Nintendo's Yamauchi: No More Playing Around

After months of being bloodied by Sega Enterprises Ltd. in North America, Nintendo Co. President Hiroshi Yamauchi is taking off the gloves. In a talk with BUSINESS WEEK at his spartan headquarters in Kyoto, Yamauchi revealed a plan to recoup market share. Many details remain vague. But the stern, 66-year-old patriarch of Japan's biggest game company made one thing clear: He'll make big changes in the way Nintendo manages its U.S. operation, promotes its products, and develops games.

His first priority is fixing the disaster in the U.S. market, where Nintendo's share of the 16-bit machine business plummeted from 60% at the end of 1992 to 37% a year later, according to Goldman, Sachs & Co. With surprising candor, Yamauchi lays part of the blame on his son-in-law, Nintendo of America Inc. President Minoru Arakawa. When Sega started running comparative ads in 1990, Nintendo failed to respond. In effect, says Yamauchi, Arakawa "allowed Sega to brand our games as children's toys. It was a serious mistake."