Review of Nintendo Magic by Osamu Inoue

Nintendo Magic: Winning the videogame wars
by Osamu Inoue
translated by Paul Tuttle Starr
published April 27, 2010
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I'm not a businessy kind of person. I am a video-gamey kind of person. So, no surprise here, the first time I heard the phrase "Blue Ocean strategy," it was in connection with the Nintendo Wii.

I can't recall what happened—either some games journalist actually said it, or I constructed the story in my head¹—but sometime in 2007, I became convinced that Satoru Iwata, President of Nintendo Co., Ltd., had read Blue Ocean Strategy, the book, and inspired by its wisdom, decided to take Nintendo's business model in a different direction with the Wii. He'd have to be quite a fast reader to have pulled that one off, it turns out; Nintendo was in the thick of the Wii's development process already in 2003 or 2004, and the book was published subsequently, in 2005.²

Nintendo Magic is just the book to dispel misconceptions of this kind. I've read a lot about Nintendo and how it does things over the years, but in Nintendo Magic, Osamu Inoue presents a new picture of the company I hadn't completely understood before, although I had seen pieces of it in the past.

To hear Inoue tell it, Nintendo is a company that has been guided towards the modern day by a cadre of philosopher-kings, all of whom have complementary (and sometimes almost identical) visions for how to make good games and good game machines.

Astonishingly, to me, three of the four lights at Nintendo profiled in the book—the fourth is deceased—consented to interviews with Inoue that originally ran separately in Nikkei Business. Shigeru Miyamoto, Satoru Iwata, and Hiroshi Yamauchi all personally helped Inoue to put together the cohesive picture of Nintendo that Nintendo Magic paints.

This means that the book holds a few surprises. Hiroshi Yamauchi, Iwata's predecessor, is someone I knew best as an overbearing shadow in David Sheff's Game Over. It feels silly to say, but by the time I'd read through the early years of Yamauchi's relationship with Minoru Arakawa, his son-in-law and former president of Nintendo of America, I was scared to death of the man Sheff was describing. Every scene with Yamauchi played out—for me—like a scene featuring Darth Vader: the instant Yamauchi entered the room, the air grew colder, everyone's pulses quickened, and every last shred of authority and power was surrendered to this overpowering, incalculable man. Not to dwell on Sheff—and I should concede here that Game Over is an incredible book, with the most detailed and comprehensive account of Nintendo's history I've seen in print, in one place, in English—but in all fairness to myself, Sheff does open his description of the Yamauchi estate thus (and this description opens the chapter on Yamauchi):

The gate, which has survived for five hundred years, locks shut with a heavy cross-bar. In the year Heisei 4 (1992), the gate is still flanked by a high fence that winds around the perimeter of the Yamauchi property. The fence is crowned with coils of razor wire, iron spikes with dagger point, and deadly-sharp bamboo spears. Their purpose is unambiguous (12-13).

That, however, is Sheff, and I apologize for my digression. The point is that I have been conditioned, by Sheff and others, to think of Yamauchi in a certain way, and there is no question that Yamauchi is a hard man. As both Sheff and Inoue point out, his opening act as president of Nintendo in 1949 was to purge the company of all his relatives, eliminating any potential challenges to his authority and possibly, I suppose, potential inducements to partial decision-making. However, what Nintendo Magic shows is that Yamauchi is a wise business leader, one for whom humility is a necessary attitude for doing business. Inoue sums Yamuchi's philosophy up by elaborating on the latter's interpretation of the kanji in Nintendo's name (任天堂, nin-ten-do, which he reads as something like "leave fortune to heaven"):

The future is unknowable; luck is the purview of heaven—simply focus on doing your best at what you can do..."Composure in failure, humility in triumph"—Yamauchi's motto. When not favored by fortune, stay composed and work hard. When blessed with luck, remain humble and put forth your best effort (170).

I'm still intimidated by Yamauchi—anyone who can bring himself to fire all the members of his family from his corporation, all at once, simply because they are family, is someone whose perspective I will never be able fully to understand—but I can certainly respect his philosophy. I'd stop short of calling him Buffettesque (Warren, I mean, not Jimmy), but I wonder if all business leaders would not benefit from more humility in times of success.

The philosophy of fun above technology, which is, um, the guiding star that has directed Nintendo's ship into the blue water of motion control, is one that has been put into practice at Nintendo for a long time. It is an approach that all of the Nintendo luminaries covered in the book have taken in some way. One of the keystones of Yamauchi's humility-in-success approach is his acknowledgment that Nintendo is a company that produces amusements, and whether it pursues the cutting edge of technology or not, if it stops creating products that consumers enjoy, it will fail. Yamauchi is clearly aware that no one needs Nintendo. Inoue shows how a failure to put fun above technology is largely what went wrong with the Nintendo 64 and the Gamecube. Conversely, this is what was so right about the Game Boy—and that is why it was a bestselling platform for more than a decade.

Although I certainly enjoyed the chapters that were based on Inoue's interviews immensely, my favorite chapter by far was the one on Gunpei Yokoi. Jeremy Parish has written a fair amount on Yokoi's philosophy of "lateral thinking" and "seasoned technology,"³ so it came as little surprise to me that Yokoi fit Inoue's thesis perfectly. Yokoi believed strongly in using somewhat obsolete, cheaper technology in creative ways to produce gaming devices that would differ from the competition in interesting ways while still remaining affordable. What surprised me was Inoue's gentle treatment of the Virtual Boy and Yokoi's subsequent departure from Nintendo. Granted, Inoue strikes me as more of a business journalist than a gaming enthusiast, but he doesn't waste time making jokes about how awful the Virtual Boy was. What he focuses on is what Yokoi did with the Virtual Boy, which was to produce an admittedly innovative platform that did something with older, inexpensive technology that no one else was doing. The Virtual Boy suffered from several missteps, not a few in design, and some others in marketing, but it was a distinctively Yokoiian creation, and looking at it from the fresh perspective Inoue opens up leaves me wishing that I could play Mario Clash or Mario's Tennis just once.⁴ It may be a testament to Yokoi's vision that Nintendo is now following up the most successful handheld of all time, the DS, with the 3DS. Nintendo's introduction of a new 3D system is unquestionably a calculated risk after the notoriously poor performance of the Virtual Boy.

The other new part of the Yokoi story—new for us non-Japanese speakers, at least—is Inoue's claim that Yokoi was not forced to leave Nintendo but left on his own. According to Inoue, Yokoi had been planning for some time to retire and go into business for himself, and the coincidence of the Virtual Boy's failure with his departure was unfortunate but not significant. I haven't heard every available take on the Yokoi story, and unfortunately the book on him is not available in English (see note 3), but every account of Yokoi's departure from Nintendo I have ever heard or read has been negative. The usual narrative is that he failed the company with the Virtual boy and so, despite his many successes, especially the Game Boy, Yamauchi forced him to retire. This seems not to have been the case, to judge from Inoue's version of the story. Those comments of Yokoi's which Inoue preserves here are not negative at all, in my opinion. Yokoi seems to have regretted the circumstances surrounding his departure, but he does not seem to hold any ill will towards Nintendo.

On this point, I do have one comment about the unique tone of Nintendo Magic. Without going into too much depth, and while I am no expert, I do understand that there is a difference in Japan between honne, one's actual feelings on some person or issue, and tatemae, what one feels free or qualified to express about her feelings. I do not know to what degree the importance of distinguishing between the two guides Japanese journalists and their writing,⁵ but I will say that Nintendo Magic always presents a much more restrained and respectful picture of Nintendo than most other accounts I have read. For instance, while Inoue is straightforward in telling the story of the shifting legality of cards and card games in Japan over the past few centuries, a history that I for one appreciate having been informed of, he never alludes to the Yakuza, which I was under the impression was an important source of revenue for Nintendo, particularly given the company's location in Kyoto. Then again, Nintendo does not make its money by selling cards anymore, so this is hardly an essential detail, but I did register its absence. At first, I wondered just a little if Yokoi's story had been embellished with a more positive tone, and if Inoue's treatment of Yamauchi had been, as well, but ultimately, I think that Inoue simply offers an alternative, more balanced view of these narratives and the people involved in them. Given the negativity of some accounts, I think an alternative perspective on Nintendo was a valuable and an important thing.

Another important lesson I learned came from Inoue's discussion of Shigeru Miyamoto's famous tendency to upend the tea table (chabudai gaeshi, translated here as "flipping the table"). The internet is a funny place, and whenever I've heard of Miyamoto upending the tea table, it's been the assumption of the person telling the story that Miyamoto was actually throwing a fit, which is the traditional meaning of that phrase. Either that, or the people I've heard these stories from were joking about Miyamoto throwing a fit and I simply failed to understand the joke. At any rate, someone's Japan filters, probably mine, are turned up too high, because while an actual chabudai gaeshi amounts to abusive behavior and is usually associated with angry husbands dissatisfied with a meal or upset with other members of the family, Miyamoto and those working with and under him use the term jokingly to describe his habit of throwing troubled projects into chaos as he often does late in production schedules—perhaps like a Tim Gunn with horribly painful timing. This has resulted in the late releases of many Nintendo games, supposedly including The Legend of Zelda: Ocarina of Time, which was supposed to be a launch title for the Nintendo 64 but ended up coming out two years later because of one of Miyamoto's upendings. So I've read, anyway.

Obviously, Miyamoto isn't an abusive person; I just assumed the stories about his chabudai gaeshi were literally true. Inoue gives Miyamoto the opportunity to have some fun with the joke, however, as he strains the metaphor delightfully further: Miyamoto jokes that while he does upend the tea table from time to time and throws all of a project's elements into chaos, he often borrows things from other tea tables and helps to set up a new, better meal.

I should say one more thing, and that is about the translation. This book was written for a Japanese audience and brought over directly from its Japanese version; with the exception of a short update at the end of the book, nothing has been added specifically for non-Japanese audiences, as far as I could tell. In one or two places, therefore, there may be concepts that would otherwise be unclear to readers who were not at least a little versed in Japanese culture; however, these are few and far between, and the ones that are important (flipping the tea table, the different kinds of Japanese playing cards) have either been explained fully or have been integrated into Inoue's discussion in such a way that their meaning is never unclear. While, as someone who does not read Japanese, I can't attest to the accuracy of Starr's translation, it is almost always excellent, and it is highly readable. I think we are very lucky to have gotten a translation of the book here.

I've passed over the figures, charts, and graphs that are so professionally presented, as well as Inoue's meticulous reporting of Nintendo's fortunes over the years. A particularly stunning timeline of Nintendo's stock price and operating profits charted against notable moments in the company's history appears in the book's appendix. This is all handled very well, but there's much more to the book, in my view. More than anything, Nintendo Magic is a much-needed addition to the available literature on Nintendo and its business practices. Inoue has had a rare opportunity to speak directly with Iwata, Miyamoto, and Yamauchi about the company's operation, and the insights their discussions with him have yielded helped me to understand much better what has guided Nintendo's successes lately. Together with the regular Iwata Asks (here too) interview series at nintendo.com, Inoue's book makes the typically quiet corporation much more transparent, and the chance to look inside and see how things work is a rare opportunity.

The picture of Miyamoto upending the tea table comes from a presentation by Eiji Aonuma at GDC 2004; the photo is borrowed from IGN.com's Gamecube section.

¹ Quite frankly, I suspect the former.

² But would you like an article about the Wii in which Iwata points out the prescience of Nintendo's business model and the relevance of the blue ocean strategy to that model? Here you go.

³ Parish uses the more common phrase "withered technology," which I take it is the usual translation for Yokoi's mildly famous phrase. Readers of Japanese will find more information in 横井軍平ゲーム館 (Yokoi Gunpei Game House), a book about Yokoi's approach to design—recently reissued, if you don't mind paying the high international shipping rate!

⁴ Oh, but my astigmatism! Oh well.

⁵ The voice of the press is a complicated thing, of course, since it involves concerns about bias real and perceived, concerns that figures will not communicate with the press if they are handled with too much candor, and most obviously concerns about covering stories that will win sponsors. I am often surprised at the number of taboos the American press works hard to avoid breaking and the number of conceits it is committed to maintaining. In other words, I can't even begin to guess what members of the Japanese press have to consider when they report on stories, but I wonder if after all it is very different from what American journalists have to consider.