

In March 2017 Nintendo launched the Nintendo Switch, which took away the physical boundary between handheld and home console. A hybrid machine that could be used in handheld mode, tabletop mode or TV mode, it was built so that development resources scattered across two lines could be concentrated on a single piece of hardware. Flagship titles including The Legend of Zelda: Breath of the Wild, Splatoon 2 and Super Mario Odyssey were fed in one after another within the launch year; consolidated revenue doubled from $4.4B (¥489bn) in the year to March 2017 to $9.6B (¥1.06tn) in the year to March 2018, putting an end to eight consecutive years of decline. Annual hardware sales also grew, from 2.74 million units in the year to March 2018 to 15.05 million in the year to March 2019.

Animal Crossing: New Horizons (あつまれ どうぶつの森), released in March 2020, met the indoor demand of the pandemic and became a hit; annual Switch sales reached the 21 million range in the year to March 2021, combining 14.83 million of the base model with 6.19 million Lite units. In the year to March 2022 cumulative sales passed 100 million, and as of February 2025 the cumulative total across all models stood at 150.86 million, closing on the 154.02 million of the Nintendo DS, Nintendo's best-selling hardware. On 5 June 2025 it launched the successor Nintendo Switch 2, carrying over the hybrid form together with backward compatibility that lets the first machine's software be played. Worldwide sales in the four days after launch passed 3.5 million units, a record for any Nintendo dedicated game machine over its first four days. In December 2025 the cumulative total reached 15 million, the fastest pace of any Nintendo hardware, the original included.