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Gaming Historian
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"2015-05-29 19:58:50"
Tengen: Atari Games vs. Nintendo - Gaming Historian
\\while browsing through any US games you occasionally come across some that look different they're black and they've a slightly different shape and they're all made by the same company known as tendon sometimes I'll even come across the same game in a grey cartridge as well as a black tendon cartridge so who was 10 gin in why do they make these weird looking video games it all revolves around a big legal battle between 2 juggernauts in the video game industry a case that would not only redefine laws but change how third party developers made video games on home consoles let's take a look more than in 1984 Atari was in trouble the video game crash of 1983 brought on by a flood of consoles and poorly made games devastated the once prolific company at the end of the year Atari had lost 539 $0 massive layoffs soon followed business deals work closed or consolidated in may of 19 for a loan 700 employees were laid off Steve Ross president of parent company Warner communications had seen enough it was time to pull the plug and recuperate whatever losses he could he came up with a plan to split the company and sell them for as much as possible Atari was split into 2 Tory corporation and Atari games Atari corporation handled the consumer products such as their line of personal computers in video game com while Atari games had control of the coin operated arcade games and software on 7/2/1984 the majority of Atari corporation was sold to Jack trim Mel the founder of the computer company Commodore although true Mel could have purchased Atari games for practically nothing he had little to no interest in video games his background was in computers Warner continue to look for a buyer as Atari games was losing money and suffered more layoffs the next year Atari games finally found a buyer it was a Japanese man by the name of messiah not Cumorah who owned a company named Namco on 2/4/1985 he purchased 60 percent of Atari games through his U. S. subsidiary Namco America for $10000000 for not tomorrow it was a long time dream realized the Tory was once the dominant game company in the industry and now he owned it but his dream would be run by another man the same man not camara sent to the United States to run Namco America his name was he to UT Nakajima in his book game over David Sheff describe Nakajima as unusually open state and in short perfect type of man to turn around Nakajima even had a history with the company back in 1973 Nolan Bushnell and Ted Dabney take the disk Tory products international thus was born Atari Japan Nakajima a veteran of the Japan art paper come was named the general manager in the beginning it was a disaster Atari Japan struggled to find distributions for their arcade games they turn to another company for help Nakamura amusement machine manufacturing company 4 name co for short Nakajima asked messiah Nakamura to help distribute the games in exchange for a cut of the profits Nakamura agreed however Atari Japan kept losing money Nakajima even had to use some of his own personal savings to keep the operation going in the end it was his own employees who were stealing money from the company in a last ditch effort Nakajima flew to the United States to meet with Atari executives begging to let him keep going but Atari was losing too much money and decided to sell Atari Japan to the highest bidder at first that was Sega for a measly $50000 but Namco saw this as a great opportunity to get into video games and agree to purchase Atari Japan for $550000 and the rights to distribute Atari games throughout the country Nakajima kept his job in within a few years Namco would utilize the resources it gained from the transaction to become one of the biggest video game companies in Japan they churned out hits such as pac man Gallagher and Paul position in 1978 with business doing well Nakajima convinced not camara to open a subsidiary company over in the United States he agreed and Namco America was born their location a few blocks away from the old Atari offices in Sunnyvale California Namco America license they're popular arcade games to American companies with midway getting too big hits Gallagher and pac man Nakajima also struck up a deal to merchandise their gains Batman memorabilia was everywhere nationwide and Namco America made a ton of money now in 1985 it was up to Nakajima to save Atari games he reduce the salaries of vice presidents and directors froze salary increases for a year and laid off 30 employees Nakajima himself took a 20 percent pay cut well he was able to get Atari games out of financial trouble he had disagreements with messiah Nakamura on what direction to take the company not tomorrow was hesitant to put more resources into the company seem them as a competitor to Namco he also did enjoy the fact that Warner still own 40 percent in 1987 Nakajima and knock a more a came to an agreement Nakajima along with several employees and Warner communications were purchased 20 percent of the company from Nakamura Nakajima would become the president and resigned from his position at Namco America for Nakajima everything had come full circle he was once working for Atari struggling to make it a success in Japan and now he was running it in America he soon turned his eye toward the home console market we should recently seen a resurgence with the Nintendo Entertainment System at the time sector was not licensing games for their master system and the Atari 7800 released by Jack for Mel's Atari corporation was barely doing anything be any yes was the way to go but there was a problem Atari games couldn't actually publish games under the Atari name as Atari corporation owned the rights to the consumer division to get around this Atari games formed a new subsidiary known as 10 gin Nakajima came up with the name 10 gin in a similar fashion as Bushnell came up with a Tory bush known dead renamed Atari after a term used in the Japanese game though the word Atari is used in the same way someone would say check while playing chess Nakajima chose the word tendon which represents the center of a go board the origin of heaven in your game officially licensed by Nintendo meant following strict rules and regulations Nintendo wasn't taking any chances not after the video game crash of 1983 or games littered the market in this was their version quality control to become a licensee you first had to submit your games for approval Nintendo had the right to make changes such as removing blood or religious symbols once approved yet to purchase your cartridges from Nintendo the cost range anywhere from $9 to $14 with a minimum order of 10000 cartridges companies were only allowed to make 5 games per year and were to be exclusive to the any yes for 2 years some companies formed subsidiaries in an effort to publish more games Konami publish several games under ultra while a claim used LJN however the most brilliant move by Nintendo was there lock out chip technology which prevented unlicensed games from even playing on the system both the console in the game cartridge contained a security chip that spoke to each other with a program called 10 any yes if they could communicate successfully game would play Nakajima wasn't a fan of the licensing agreement but he met with Nintendo of America president Minoru Arakawa and vice president Howard Lincoln anyway there was mutual interest between the 2 companies Nintendo so Atari games as a recognized brand with a slew of great titles they could potentially bring to the any yes Nakajima push toward for a better deal this was Atari who basically invented the video game industry Arakawa in Lincoln wouldn't budge all licensees had to be treated the same although upset Nakajima reluctantly agreed on 1/18/1988 10 gin officially became a Nintendo licensee their first 3 games were announced that same year at the June Consumer Electronics Show gauntlet pacman and RBI baseball after the agreement Nakajima in article would frequently meet for dinner or play a round of golf a nice gesture between 2 business partners however other cow unnoticed Nakajima was quite chatty asking many questions about Nintendo's business and it's just abuse and strategy to not wanting to seem rude in having good faith and not get Arakawa shared it for he had no idea that behind closed doors at Atari game engineers were working to crack beat any S. lock out chip a year earlier in 1986 Atari games was aware of the strict demands of the Nintendo licensee program Nakajima along with other executives were not fans Nintendo was new to the video game world and their demand seen troll the mark said chief operating officer Dan van elder in the way Nintendo did business was like Ford introducing a car that could only use for Gasol lawyers for Atari games read over the license to see if there was any way to make games for the any S. without going through Nintendo there was a way but it all hinged on being able to get around the lockout chip technology engineers were given the task to reverse engineer the chip after many attempts they found no success one engineer that McCarthy wrote unless there's a specific profit motivation or there's a hacker available with nothing to do I recommend that the investigation end here it was clear that in order to reverse engineer the chips they would need access to the 10 any US program however Nintendo had copyrighted the algorithm now it is true that anyone can walk into the copyright office and to look at copyrighted material but for certain material such as 10 any yes you can't take a copy with you or even take notes unless that material is the subject of litigation Atari games came up with a plan Tory lawyers filled out a form requesting a copy of the 10 any US program falsely alleging that they were the defendants in a case regarding the algorithm in the U. S. District Court of northern California in no time at all Atari games suddenly had a copy of the 10 any US program obtained illegally with access to the program Atari engineers had no trouble at all reverse engineering the lockout chips they created a similar chip that contain their duplicate 10 any US program and tested it in a cartridge it worked they dump their clone rabbit Atari games planned to circumvent the strict any US licensing agreement was coming to fruition do you mean picked the worst possible time to become a Nintendo licensee in 1988 the entire electronics industry was experiencing a chip shortage simply due to high demand Nintendo was hit hard because they manufactured every single game they had to let all of their licensees no they would be getting fewer games than originally planned some companies were furious the loss of sales would cut deep into their profits Ian van eldrin chief operating officer of tendon asked if they could just find surplus chips themselves without Nintendo Nintendo agreed but only if 10 gin would pay the difference in cost the chips also had to pass their standards after finding a supplier in the United States tendon submitted the chip to Nintendo for review it was denied when tendons spokesperson claimed that due to the chip shortages and intend those policies they were only able to satisfy less than 10 percent of their demand Nakajima saw this as the final straw Nintendo's licensing policies were hurting their business and they had finally found a way around the lockout it was the perfect time to strike in December of 1988 Atari games sued Nintendo for antitrust violations and unfair competition for a sum of $100000000 at the same time they sent out their new games containing the rabbit chip to retail stores the very first unlicensed games for the Nintendo Entertainment System tendon games are similar in size and weight to standard any US cartridge they have a curved and into tabs to help you pull the game out of this each game has the tendency of quality antenna box with its very own dust cover tendon only made 3 officially licensed games but they also made unlicensed versions of them as well the tendon library was notable for their RBI baseball see which is considered the best baseball game on the end yes as well some good arcade games like gauntlet in rolling thunder even published a few second titles such as afterburner Sangamon intend to entertainment system who would've thought there is also the close relationship with Namco which resulted in courts of pac man miss pacman impact mania tendon even made their own version of Tetris for a little while before a court ordered them to stop distributing the game due to licensing but we'll save that story for another time after the 1980 a Christmas party at Nintendo Minoru Arakawa and Howard Lincoln receive the news that Atari games was suing them they were completely blind sided they quickly contacted Nintendo of Japan president Hitoshi amount she was clear Atari games in there unlicensed cartridges must be stopped Nakajima met with Arakawa to discuss the lawsuit he told him he never wanted it to come to this could do to Nintendo strict rules he felt he had no choice Nakajima offered to withdraw the suit let us do our own manufacturing he said Arakawa said no the lawsuit would continue Atari games went to the media accusing Nintendo of creating a chip shortage in order to keep prices high Nintendo vigorously denied the claim calling it absolute nonsense for Nintendo vice president Howard Lincoln it was a total betrayal of their initial licensing agreement with 10 again he stated I thought to myself you have no idea where you have taken on a tiger who will skin you piece by piece Nintendo quickly countersuit in February of 1989 stating that 10 gin had entered the Nintendo licensee program fraudulently obtaining technical support and detailed information about retailers for the sole purpose of making their unlicensed games they also sued for 10 gin sales of unauthorized an unsupported games on the NAS as well as patent infringement on their lockouts security so later that year November they amended their suit adding that Atari games unlawfully obtained their copyrighted 10 any US program from the U. S. copyright office all of the allegations in suits would be condensed into one case it was only the beginning of a long drawn out battle between the 2 juggernauts the media took their sides the majority rooting for attendance whom should the average consumer root for clearly Atari games it wins certainly more cartridges and a wider variety of games will be available for users if Nintendo wins the negative consequences for the rest of the computer industry could be staggering if the makers of hardware had veto power over what software gets me consumers would suffer fewer programs will be available and they would certainly cost more the Atari games suit is an effort to open up the marketplace Denis Lynch Chicago Tribune Nintendo employed a strategy of intimidation outside of the courtroom threatening retailers with legal action for cutting them out of supply if they sold 10 gin products Nintendo products sold consistently throughout the year for retailers sometimes making up 50 percent of sales for some it was simply too risky to sell the unlicensed games retailers such as toys R. us Walmart target in circus world all stopped selling 10 gin gains Atari games filed an injunction in order to stop Nintendo from threatening its customers judge fern Smith who would oversee the entire case ruled that Atari Nintendo could not interfere with each other's customers both companies appealed in the injunction was lifted Nintendo continued to contact retailers despite the legal battles and retailer threats 10 gin was seen good returns on its unlicensed games sales were up by 40 percent I ... March of 1991 in the U. S. District Court of northern California judge firm Smith would decide whether or not 10 gin had a legal right to sell their unlicensed games it all boil down to the rabbit chip included in every 10 game cartridge it use an exact copy of the 10 any US program in order to authenticate with the chip inside the any yes but torie games argued that they took the copyright office documents because it was ridiculous to think someone could reverse engineered chip just by looking at papers they felt they were entitled to quote self help they also claim that the documents weren't important anyway as they had already cracked attend any S. program but evidence suggested otherwise the copyright on the 10 any US program was dated 1985 however in 1987 Nintendo made some modifications the program code then any us also had other function beyond just unlocking the cons the rabbit program contained those as well it was clear to judge fern Smith that the program contained inside 10 gin's rabbit chip was a direct copy its program she ordered Atari games distributing and selling their unlicensed games as well as recall all product currently on store shelves Smith also harshly criticized the company for their actions if Atari did not need copyrighted information in order to achieve its goal that it should not have Siva the car office in order to bring US code back to Atari decided to make its cartridges functionally indistinguishable and does own game I admittedly cop a preliminary injunction is appropriate judge fern Smith Atari games would appeal claiming the decision would force them to shut down 10 gin laying off 39 employees a huge financial impact judge firm Smith agreed and suspended her decision 10 game games would remain on store shelves for now on 9/10/1992 the case went to the U. S. court of appeals in Washington DC as a defense to their copyright infringement Atari games argued that Nintendo had misused its copyright of the lock out program giving them control of games developed by third party companies they asserted that Nintendo's misuse of copyright should prevent copyright enforcement they also argue that reverse engineering the chip should fall under fair use the court disagreed with copyright misuse stating the record does not demonstrate as a matter of law that such restrictions restrain the creativity of Nintendo licensees they did however ruled that reverse engineering was fair use stating reverse engineering object code to discern the un protectable ideas in a computer program is a fair use ultimately the court agreed with judge fern Smith's original decision Atari games had stolen the 10 any US program code and ordered them to stop making and selling their unauthorized 10 gin game cartridges for the any S. after 4 years of litigation the battle was over tendencies production of any S. games and shifted their focus to other systems mostly the Sega Genesis which was gaining ground in the market share Atari games accusation that Nintendo violated antitrust laws would be settled out of court although Nintendo won the battle Atari games lawsuit ultimately brought about sweeping changes the case helped establish the legality of reverse engineering it also performed how the copyright office gave access to copyrighted material their anti trust suit also got the attention of other companies Jack terminals Atari corporation also student 200 1000000 violation of Thai trust law teen 18 Jamelle claim Nintendo's practice of console exclusivity for 2 years Benedito S. would ultimately be dismissed in December of 1989 presented of Dennis Eckhart of Ohio urged the justice department's antitrust division to investigate citing unreasonable tactics to this led to an investigation by the Federal Trade Commission a year later in our Nintendo announced they had decided to ease their licensing restrictions which included the 2 year exclusivity in 1991 the Federal Trade windows the case tender was ordered to send $5 value any per purchased between June of 1988 in December of 90 T. 90 and tendo dealers were now allowed to sell games cartridges and accessories at any price they chose the case even reach the Japanese video game market in 1989 the inco had to renew their initial licensing agreement with Nintendo which originally gave them special provisions for being 1 of the first licensees Nakajima's old boss messiah Nakamura met with Nintendo president Hiroshi Yamauchi to discuss the new terms the amount she refused to give Nakamoto the special treatment he once had Nakamura was furious and spoke out publicly against Clinton does monopolistic practices he also declared that Namco would begin development of games for Sega's latest console the mega drive either you key Nakajima would run Atari games into the nineties in 1994 Time Warner decided to fold both Atari games and 10 to their new come around the same time Nakajima announced he was changing his role within the but friends family and co workers knew the truth he was battling and simply couldn't handle the responsibilities of running the company on 7/11/1994 he day you can Nakajima passed away in Tokyo under Nakajima's leadership Atari games aggressively attacked Nintendo's business practices this eventually led to Nintendo changing their strict policies which allow developers to make their games on other consoles this helps systems like the Sega Genesis in a stronger foothold in the market share creating a more open market without the battle between Nintendo and Atari games the video game industry wouldn't be what it is today that's all for this episode of game historian thanks for watching //

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