Publisher Profile: Tengen
When Nintendo launched the Nintendo Entertainment System (NES), they were determined not to repeat the mistakes of the previous home gaming giant, Atari. The market getting flooded with poor quality titles on the Atari VCS/2600 was considered the key factor in the 1983 video game market crash, which had killed the industry.
Having also seen that Atari was not able to completely control the content developed for their system by failing to legally block titles produced without their consent, Nintendo created the 10NES lock-out system for the NES. All front loading NES consoles in North America and Europe contain this system, which checks the chip on an inserted cartridge for a specific output which authenticates itself as an officially produced Nintendo cartridge.
Nintendo also put together a series of restrictive guidelines that software developers for the NES had to follow. These guidelines included limiting publishers to releasing a maximum of 5 games a year, not allowing games published on the NES to be released on any other home console for two years after its NES release, and forcing publishers to go through Nintendo for their cartridge production and pay a hefty license fee. Games that followed the process were awarded a Nintendo Seal of Quality on the box. Nintendo advertised that the Seal of Quality was a sign to consumers that the product met Nintendo’s standards and all licensed titles on the NES displayed the seal.
Many developers felt the guidelines were unfair, but continued to support the platform out of the sheer popularity of it. These limitations led to some companies trying to take matters into their own hands. These companies produced cartridges without an agreement with Nintendo, and without going through their process. The games released in this manner did not contain the Seal of Quality and did not contain the typical copy “Licensed by Nintendo”.
Tengen is the most well known non-licensed publisher for the NES, and its origin probably plays into why it was unlikely to follow Nintendo's rules.
In order to see where Tengen came from, we need to go back to Atari and understand what happened to Atari Inc. after the video game crash of 1983.
Atari Inc. / Atari Games / Atari Corp. : 1984-1987 (Milpitas, California)
Shortly after the video game crash, Warner Communications shut down Atari Inc. and sold the Atari Consumer division to Jack Tramiel (founder and recently ousted partner of Commodore International).
Warner retained Atari Coin, the arcade division of Atari Inc., and renamed it Atari Games. Atari Games continued to employ most of the employees that had worked at Atari Inc.
Tramiel took the home computer and console division and named his company Atari Corporation. He continued to produce computers and Atari consoles under this name.
The agreement between the two companies stated that each side was able to use Atari branding in order to promote products only for their markets. This meant that Atari Games could only market arcade games under the Atari branding, and Atari Corporation could only market computer and console systems and games under the Atari branding. The agreement was open to Atari Games developing computer/console games and to Atari Corporation developing arcade titles, as long as they did not brand those products as Atari.
While Atari Corporation continued with its projects, Atari Games was in a standstill. In 1985, controlling interest of Atari Games was sold to Namco, who had worked closely with Atari Inc. in the past.
When it came to running Atari Games, Namco had the perfect man for the job. Hide Nakajima had been handpicked by Nolan Bushnell (creator of Atari) to run Atari Japan when it opened in 1973. When the company was not doing well the following year, Bushnell sold it to Namco who continued to employ Nakajima. Nakajima later convinced Namco president, Masaya Nakamura, to open a North American division of Namco and he was put in place as head of it in 1978. In 1985, Nakajima was put in charge of the newly acquired Atari Games. Namco could not build the co-operation between the two companies as intended and considered Atari Games a direct competitor which they had little interest in owning. Masaya and Nakajima had differing opinions about how Atari Games should be run and within a year an agreement between the two was reached. Backed by Time Warner and a group of current Atari Games employees, Nakajima convinced Namco to sell back their controlling share.
Tengen : 1987
With the steadily increasing popularity of the Nintendo Entertainment System, Atari Games took a serious look at publishing games for that platform, however they were not able to use to the Atari name because of the previous arrangement with Atari Corporation. The company came up with the new label Tengen, which is the middle point of the board in the Chinese game Go. Atari's name also came from this game.
Tengen found Nintendo's license too restrictive for their purposes. The sticking point was the limitation of only being allowed to produce 5 games a year.
Nakajima went to Nintendo to discuss a licensing arrangement with less restrictive guidelines. He felt that having access to Atari's popular catalog of games gave Tengen a leg up over the competition but was told that everyone must follow the same guidelines.
Nakajima was used to how Nintendo operates from dealing with Namco’s licensing arrangements for the Famicom. As one of the first publishers on the Famicom, Namco received special benefits which, despite their objections, were revoked when the licensing agreement was renewed after a year.
Seeing Nintendo unwilling to negotiate, Nakajima put a team in place to work on reverse engineering the 10NES chip so that they could produce unlicensed games. While the team working on that, Tengen prepared to release titles for the NES. Because of their past relationship, Nakajima was also able to secure North American console rights to Namco's Famicom titles. The first titles launched would be RBI Baseball (Developer: Namco), Pac-Man (Developer: Namco), and Gauntlet (Developer: Tengen/Atari Games).
After nearly a year the games were ready to go, but Tengen was unable to reverse engineer the 10NES chip. In December 1987, Nakajima went ahead and signed the license agreement with Nintendo. The following year the 3 NES titles were released as licensed Nintendo games.
Tengen vs. Nintendo – The Rabbit Chip : 1988-9
Tengen, still unhappy with the license arrangement, continued to look into reverse engineering the 10NES chip.
Other companies had circumvented the chip by shocking it with a voltage spike which confused it and loaded in the inserted unlicensed game. Tengen was wary of this approach, afraid that it would open them up to liability over damaging the users’ consoles, and that Nintendo could potentially update consoles to stop that technique from working. This would make those games unplayable on future hardware, which did eventually end up being the case as some unlicensed titles do not work on the top loader NES.
Tengen was determined to release their next set of games outside of Nintendo's guidelines. While the research team was considered to be close to reverse engineering the chip, the deadline for the next set of games was fast approaching. A crafty paralegal at Tengen found the solution to get the chip specs straight from the United States Copyright Office.
Tengen's lawyers claimed that the company needed the specs for the chip in order to confirm potential litigation against Nintendo for its lock-out program. With this information, Tengen was able to build a clone of the 10NES system which they called the Rabbit chip. This chip allowed them to create uniquely designed black cartridges (inspired by old Atari 2600 cartridges) that behaved like officially licensed NES cartridges. Tengen did not need to pay Nintendo’s license fees, or wait in their production queues in order to get their games out to market.
Because of the initial agreement with Nintendo and having launched 3 licensed games, Tengen had direct access to the major retailers that sold Nintendo products. They were able to deal directly with the retailers and get their games on store shelves quickly because of this, which is why Tengen games were more readily available than those produced by other unlicensed NES publishers.
Similar to the Nacmo deal, Tengen signed an agreement with Sunsoft to distribute their games in North America. Sunsoft had ported many Sega titles to the Famicom, which is how Sega games ended up on the NES in North America. By the end of 1988, Tengen had released the Sunsoft title Alien Syndrome.
In December of 1988, the Tengen-developed Paperboy and a re-release of Indiana Jones and the Temple of Doom were released as officially licensed NES games by Mindscape. It is unclear why Tengen sought out this extra publishing avenue at this time. Based on the timing, the best guess is that Tengen was preparing another way to release games if Nintendo did manage to prevent them from selling their black label cartridges. The re-release of Indiana Jones also may have been a trial run to see if a game sells any better as a licensed grey cartridge versus their unlicensed black model.
Knowing that Nintendo would file suit against them for producing the unlicensed games, Tengen fired a pre-emptive strike by filing a lawsuit against Nintendo on December 12, 1988 for “improperly using its patent and greater market-share to monopolize the home video game market.”
Rather than respond to Tengen's suit right away, Nintendo took almost a full year to file a counter suit. In a surprise move instead, Nintendo sent letters to all major retailers telling them that Tengen games were unlicensed and selling them would open the retailer up to being subject to legal action. Many retailers removed Tengen games from stores, and refused further shipments. Tengen approached the courts to stop Nintendo sending threatening letters.
While the cases were going through the courts, Tengen continued to release NES titles throughout 1988 and 1989.
Nintendo eventually did file a counter suit in November 1989 where they accused Tengen of patent infringement, breach of contract, and unfair competition.
At this point, Nintendo also launched a separate lawsuit against Tengen for rights to Tetris, but that’s a whole other story and will be covered later in a separate article.
Judge Fern M. Smith presided over the cases. On the issue of the threatening letters, Judge Smith declared that neither side would be allowed to interfere with each other’s customers. Since this was less than ideal for Tengen since their customers were essentially Nintendo’s customers, they appealed the ruling, as did Nintendo, and so the issue was dropped and Nintendo continued to send out the letters. Basically nothing happened and the overall court case continued.
The main arguments of the lawsuit were Atari’s antitrust claim against Nintendo’s Copyright Infringement claim. The court battle over unlicensed games and Tengen's rip-off of the 10NES chip ended with the court siding with Nintendo upon proving that the Rabbit Chip directly infringed on the patent. Had Tengen managed to reverse engineer the chip on their own, like other unlicensed publishers, they would have been in a much better position, but by showing that Tengen filed a false affidavit in order to get their hands on Nintendo's patent documents in order reproduce the chip, Nintendo held the upper hand. They showed that much of the same code was used in both chips, confirming the Rabbit to be a direct copy of the 10NES. Nintendo won the favour of the court.
Tengen were forced to pay damages to Nintendo and had to stop producing the unlicensed cartridges. Atari appealed the verdict, but the court upheld the original verdict.
Tengen's final unlicensed title was R.B.I. Baseball 3 released in 1991.
For those interested in the case specific please see the following links:
After all was said and done, Tengen continued to publish games for various consoles. Their later NES games were published through their established relationship with Mindscape. These games include: 720 degrees, Gauntlet 2, Paperboy 2, and RoadBlasters.
Other Tengen Releases.
Tengen also released games as licensed developers on other consoles. These games included:
Later Tengen releases for other platforms
Paperboy (July, 1990)
Klax (July 14, 1990)
Marble Madness (May, 1991)
Gauntlet 2 (Sept, 1991)
Paperboy 2 (April 1992)
Pit-Fighter (June 1992)
Klax (Aug 10, 1990)
Road Riot 4WD (Cancelled)
Paperboy 2 (1992)
Marble Madness (1992)
Prince of Persia (1992)
World Cup Soccer (1993)
PGA Tour Golf (May 5, 1994)
R.B.I. Baseball '94 (1994)
Klax (Sept 6, 1990)
Cyberball (July 28, 1990)
Hard Drivin' (Dec 21, 1990)
Ms. Pac-Man (1991)
R.B.I. Baseball 3 (Mar 19, 1991)
Steel Talons (1992)
R.B.I. Baseball 4 (1992)
Dragon's Fury (1992)
Paperboy 2 (June 1, 92)
Prince of Persia (1993)
Dragon's Revenge (1993)
Race Drivin' (1993)
Awesome Possum (1993)
R.B.I. Baseball '93 (1993)
Formula One (Aug 12, 1993)
Davis Cup Tennis (Aug 15, 1993)
Grind Stormer (1994)
Gauntlet IV (Sept 16, 1993)
R.B.I. Baseball '94 (1994)
Robo Aleste (1993)
RBI Baseball '95 (1995)
Cancelled NES titles include: Airball, Hard Drivin’ and Xybots.
In 1993, Time Warner purchased a controlling interest in Atari Games. They allowed Atari Games to maintain its brand and produce arcade games, but folded Tengen into their existing home gaming division: Time Warner Interactive. As of 1994, Tengen no longer existed in name.
Over the following years, Atari Games was sold to WMS Industries (Williams and Bally/Midway owners), who renamed it Midway Games West. In 2003, Midway disbanded Midway Games West due to bad game sales figures.
The company continued to exist in order to hold the copyright and trademarks for its franchises until 2009, when Midway intellectual property was sold to Warner Bros. Entertainment.