In July 1981, at the height of Pac-Man fever, Nintendo released its third stand up arcade game. This game, Donkey Kong, took over as the most popular arcade game in the world, but it had a lasting repercussions. It irreversibly changed the course of the home console market, and whether you know it or not, you are still feeling those effects today. Donkey Kong played a direct role in Nintendo toppling Atari.
Nintendo needed Donkey Kong to be a hit
Donkey Kong launched in Japan on July 9, 1981. Nintendo had been in business nearly 100 years as a maker of traditional games. They entered the electronic game market in the 1970s. The first game, Sheriff, came out in 1979 and their second, Radar Scope, came out in 1980. Radar Scope did well in Japan but not in the rest of the world, leaving Nintendo with a surplus supply of arcade cabinets.
Financially, Nintendo needed its third game to do better. At the very least, they needed something that would be a big enough hit to clear that supply of arcade cabinets. Shigeru Miyamoto drew inspiration from the American cartoon Popeye, the fairy tale Beauty and the Beast and the 1930s American movie King Kong when creating Donkey Kong.
Unable to license the rights to Popeye, Miyamoto put a deranged escaped pet gorilla in the role of the villain Bluto and a character simply named Jumpman in the role of Popeye. Jumpman retroactively became Mario after Donkey Kong became successful and Nintendo wanted to expand use of the character.
When asked about the character who became Mario, Miyamoto said he wanted a hero with a strong sense of justice who wasn’t handsome.
Donkey Kong’s immediate effect for Nintendo
To say Donkey Kong was a hit is a massive understatement. It became the highest grossing arcade game of 1981 and 1982.
Donkey Kong launched to the Mario franchise for Nintendo, and Donkey Kong also returned as a recurring character over the years, although the focus shifted after the two immediate sequels from Donkey Kong to Mario.
It put Nintendo on the map as a major producer of arcade titles. Not long after, Nintendo was able to license the rights to Popeye, which resulted in them making essentially the platform game they would have made in the first place. The Popeye arcade game was a hit in its own right, but paled in the shadow of Donkey Kong.
The failure to immediately secure the rights to Popeye turned out to be a blessing in disguise, because as nice as the Popeye game was, it wouldn’t have been transformative like Donkey Kong.
Besides the arcade game revenue, it sold 8 million units as part of Nintendo’s Game and Watch series, and Coleco licensed the rights to the game for home video consoles, selling 6 million cartridges, including the (in)famous Atari 2600 version. It was also the star of Coleco’s launch title lineup for the Coleco Vision console.
Both Coleco and Atari saw Donkey Kong and wanted to license it. Nintendo licensed the rights to video game console versions to Coleco and home computer versions to Atari. Atari made versions for its own computers and, later, versions for other home computers like the Commodore 64 through Atarisoft.
This was where Donkey Kong changed the industry in unexpected ways.
The Nintendo/Atari disagreement
When Coleco announced its Adam home computer at the Consumer Electronics Show in Chicago, held June 5-8, 1983, they demonstrated the computer running an enhanced version of Donkey Kong. Since the Adam was an add-on to the Coleco Vision console, Coleco believed they had a loophole that let them produce this version. Atari CEO Ray Kassar was incensed. He believed Coleco had violated the contract Atari had with Nintendo.
This proved pivotal.
The Coleco Adam famously flopped. It was a reasonable design on paper, but quality control issues ruined it. Coleco discontinued the computer after 16 months on the market, disappointing sales of 100,000 units, and the money they lost on it played a role in the company going out of business.
How Atari walked away from Nintendo over 100,000 potential lost sales
Atari was the undisputed leader in home video games, but they were showing weakness. The 2600 console was showing its age, and Donkey Kong was one of the better examples of contemporary games that the 2600 struggled to play. Atari’s successor, the 5200, fared poorly.
Nintendo was ready to solve that problem for Atari.
Nintendo was about to release its first game console, the Famicom, in Japan. They wanted to export it to other markets, but didn’t want to do it alone. Nintendo really wanted to license the Famicom to Atari and have Atari distribute it in North America. Atari CEO Ray Kassar was going to sign the deal at CES in June, but delayed due to the spat over the Coleco Adam version of Donkey Kong. Then the deal fell through the cracks after Atari forced out Kassar as Atari CEO on July 7, 1983. Atari’s next CEO, James Morgan, never revisited it.
Yes, you read that correctly. Atari could have had the Nintendo NES, and Atari’s embattled CEO walked away from the deal over Donkey Kong running on a computer that went on to sell fewer than 100,000 units.
Nintendo and Atari go their separate ways
Atari went ahead with its own plans for a third generation console, the Atari 7800. Nintendo eventually released its console worldwide under its own name, finding other companies that had existing relationships with local distributors and store chains to handle distribution throughout the world. It worked. Here’s the story of how the NES became a sensation in the small town I was living in at the time.
During the third generation, Atari found itself competing with its estranged business partner using Nintendo titles it had licensed earlier in the decade going against Nintendo’s newest titles. Nintendo ended up selling 60 million units that generation and taking the crown from Atari as the leading name in the home video game console market.
Nintendo later lost that crown to Sony but continued releasing consoles each subsequent generation, using its family-friendly approach to remain in the game even if they don’t outsell Sony or Microsoft.
Atari’s attempted combacks over the years
Atari attempted several comebacks, but ultimately withdrew from the console market in 1993. An attempted 2021 comeback called the Atari VCS only gained a small niche following. Today, Atari is succeeding as a distributor of retro video games and other ventures related to those games. But Nintendo dwarfs it in size at this point.
So that’s why I say Donkey Kong had effects you are still feeling today. If Atari had the NES, their recovery from the 1983 crash probably would have looked very different. We know now that Nintendo could do just fine on its own, and what exactly Atari had to offer to the partnership depends on which Atari we are talking about. The Atari under Warner ownership was a different company than the Atari under Jack Tramiel ownership that started July 1984. Maybe Warner goes through with the sale, and maybe they don’t. If Tramiel and his sons come in and take over and find the arrangement with Nintendo, maybe that changes the early decisions they made. Any number of outcomes are possible, and that’s what makes alternative history so much fun.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.
why didn’t the Sega Master system do as well as NES?
i liked Ghost House and Choplifter