Nintendo of America (NoA) is a subsidiary founded in North America in 1980. The founder Hiroshi Yamauchi chose his own son-in-law as president. Minoru Arakawa then appointed his wife, Yoko Yamauchi as the first employee. The family moved to Vancouver to look for an office in New York which was at that time a hot bed for booming business. Manhattan was the central arena for American commerce and since both were from strong and influential families and a greater background together they aimed at more than just making money.
Since both the partners already had inherited capital from Nintendo Japan, they had enough in their pockets to take things further. The USD 8 billion per year was already the largest entertainment industry in the United States. This was more than television and movies combined, meaning that the video game industry was earning a lot more than any other entertainment industry at the time.
A part of the NoA was research in order to create new and better games for the audience. For this particular job, young gamers were hired to receive services of the game hardware directly from Japan. The place where this work was to be done was filthy, hot and ratty. The warehouse was not fit for humans to work in.
Far East Video was a distribution company based in Seattle. NoA signed a contract with them in 1980 solely for the namesake of Al Stone and Ron Judy who were the best in the field. These two already had made their position in the New York market for selling Nintendo games. As per the contract, they would now earn a percentage commission on every game they would sell. According to them, it would not be a problem is Nintendo created better games for the audience. Soon, Far East Video took over the sole distribution of Nintendo across America and charged a fixed commission per unit. It would all be settled every month by the company’s Seattle based lawyer named Howard Lincoln.
Since things were going pretty good with Nintendo games in America, Arakawa decided to put a wager on NoA’s finances on a gigantic order of 3000 Radar Scope cabinets. Since it took time for games to be delivered from Japan to Seattle, the game failed in the unpredictable market. As a result, Arakawa panicked after having wagered at such a high risk.
On the other hand, Far East Video was already struggling with finances due to a steep decrease in sales. Ron Judy still had faith in Nintendo that it would create a big hit like it did with Pac-Man, so he borrowed some money from his aunt. His aunt gave him $50,000 which was her life’s savings. Arakawa started to regret his decision of starting this venture all the while his wife, Yoko found herself troubled while being stuck between her father and husband who constantly fought with each other over Nintendo.
Changes in the Dynamics of NoA
In order to make things better, Nintendo of America decided to make some major changes. They moved their office and warehouse to Seattle from Manhattan. The major reasons being the stressful New Jersey and New York lifestyle and the commute that was associated with it. The port at Seattle was closest to Japan and took only 9 days for delivery through the sea as compared to four months to Manhattan. The Radar Scope disaster was reason enough for this decision to be executed.
Arakawa’s real estate team found him a 60,000 square feet warehouse which held three offices, one for Judy, one for Stone and one for Arakawa. This warehouse was located in the Tukwila suburb whose owner was Mario Segale – this is the man after whom the famous Mario character of the Mario game will be named after.
After this movement from one state to another, the company had less than 10 employees for quite some time. All the business operations were handled by this small team of 10 employees. Advertising, sales, marketing, and distribution was done from this office. Manufacturing was limited was being done in Japan. All the games and hand held games were being imported from Nintendo back home in Japan.
The small scale of operations were still a financial strain on NoA and Arakawa worried about it. The parent company was out of ideas to create new interesting games for the American market. Arakawa pleaded with Yamauchi to hire top talent for creating new game ideas who would be from a place other than Japan. A different market needed a different talent, apart from Japan. Since Nintendo Japan was still doing well and NoA was only a fraction of the business, Yamauchi assigned Shigeru Miyamoto who was a young assistant of Gunpei Yokoi. Miyamoto had no engineering background, so it seemed like no hope for NoA.
Out of surprise and a very revolting initial draft, Donkey Kong hit the market. This game was a huge success where NoA earned a massive gain of $280 million in 1981 and 1983 alone. This helped NoA sell over 4000 units of new arcade games each month within America. As a result, young Phillips Howard became the largest volume shipping manger in the Port of Seattle. He was only 24 years old then.
Arakawa saw this as an opportunity to secure NoA’s position after the devastating recent past. He bought 27 acres of land in Redmond from the profits earned. He then invested about $50 million in order to launch Nintendo Entertainment System in 1985. This resulted as a revolution after the crash of 1983.