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Nintendo once accounted for 10% of Walmart’s profits — and 5 other things I learned from reading ‘Console Wars’

Above: Mario and Sonic duking it out.

Image Credit: Nintendo

The biggest retailer in the world’s profits were once so interlinked with Nintendo that it didn’t want anything to do with Sega or any other game-hardware company.

That’s just one of a few dozen interesting tidbits I learned while reading the upcoming book Console Wars: Sega, Nintendo, and the Battle That Defined a Generation. In the 500-plus page tome, author Blake J. Harris guides readers through the various battles of Nintendo and Sega. He conducted more than a hundred interviews and brings a narrative style of storytelling that reveals a number of amazing facts that I either didn’t know or had long forgotten about the dominant gaming corporations of the late 1980s through the 1990s. It all makes for an incredibly gripping read that feels much shorter than its actual length because of how difficult it is to put down. That’s also one of the main reasons that Hollywood announced plans to have Superbad writers Seth Rogen and Evan Goldberg turn the story into a feature film.

Console Wars is due to hit book stores, both physical and digital, May 13. I’ve been reading and enjoying it over the last few weeks, and I wanted to share a handful of other interesting things I learned about the 16-bit gaming kings.

For example, Walmart barely even wanted to speak to Sega of America, let alone stock its Genesis system back in the early days of the 16-bit console’s life in the U.S. This was for multiple reasons — but particularly because the Nintendo Entertainment System and its software represented nearly a 10th of the Arkansas-based retailer’s profits. Of course, having Sega probably would have made Walmart even more money — so, why did it turn down Sega of America president Tom Kalinske when he asked them to make an order?

Because Nintendo was scary as hell.

The NES manufacturer once threatened to stop filling orders for any retailers that stocked games from rogue third-party manufacturer Tengen, which released unlicensed software for the NES in an effort to avoid Nintendo’s strict contracts. Nintendo’s threat was enough to convince every retailer to stop selling Tengen games, and it rippled through the industry and convinced companies like Walmart to avoid making decisions that might upset Nintendo … like stocking the Genesis.

Here’s some of the other things I learned while reading the book:

To get into Walmart, Sega took over the retailer’s hometown

Kalinske and Sega had a problem. Retailers weren’t interested in the Sega Genesis, so instead of going from chain to another in an effort to get what he could, the Sega boss decided to focus on Walmart.

That didn’t pan out for all of the reasons noted above, but that’s when Kalinske and one of his partners came up with a plan to cover Bentonville, Ark., the home of Walmart’s headquarters, with advertisements for the Genesis. The hardware company even rented out a storefront where consumers in town could come in and check out the Genesis, but they couldn’t buy one. The idea was that everyone would go to Walmart and ask for the new, amazing system only to find out they didn’t have it — and ask why not.

This didn’t work … at first.

After months of rejection, Kalinske finally received a call from Walmart’s head of electronics. He gave in after explaining that his bosses kept pestering him about why they weren’t carrying the Genesis. The Sega boss agreed to close the store and take down all of the advertising. And other retailers started falling into line behind Walmart.

Sega of America boss Tom Kalinske was integral to Barbie, Flintstone vitamins, and He-Man

Before joining Sega of America as its chief executive officer, Kalinske worked as CEO of Mattel. Before that, he was a marketing whiz at health-supplement company Miles Laboratories.

While at Miles, Kalinske came up with a way for the vitamin maker to expand its market. He believed that a supplement that tasted pleasant and featured a property that children recognized could do well. That’s how he and his team came up with Flintstones Chewable Vitamins, which was a hit with kids and parents when it hit the market in 1968. The product remains the top-selling vitamin for children today.

His work at Miles eventually helped his get his position with Mattel. Early in his tenure at the toy company, Barbie sales were starting to slip for the first time in history, and most people predicted the blonde toy for girls would fade into obscurity. Kalinkse came up with a plan that would introduce a variety of different Barbie dolls all throughout the year that would appeal to different interests and budgets. This completely reinvigorated the Barbie brand and has helped it maintain its success through to today.

It didn’t end with vitamins and Barbies. Kalinske was also crucial in the development of He-Man and other iconic toys.

“I was shocked to learn that before he even joined Sega, Tom Kalinske had been responsible for such a large part of my childhood,” Harris told GamesBeat. “From Flintstones Chewable Vitamins and Matchbox cars, to He-Man and Pee Wee Herman dolls, the man’s behind-the-scenes influence shaped an entire generation.”

Nintendo could have implemented backward compatibility into the Super Nintendo … for $75

To follow-up the incredibly popular Nintendo Entertainment System and to thwart competition from the upstart Sega, company president Hiroshi Yamauchi gave his engineering team orders to make an amazing new system. More important than that, however, the Super Nintendo had to have the capability to play the original Nintendo games.

We all know that didn’t happen.

Nintendo was able to build a system that could produce colorful visuals, but the top engineers could not get that hardware to work with older NES titles without adding $75 to the cost of the $250 machine.

In the end, Nintendo reasoned it was more important to have a lower price and that consumers were giving up cartridges for CDs. Maybe they would look at the Super Nintendo transition in a similar way. Unlike Sega, however, Nintendo didn’t even opt to release an add-on port that would enable the Super Nintendo to play the 8-bit software.

Consumers, and parents in particular, felt that Nintendo was actually trying to exploit them by releasing a new system that requires new software. The nightly news reports even featured stories about it:

Nintendo didn’t care about making friends, and this helped Sega

Nintendo dominated gaming for much of the 1980s, and it didn’t hesitate to implement draconian controls or to throw around its legal might to keep it in charge of all aspects of the industry. That included things like taking the Blockbuster corporation to court to fight game rentals as well as starting the Nintendo Power magazine to cut out independent publications.

So when Sega needed to grab the attention of gamers, Blockbuster was happy to work with Sega by setting up in-store displays. When Sonic The Hedgehog was getting ready to debut, the American press was happy to put him on the cover of their magazines since Nintendo gave almost all of its biggest stories to its own Nintendo Power.

Kalinske, a charming man who knows how to make friends, even noted to Harris that it was much easier to rely on the hatred others had for Nintendo.

The U.S. government brought a lawsuit against Nintendo on the anniversary of Pearl Harbor

Nintendo’s retail tactics, such as those that kept Tengen games out of stores, eventually led the federal government to bring charges against Nintendo. While many argued the House of Mario was operating a monopoly, others believed that the suit was an example of Americans trying to prevent a Japanese company from gaining traction in the U.S. Harris points out that many believed the latter theory because the government filed the charges on Dec. 7, 1989, which was the 48th anniversary of Japan’s attack on Pearl Harbor.

Whatever the reason, Nintendo’s legal team — savvy as ever — was able to negotiate a deal that would give everyone who purchased a Nintendo Entertainment System between June 1, 1988, and Dec. 31, 1990, a $5 coupon. This got the government off Nintendo’s back, and it would force consumers to spend $50 on an NES game to save $5.

What surprised the author?

While the book surprised me a number of times, I wanted to learn what shocked the author while he was researching the book. Harris, who is working on turning the book into a documentary, was happy to fill me in.

“Going into the writing of Console Wars, I expected the most vicious war stories to be about the feud between Sega and Nintendo,” he told GamesBeat. “But I was totally surprised to learn that while that battle was going on, an even greater war was brewing between Sega of America and Sega of Japan.”

Those battles started with Sega of America taking over the design of Sonic The Hedgehog (which looked much edgier) and continued for years.

Out of everything he uncovered, however, Harris still has one thing that he still shocks him.

“I still can’t believe that Sega passed up the opportunity to release the consoles that became the Sony PlayStation and Nintendo 64,” Harris said. “And even more surprising than the fact that they missed out on these two consoles, which ultimately led Sega to their untimely demise, were the strange reasons why this was the case.”

Those reasons? Well, it has a lot to do with the battle between Sega of America and Sega of Japan. You can get the full story when the book drops later this month.

More about the companies and people from this article:

Nintendo of America is consistently amazed and humbled by the passion and loyalty of our fans. Our hope is that this Page can be a place where that excitement can live, thrive and be shared. And while we love your creativity and are he... read more »

As one of the leading interactive entertainment companies, SEGA cultivates creative talent worldwide with offices in America, Japan and our European HQ in London. Our acclaimed UK based studios include Sports Interactive and The Creati... read more »

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