Mario Bros. is the biggest franchise of all time. Bigger than Star Wars, Marvel… bigger than Harry Potter. Nintendo is an empire.

Dave Young:

Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is… Well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.

[Travis Crawford Ad]

Dave Young:

Welcome back to the Empire Builders Podcast. Dave Young here with you, and Stephen Semple’s alongside, with another empire-building story for us that-

Stephen Semple:

An exciting story.

Dave Young:

It’ll take you back to childhood, but it doesn’t take me back to childhood because I’m too goddamned old.

Stephen Semple:

Well, it depends how you look at this, this might be-

Dave Young:

No, I suppose. I suppose the company [inaudible 00:01:55].

Stephen Semple:

It might be older than your childhood, but depends what we decide to talk about.

Dave Young:

Yeah, it’s just like when the big games came out, the… So we’re talking about Nintendo today.

Stephen Semple:

Correct. Correct.

Dave Young:

And I had Atari and things like that. And my kids all had the Nintendo. I actually have a Nintendo Switch, but I didn’t get that until I was…

Stephen Semple:

It also originally started as an arcade game, if we go back, because we are going to go back far enough.

Dave Young:

Well, that’s true. That’s true.

Stephen Semple:

Yes, yes. But if we actually went back to the company, Nintendo, we would be going back to 1889.

Dave Young:

Okay. So not so much my childhood. There you go.

Stephen Semple:

1889. Yeah. And we’re really not going to talk so much about the origin and Nintendo as a company, but really, the origin of the video game business, and more specifically Donkey Kong, and went on later to become the Mario Brothers franchise. That’s really what we’re going to talk about.

Dave Young:

Now, hold on. Hold on. Hold on. Now, I don’t know everything, but I’m pretty sure video wasn’t around in 1889.

Stephen Semple:

It was not.

Dave Young:

There was no video games.

Stephen Semple:

No, there was not. So that’s why we’re really going to be talking about more of the recent history of Nintendo.

Dave Young:

A real Donkey Kong, climbing ladders and throwing barrels.

Stephen Semple:

Okay. That’s it. That’s it.

Dave Young:

Or a monkey, a gorilla. Yeah.

Stephen Semple:

And here’s the thing, the Mario Brothers franchise is huge. It’s one of the biggest franchises in history. There’s been 800 million video games sold worldwide, making it the bestselling video game of all time. It’s bigger than Pokemon in game sales alone. The estimated lifetime sales across all revenues for the Mario Brothers franchise is $60 billion. Bigger than Star Wars, bigger than Harry Potter, bigger than Marvel.

Dave Young:

Wow.

Stephen Semple:

The movies alone sold over a billion dollars. There’s theme park now. It’s huge. It’s absolutely massive. And the Nintendo company is very old. It was founded back in Kyoto, Japan in 1889 by Fusajiro Yamauchi. That’s it, Yamauchi.

Dave Young:

Oh.

Stephen Semple:

Boy, I’m going to struggle with these names.

Dave Young:

What were they doing back then? What was the company doing?

Stephen Semple:

The first product they did was a playing card called Hanafuda, and it was very, very successful. So they actually started-

Dave Young:

As a gaming company.

Stephen Semple:

… in game business doing playing cards.

Dave Young:

Okay.

Stephen Semple:

Now, during the 1950s, during Japan’s economic recovery, because if you remember, the economy was decimated in World War II, and through the Marshall Plan and whatnot, there was this rebuild going on. And during that time, they had a new leader, Hiroshi Yamauchi, who decided to explore all sorts of new businesses. He was doing all sorts of stuff. They had taxis, they had love hotels. Yes, you heard it right, love hotels.

Dave Young:

Love hotels.

Stephen Semple:

Instant rice, and of course, toys. And most of the things they did failed, except toys held a promise, so they continued to lean into toys. So it’s April 1978, so this is basically really where our story starts, and Taito, a competitor, releases a game called Space Invaders.

Dave Young:

Oh, right. I remember Space Invaders. Sure.

Stephen Semple:

Remember Space Invaders? And of course, this is back in the day of arcades, and you’re putting money into the games. This is so big in Japan, there’s 100 yen shortage. It would be like being in the U.S., and we run out of quarters.

Dave Young:

Right.

Stephen Semple:

It’s so big. So Nintendo, because it’s having some success in the game space, decides to make a knockoff of Space Invaders. So it’s October 1980, they create this knockoff called Radar Scope, and they decide also to ship it to the U.S., because they’ve started up a U.S. division. And it takes four months for the game to travel from Japan to the United States, and once it arrives, the trend has changed, it’s no longer Space Invaders, it’s now Pac-Man is the big game.

Dave Young:

Okay.

Stephen Semple:

So they’re left with these 2,000 unsold cabinets sitting in the United States. Enter Shigeru Miyamoto, who’s a graphic designer with Nintendo, and he has an idea, and he says to them, “Look, let’s reuse the cabinets, and let’s just create a new game. Let’s do that.” And it’s like, “What the heck? Let’s give this a try.” So Shigeru grew up in rural Japan, and this deeply influenced how he looked at games, because he grew up in a place where there was no television, none of these things, and he would go and he would play in like a cave that was nearby, and he would create all of these stories and characters. And this is the ’80s where the games do not have characters or a story.

Dave Young:

Okay. Yeah.

Stephen Semple:

They didn’t have that.

Dave Young:

Space Invader, you’re just knocking down…

Stephen Semple:

Right. Pac-Man, the same thing, there was no story. Pong, all that stuff, no stories. He takes a look around and he realizes that Nintendo has the rights to use Popeye, so Shigeru makes a suggestion to create a game using Popeye, where they already have the rights, and he moves ahead and does that. And so he also decides to make a game where characters move up rather than scrolling left to right, and there’d be different levels, which was also a relatively new idea. And he created this whole thing where they could jump, and using just a joystick in the buttons that already existed. So they started to create this game, but they hit a snag. Just before the release, they discovered Nintendo only had the rights to use Popeye for playing cards.

Dave Young:

For playing cards. Darn it.

Stephen Semple:

Now, turns out this was a gift from heaven, and the best thing that could ever happen in Nintendo.

Dave Young:

So it would’ve been Bluto up at the top, and Popeye trying to get up there, climbing the ladders and-

Stephen Semple:

And saving-

Dave Young:

So sort of a nautical theme?

Stephen Semple:

And saving olive oil.

Dave Young:

Yeah.

Stephen Semple:

Because remember, he would always capture olive oil.

Dave Young:

Yeah.

Stephen Semple:

And Popeye was this love triangle, right?

Dave Young:

Yeah.

Stephen Semple:

So what does Shigeru do? Replaces-

Dave Young:

Bluto becomes-

Stephen Semple:

… with-

Dave Young:

… the gorilla.

Stephen Semple:

Right. Popeye becomes Mario.

Dave Young:

Yeah.

Stephen Semple:

And olive oil is Princess Peach.

Dave Young:

Okay.

Stephen Semple:

It’s the same story.

Dave Young:

Yeah. Beautiful.

Stephen Semple:

It’s exactly the same story. And if you think about it, even the whole idea of this gorilla capturing the princess kind of sounds like King Kong, doesn’t it?

Dave Young:

A little bit. Sure.

Stephen Semple:

A little bit. And of course, they can’t use the name King Kong, so it’s Donkey Kong. And the reason why Donkey Kong is, he went looking through English dictionaries, and there’s all this stubbornness, and all this other things that go along with it. So we went, “You know what? This monkey, this Kong is kind of stubborn.” So Donkey Kong is the n...