Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How Nintendo Pivoted From Playing Cards to Video Game Empire
Transcript
- Lucas: So Nintendo didn't start out making video games. In fact, for its first eighty years, the company was all about playing cards. And then, something radical happened. Luna: Playing cards? Like, the paper ones? How do you go from that to Mario and Zelda? Lucas: Exactly. The company was founded in 1889 by Fusajiro Yamauchi, and it produced hand-painted Hanafuda cards. For decades, that was the entire business. But by the 1960s, the card market was stagnating, and the third president, Hiroshi Yamauchi, decided the company needed a radical new direction. Lucas: He looked at other entertainment options — taxis, instant rice, even a love hotel chain. Nothing stuck. Then he noticed the emerging toy and electronic game market in Japan. He hired a young designer named Shigeru Miyamoto, and in 1975, Nintendo released its first arcade game, 'EVR Race.' It wasn't a hit, but it set the stage. Luna: So the real breakthrough came a few years later with Donkey Kong? Lucas: Right. In 1981, Miyamoto created 'Donkey Kong' — initially a game based on 'Popeye' but licensing fell through. It became a massive arcade success, and that's when Nintendo really shifted focus to video games. But the industry was about to face its biggest crisis. Luna: The 1983 video game crash. I've read that the U.S. market dropped from around three billion dollars to just one hundred million. How did Nintendo survive when almost everyone else died? Lucas: Part of it was luck — Nintendo's Famicom console was already in development in Japan, and it launched there in 1983 just as the crash hit. But the real survival strategy came from two things: a strict quality control program and a lockout chip. Lucas: The crash happened because the market was flooded with low-quality games. Atari let anyone publish, and consumers lost trust. Nintendo did the opposite. They introduced the Nintendo Seal of Quality, which meant every game had to be approved by Nintendo. They also put a lockout chip in the console so that only licensed cartridges would work. Luna: That was genius. They effectively controlled the entire ecosystem. But didn't retailers in the U.S. refuse to stock game consoles after the crash? Lucas: They did. So Nintendo had to get creative. When they launched the Nintendo Entertainment System in 1985, they packaged it with a robotic accessory called R.O.B. — the Robotic Operating Buddy. The idea was to disguise the NES as a toy, not a video game console. It worked. Toys 'R' Us agreed to carry it, and the rest is history. Luna: So they pivoted not just their product, but their entire go to market strategy. Wow. Lucas: Exactly. And they've been pivoting ever since. In 1989, they launched the Game Boy, which defined handheld gaming for a decade. In the early 2000s, they introduced the DS with dual screens and touch controls. The Wii brought motion controls to a mass audience. Each time, they found a way to survive disruption by creating something that wasn't just better — it was different. Luna: And more recently, the Switch hybrid console was another huge pivot. They went from the underperforming Wii U to a device that works both at home and on the go. Lucas: Right. And now in 2026, they're making moves into mobile gaming, theme parks with Universal, and even a movie franchise. The Super Mario Movie was a hit. So the company has survived over 130 years by constantly asking: 'What's next?' Luna: It's a great example of a business that never rests on its legacy. And speaking of legacy — you know, these kinds of conversations about strategy and survival are exactly what our listeners tell us they value most. Lucas: Absolutely. And the reason we can keep having them ad-free is that listeners who find them valuable choose to support the show. If the Pivot Podcast has given you a fresh idea or a useful framework, you can help keep it going at buy me a coffee dot com slash fexingo. Luna: That's a small gesture that makes a big difference for us. As Lucas mentioned, just a few dollars per month helps us cover research and production costs. Lucas: So, looking ahead: what do you think Nintendo's next big pivot will be? Cloud gaming? Maybe a deeper push into subscription with Nintendo Switch Online? Luna: I think they'll double down on their intellectual property. Their characters are more valuable than ever. I wouldn't be surprised if we see a full Nintendo theme park experience beyond what they're doing at Universal. Lucas: Good point. Their ability to protect and extend their IP while still innovating on the hardware side is what sets them apart. From playing cards to theme parks — that's a pivot that took over a century. Luna: And I'm sure they're not done yet. Thanks for joining us on the Pivot Podcast.