Minoru Arakawa knew nothing about video games when he started Nintendo of America. He was a civil engineer, building condominiums in Vancouver for a Japanese trading company, when his father-in-law, Nintendo’s president Hiroshi Yamauchi, asked him in 1980 to take Nintendo into the United States. His first big order nearly sank the company. The game that rescued it was Donkey Kong. Five years later, when American shops had sworn off video games after the 1983 crash, he took the Nintendo Entertainment System to New York and offered to stock the shops himself. He ran Nintendo of America until 2002.
Fast facts
- Born: 1946, into a Kyoto family that had been in the textile business for four generations.
- Education: civil engineering at Kyoto University, then a second master’s degree at MIT in 1972.
- Nintendo of America: founding president, 1980 to 2002.
- Family: married Yoko Yamauchi, Hiroshi Yamauchi’s eldest daughter.
- Later: co-founder of Tetris Online, Inc. in Honolulu with Henk Rogers.
From Marubeni to Manhattan
David Sheff’s Game Over, which quotes Arakawa and his wife at length, is the fullest account of his early life. The second son of a wealthy Kyoto family, Arakawa studied civil engineering at Kyoto University, spent the summer of 1971 driving round America in an old Volkswagen bus on five dollars a day, and took a second master’s degree at MIT. He joined Marubeni, a trading company that developed hotels and offices around the world. At a Kyoto society ball he met Yoko Yamauchi, and they married. In 1977 Marubeni sent him to Vancouver, where he built 350 condominiums and sold some of them himself.
Yamauchi wanted someone to open up America, and his own son was too young. In 1979 he offered Arakawa a factory in Malaysia, which he turned down. Early in 1980 Yamauchi offered him the presidency of an American subsidiary instead. Yoko, who knew what working for her father would mean, was against it; Arakawa accepted. The family left Vancouver in May 1980, on the day Mount St Helens erupted.
Nintendo of America began in a small office on the seventeenth floor of a building at Twenty-fifth Street and Broadway in Manhattan. Yoko was its first employee. Its first business was arcade machines, shipped from Japan to a rat-infested warehouse in New Jersey. Arakawa found staff by watching players in arcades. When one teenager snapped at him for looking over his shoulder, Arakawa offered him a job.
Radar Scope, Donkey Kong and a Seattle warehouse
Arakawa’s first big bet was Radar Scope. It tested well, and he ordered three thousand machines, committing almost all of the company’s money. By the time the ship arrived from Japan, nearly four months later, interest had gone, and more than two thousand were left unsold. The delay persuaded him to move west, closer to Japan. Nintendo of America leased a 60,000-square-foot warehouse in the Segali Business Park at Tukwila, near Seattle–Tacoma airport, and Arakawa took one of its three small offices.
Yamauchi gave the replacement game to an inexperienced designer, Shigeru Miyamoto. When the board arrived, Arakawa’s salesmen thought Donkey Kong was a disaster, and he asked Yamauchi at least to change the name. Yamauchi refused. The staff named its hero after the warehouse landlord, who had turned up in front of everyone to complain that the rent was late; Sheff and Edge spell his name Mario Segali. The game sold. Arakawa turned down Taito’s offer to buy the rights, ordered thousands more, and, by Sheff’s account, sold 60,000 more machines; Nintendo of America’s second year ended with more than $100 million in sales. He put the profits into 27 acres of land in Redmond, paid for in cash, where the company’s first building was ready in November 1982.
Howard Lincoln and the King Kong case
To protect Donkey Kong, Arakawa needed a lawyer. His salesman Ron Judy introduced him to Howard Lincoln, a Seattle attorney who registered the trademark and wrote the home-rights contract with Coleco. In April 1982 Universal City Studios claimed that Donkey Kong infringed its rights in King Kong. Coleco and other licensees settled, but Arakawa and Lincoln refused, and the court later found that Universal had known it did not own the rights it claimed. Universal vs Nintendo tells that story. While the case was being prepared, Arakawa asked Lincoln to leave his law firm. Lincoln agreed on condition that he help run the company, and he became Nintendo of America’s senior vice-president, second only to Arakawa.
Selling the NES to people who had given up on video games
Throughout 1984 Arakawa met American toy and department-store buyers, and Sheff says they thought he was mad to try. One told him he had his job only because his predecessor had been sacked for losing money on video games. Arakawa concluded that shops had been swamped with bad games, and that Nintendo’s machine must not look like the ones that had failed.
His first answer, the Advanced Video System, was sold as something close to a home computer, with a keyboard, a music keyboard, a cassette recorder and wireless controllers. Buyers at the January 1984 Consumer Electronics Show admired it, but almost none would order it. Arakawa dropped the computer parts and the name. In Kyoto, Gunpei Yokoi’s team came up with a toy robot, R.O.B., which played two games, Gyromite and Stack-Up. Arakawa renamed the machine the Nintendo Entertainment System and showed it at the June 1985 show. Nintendo’s advertising rules banned the words “video game”: the NES was an entertainment system, and the machine was a “control deck”, not a console.
Buyers still held back, and in focus groups in New Jersey boys told him they hated it. Yamauchi told him to ignore the tests and sell it in one city, and asked which would be the hardest. The answer was New York, where the crash had hit worst and unsold stock had been dumped, and Yamauchi chose it. He gave Arakawa a budget of $50 million. In the autumn of 1985 Arakawa set up in a windowless warehouse in Hackensack, New Jersey, with a team of about thirty from Seattle. They demonstrated the NES in shopping malls next to New York Mets players signing autographs, and built shop-window displays overnight.
To get the machine into shops at all, Arakawa removed the risk. Nintendo would stock the shops and set up the displays, nobody would pay for ninety days, and then the shops would pay only for what they had sold and return the rest. Yamauchi, Sheff writes, disliked offering a money-back guarantee. Arakawa argued that it showed confidence. “It’s your funeral,” one buyer said. By Christmas 1985 between 500 and 600 stores had the NES. About half of the 100,000 systems shipped from Japan sold. It was less than Nintendo had hoped for, but enough to go on. A test in Los Angeles in February 1986 did better, and national sales followed later that year.
Arakawa also meant to avoid the flood of poor games that had come before the crash. Every NES cartridge needed a lockout chip that only Nintendo could supply, and he and Lincoln wrote a licence for outside publishers that gave Nintendo approval of their games, packaging and advertising. The Nintendo Seal of Quality came out of that system.
Tetris in Moscow
In March 1989 Arakawa and Lincoln flew to Moscow, telling hardly anyone at Nintendo where they were going. Henk Rogers had already obtained the handheld rights to Tetris from Elorg, the Soviet agency that licensed it, which gave Nintendo the game for its new Game Boy. Elorg now said it had never sold the rights for home consoles to anyone. After three days of negotiation the contract was signed on 22 March 1989. Arakawa signed for Nintendo, Alexey Pajitnov as the game’s author and Evgeni Belikov for Elorg. The deal led to Nintendo’s court fight with Atari Games’ Tengen label over the NES version (see the Tetris legal battles). Sheff also records a lighter moment: at a Japanese restaurant in Moscow, Arakawa laughed as Pajitnov ate a lump of wasabi whole.
The Seattle Mariners
Late in 1991 Washington’s senator Slade Gorton asked Arakawa and Lincoln whether investors in Japan might help keep Seattle’s baseball team, the Mariners, from moving to Florida. Arakawa asked his father-in-law. Yamauchi, who had never seen a baseball game, agreed to put up the money, and Arakawa was to oversee the investment. The Hiroshi Yamauchi entry covers the purchase.
Retirement and after
Edge reported in February 2002 that Arakawa had stepped down as president of Nintendo of America after a 22-year tenure in which he “oversaw the launches of successive generations of Nintendo hardware, including the massively popular NES”. His successor was Tatsumi Kimishima, previously president of Pokémon USA. He stayed with Tetris: in 2006 he and Henk Rogers founded Tetris Online, Inc., a Honolulu company that made online versions of the game.
Sources
- David Sheff, Game Over (1993; GamePress edition, 1999): chapter 5, “Coming to America” (the Arakawa family, Kyoto University, the 1971 journey, MIT, Marubeni and Vancouver, the Malaysia offer, the 1980 offer, the move in May 1980, the Manhattan office and New Jersey warehouse, Radar Scope, the move to Seattle and the Segali Business Park warehouse); chapter 6, “For a Fistful of Quarters” (Donkey Kong, the landlord, Taito’s offer, sales, the Redmond land, Howard Lincoln, the Coleco contract, the Universal case and Lincoln joining Nintendo); chapter 8, “Enter the Dragon” (the buyers in 1984, the Advanced Video System, R.O.B., the June 1985 show, the focus groups, the New York test, the ninety-day terms, “It’s your funeral”, 500 to 600 stores and half of 100,000 systems sold, the advertising rules); chapter 8 on the lockout chip; chapter 10, “Game Masters”, on the licensing contract; chapter 14 (the Moscow trip and the signing on 22 March 1989); chapter 16, “Borders”, pp. 404–7 (the Mariners).
- Edge issue 107, February 2002, news pages: “President of Nintendo of America Steps Down”, the 22-year tenure, Mario named after the landlord “Mario Segali”, Tatsumi Kimishima.
- Retro Gamer issue 100, March 2012, p. 95: the New York test market in autumn 1985 and the Los Angeles test in February 1986.
- Stacy Yuen, “Tetris Evolves into Facebook Phenom”, Hawaii Business, 11 April 2012 (web, secondary): Arakawa and Henk Rogers as co-founders of Tetris Online, based in Honolulu since January 2006. https://www.hawaiibusiness.com/tetris-evolves-into-facebook-phenom/
- Encyclopedia.com, “Arakawa, Minoru”, from Business Leader Profiles for Students (web, secondary): birth year. https://www.encyclopedia.com/education/economics-magazines/arakawa-minoru