Original subtitles

[exciting music]

id

- Yahoo!

[laughs]

[dramatic music]

id

- | think it was bigger, better, faster.

id

But, you know,

who's to stay when the game changer really happens?

- Nintendo is fighting a come-from-behind battle.

id

It once ruled the $15-billion video game market

but is now second to Sony in the U.S.

Sega is getting blitzed by the competition.

The Japanese video game maker is watching consumers opt

for the more popular Nintendo and Sony video game machines.

- | think during 1997, we will see Nintendo surpass Sony

in terms of market share.

But | think we're gonna have

two strong competitors out there.

It's gonna be like Coke and Pepsi,

where they just battle away.

id

- Some of the early games were very, very good

and exploited the technology quite nicely.

[gunfire]

But | think that there gets to be a point

where graphics cannot substitute for good gameplay.

id

- Nintendo 64-- cool game system.

Better technology. More colors.

But it just couldn't compare to the magic of that first time

you played the 8-bit Nintendo.

id

- The N64's first year on the market

was not only overshadowed by the PlayStation

but also by Yamauchi's bet

on that little trading card game.

id

- Hey, plumber boy, mustache man, your worst nightmare has arrived.

id

[wondrous music]

id

- It may be the most addictive toy in history,

and it's definitely the hottest thing this Christmas:

Nintendo video games.

id

- While Nintendo was printing money from pocket monsters

on their small screen,

taking back living room screens from Sony

was proving more challenging than they'd thought.

- N64 has only three games out.

Sony and Sega boast more than 150 titles each in the U.S.

And amidst the shortage,

Nintendo's losing some potential sales to its rivals.

- A lot of the people that want it right now are opting for that.

- Nintendo says it will double its shipments

of hardware to the U.S. this year

but predicts it'll still fall short of demand.

And it'll put out five more software titles by Christmas.

But some analysts say it'll have to put out more than that,

and fast, if it's to keep the momentum going.

- Nintendo essentially skipped the 32-bit console cycle

and would be first to market with 64-bit technology.

- That really was the legacy of the N64, of, really,

Nintendo getting punished for its hubris

while at the same time doing more, | think,

in the design of the system, to look towards the future.

- The problem:

they'd lost their secret weapon along the way.

- Nintendo 64 has proven popular,

but the industry pioneer has recently been fighting an uphill battle.

An industry research firm says Sony's PlayStation machines,

which sell for the same price,

are outselling Nintendo's by two to one.

- They definitely lost significant ground

due to costs of cartridges versus discs

really made the PlayStation a much more attractive platform for publishers.

- They made the hardware cheaper

by not having that disc drive.

But then your game had to be a cartridge,

which had a circuit board in it

with a gold-plated connector

that plugs it into the memory of the computer directly.

So hardly anybody could even really afford

to make these cartridge games.

And it was terribly, terribly risky.

And your merchants were really at the service of Nintendo.

- You know, they sold a lot of Nintendo 64s

and they sold a lot of games.

But it was nowhere near the dominant platform.

And the Nintendo 64 era, really brought on

by Nintendo's very self-serving decision

to not even make CD-ROMs an option for developers.

[dramatic music]

id

- Right now, 64-bit versions of "Mario" and "Pilotwings" are available.

12 new titles are expected to be delivered by the holidays.

The interactive entertainment industry is a tough place to do business.

- Hundreds of titles are available for other video game systems.

With just eight games on the market, it's still a smash.

- Analysts say a price tag below $100

can make a Nintendo purchase an impulse item,

bolstering sales and encouraging software developers for the PlayStation

to write for Nintendo as well.

Sony boasts four times as many software titles as Nintendo.

- It's a CD-based interactive multiplayer system.

And that's a long name,

but, then, this is a lot of machine.

3DO does more than just play games.

It also shows photos.

It will help you edit your home videos.

It plays audio CDs.

It will eventually play video CDs.

It has 50 times the graphics and animation capability

of most other video games.

3DO is taking on big-name competitors like Nintendo and Sega.

id

- Sega realized that they wanted to have

a licensing program very similar to Nintendo's.

And | really didn't want to be part of that kind of licensing program.

| wanted to have freedom.

| found myself getting to the hardware market.

That gave birth to the 3DO.

This is actually representing

about a 50-times jump in the quality

and the performance for the graphics and the animation.

And that is a bigger leap in one generation

than ever before in the history of consumer...

- The area where the greatest challenges will come

is, a lot of people look at what other people have done

and try to do something that's a spin-off from that.

But the really creative geniuses in the industry

are capable of coming up with something completely new.

- This is a concept sale. It hasn't happened yet.

It looks like it's coming together. It might fail.

They can be perfectly honest and open about it,

say, "Might not work, guys."

- The problem was, by setting the software license fee low,

there wasn't any way to get the hardware price

low enough at the start,

and that resulted in the 3DO launch price being $600.

And of course, that ultimately didn't go well.

id

You know, | thought that price point might work

‘cause it was more diverse in terms of what it could do.

And why won't there be enough people at that price point?

And there just weren't.

id

3DO, it was a bold idea

and, you know, just wasn't realistic.

The alternative was accepting the idea

that companies like Nintendo were gonna take over

and we were gonna be servants in their kingdoms.

And guess what.

That's where we are now. [laughs]

It isn't Nintendo.

- Right. - But Nintendo

basically invented the business model...

- Right. - That everybody operates now.

- The men sitting in this room

control the American video game industry.

Nintendo controls 85% of the U.S. video game market.

- Within a year or two after that,

| found myself sitting in a car with Howard Lincoln,

driving back to the Nintendo office from lunch,

and he said to me,

"You know, Trip, when Sony came along,

we had no idea what we were dealing with."

id

- It's best described as being

the number one video game platform

in the United States

and around the world, for that matter.

No matter how you look at it,

whether you're talking about the installed base,

the number of hardware units that we have,

the number of titles that we have,

or if you're talking about the pricing on the hardware

and the software,

you know, we're always in the leadership position.

- Nintendo's closest and most talented game developers,

the key to any game publisher's success,

were defecting for PlayStation.

- We are clearly the leader

in the next-generation marketplace,

with about 80% hardware market share today.

But the real key to our success was the games.

- Mass exodus...

id

First Konami and Namco,

then Taito, Data East, and Capcom.

American developers also defected:

Midway, Acclaim, and EA.

- The really important thing was that CD-ROMs

were absolutely just embraced by everybody in the development community,

for all of the reasons that you would expect.

It would just cost so much more money to put your games on cartridges.

Like, people didn't want to do that anymore.

And Sony knew that.

Like, that's how Sony courted developers with PlayStation.

It was like, "Hey, number one,

"these things are a lot cheaper to make.

"Number two, we can do really low minimum orders

"if you want to, like, just take a chance with a game.

"Three, if you sell out of that initial order and you want more,

we can turn it around really fast for you."

Like, CDs were head and shoulders above cartridges.

- But when the Sony PlayStation came out, they said,

"Hey, developers, we want you. We need you.

"In order for our system to be great,

“we want to support you with all the tools and all the hardware

and all the stuff that you need."

The smartest move in the world. That's why they shot up.

id

- | think by the time that Nintendo 64 rolled around,

we were all sort of used to the idea of, okay,

now when there's a next-gen machine, you get that.

And 64, while it was a great machine, to me,

still was, like,

the same games | was playing on Super Nintendo,

just cooler-looking, and that's not a bad thing.

But | remember that being the first time where | was like,

"Do | necessarily need to make the next-gen jump

every time the next gen comes out?"

- They couldn't rely on the fact that,

hey, this is a Nintendo console, and of course

people are going to buy a Nintendo console anymore,

and | think that was a wake-up call.

- By the time one of their closest partners, Square,

left for PlayStation with their "Final Fantasy" franchise,

Nintendo finally woke up.

- Nintendo's next-generation game console,

one analyst calls a Trojan horse PC.

Game developers will be able to enjoy fatter profit margins,

because the appliances use discs

instead of expensive cartridges.

- People who just have to have the latest high-tech gizmo

will have to show some patience.

The brawny bargain-basement devices

won't start showing up until spring of next year.

- Family Basic was a keyboard

that hooked up to the--to the Famicom.

Here's a cassette recorder for the Famicom.

Down here, | have an N64 and an N64 disk player.

The disk player only came out in Japan.

The cartridges go on top.

But the disk drive player plugs into the bottom of the 64,

and the disks go into here.

- The N64DD was Yamauchi's answer.

Hiroshi's pitch was that the rewritable disk of the N64DD

would allow gamers to download updates

and preview new games from the World Wide Web.

- The device will be able to cruise the Internet,

so there could be deals ahead with companies selling Internet service,

like Microsoft or America Online.

- While Sony could have the Walkman, VCRs, cameras, stereos,

and now the PlayStation all on one shelf,

people wanted only one thing from Nintendo.

id

- The characters are extremely likable.

Like, right away, you like the characters.

And each one, while it has a little bit of the personality

of the previous one,

it's still a new and unique experience.

People wait for the next one, because they know

that they're gonna be able to have that sort of,

"Gee, I'm comfortable.

"I'm home playing this game I'm familiar with.

But it's got a whole new avenue for me to explore."

id

- Yamauchi's dream of an Internet-connected Nintendo system failed,

along with the online service tied to it.

But if Nintendo believed anything,

it was that although stranger times,

their leaders' foresight was rarely wrong

in the long term.

And with PlayStation sales approaching 100 million units,

that belief would be put to the test

as '99 turned into 2000.

- Sony's got a very strong brand.

lt was so incredible.

We'd never seen anything like that.

Before that,

dealing with companies like Sega, no problem.

[laughs]

Sony brand--wow.

Yeah, to have Howard actually say that--[laughs]

Yeah, Sony had one heck of a brand at that time.

- The N64, | think that it should be remembered

as a stronger product than maybe people refer to it as.

It had great content on it and was a sleek system.

Nintendo's focus has never been the power. It's been the experience.

And | think that that philosophy

is absolutely accurate

and true to many forms of entertainment today.

id

- Nintendo was making

Japanese games that the world loved.

And what Sega of America started to do

was make American games that the world loved.

- Sega of America did a lot of really smart things,

but they were kind of hamstrung by Sega of Japan.

Sega of Japan kept thwarting all of Sega of America's progress

at many different intervals.

- And that created a real schism

between Sega of America and Sega of Japan,

because Sega of Japan wanted to make Japanese games,

and Sega of America wanted to make American games.

- We're bringing out a 32-bit upgrade kit

for our 16-bit machine.

We'll ship that in October. It's called 32X.

- Sega of America, | don't think, wanted to publish the 32x,

which was, like, another add-on for the Genesis.

This was very confusing for consumers. They didn't want it.

Sega of America didn't want it, but it was kind of pushed them.

They also didn't really want the design of the Sega Saturn

that Japan was pushing on them either.

They didn't think that that was gonna be a Success,

and it really was not.

id

- Sega was out, Sony was king,

and Nintendo was--

well, they weren't sure.

They were the former heavyweight champion,

the former Olympic gold medalist.

And the competition wasn't letting up.

- Right now, Sony has about 70% of the game console world market,

trailed by Sega, Nintendo, and soon Microsoft.

- No dust will gather on these blue boxes.

Every single one will be snatched up by eager gamers.

[crowd yelling]

id

[cheers and applause]

id

- Five, four, three, two, one.

Happy 2000.

id

- As the new decade began,

Metallica lost its cool and sued Napster...

- Napster hijacked our music without asking.

- "Big Brother" and "SpongeBob" were conquering television...

- I'm ready!

- And Julia Roberts was the queen of Hollywood.

- All you lawyers do is complicate situations

that aren't complicated.

- Apple had high hopes for their sleek new portable music player...

- iMac. iBook. iPod.

- DVDs were selling like hotcakes...

- This is DVD.

- And the world at large was finally embracing the Internet.

- You've got mail.

- Yamauchi had learned from past mistakes,

and Nintendo's new GameCube came out swinging.

id

- One of our competitors is a manufacturer in Japan,

transporting all your content

between all your electronics devices

on their memory sticks.

And there's another company out there

who doesn't care what you do

as long as you do it on their operating system.

[laughter]

[cheers and applause]

We're not that company either.

[Beethoven's Symphony Number 5 in C Minor]

- The latest video game war is heating up tonight.

Nintendo's GameCube system... - One, two, one, two.

id

- What went wrong with the GameCube?

- | never had a GameCube. | skipped.

Can | say that, | skipped a generation?

- No, that's good. - | never really saw

too many ads for it growing up.

| just knew that my cousins had one, you know,

or, like, my friend had one.

- We had one, but my brothers

were playing it more than | was.

- But, | mean, | definitely played it at friends' places when they had it, but...

- What's the "Mario" game that was on the GameCube

that was probably underrated? "Mario"--

- What was the big game?

It was "Mario 64"-- no, no, that was the N64.

- It was the platformer where you sprayed everything.

Gosh, what was that?

- | feel like it's a little presumptuous for me

to opine on the GameCube,

because | didn't pay especially close attention to it.

And that might be why there was such a drop-off in sales

for the company at the time.

- Meanwhile Nintendo was really one of the few surviving contenders.

And the N64 did not have a optical disk drive.

So when they moved on from there to the GameCube,

they were still kind of newbies

in dealing with optical disks

and networking, and that's an area

where they're gonna have to go down the learning curve.

And Sony's just plowing ahead with the strongest brand

the game industry has ever seen.

[upbeat music]

id

- The GameCube kind of has an odd design.

And the small disc,

| think that turned off a lot of people.

- Just a weird format.

- 3-inch, 2 1/2 inch CDs,

so people were upset ‘cause they couldn't play DVDs.

- First Nintendo not to use cartridges.

It uses discs. - Yes.

It's basically a proprietary DVD format

that holds about 1 1/2 gigabytes.

- 1 1/2 gigs on one of these,

that's a big-- that's a lot of game.

- The purple color probably was not universal.

At that time, people called it, you know, a Barney box.

- The handle on it was kind of odd.

- It looked like a purple purse.

- This is it. It's kind of cute. It's got a little purple handle on it.

It's like a little lunch box. - It's cube-ish.

- So like all of Nintendo's systems and games,

| loved the GameCube.

- I'm actually a big fan of the GameCube

and the franchises that were born out of that.

| think "Eternal Darkness"

is one of the coolest games that has ever been made.

- Nintendo did a lot of things with GameCube,

like embracing more mature content,

allowing more M-rated games,

being more hospitable development environment.

Apparently it was actually much easier to develop games for the GameCube.

- This resulted in an unprecedented amount of games

that would become available at launch.

id

- When | worked on "Metroid Prime" on the GameCube,

that was, like, one of the great games.

- "Pikmin" was a really fun game.

| remember watching my son play that.

- My daughter absolutely mastered "SSX Tricky."

She was a savant at "Super Monkey Ball."

- You had "Smash Brothers."

- "Double Dash" on the GameCube is phenomenal.

- And the ultimate irony: Sonic,

once Mario's biggest rival, was now running loop-de-loops

and collecting gold rings inside a Nintendo system.

id

But at a time when games were starting to resemble interactive movies,

being developer-friendly just wasn't enough to remove

the Sony-sized shadow looming over Nintendo

and the entire video game industry.

- Once the PlayStation came out,

it was a different level of competition,

and it hurt Sega; it hurt Nintendo;

it hurt anybody else that was in the market or thinking about entering the market.

And then Sony just kept, as a juggernaut,

moving on to something even bigger and better.

- The GameCube felt like Nintendo

coming back to the pack on the hardware side

and doing something that was more in line

with what a traditional console creator would have gone off and done.

- It was the first time when Nintendo was kind of coming from behind,

and rather than offer something very distinctive and new,

they really had something that was very similar

in terms of horsepower to a PlayStation 2.

So there wasn't that much of a differentiator

in terms of the hardware itself.

- The hardware felt like Sony could have built that;

you know, we could have built that.

But other than the franchises themselves,

there wasn't something special about being a GameCube owner

that felt completely different.

- In a lot of ways, it almost wouldn't have mattered

what Nintendo did with the GameCube. It was gonna be a day late

and a dollar short in comparison to Sony.

- And unlike one of our competitors,

who appears anxious for this generation to end,

we're intent on fully playing out our hand.

- [speaking Japanese]

- So to kick off the summer of 2007,

the company played another card they had up their sleeve

in a market they had all to themselves.

[dramatic music]

id

- The Game Boy Advance, or GBA to its friends,

is the equivalent of a mini PlayStation in your pocket.

- So | thought | might fly myself over from the UK to buy one.

My family think I'm mad,

but | wanted to be the first person in Europe to own one.

- Well, Nintendo now is making lots of money on the Game Boy.

Everybody's buying Game Boy.

- Nintendo is great.

Very good. Very nice game.

- Nintendo Game Boy Advance: we own that business.

- Nintendo's slick new handheld was a hit.

- It's a one-two that our competition

can't even get close to.

- But would it be enough?

id

As if on cue...

id

- It is truly the future of video games.

- In the fall of 2007...

- Cutting-edge. Powerful. Exhilarating.

- An all-new threat disrupted the industry yet again.

id

- So we couldn't leave you

without telling you all about the full pie.

It's a cheeky wee entry from ubercorp Microsoft.

- The biggest wild card is what Microsoft's Bill Gates...

- Have you ever played the Nintendo consoles?

And if so, what'd you think?

- Well, those machines were designed in the past.

- We created a console that's two to three times

more powerful than anything that's ever...

- Bill Gates is finally expected to tip his company's hand

about what's been dubbed Microsoft's Xbox console.

- Once you've played Xbox, you'll never want to go back.

- Something about it made the GameCube feel like a toy

that was for kids.

- Nintendo!

- The industry as a whole seemed to be aging up

and moving into more of, like, a home component sort of thing.

- The PlayStation 2 isn't really a video game anymore.

- We're referring it to asa computer entertainment system.

- Like the Nintendo Entertainment System,

with the Zapper light gun and R.O.B. the robot.

- It is the future of entertainment.

- Xbox, a powerful computer disguised as a game console.

- [laughs]

As a lot of things in Microsoft's history,

I'm not sure we wanted in as much as we wanted to defend.

The home for Windows was important.

PCs in the home were critical to Microsoft's growth.

And we wanted to make sure that as video game consoles

were growing that we could show

what a Windows Microsoft platform in the home could do,

and video games were a great avenue for us to do that.

- When | first heard that Microsoft wanted

to get into the game business, | just thought they were crazy.

I'm Trip Hawkins.

I'd like to tell you why 3DO is gonna be the biggest product

in your stores since the VCR.

It's a really difficult business.

And | didn't think they understood

how much money they were gonna lose.

- Well, for £299, your PlayStation 2

will not only run your games but also play your DVD movies.

- Sony announced that the PlayStation 2

was gonna be 300 bucks and would have a DVD player in it.

- And the average person didn't own a DVD player at that point.

For a lot of people,

their first DVD player was the PlayStation 2.

all: PlayStation 2. PlayStation 2.

- It's great.

- The fact that it can be also a DVD player.

- Obviously we went from the cartridge model

to the disc model, which was mainly an economic and also a piracy fix.

- Facing a huge problem that's taken place

in the gaming business that's called counterfeiting.

An open architecture like DVD

has led to rampant counterfeiting issues.

- People say, "Why did Nintendo never go the way of the DVD?"

I'll tell you why. 'Cause Sony owns it.

Every single time they sold a DVD,

they'd have to pay a royalty to Sony.

id

- The other boxes are jack-of-all-trades.

They brew decaf latte.

They go on the Internet. They play DVDs.

This thing is strictly about high-end video gaming.

That's what Nintendo's all about.

- Not surprising, but our greatest assets

are our characters: Mario, Donkey Kong, Metroid,

who has not been shown for many years.

So we're gonna take full advantage of those,

and of course, those are actors

that don't require any talent payments.

- PlayStation 2 doesn't even have as many games

as Nintendo will come out with for GameCube.

- "Super Mario Sunshine," it was, you know,

mainline "Mario" title.

A lot of people really didn't consider that one as good as "Super Mario 64."

- But there wasn't a lot of, "Oh, my God, | must have that."

- We would launch with something incredible,

but the wait was really long, and people wanted it,

just as they have always wanted from Nintendo.

They want more content, more games

of what they love.

- We started off down one path,

which was gonna be more like a PC in the home,

and ended up with something

that was more like a video game console.

Certain people will say that was the plan all along.

I'll let kind of others weigh in.

| think the company's heart was not at all a Trojan horse

but rather, "How do we defend the fact that we want Windows

to continue to grow in the home?"

- Probably, | think,

Microsoft's biggest contribution

to the video game industry is in the online space.

- Microsoft staged a preemptive online flank,

announcing Xbox Live

to let Xbox owners play each other over the Internet.

- It's an online universe, basically.

- I'd just gotten into Xbox Live.

| had, like, the highest score in the country.

- Master!

[whistle blows] - That's gotta hurt.

- We really had a design ethos around "Halo."

And what we needed in order to support "Halo 2"--

we'd seen on the PC side that online gaming could work.

We weren't inventing online game.

We were trying to bring high-speed Internet into consoles in the home

and what experiences could come out of that.

- Once they had that and they were able to provide

enough reasons such that every Xbox customer really wanted it,

a lot of great things came out of Xbox Live.

- Voice chat that would carry through the entire game,

matchmaking, a persistent identity across all of your games, friends lists.

- You'll be able to communicate and chat and taunt in the game.

Now, that's what community experiences are all about.

- Just revolutionized the way games are played.

- The era of broadband games has arrived.

- The adoption of it, | think, we were pleased by,

but we also did kind of expect, so it was a big bet for us.

And I'm proud of that-- in the history of Xbox,

the amount of focus we had on online gaming,

and | think that's an innovation that the teams

brought to console in the home that really helped make that

kind of anorm and an expectation.

- How can Nintendo compete with the biggest technology company on the planet?

They have more money than you.

They have more technology.

- Nintendo is cutting the price of its GameCube console by $50

after saying last week that it wouldn't.

- Everyone who had money to spend got a PlayStation 2.

Everyone who had extra money to spend got an Xbox.

Only after the Xbox and the PlayStation 2

did you then decide, "Well, I'll try a GameCube also

because | remember Nintendo from growing up."

- They were in solid third place.

That is not a position that Nintendo is used to.

- In a way, we were starting to become old hat.

A lot of people were gravitating towards that newness,

that cool factor in their eyes.

- "Grand Theft Auto 3" was the biggest game of that generation,

and it wasn't on Nintendo's platform.

- Things like "Metal Gear," "Halo," of course,

certainly big business, and | think people

were not always supportive of the direction Nintendo took

in terms of capturing the most dollars.

- | just don't know if there's anything that Nintendo

could have done with the GameCube at that point.

- Adding salt to the wound,

many of Nintendo's top developers, like Rare,

began abandoning them for Xbox or PlayStation 2.

- And the single biggest mistake

| think that Nintendo ever made was not buying Rare.

They let Microsoft pull the rug underneath them.

Now, Rare never did a huge game after they left Nintendo.

It shows you how much knowledge the folks at Nintendo have,

‘cause truth be told,

Microsoft's a spreadsheet company.

- The GameCube did okay. It was definitely not a failure.

People might not have the right memory of it,

but it was a compact, a really cool system, very fun, super easy to play.

And | think it set up maybe the next generation,

where we tried to show that gaming is for everyone.

- We can't achieve the kind of quality,

that level that we had with "Super Mario 64"

every time out.

That's a goal.

And the only thing that | can say is that we're concentrating on that goal.

And | think that the kind of quality that you would see

in either "Bond 007" or "Conker's Quest"

or "Banjo-Kazooie" demonstrates that

by concentrating on that and working at it as our goal

that we are successful most of the time.

id

- The GameCube ultimately faded from store shelves,

leaving Yamauchi and all at Nintendo

to lick their wounds

and go back to the drawing board.

id

Meanwhile Nintendo continued

to dominate the handheld market

with their new 32-bit marvel.

Competitors came and went.

But ever since those original "Tetris" blocks fell in 1989,

Nintendo just got it when it came to portable gaming.

Their next system was set to do something

no game system ever had.

- Well, the wait is over. This is Nintendo DS.

[cheers and applause]

- What are you here for?

- Ladies and gentlemen, Nintendo DS is here.

[dynamic music]

id

- The Nintendo DS is the biggest-selling handheld video game system

ever, of all time.

- Instead of having to learn all the buttons,

you could just tap on the screen to interact with the game.

And this manifested itself in a variety of ways, the most popular of which was "Brain Age."

- It was innovation, it was different, and affordable.

And | think those things combined

made it a great product.

- When the DS came out,

Nintendo, still being five years

behind the ball technologically,

five years behind the ball

looked pretty good at that point.

- It's just--it's funny to think now

that nobody else in the video game industry

was trying stuff like this.

- It was a little hard for people to understand it at first.

We had some challenges in how we were gonna market it,

because it was so confusing to take something that was gonna be one screen

and how you could stretch it to two.

- The combination of GameCube's failure,

the runaway success of the Game Boy Advance,

and the explosion of the Nintendo DS

got Team Nintendo thinking.

Maybe they were looking at the living room all wrong.

Maybe it's not about HD, sexy, online, multipurpose machines.

Maybe the simplicity and success of their handheld products was the answer.

id

- We're always thinking about, how do we--

how do we utilize new input devices,

how do we utilize new accessories as a way

to push the experience forward for the consumer?

It was that thinking that led us to create the Nintendo DS,

first system with a touch screen,

first system that leveraged voice activation.

Systems before the original Nintendo Entertainment System,

if you look at the input devices, they were fairly crude.

We added a range of functionality

that then allowed new types of games to be played.

We did the same thing with the very first joystick

put on a game controller.

We did the same thing by introducing rumble

into the game controller.

- For me, the DS was sort of revolutionary,

because all of a sudden, it took handheld gaming

into a completely different realm.

- So we have this very fortunate history

of bringing innovation into the marketplace.

- The global embrace of the Nintendo DS

would not only heal the wounds of the GameCube.

It would prove to be the beginning of a resurrection for the company...

a revolution.

- Nintendo revolution.

- For two decades, our mission has been

not to just play the game

but to change the game.

- The financial investment of Microsoft,

their willingness to go head-to-head with Sony,

that was gonna have those two powerhouses

fighting for the top two spots,

and that kind of set us up for the way Nintendo

fell further behind and became kind of an underdog

so they could come out of nowhere

with the strongest brand the game industry's ever seen.

[dramatic music]

id

[upbeat music playing]

- J |remember when J

- Gnarls Barkley's "Crazy"

was the biggest song on the radio.

id

"American Idol" had a stronghold on television.

[cheers and applause]

And Sacha Baron Cohen became a megastar for a couple of minutes.

- What type of dog is this?

[dramatic music]

- As all of this unfolded,

everyone in the gaming community was waiting for that new machine

with those weird-looking controllers.

- After the GameCube, they had to change course.

They had to, like, make a left-hand turn.

They're gonna get eaten up now.

What can they do that's so different

than Sony and Microsoft?

- | don't know their internal design process and how they revolve

and kind of iterate on top of what they learn.

But clearly they came out of that

with a lot of momentum on the next thing they did.

- What Nintendo did is--

by the way, mistakenly--

is, they caught lightning in a bottle.

id

- As many of you know, Nintendo's way

is to challenge conventional thinking,

not just for the sake of doing things differently

but to do things better.

- And now you say you want a revolution.

We've got one.

[cheers and applause]

id

- When the Wii came out

and Nintendo sort of reformatted

what video games were looking like

and we all of a sudden had motion control, | was like,

"That--I absolutely need to have that."

- But the idea for the Wii

actually didn't originate within Nintendo's walls.

id

In the late 1980s, Tom Quinn, CEO of Gyration,

began developing a system and patent

for motion-based controls

for use in moving aircraft more effectively.

It took him over ten years to be awarded the patent

for his motion control design idea.

But it would soon pay off.

Though his efforts to apply the idea in aeronautics never took flight,

he thought it might have applications in video games.

He pitched his innovative idea

to both Sony and Microsoft in the early 2000s

but was rejected.

In September of 2001,

the same month GameCube launched,

Tom finally got a meeting with Nintendo.

After fierce internal deliberation,

Nintendo executives agreed the system,

the whole idea, had huge potential.

They decided to license Tom's patents

and buy some of his company, Gyration.

The Wii was born.

Skepticism was high, but Nintendo was poised and ready.

After losing half of their market share,

they took the aikido approach:

let the competition fight over better graphics,

speed, and tech.

- The big thing, if we look at video games over time,

it's just been very much same old, same old.

And the video game market has actually been stagnating.

So people were getting bored with video games.

So what we looked at-- we went for a different direction,

say, "How do we get other people into the gaming market?

"What sort of things scare them?

What sort of things stop them from playing?"

And so we started developing the Wii.

And the most important thing was the controller.

- In the video game world,

there is what | call a rush to complexity,

in which you're constantly keeping your fan base

challenged and updated.

And so pretty soon,

you have controllers that have 27 buttons on them.

And so what Nintendo was able to do with the Wii

is to have a controller

with one button and physical control.

And so all of a sudden, it re-enabled a bunch of people

who were casual gamers, who were non-gamers,

who were senior citizens and young kids, what have you.

And the minute | saw what it was,

| said, "This is going to be a game changer."

[both grunting]

[cheers and applause] - Yeah!

- The Wii was more vintage Nintendo technical innovation.

You know, having a controller

that was simple and easy to use

but, at the same time, categorically different in what you could do with it

| think was a key to making the Wii successful.

- We're a company that doesn't run from risk.

We run to it.

- A hundred years of experience,

trial and error, a bit of luck,

and the patience of Job yielded a true innovation,

a product people didn't know they needed

until they did.

id

id

- Nintendo had quite literally redefined the game

and, in the process,

won the trust of game developers all over again.

The result: some truly great games.

[dramatic string music]

- We would like to play.

[quirky music]

- The Mii Maker was ridiculously fun.

And it wasn't that | could just make little Miis

that looked kind of like me,

but | could build--like, | built the Brady Bunch.

id

- Where Nintendo, | think, dropped the ball

is that they captured that audience,

but they went right back to their wheelhouse.

They're a $40-billion company

because they know their audience.

So let's do another "Pikmin."

Let's do another "Smash Brothers."

Let's do a "Mario Party 8" or whatever.

Wii was incredible,

but you had literally tens of millions of people

who only ever bought the Nintendo Wii for Wii Sports.

id

- [chuckles]

[glass shatters]

[Bizet's "Toreador Song"]

- Oh!

id

- Oh, jeez!

- Oh!

- | mean, there are plenty of gamers who have thrown controllers in anger.

But to do it accidentally is amazing,

because true gamers break their consoles on purpose.

[dramatic music]

- But it went beyond just the games.

The Wii redefined what a game in a communal space could be.

It reached the hard-core gamers

and the casual moms.

It bridged a gap in video games like never before.

- Everybody is a potential player of video games.

That was not necessarily a belief that was held for a very long time.

If you looked at the video game market in the mid-2000s,

video game publishers had started concentrating

more and more and more on young males.

And there was software out there

that tried to appeal to older people or to women or to girls,

but the game machines themselves

were so directly marketed towards, like, young males

that it just gave off this vibe

that it wasn't for anybody else.

To try something--you know,

to sort of fundamentally redefined yourself like this,

you have to give up.

You have to give up on the hard-core gamers, and you have to Say,

"We're not gonna make products for you."

id

- | had women, mothers,

telling me that they just received a Nintendo Wii

as a gift for Mother's Day and they're really happy about it.

Women who, for years, were trying to convince their kids

not to play video games

and desperately worried their kids

were spending too much time playing video games,

now some of these same women are basically saying,

"Yeah, now we have family game night every Tuesday."

- The graveyard of any industry is filled

with the headstones of companies

who decided to keep doing things the same old way.

id

- | remember seeing it, and I'll tell you,

| could have--! would have never designed the Wil.

| don't have that in me.

I'm not--I don't know

if I'm not brave enough or whatever

as a platform holder now

to go and do something as just completely different.

To be just so all in on a new paradigm

was just amazing to see, and it gave us a real jolt

that we can't just be great at what others are doing.

We have to have some unique things that are important to our platform.

And the Wii was just such a perfect example of that.

id

- The thing that | loved so much about the Wii

is the same thing that | loved about the Atari 2600

a generation before: it encouraged playing a game

simultaneously with other people.

- We got it into the hands of regular people pretty quickly.

We didn't go the normal routes, because we wanted it to be for everybody

and to show that it was multigenerational.

- You weren't as beholden to buttons.

You were able to move around.

You were able to swing a tennis racket,

and you were able to swing a baseball bat,

and you were able to move around

in a way that connected you kinetically

with the game in a way that no one else had done before.

- There was no learning curve whatsoever.

Like, you could go to your grandma and be like,

"Here, when the ball comes, swing it like a tennis racket."

And they could immediately get that.

- It was easier for people to get into playing them,

so it activated a more casual and more social audience.

- Everybody had a Wii.

You hear stories about old-age homes,

senior citizens playing with the Wii.

id

- This is how seniors keep alert

at the Sunrise Community Living Center:

playing video games that react to body movement.

- | just gotta hit you one more time.

- Heidi McKenzie may look like

she's just having a bit of competitive fun.

But she and her boxing partner are engaged in a serious form of rehab.

- | put them in military hospitals,

where these people who are doing their rehabs,

they can play tennis, bowling.

| mean, that product is just a fantastic product.

- They arrive one after another,

America's retired warriors,

veterans from World War II, Korea, Vietnam War.

- It brings life to those who have lost their limbs.

It has brought equality to their life

that they could never have done before this technology.

id

- With a string of hit third-party games,

several add-ons that enhanced the experience,

and record-breaking "Mario" and "Zelda" titles,

the platform became the most popular of its generation,

surpassing Microsoft

and even their old rival, Sony.

Nintendo owned the living room once again.

[upbeat music]

- J We are, we ares

S We are, we are f

f We are stronger together f

S Oh, oh, oh, we are Sf

S Oh, oh, oh f

S Oh, oh, oh, we are Sf

S Oh, oh, oh f

id

- Yahoo!

- Today Nintendo has sold over 52 million Wii consoles.

That's more than double the number of PlayStation 3s

that the Sony has sold.

- | had a Wii sent to me from Nintendo,

and one of my grandkids came over and saw | had it.

we had to hook it up right off the bat.

And we were competing who was gonna be playing against who.

And all those years later, nothing had changed.

It was still that same philosophy.

- A guy took me aside when we were in LA and had his whole family there together,

and he was really teary-eyed.

And | said, like, "What? Is something wrong?"

He said, "My family has not been like this in | can't tell you how many years.

"We're not fighting.

"We're all together in the same room.

"And we're doing something with our kids, and they want to be with us."

And so it just was this magnet for such kind of family and friend joy.

So we had to be very purposeful about reaching that end goal.

And it wasn't to release this big system in the traditional way

that all the other consoles had been released.

We had to go a different route, and it was a very home-grown route.

And it traveled because the people fell in love with it.

[dramatic music]

id

- The App Store

to deliver apps to the iPhone.

- | mean, it's Apple.

- By 2010, smartphones and new tech

like virtual reality and augmented reality

were driving game development and hardware.

- Nintendo is now competing with 99¢ smartphone apps.

- With all that in play,

Nintendo faced what would be their most difficult year

since 1889.

id

- Today welcome to the world of Wii U.

id

- Wii was so different.

First of all, | still hate that name.

| still--12 years later,

| still feel uncomfortable talking about my Wii.

You know what I'm saying?

It's just wrong. Wrong.

| don't care how they spell it.

That was bad marketing still.

Wii. Ugh. Anyway.

id

- Isn't there, like, a fun fact where, like,

Kirby had mean eyes, like, in Europe

but not in the States or something like that?

- | think that's--yeah, he had little angry eyebrows.

But when he came out--

- You literally taught me that. - But yeah.

In Japan, he had little angry eyebrows.

But when it came out, they had to get rid of them

‘cause he looked too mean.

id

- f Doo-doo, doo-doo, doo-doo S

~ Doo-doo, doo-doo, doo-doo I

~ Doo-doo, doo-doo, doo-doo I

~ Doo-doo-doo, doo, doo, doo, doo, doo, doo, doo, doo, doo I

~ Doo-doo Sf

id

- Okay, so Ralph Baer, who invented the first video game console,

he played around with other things, like...

on NES "Duck Hunt,"

he made a version where instead of using a light gun,

you throw Nerf balls at the screen.

And Funspot in New Hampshire has that up there.

But he also was playing around with a camera controller for the NES.

id

Now, this is just a dummy. It's just a prototype.

It's the only one in the world.

He couldn't think of a practical reason for its use,

so he never expanded his work into it.

So this is all that remains of that work.

id

- We had times where the big Mario statue in the lobby

would all of a sudden be missing.

Someone will have stolen it and find it in the bushes.

You know, there was a time, when we launched "Mario Kart,"

Mr. Arakawa and Howard were gonna race in go-karts,

and we had all the hay bales and the whole trail.

And, oh, my gosh, it was hilarious,

because Howard wanted to practice.

He wanted to--and Arakawa just thought that was hilarious.

And so when it came to race day,

Howard was so intent on winning,

being the competitive, amazing human he is,

that he almost flipped on some, you know, hay bale.

Arakawa just went right by him, looked back,

and, "Ah-ha-ha-ha," just laughed at him.

And of course, Howard lost and Arakawa won.

id