Failed negotiations between Nintendo and Coleco led to the Famicom
The beginning of Coleco's end
Nintendo has their fair share of missteps in the game industry. At one point, Nintendo and Sony were going to work together on an expansion for the SNES, but the deal fell through. That split paved the way for the PlayStation, which is no doubt a decision Nintendo regrets.
There are other moments in Nintendo history that the Big N would no doubt like a redo on, but there’s also random events that led to their incredible success. Case in point, a failed negotiation with Coleco that would mark Nintendo’s entry into the home console market.
In an interview with Time Extension, former Coleco exec Bert Reiner talked about their great relationship with Nintendo that eventually went sour. Nintendo and Coleco signed a deal to bring Donkey Kong to the ColecoVision, which ended up being a big hit. That was a stepping stone for Nintendo and Coleco to open up discussions for the ColecoVision’s release in Japan. Nintendo wanted to handle the console’s Japanese release, and while Coleco was interested, the two sides couldn’t strike a deal.
That failure to reach an agreement is the exact moment that set Nintendo down the path to creating the Famicom. You can see Reiner talk about the entire situation in much greater detail below.
Eric Bromley, who worked for me, went to Japan and looked at several games that they had. At that time, Nintendo was basically making playing cards. They were the largest playing card company in the world. The cards that you play in poker and whatnot. They also made large, stand-up arcade games. They had a number of games that were quite good, one of which was the Donkey Kong. So Eric went to Japan to meet with Nintendo and he struck a deal exclusively for us and we got the rights for the Donkey Kong. We included that in the ColecoVision. So every ColecoVision that was sold included a Donkey Kong cartridge. It was truly a good game so that helped the sale of ColecoVision.
I went to Japan later, after we had already established a relationship with Nintendo and I went to Japan with Leonard Greenberg and met with Yamauchi, who was then the president of Nintendo. They were interested in buying the ColecoVision for the Japanese market and we were obviously interested in selling it to them.
…What happened was we went to Japan and we were willing to sell the game [console] to them at 10% below our wholesale price. So Toys ‘R Us we’ll just say could buy it for $10, they could buy it for $9. Nintendo, on the other hand, wanted to do their own deal. They wanted to do their own manufacturing, their own marketing, essentially do everything, and give us 10% of their selling price, which obviously would be lower than our price. I thought it was a good deal because we would have to do absolutely nothing and we would get 10% of every unit that was sold in Japan. We couldn’t strike a deal. We spent several hours – Leonard Greenberg and Yamauchi through a translator of course – and finally we decided to walk out and no deal was made. Yamauchi said – I spoke a little bit of Japanese – he said that they would develop their own game [console]. Leonard Greenberg laughed. The rest is history. They, of course, got into the market and we really lost out.
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