Arcade History: Nintendo and Sega’s Early Console War | History Hit

Arcade History: Nintendo and Sega’s Early Console War

Ben Wilson

05 Jul 2021
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Tokyo, Japan, August 27 2020.
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Developers Sega and Nintendo are famous for the competition that erupted between the Master System and NES, and Mega Drive and Super NES.

These late 1980s and early 1990s console wars didn’t come out of nowhere, however. They were the culmination of a turf war that had been brewing for decades.

Here’s how the fight between Japan’s big two game developers unfolded, long before Sonic and Mario went head-to-‘tache.

Sign on the front facade wall of the original office and manufacturing facility of Nintendo Company Ltd in Kyoto, Japan.

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Nintendo founded

In 1889, a full 92 years before the advent of Mario, Japanese craftsman Fusajiro Yamauchi founded Nintendo Kurate in order to produce handmade hanafuda playing cards. These cards are smaller than the Western equivalent, depicting flowers, animals or culturally significant scenes on their reverse.

The company meandered along until 1907, when it struck a deal with Japan Tobacco to distribute cards to cigarette stores. Its first move to a younger market occurred much later. In 1959, Nintendo partnered with Disney to produce cards which could be purchased in toy shops.

Downtown Tokyo, Japan in December 1952.

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Standard Games

While Nintendo’s path to gaming was circuitous, Sega seldom strayed from its initial vision. Originally known as Standard Games, the company was formed in 1940 to provide coin-operated gaming machines to military bases during World War Two.

The US Government outlawed such machines in 1952, so the company shifted operations to Japan and Panama to benefit servicemen in those territories instead. The name Sega is an abbreviation of Service Games. It was first used on the Diamond Star slot machine of 1954.

First engagements of a console war

Despite Nintendo’s teaming-up with Disney in the 1950s, it would be more than two decades before Nintendo would cross paths with Sega.

The 1960s saw the hanafuda market dry up thanks to the rise of pachinko machines, which led to Nintendo dabbling in some truly curious experiments. These included its own brand of instant rice, a chain of love hotels, and a taxi service named Daiya. Finally, a new production plant outside of Kyoto proved fruitful, and its tabletop games such as chess and mahjong were well received.

Pachinko in Osaka, Japan

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Periscoping the competition

Sega’s experience of the 1960s proved more conventional. Frustrated at the constant need to fix imported machines, it developed its own manufacturing arm and, in 1966, released its debut first-party game: submarine simulator Periscope.

Periscope was soon exported to US shopping malls and effectively became the first arcade game. Thereafter, Sega produced 8-10 games per year and, in 1970, expanded to open a 125-game arcade in Sapporo. This kicked off the tradition of ‘family fun’ centres which continues to this day, as anyone who has ventured to London’s Trocadero during the late 1990s will attest.

Amusement Arcade, Sapporo Japan

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Nintendo Beam Gun

That same year, Nintendo assumed the guise we know well today. Japan’s first electronic toy, the Nintendo Beam Gun, sold more than a million units, and was followed up by a similar pretend weapon for the Magnavox Odyssey console in 1971.

The company wasn’t ready to venture into Sega’s arcade territory just yet, but it did release a home-based skeet shooting simulator called Wild Gunman in 1974. It then released its own Color TV-Game console three years later. This contained six different versions of the classic Pong, powered by batteries or a unit sold separately.

Super Mario Bros.

Image Credit: Nintendo

Jumpman’s genesis

The ‘80s saw both Nintendo and Sega establish themselves as video gaming powerhouses. Sega made $100 million in revenues in 1979; the releases of Frogger and Zaxxon, the first game with isometric graphics, lifted that number to $214 million three years later.

Nintendo tasted similar success. Its portable Game & Watch system sold 43 million units, before it ate into Sega’s share of the arcade pie with the 1981 release of Donkey Kong. Its protagonist, Jumpman, would soon be renamed Mario and become the company’s permanent mascot.

Randy Horn shows his personal copy of “E.T. the Extra-Terrestrial” at the old Alamogordo Landfill dig site in Alamogordo, New Mexico, April 26, 2014. Horn worked at the landfill from 1979-1989 and was on hand when the Atari cartridges were buried.

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1983 downturn

In 1983, over-saturation of the market led to a two-year recession in the video game industry. 1983 revenues stood at $3.2 billion. By 1985 they had fallen 97% to $100 million.

Inexpensive home computers such as the Commodore 64 saw consumers move away from console gaming. This resulted in software giant Atari losing $356 million and axing 3,000 staff. The company went so far as to bury 728,000 unused cartridges in a New Mexico landfill site.

Yet the crash pushed Nintendo into rethinking both the name and design of its upcoming machine.

Tokyo, Japan, August 27 2020.

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NES generation

Nintendo dropped the term ‘console’ completely from its new machine’s name and called it the Nintendo Entertainment System (NES).

Rather than load a game cartridge into the top of the unit, it mimicked the era’s popular VCRs and had you push the cart into the front. The nationwide US launch arrived in September 1986 and its astonishing success meant it was still being manufactured nine years later. The machine sold 61.9 million units worldwide.

Sega’s response to the crash was to release motorcycle simulator Hang On in 1985. With its groundbreaking 3D graphics, it struggled to meet demand. The games Hang On and the car-based OutRun released in 1986 are both credited with rescuing arcades following the 1983 crash. They were followed up with two more Sega classics: Space Harrier and After Burner.

Sega Mega Drive

Image Credit: Wikimedia Commons / Composite: History Hit

Sonic boom

As Nintendo took control of the home-based video game market, Sega owned the arcades. This meant that both companies prospered in the late 1980s while others floundered.

Sega did attempt to eat into Nintendo Mega Drive’s 80% market share by releasing the Master System, but it was in 1991, with new mascot Sonic, that the competition got hot. Blue to match the company logo and with red shoes borrowed from Santa Claus and Michael Jackson, Sonic and rival Mario would define video gaming for the much of the next decade.

Ben Wilson

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