The following article by Masaharu Takano is a Oct. 8th, 2008 reprint of “How the Famicom Was Born – Part 10″ which appeared in the September 11th, 1995 edition of Nikkei Electronics. It was commissioned by Nathan Altice. The names and titles of the businesses and people mentioned in the series are unchanged from how they appeared at the time of the original publication.

Summary

Famicom Trade Commercial

4 years after the system’s release in 1983, nearly 12,000,000 Famicoms had been shipped. Finance companies such as Nomura Securities had their eye on the fast-selling Famicom. Their idea was to connect the Famicom to the telephone network in order to provide consumers with services that included the ability to check stock prices and other news from the finance industry, as well as the ability to trade stocks. Nintendo, realizing the potential to expand the world of gaming and their other pursuits, worked on developing a modem for the console. However, once stock prices began to decline, consumer interest in stock prices waned, and the system received little attention. Nintendo also failed to merchandize network games.

Developing the Famicom Modem With Nomura Securities & Leaving Games Behind

In the summer of 1987, Masayuki Uemura (titles omitted) of Nintendo Manufacturing Headquarters’ Research & Development 2 was given a telephone by Hiroshi Yamauchi, the company president. His orders: To look into the possibility of codeveloping a Famicom network with Nomura Securities. According to Uemura, “The president was seated beside an employee of Nomura Securities at a lecture held in Shikoku. It was on that occasion that conversation turned towards the possibility of jointly developing a Famicom network.”

Uemura wasted no time in paying a visit to Nomura Securities’ headquarters in Nihonbashi, Tokyo. There, he attended a meeting in which he was treated to an explanation of Nomura Securities’ proposal.

Their idea amounted to the following: The company desired to turn the Famicom into a computer terminal and hook it up to the phone network, thus providing their customers with stock prices and other financial information, in addition to enabling them to buy and sell stocks.

In order to achieve this, Nomura Securities would go about developing the necessary host computer program, including the database of information that would be provided to consumers. They requested that Nintendo take on the role of developing a modem that would allow the Famicom to be hooked up to the phone lines. (Fig. 1)

Figure 1

The Famicom Modem

The modem sits atop the Famicom. The device is inserted into the same slot used by the game cartridges. To the lower left of the Famicom, an example of a cartridge can be seen. A variety of cartridges were created for different Famicom transmissions, including financial information and horse racing statistics.

The Modem’s Nagging Issues

In actuality, the proposition of developing a modem for the Famicom had frequently been raised around R&D2. However, one of the advantages of computer games was the fact that they could be enjoyed even without human opponents. As a result, the team couldn’t help but conclude that there was no need for network games. In Uemura’s words, R&D2 “wasn’t confident that they would be able to make network games entertaining,” and discussion of the matter stretched on.

This time, however, Nomura Securities would be handling database development. Nintendo employees would thus be able to devote themselves to the development of modem hardware. If they could just develop a modem now, they could worry about expanding their other pursuits, such as gaming, later on. “I thought it would be a good chance for the company,” says Uemura on embracing the idea of joint development.

Once Nomura Securities decided to enter the market of Famicom networking, Nintendo started receiving calls from banks as well.

Even the Japan Racing Association (JRA) began looking to get involved. They proposed to transform the Famicom into a betting station, allowing JRA-approved members to bet on horse races from their own homes. The service debuted in 1991.

Joint development with Nomura Securities on the Famicom Modem, which would later spawn the Famicom Network Service, began in the summer of 1987.

Including Non-Networking Functionality

An example of a Commodore 64 menu screen.

Leading the development of the modem was Takao Sawano, deputy section chief of Nintendo Entertainment Analysis & Development Division 1 (presently employed by R&D2).

Sawano’s first act was creating a menu screen using Famicom software. The most popular way to display information on a menu screen was to list selections by number, allowing users to select which item they wished to view. However, Sawano felt that this method didn’t mesh well with the keyboardless Famicom.

Sawano thus came up with a method that would cause the menu to scroll by pressing the keys on the D-Pad, with information being displayed once users stopped scrolling at a listing. Nomura Securities approved, and adopted his system.

The Famicom Modem was structured so as to allow the insertion of additional cartridges that would offer services other than financial information. Software used by the financial news service was stored on cartridges. The modem itself came equipped with features such as ROM used for kanji storage and network control circuits. (Fig. 2)

Also built into the Famicom peripheral were LSI chips that ended up going unused. For example, a chip intended to handle public-key encryption (a system of encryption that decrypts encoded keys and privatizes decrypted keys) was installed in order to enhance security.

As the Famicom Network Service attempted to guarantee user security through the use of a password system, however, the chips wound up being unnecessary. Sawano states that this was due to the fact that “At the time, computer networking wasn’t nearly as widespread, and this wasn’t seen as a necessary function for a modem that connected homes and host computers.”

Nintendo also made it so the modem was capable of receiving and transmitting touch-tone signals (outlined in Figure 2’s network circuit block diagram). It was structured to enable the exchange of signals via push-tone, even while the household telephone was in use. This was due to Nintendo’s intent to make use of this function when developing network games in the future.

Figure 2

A Diagram of the Modem’s Circuit Blocks

Click the image to enlarge.

A Promising Start Due to Rising Stock Prices

In July of 1988, Nintendo had constructed 1500 prototype modems. 1500 households were recruited from a pool of Nomura Securities’ customers to act as testers, and modems were distributed to each. (Fig. 3)

Meanwhile, the economy was beginning to bubble, and stock prices were on the rise. It was a time when throngs of people would gather before financial companies’ stock ticker boards in order to keep tabs on share prices. According to Uemura, reception towards the Famicom Network, which allowed users to look up stock market data for themselves in their very own homes, “couldn’t have been better”. The modems soon underwent mass production.

Around the same time, a firm known as Micro Core, unaffiliated with Nintendo and Nomura Securities, partnered with companies such as Yamaichi Securities and Bridgestone to do business in the Famicom Network market. Both groups began competing with each other, actively promoting the adoption of their respective systems to other firms in the financial industry. This set the backdrop to the hastening in mass production. It would be difficult to imagine introducing 2 different modems into one household in order to make use of the same sort of service. In short, this meant that the company with the biggest customer base already assembled would come out victorious.

Figure 3

The Famicom Modem Network

The network connected the financial company’s host computer to a household’s Famicom via DDX-TP. (Click the image to enlarge.)

Plagued by Circuit Failures

The Famicom Modem first underwent mass production in September, 1988.

Directly following the launch of the service, Nintendo was plagued by circuit failures. DDX-TP’s circuit system, which had been adopted to connect Nomura Securities’ host computers and household Famicom systems, was unstable.

DDX-TP was a network operated by NTT (Nippon Telegraph & Telephone) that allowed data to be transferred via telephone lines to DDX, the company’s packet-switching network. However, in the words of Uemura, “Now and again, there were times when data transmission would fail, and we didn’t know why. If you didn’t touch anything, the situation would return to normal on its own. The truth was that the DDX-TP service had also just been launched in 1988, and it’s possible that their circuits were unstable.”

In order to investigate the condition of the circuits, Sawano visited houses where failures had occurred. It’s said that his measurements revealed that signals coming from switches were occasionally bigger than usual.

Orders Decline With the Financial Recession

An example of the betting software used by the Japan Racing Association.

Nintendo’s worries didn’t end with circuit failures. “We weren’t successful at integrating the financial firm’s stock-savvy clientelle into the market for the child-oriented Famicom ,” explains Uemura.

The company also received calls from households unable to connect the Famicom to their television sets, and questions from people complaining that their Famicoms weren’t transmitting data, despite the fact that they’d forgotten to attach the modem.

In cases where a household’s TV set and phone were in different locations, the appliances would be connected via wiring. Some families were opposed to the wiring, claiming it was a hindrance, which resulted in Famicom systems being returned.

Even when they had no problems using the system, there were few customers who accessed anything other than stock prices. Despite the fact that a variety of informative databases and a system for ordering stocks had been created, these services sat largely unused.

Perhaps it was that consumers were mostly interested in stock prices and weren’t much concerned with other information. As a result, even the stock trading service went mostly unused. Uemura states that “It seems that people felt the Famicom was a toy, and we weren’t able to earn their confidence to the degree that would convince them to use it for trading stocks.”

Accordingly, as stock prices began to decline, financial firm consumers lost interest in stock prices themselves, and stopped using the system. The number of Famicom Modems shipped bottomed out at 130,000. “Naturally, once there was no longer any desire for the information we were offering, people stopped using the system,” says Uemura.

Even so, it was enough that mass production had begun at a time when interesting information was available in the financial sector. Targeting banks, however, was another matter. Savings interest rates didn’t fluctuate to the same degree as stock prices. In addition, there were few people who would be gratified by the ability to look up their bank account balance at home. There was a market for the abillity to look up account balances at arcades, but computers could also be used for such a task. Even from the beginning, the market for a Famicom modem was weak.

“Even now, the only thing pushing Famicom Modem sales is the fact that consumers can use it to bet on horse races from home,” confides Uemura. Horse-racing afficionados who wish to place their bets from home can choose between systems such as a PC or other special device equipped with a betting apparatus, or display phones with small screens attached. 35% these users choose Famicoms as their betting terminals. Sales of modems targeted towards the horse racing market have almost reached 100,000 units.

“Horse racing entertained in the past, and continues to entertain today,” says Uemura. Sales of the Famicom Modem continue thanks to its lasting ability to offer interesting information that people want to see.

Figure 4

A Screenshot of a Competitive Go Game

Leaving Games Behind

“We were unable to realize our dream of using the modem to augment Famicom games,” Uemura laments. Nintendo manufactured 5 prototype games that made use of the modem, but they were never released on the market.

One of the titles Nintendo developed was a competitive game of Go. (Fig. 4) President Yamauchi had played Go before, and the game was developed at his insistence. In the words of Uemura, “Consequentially, the game would require players to be connected to the phone line for an extended period of time. If the problem of data transmission fees wasn’t enough, we were also faced with the risk of users monopolizing the phone line.”

In the US, advancements were being made on the lottery, a form of gambling that awarded players with a share of the prize if they succeded in guessing numbers. This type of gambling was allowed in some states and forbidden in others. Minnesota, a state whose laws permitted gambling, was joining forces with modern firms in order to capitalize on its legality.

Nintendo was taken by surprise, however, when these negotiations ground to a screeching halt. In the latest election, the Republican governor of Minnesota was replaced by a Democratic one, and the lottery was banned.

Getting Acquainted With the Modem’s Strengths & Weaknesses

Eventually, Nintendo’s only use for the Famicom Modem they’d codeveloped with Nomura Securities was putting it to work as an arcade machine targeted towards toy shops.

The Super Mario Club was formed out of these toy shops, and its members created a searchable database of Famicom game reviews. The question of whether or not a game would sell was entrusted to the work of research companies that conducted ratings surveys, and the database provided these results via network.

“That was the first time I felt that the network came in handy. At the same time, I was able to get acquainted with its weaknesses,” confides Uemura. One of these faults was the trouble with the phone lines getting tied up when everyone tried to access the network at the once. Once usage increased, the number of installations had to increase as well. It was difficult to judge how many would be needed.

On the other hand, one of the advantages of the network was that the toy stores could view the database whenever they liked. Nintendo was also able to understand, at a glance, just what sort of information each respective shop had an interest in. User response was communicated directly to the company. People felt the network had a lot of charm.

“Our experiences with the Famicom Modem triggered Nintendo’s entrance into the satellite data broadcasting market in April, 1995,” says Uemura. Things with the Famicom Modem, including the abandonment of game expansion, didn’t go at all according to plan. Using networking to provide entertainment to Super Nintendo users would begin with Nintendo’s satellite data broadcasts.