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Last week, I was feeling a bit creative, so I shipped a piece titled "Exiting Weapons, Betting On Gotham & The Anti-Portfolio"; it was a fictional interview with Bruce Wayne, otherwise known as The Dark Knight, The Caped Crusader, or simply The Bat-Man.

It was fun for me. I was literally laughing out loud in parts. It had been a while since I did a fictional piece. The last time was my deep dive on Ted Lasso, I think. But while it’s good that I am having fun, I want to know if you like strange pieces like these.

If we do decide to do more pieces like this, I’d love to do a deep dive on the economics of The North, from Game of Thrones next. If you think they sucked, though, they’ll likely be shelved. Anyway, thanks for your vote, and enjoy today’s piece!

DEEP DIVE 🕵🏻

Mario, Luigi & The Long History Of Nintendo

Mario, Pokémon, Zelda, Donkey Kong. If you're alive today, you've either played these games or your kids have. And if I had to guess, I'd say it was you. I bet you romped through the Mushroom Kingdom with the brothers Mario by day, and chased Pikachu and swapped rare Pokémon by night. I know I did. But how did we get here? How did a Yakuza-adjacent trading card company end up inside every family's living room for the last half-century?

Look under the hood of the Japanese gaming giant, and you run into the same thing over and over: creativity. Think of Nintendo as Pixar, if Pixar had reinvented itself every few years across platforms.

I've been waiting to write this one. As I started, a thought hit me: this company may have added more joy to children across the world than any other in the last fifty years. Sit with that for a second. On paper, Nintendo is a big, old, fat, smelly corporate monolith. Boards, investors, backstabbings, PR nightmares, links to the underworld. And yet somehow, for decades, it has pumped pure joy into the world. Kinda gives you the warm fuzzies.

So today we're going back in time. All the way to 1889, to a side alley near the banks of the Kamo River, in Japan's former imperial capital, Kyoto. That's where the story of Nintendo begins.

Playing cards, tobacco, ‘love’ hotels & the Yakuza

If I were to tell you Nintendo had an ‘interesting’ past, I’d probably be underselling things. Their original business, launched 23 September 1889 by Fusajiro Yamauchi, originated in playing cards, which had long been looked down upon during the Edo Period of Japan due to their connection to gambling and, by extension, to Japanese organized crime, the Yakuza.

The cards Nintendo were developing were known as ‘Hanafuda Cards.’ They were beautifully decorated and hand-made, 'flower cards,' divided into twelve suits, one for each month of the year. The cards themselves were hand-painted on mulberry wood pulp, and sold well all across Japan. Before long, though, hanafuda cards became associated with the criminal underworld, and manufacturers stopped making them to protect their image.

Unlike its rivals, though, Nintendo saw this as an opportunity, and before long, they were the most prominent hanafuda card manufacturer in all of Japan, with the Yakuza as its biggest customers. Rumor has it that members of the Yakuza even have tattoos that are inspired by the illustrations on the Nintendo cards. This was not the only partnership early Nintendo would share with the underworld.

In what is a strange precursor to Pokémon, the next sordid stage of Nintendo’s growth was their 1900s partnership with Yoshihiro ‘Tobacco King’ Murai. Each pack of Murai’s cigarettes would hold one single card from the hanafuda deck, leaving early Nintendo fans collecting tobacco wrappers in effect trying to ‘catch them all,’ Pokémon style.

_{*Warning: Speculation and rumor incoming.}

Where things get even dicier again in our story is where Nintendo (may have) went next with their product development: love hotels. And by ‘love’ I am sure you know that I mean love in the proverbial sense. The type of love that is fleeting, in and out in under an hour. Yes, that type of love. The story goes that Nintendo's venture into love hotels was part of their business diversification in the 1960s through their real estate development branch. This happened during a period when Nintendo was searching for new business opportunities beyond their traditional playing card market.

Love hotels were (and still are) a legitimate and regulated part of Japanese urban infrastructure. They emerged as a practical solution in post-war Japan, where multiple generations often lived together in small homes, leaving couples with little privacy. These establishments offer short-term stays and maintain a high degree of discretion for their customers.

The rise of the (arcade) machines

It’s the 1970s; disco is taking off, and Star Wars, Jaws, and Saturday Night Fever have been dominating the box office, and one fast-emerging technology is about to catapult Nintendo onto the global stage. That technology is video games. To contextualize this un poco, the video game industry, at $455 billion annually, is larger than television, music, and film combined.

But in the decade that brought us funny things and funny things, the industry looked a lot like the following: Little Johnny asks his mother for a few quarters to head down the local arcade to play a few rounds of Pong and Space Invaders.

In the late 70s, the team at Nintendo began building their first video game systems, starting with the Laser Clay Shooting System, also sometimes called the Beam Gun Series, which marked Nintendo's first venture into electronic gaming. Installed in converted bowling alleys across Japan, these setups used projectors and light-sensing technology to simulate clay pigeon shooting. Players used rifle controllers to shoot at on-screen targets, with sophisticated detection systems tracking their accuracy.

Though the 1973 oil crisis forced many installations to close, the project provided important experience in electronic gaming. This led Nintendo to develop the Beam Gun series of toys and their first home gaming product, the Color TV-Game series, in 1977. These early experiments laid the foundation for Nintendo's transformation from a playing card company to a video game pioneer.

Towards the close of the decade, in 1978, they produced Computer Othello, their first microprocessor-based arcade game. But in 1981, Nintendo would find its true breakthrough with a game featuring a villainous giant gorilla and a hero in a red cap and overalls.

Konnichiwa, Shigeru Miyamoto

By the early 80s, Nintendo was throwing everything at the wall to see what would stick. Playing cards, love hotels, clay-pigeon light guns—it was a cocktail of weird ideas fueled by sheer survival instinct. But the gamble that changed everything wasn’t a corporate boardroom play. It came from a young developer with a sketchpad, a wild imagination, and a knack for creating magic. Enter Shigeru Miyamoto.

Miyamoto wasn’t a conventional hire. A freshly minted industrial designer, he walked into Nintendo with dreams of creating toys. What he ended up doing instead was creating a legacy with his first major project. What was that project? Donkey Kong. 

The whole thing was part necessity, part accident, with Nintendo needing a hit to salvage their failing arcade game Radar Scope. Miyamoto’s task was to rework the machines into something profitable. Instead of playing it safe, he concocted an idea that not only saved the company but cemented its future.

In Donkey Kong, Miyamoto turned a simple chase into a story. A barrel-tossing gorilla kidnapped a damsel in distress, and players guided a hero carpenter—yes, that’s right, carpenter—then called Jumpman, through a maze of platforms to save her. It was the first time a video game felt like more than a game; it was a world, it was a narrative, and most importantly, it was fun.

As the game took off, Jumpman got a makeover. The original character would trade his hammer for a plunger and go on to be renamed Mario, after Nintendo of America's short-tempered landlord, Mario Segale. Who would have ever guessed that this friendly little Italiano would become Nintendo's most famous face and gaming's most recognizable pizza-loving hero?

The genius of Miyamoto was that he didn't just create games; he created entire universes. After Donkey Kong came The Legend of Zelda, Super Mario Bros., and a parade of hits that would cement Nintendo's place in entertainment history. But perhaps more importantly, he showed that video games could be more than just high scores and flashing lights; they could tell stories, create worlds, and capture imaginations.

The world meets the Famicom + NES + Game Boy

The latter half of the 1980s is where Nintendo really started to cook. On July 15, 1983, the world (well, actually Japan) was gifted the Famicom, a smooshed-together version of the ‘family-computer.’ This platform is what the larger world, starting with the United States, would know as the NES, or the Nintendo Entertainment System, from 1985 onwards.

_{*Note: The same year the Famicom was released, Nintendo would be listed on the first section of the Tokyo Stock Exchange}

Nintendo had really struck something here. In a few short years, it was obvious that Nintendo had some budding IP, and with the success of the 1977 launch of the Atari 2600, felt it was the right time for them to join the home console revolution.

When released, the games Donkey Kong, Donkey Kong Jr., and Popeye were available on the platform, and Mario and the debut of his leaner, meaner, and greener would come shortly after with the first official edition of Mario Bros. As they prepared for their eventual U.S. launch, the Nintendo team decided that the quickest and safest way to get their system into consumers' hands was through a partnership with their competitor, Atari.

In what seemed like a wild stroke of bad fortune, come good, Atari nixed the deal after they noticed a bootlegged copy of Donkey Kong being played on a rival system at the 1984 CES festival. They wrongly assumed Nintendo had been negotiating behind their backs, and, in turn, forced Nintendo's hand to do so themselves, which they did, launching the Nintendo Entertainment System at CES in Las Vegas on January 5th the following year.

The thing that would really propel Nintendo into the stratosphere, though, is a new game that Shigeru Miyamoto and his team were working hard on in 1985, Super Mario Bros. The original Mario Bros. game you see was just based around the favorite Italian brothers cleaning the sewers of New York City. This new incarnation raised the stakes.

Nintendo maintained their momentum through the latter half of the eighties, releasing several major titles you may remember, such as Metroid, Mega Man, and, most notably, The Legend of Zelda, a franchise that is as popular today as it was in decades past.

And finally, with the last gigantic move of the 1980s, Nintendo finally released a product they had been working diligently on for many years, their handheld version of their system, the Nintendo Game Boy. By this stage, it was beginning to look like the video game world was Nintendo’s; we were just living in it.

Street Fighter or Mortal Kombat: The Console Wars

I could have led this section with a title along the lines of Mario versus Sonic the Hedgehog, but for me, the Console Wars of the early nineties were really this dispute: were you a Ryu guy, or did you prefer Sub-Zero, or maybe even his evil arch nemesis from the Shirai Ryu clan, the "GET OVER HERE!" wielding Scorpion. *_{Back, Back + High Punch}

Anywho, by the 1990s, Nintendo wasn’t just running a gaming empire; it was fending off invaders. Sega, the brash upstart, had thrown down the gauntlet with the Genesis, a sleek machine that wasn’t afraid to call Nintendo ‘kid stuff.’ The Genesis came roaring onto the scene with an aggressive marketing campaign and the attitude-packed Sonic the Hedgehog, promising speed, edge, and just enough rebellion to hook older kids who’d outgrown the Mushroom Kingdom. It was effectively a pre vs post-puberty throwdown.

And the fight was real. By 1994, Sega’s Genesis, or Mega Drive, if you were outside the U.S., had sold over 29 million units worldwide. Not bad, but still dwarfed by the Super Nintendo Entertainment System, which would ultimately move more than 49 million units globally. Sega’s moves, including a direct call-out to Nintendo in their ‘Genesis does what Nintendo can’t’ ads, forced the gaming giant, Nintendo, to step up its game. The SNES countered with classics like The Legend of Zelda: A Link to the Past, Donkey Kong Country, and the Super Mario series, reminding everyone why Nintendo was still a force to be reckoned with.

But as the Sega-Nintendo showdown heated up, two new players entered the arena: Sony and Microsoft. Sony’s PlayStation, launched in 1994, wasn’t just another console; it was a revolution. With sleek AF design, CD-based games, and a killer library, Final Fantasy VII, Metal Gear Solid, and Crash Bandicoot to say the least, the PlayStation became an instant hit. It sold over 102 million units, leaving both Sega and Nintendo scrambling. Sega tried to keep pace with the Saturn, but it fizzled at just 9.2 million units sold.

Then came the wild card: Microsoft’s Xbox in 2001. The Xbox, with its online play via Xbox Live and hits like Halo: Combat Evolved, changed the gaming landscape forever. It wasn’t an instant blockbuster, selling 24 million units compared to the PlayStation 2’s staggering 155 million, but it signaled a shift. Gaming wasn’t just about nostalgia or cute mascots anymore; it was becoming a serious entertainment medium.

For Nintendo, this was a wake-up call. Their GameCube, though beloved by fans, sold just 21 million units, falling behind even Microsoft. The Console Wars weren’t just about Sega vs. Nintendo anymore. Now, it was a battle royale, and Nintendo needed to find a way to stay relevant in a field that was suddenly more crowded and competitive than ever.

And in the years that followed, that’s exactly what they did. But before the comeback, Nintendo would endure some lean times.

The lean years

The late 1990s and early 2000s were brutal for Nintendo. Sony's PlayStation owned the maturing market with cinematic titles and cutting-edge graphics. Microsoft's Xbox arrived with powerful hardware and proper online play. Nintendo got squeezed in the middle. The N64, beloved for Super Mario 64 and GoldenEye 007, sold 32 million units, a sharp drop from the SNES's 49 million.

The next swing, the 2001 GameCube, did worse. Even with hits like Super Mario Sunshine and Wind Waker, it stopped at 21.74 million units. Sony's PlayStation 2 sold 55 million in the same window. Microsoft's first Xbox cleared 24 million. Nintendo was getting outsold in its own category.

The bright spot was handhelds. The Game Boy Advance sold 81 million. The DS topped that and then some, hitting 154 million units and becoming one of the best-selling gaming systems ever made. Whatever Nintendo was losing in the living room, it was winning back in pockets and backpacks.

The home console rebound came in 2006 with the Wii. Motion controls, family-friendly software, and a $250 price tag turned it into a phenomenon. It sold more than 100 million units and pulled Nintendo back into the conversation. Then 2012 happened. The Wii U launched, confused everyone with its tablet controller, and sold 13 million units over its lifetime, one of Nintendo's biggest flops.

So why did this happen? One theory: Nintendo lost its army of third-party developers. And when you lose the developers, you lose the games.

The first self-inflicted wound was the hardware. Nintendo stuck with cartridges on the N64 while competitors moved to CD-ROM. Even the GameCube, which finally adopted optical discs, used a proprietary 1.5GB mini-DVD against Sony's standard 4.7GB DVD. Developers had to compress or cut content to ship on Nintendo.

It wasn't just content getting cut. Between the hardware ceiling and the cost of production (pressing a DVD is far cheaper than manufacturing a Nintendo disc), studios started skipping Nintendo altogether and building for PlayStation and Xbox, which shared a clean port path. Grand Theft Auto, Metal Gear Solid, and Final Fantasy all became PlayStation exclusives by default.

On top of that, developers fed up with Nintendo's demanding licensing terms and censorship policies defected to Sony's more developer-friendly PlayStation. The business equivalent of biting the hand that feeds you.

By 2016, many people were openly questioning Nintendo's future in the home console market. The company needed something that could bridge the gap between its winning handhelds and its struggling living-room hardware. As it happened, that exact thing was already being built.

Failure Innovation

For every Wii and Switch, Nintendo has shipped a clunker. The misses are part of how they get to the hits. Virtual Boy. R.O.B. (the Robotic Operating Buddy). The clunky Power Glove. The short-lived Game Boy Micro. The Wii U. The Pokéwalker (yes, really). Even the ill-fated partnership with Sony gave birth to their biggest rival, the PlayStation. Nintendo has failed publicly, expensively, and often.

Companies like Nintendo need to fail at scale to build something worthwhile. As Jeff Bezos puts it, "failure and invention are inseparable twins." The trick is walking the knife's edge. One step too far and you have a major loser on your hands. Two or three in a row and you have a bad decade. A bad decade drains the company's creative horsepower, and then you're not really Nintendo anymore.

Nintendo knows this. They've stayed on top for decades by threading the innovation needle often enough that the wins more than pay for the misses. Most companies can't, and don't.

The Switch: Nintendo's 3-1 comeback

On June 19th 2016, LeBron James won a championship for the Cleveland Cavaliers in the National Basketball Association, the NBA. Who cares, right?! And more importantly, what the heck does this have to do with our story? A lot, it seems.

It was not the fact that LeBron and the Cavs had won it; it was how they had won it. In the days leading up to the 19th, the Cleveland Cavaliers, who LeBron had returned home to play for, had found themselves down 3-1 in a best-of-7 series against MVP Steph Curry’s near-insurmountable Golden State Warriors. A Golden State Warriors team that not only were the reigning champions, but had just set the regular season record of 73 wins and only nine losses. Teams that have been down in the NBA Finals by a 3-1 deficit on 32 occasions, and exactly 0 of them have managed to come back. It was a bridge too far.

But just as LeBron and the Cavs orchestrated one of sports' greatest comebacks, Nintendo was about to launch their own revolutionary response: the Switch. Released in March 2017, this hybrid console would go on to sell over 132 million units (as of late 2023), becoming Nintendo's best-selling home console ever.

The Switch succeeded by combining home console and portable gaming, offering both Nintendo's beloved franchises and strong third-party support, while its flexibility appealed to casual and hardcore gamers alike. The masterstroke that was the Switch single-handedly rocketed the company back to the place they had spent much of the last decades, the very top of the cultural video game zeitgeist. Marrrriiooo … this is for youu.

Nintendo’s intellectual property push

Now that Nintendo has its swagger back, their next likely foray is into other art forms. Case in point, the incredibly successful launch of The Super Mario Bros. Movie, starring Chris Pratt as Mario, Jack Black as Bowser, and Seth Rogen as Donkey Kong. Expect more of this.

Even though Disney totally screwed it up by turning the Marvel brand into a pile of stinking, slimy, gutter trash by putting profits ahead of the people, companies saw what Disney achieved with the first half of the Marvel Cinematic Universe and are licking their lips. It really started with Marvel and Star Wars, but now franchises like Lord of the Rings, Dune, Game of Thrones, the Batman universe, and more are spreading their IP across more movies and TV (streaming) than ever before.

Only recently did Nintendo announce its plans for an upcoming feature film based on The Legend of Zelda. Take a look at this treasure trove of IP Nintendo can and will likely call on in the not-too-distant future to exploit/extend their brand.

If the massive success of The Super Mario Bros. Movie is anything to go by, Nintendo has only scratched the surface. Expect expansions into streaming series, theme parks, and maybe even more unexpected collaborations; I’d see Donkey Kong on Broadway, wouldn’t you? The sky’s the limit when your characters have already been etched into the cultural consciousness for generations.

Playbook / How you can apply this

Most deep dives serve up an easy playbook. SaaS tool does X. Consumer app does Y. Nintendo is harder. It's 130 years old, sells video games, and has reinvented itself a half-dozen times over. But a few patterns come through.

• Master storytelling. Nintendo is a master storyteller, and that skill compounds as the world gets more crowded with content.

• Make things fun. Nintendo prioritizes fun over hardware specs. That's how you end up with a player base that spans kids, casual players, and hardcore gamers.

• Double down on winners: When something works, push it across every channel and platform you can. When something doesn't, cut it fast.

  Reinvent on a clock: Users, trends, and tech all move. Nintendo ships a brand-new approach to the market roughly every decade and resets the conversation.

  Don't die: Business is the act of outlasting the competition. Nintendo had been around for nearly 100 years before it broke through on the global stage.

Closing

For me, Nintendo is a story of continuous reinvention, decade after decade, and one that I personally hope to see play out for many decades more. Sure, they may have done dealings with the Yakuza, but hey, we’re all young once.

The main thing Nintendo should be remembered for is the joy it has brought to kids around the world. And the exciting part is to think of how much more of this beautiful elixir it still has to serve up. Long live Mario, long live Luigi, hell even long live Bowser the cantankerous old sot.

Fun facts

• Mario before Mario: French general Napoleon was the face of Nintendo for many years and was featured on their ‘Presidential’ line of cards (even though he was technically an emperor). You can still find the Napoleon cards for sale at toy shops today.

• Mario makes cement: Nintendo’s little-known first game hit was the Game & Watch title ‘Mario’s Cement Factory.’ An oft-rumored, but ill-proven homage to the Yamauchi family’s cement factory business.

• Looking into the histories: On October 2, the first official Nintendo Museum was opened in Kyoto, Japan, inviting fans to dive into decades of gaming history.

Extra reading / learning

• Nintendo Wiki - Undated

• Nintendo's Origins, The Acquired Podcast - March, 2023

• Nintendo: The Console Wars, The Acquired Podcast - April, 2023

And that's it! You can follow me on Twitter and LinkedIn, and also don’t forget to check out Athyna while you’re at it.

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TOOLS WE RECOMMEND 🛠️

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