Hiroshi Yamauchi

Hiroshi Yamauchi (山内 溥 Yamauchi Hiroshi, real name: 山内 博; November 7, 1927 – September 19, 2013) was a Japanese businessman. He was the third president of Nintendo, joining the company in 1949 until stepping down on May 31, 2002, to be succeeded by Satoru Iwata. Yamauchi is credited with transforming Nintendo from a small hanafuda card-making company in Japan to a multi-billion dollar video gamecompany. He also became the majority owner of the Seattle Mariners baseball team in 1992; the current CEO of the Mariners is former Nintendo of America chairman Howard Lincoln.

As of April 2013, Forbes estimated Yamauchi’s net worth at $2.1 billion; he was #13 on this year’s Japan rich list and 491st richest in the world, having a net worth of approximately $2.5 billion.

At the time of his death Yamauchi was the second largest shareholder at Nintendo.

Early life

Yamauchi was born in Kyoto, where he was sent to a preparatory school at age twelve. He planned to study law or engineering, but World War II disrupted his studies. Since he was too young to fight he was put to work in a military factory. Once the war ended in 1945 Yamauchi went to Waseda University to study law. He married Michiko Inaba. With the absence of Yamauchi’s father, who had abandoned his son and wife, Kimi, his grandparents met to arrange the marriage.

Nintendo career

Early career

In 1949, Yamauchi's grandfather, the incumbent president of Nintendo, suffered a stroke. As he had no other immediate successor, he asked Yamauchi to come immediately to Nintendo to assume the position of president. He had to leave Waseda University to do so. Yamauchi would only accept the position if he were the only family member working at Nintendo. Reluctantly, Yamauchi's grandfather agreed, and died shortly thereafter. Under the agreement, his older cousin had to be fired. Due to his young age and total lack of any management experience, most employees did not take Yamauchi seriously and many resented him. Soon after taking over, he had to deal with a strike by factory employees who expected him to cave in easily. Instead, he asserted his authority by firing many long-time employees who questioned his authority. He had the company name changed to Nintendo Karuta and established its new headquarters in Kyoto. Yamauchi led Nintendo in a "notoriously imperialistic style". He was the sole judge of potential new products, and only a product that appealed to him and his keen instincts went on the market.

He was the first to introduce the plastic Western playing card into the Japanese market. Western playing cards were still a novelty in Japan and the public associated them with Western-styled gambling games such as poker and bridge. Most gambling activities were technically illegal by default with only a few legally sanctioned exceptions (horse racing, pachinko and lottery). Therefore, the market for anything which was associated with gambling, including Hanafuda, was limited. Yamauchi's first "hit" came when he made a licensing agreement with Walt Disney in 1959 for his plastic playing cards. Nintendo targeted its playing cards as a tool for party games that the whole family could enjoy, a foreshadowing of the company's approach going into the 21st century. Disney's tie-in was made towards that end. Nintendo's Disney playing card was also accompanied by a small, thin booklet with many tutorials for different card games. The strategy succeeded and the product sold 600,000 units in one year, soon gracing Nintendo with the domination of Japanese playing card market. With this success, Yamauchi once again changed the company name to Nintendo Company Limited and took the company public (listed on stock market) and became the chairman. He then decided to travel to the U.S. to visit the United States Playing Card Company, the world's biggest manufacturer of playing cards. Upon arriving in Cincinnati, Yamauchi was disappointed to see a small-scale office and factory. This led to the realisation that card manufacturing was an extremely limited venture.

Upon his return to Japan, Yamauchi decided to diversify the company. Some of the new areas he ventured into included a taxi company called Daiya, a love hotel with rooms rented by the hour, and individually portioned instant rice. All of these ventures eventually failed and brought the company into the brink of bankruptcy. However, one day, Yamauchi spotted a factory engineer named Gunpei Yokoi playing with a simple extendable claw, something Yokoi made to amuse himself during his break. Yamauchi ordered Yokoi to develop the extendable claw into a proper product. The product was named Urutora Hando (Ultra Hand) and was an instant hit. It was then that Yamauchi decided to move Nintendo’s focus into toy making. With an already established distribution system into department stores for its playing cards, the transition was a natural one for Nintendo. Yamauchi created a new department called Games and Setup, manned initially by only Yokoi and another employee who looked after the finances, and was situated in a warehouse in Kyoto for the purpose of research and development. Gunpei Yokoi was solely assigned to develop new products. Yokoi utilised his degree in engineering by developing what is now known as electric toys such as the Love Tester and a light gun using solar cells for targets. These electric toys were quite a novelty in the 1960s when most other toys were simple in origin, such as toy blocks or dolls. Eventually, Nintendo succeeded in establishing itself as a major player in the toy market.

Beginning of the electronics era

Yamauchi realised that technological breakthroughs in the electronic industry meant that electronics could be incorporated into entertainment products since the prices were decreasing. Atari and Magnavox were already selling gaming devices for use with television sets. Yamauchi negotiated a license with Magnavox to sell its game console, the Magnavox Odyssey. After hiring several Sharp Electronics employees, Nintendo launched the Color TV Game 6 in Japan, which was followed by several revisions and updates of this series.

Yamauchi decided to expand Nintendo into the United States in order to cash in on the growing American arcade market. He hired his son-in-law Minoru Arakawa to head the new American operation. Their Japanese hits such as Radar Scope, Space Fever andSheriff did not achieve the same success in the United States, so Yamauchi turned to designer Shigeru Miyamoto's pet project, Donkey Kong in 1981, which became a smash hit.

Yamauchi infused Nintendo with a unique, industrial development process. He instituted three separate research and development units, which competed with one another and aimed for innovation. This system fostered a high degree of both unusual and successful gadgets. Yokoi, who headed R&D 1, created the first portable LCD video game featuring a microprocessor called the Game & Watch. Although the Game & Watch was successful, Yamauchi wanted something that was cheap enough that most could buy it and yet something unique enough so that they dominated the market for as long as possible.

Nintendo Entertainment System

The Famicom was created and Yamauchi was so confident with this device that he promised an electronics company one million unit orders within two years. The Famicom easily reached that goal, and, after selling several million units, Yamauchi realised the importance of the software that ran on the game systems and made sure the system was easy to program. Yamauchi believed that technicians did not create excellent games, but artists did. The Famicom was released in the United States as the Nintendo Entertainment System (NES). Yamauchi, with no engineering or video game background, was the only one deciding which games were to be released. His remarkable intuition for what people would want in the future was one of the main reasons for Nintendo's success. To help spring creativity, he created three research and development groups and allowed them to compete against each other. This caused the designers to work harder to try to get their games approved.

Super Nintendo Entertainment System

In 1990, the Super Famicom was released in Japan. It was subsequently released a year later in North America, as the "Super Nintendo Entertainment System" (SNES) and in 1992 in Europe. The Super Famicom had been sold out within three days in Japan and had gamers camping for days outside shops in hope of getting the next shipment. The SNES was redesigned for its release and was more box like as compared to its counterpart in Japan. In 1993, the Super FX Chip was launched that would make the SNES display 3D polygonal graphics, utilising it to create the smash hit title called Star Fox, which was designed and produced by Shigeru Miyamoto during the entire development process along with his team in collaboration with another video game developer known at the time as Argonaut Software (currently Argonaut Games). Around the same time, Nintendo increased its research facilities. Nintendo showed major expansion during this period with new plants, R&D facilities and a partnership with Rare. Yamauchi had displayed from the beginning a knack at identifying good games even though he had never played them, and he continued to do so alone at least until 1994. Later that same year, Donkey Kong Country was released. One of the major reasons for the success of SNES was the abundance of good games developed for it.

In 1995, the Virtual Boy was released, but did not sell well. Despite the bust, Yamauchi said at a press conference that he still had faith in it and that the company would continue developing games for it.

Nintendo 64  

In 1996, Nintendo released its new, fully 3D console, the Nintendo 64, and Yamauchi used it to draw attention away from Virtual Boy. Simultaneously, Super Mario 64 was launched as the first fully 3D platform game. In 1999, Yamauchi and Nintendo announced their intentions to work on a new system with an IBM Gekko processor and Matsushita DVD technology codenamed Dolphin. This system was christened GameCube. Yamauchi talked at the E3 about the impact that the release of Xbox would have on the GameCube.

Yamauchi admitted at the 2001 Nintendo Space World event that he had intentionally ordered the Nintendo 64 to be difficult to program games for. The idea was to repel untalented third-party developers from the console, and hence tighten the quality of third-party games. However, his plan backfired and merely increased the number of poorly developed games for the console. As a result of this, the Nintendo Gamecube was to take a step in the other direction, and provide an easy, smooth and intuitive programming environment for game developers.

Nintendo GameCube

 Yamauchi touted the Nintendo GameCube as a machine designed exclusively to be a video game console; an approach which he considered different from Microsoft's and Sony's for their respective Xbox and PlayStation 2 consoles. He believed that the GameCube would specialise in providing the best gaming experience possible as opposed to the all-encompassing entertainment hubs being promoted in its competitors' products (both the Xbox and the PlayStation 2 have DVD and CD-ROM playback functionalities, while the Xbox also features a built-in hard drive). This bias towards "performance only" and the creation of hardware that would allow developers to "easily create games" is what Yamauchi believed would set the GameCube apart from its competitors.

Yamauchi also wanted the machine to be the least expensive available of its kind, in his belief that people "do not play with the game machine itself. They play with the software, and they are forced to purchase a game machine in order to use the software. Therefore the price of the machine should be as cheap as possible." Nintendo hence priced the GameCube significantly less expensively than its rivals in the market, although the console's games were priced identically to those designed for the competing systems.

Post-Nintendo presidency

On May 31, 2002, Yamauchi stepped down as president of Nintendo and was succeeded by the head of Nintendo's Corporate Planning Division, Satoru Iwata. Yamauchi subsequently became the chairman of Nintendo's board of directors. He finally left the board on June 29, 2005, due to his age, and because he felt that he was leaving the company in good hands. Yamauchi also refused to accept his retirement pension, which was reported to be around $9 to $14 million, feeling that Nintendo could put it to better use. He was also Nintendo's largest shareholder despite stepping down. As of 2008 he retained a 10% share in Nintendo. He was the 12th richest man in Japan due to his shares in Nintendo since their success with the Wii and Nintendo DS consoles. He donated the majority of the 7.5 billion yen used to build a new cancer treatment center in Kyoto. Following the announcement of the Wii U and the price cut of the Nintendo 3DS, Nintendo shares fell to 12,290 yen, the biggest drop since 2009. Yamauchi was estimated to have, virtually, lost $312 million USD (approximately 24.2 billion yen).

Family

In 1950, Michiko, Yamauchi's wife gave birth to their first child, a daughter named Yoko. During the next few years, Michiko had several miscarriages and was often ill. In 1957, she gave birth to another daughter, Fujiko and, shortly after, a son named Katsuhito.

When Yamauchi's father, Shikanojo, returned years later to see his son, he refused to speak to him. When Yamauchi was close to 30, he was contacted by his half sister and informed that Shikanojo had died of a stroke. At the funeral he met his father's wife and their four daughters whom he never knew existed. He began feeling sorry about that he had not taken the opportunity to reconcile with his father when he was still alive. The death of his father changed Yamauchi, and he grieved for months and cried freely. From that day he made regular visits to his father's grave.

Baseball

In the early 1990s, the Seattle Mariners were available for sale and Washington state's senator Slade Gorton asked Nintendo of America to find a Japanese investor who would keep the club in Seattle. Yamauchi offered to buy it, even though he had never been to a baseball game. Although the owner accepted the offer, the baseball commissioner and ownership committee were strongly opposed to the idea of a non-North American owner and did not approve the deal. However, following the strong support and sentiments of the people of Seattle and press, and having the decision be deemed as racist, the commissioner formally approved the deal, under the condition that Yamauchi had less than 50% of the vote. This was a major development in American baseball, because this opened the gates for Japanese baseball players to American league teams, which had been previously denied. In 2000, the club made its first profit of $2.6 million since its acquisition by Yamauchi. Despite his ownership of the club, Yamauchi never attended a Mariners game.

Death

On September 19, 2013, Yamauchi died in the hospital following complications of pneumonia. He was 85 and is survived by three children (son: Katsuhito Yamauchi). Nintendo released a statement saying they were mourning the loss of their former president.