Why is Nintendo so Overprotective of its Intellectual Property?

business decisions often occur at the intersection between the law and psychology in other words the law sets the boundaries and tells you what you need to be aware of it tells you what you can and cannot do to protect the property that you own the law sets the stage but we individuals are the actors and depending on our experiences the way we perform on stage can be very different despite the stage directions being fundamentally the same Nintendo is often criticized for being fiercely overprotective of its intellectual property we've seen just recently 25 year old strategy guides being taken down thousands of copyright strikes issued against music YouTubers some of whom are obvious paradists and much more as a lawyer with some let's say professional interest in corporate law and intellectual property Nintendo's decision making has never been a surprise to me I may not agree with their decision making as a fan but in its context both legally and psychologically it all makes sense to me as a lawyer I'm also of the opinion that Nintendo will become less overprotective as time goes on as a consequence of older less legally Savvy leadership leaving the company we'll explore that theory towards the end of the video but in any case let us begin why is Nintendo so overprotective of its intellectual property we will start with a story of Law and psychology when leadership in a company changes you will often find that the business philosophy of said company will change relative to how powerful the leadership was Nintendo company was founded in 1889 by one pusajiro Yamauchi at the time the company produced hanafuda a sort of Japanese playing card after fusajiro Yamauchi passed away in 1951. his grandson hiroshiyamoji began to shift the focus of Nintendo away from traditional Japanese games and as part of the changes he implemented the younger yamoichi expanded Nintendo to work on other forms of entertainment media including video games by 1977. Nintendo had begun sales of several of its new video games in the lucrative American Market 1977 was also the year in which a young Shigeru Miyamoto was brought onto the company as an apprentice in the planning department Nintendo would soon thereafter announce a subsidiary location in my home state of New York in around 1979.

and in order to break into the American Market Yamauchi tasked young shigaru Miyamoto to convert unsold radar scope arcade units into a new arcade game Miyamoto would come up with a story involving a love triangle between a gorilla a carpenter and a woman set in New York City the game we are referring to is of course Donkey Kong and Donkey Kong became an instant hit taking arcades by storm and as profits flowed into Nintendo's coffers an onlooker observed with jealousy you see video gaming was a relatively new industry at the time one which every Media Company wanted to get a piece of in Universal Pictures known otherwise as Universal City Studios was no different Universal was actively looking for a way into the video game Market when Donkey Kong made its Splash in the United States in Donkey Kong Universal saw an opportunity you see Universal had produced a King Kong movie in 1976 along inside this movie Universal had ostensibly secured its ownership of King Kong as an intellectual property or so it thought Universal would soon intend out in the infamous Universal City Studios Incorporated versus Nintendo Company Limited a 1984 legal case heard by the U. S District Court for the southern district of New York in which Universal Studios alleged that Nintendo's video game Donkey Kong was infringing on their intellectual property rights in King Kong but in what appeared to be a miraculous Victory Nintendo at the time a mere guppy facing down the shark of Universal Studios prevailed judge Robert W sweet ruled that Universal had no right over the name King Kong or the characters and story that there was no possibility for consumers to confuse Nintendo's game and characters with the King Kong films and their characters the verdict was upheld on appeal as well the victory established Nintendo as a major player in the interactive media industry it gave a fledgling Nintendo confidence to push forward in the American Market Nintendo even named a new character after the lawyer who represented them the lawyer's name was John but consider what this lawsuit meant to Universal it caused them to decisively lose their attempt to own King Kong to this day the rights of King Kong remain only in various interpretations of the character writes to various films and takes on the characters are owned by their respective holders but each interpretation is held by a different party nobody owns King Kong this early lawsuit evidently traumatized much of Nintendo's leadership to follow everyone at Nintendo got a first hand look at how even a titan-like universal could lose a property as valuable as King Kong out of mere carelessness having seen what had happened to Universal debt Nintendo would make sure that such a mistake would never happen to them this story informs what in my opinion is the psychological aspect of why Nintendo is so overprotective Nintendo as a company has a core traumatic memory from its childhood one which its leadership internalized deeply there is however another aspect as to why Nintendo is so overprotective of its intellectual property and that is the legal side to explain why Nintendo acts as it does I'm going to break down the legal aspects into three parts one what Nintendo actually owns IP wise two what Nintendo fears will happen to its IP and three finally why Nintendo feels it's necessary to take such extreme steps to protect its IP so let us begin with part one what Nintendo has to understand why Nintendo is so fierce in protecting its intellectual property you must first understand what it is that Nintendo actually possesses I want you to First consider a different Media Company the final boss of intellectual property law let's take a look at the Walt Disney Company Disney is a massive massive company you don't need me to tell you that it is the number 46th largest company in the world by market cap it owns some of the most valuable media franchises in the world Titans of profitability like the Disney Princesses Star Wars the Marvel Cinematic Universe and Mickey Mouse himself now let us ask this question how much are these franchises worth it's hard to measure that right but one way we can attempt to measure the worth of a franchise is in how much revenue it generates how much money it makes in the aggregate now Wikipedia though not usually the best source gives us some pretty useful and reliable figures in this respect we can see here that the Disney Princess franchise is a total revenue of 46. 4 billion dollars that's an incredibly large amount it's five billion dollars more than the GDP of the entire country of Serbia what about the mouse himself well Mickey Mouse and friends has a total revenue of 82.

9 billion dollars now when you consider that the Google trademark is estimated by Forbes to have a value of 44. 3 billion and that Microsoft's trademark is valued at 42. 8 billion you start to understand how Titanic these numbers truly are Disney's 46.

4 billion and 82. 9 billion dollar franchises are not to be sneezed at but what if I told you that Mickey Mouse is not the media franchise with the highest revenue can you guess which media franchise the number one slot might be well the answer is Pokemon Pokemon has the highest total revenue of any media franchise in the entire world and it is not even close Mickey Mouse and friends has earned 81 billion since its Inception in 1924. Pokemon has a total revenue of 110 billion dollars with an Inception date of 1996.

Mario has a total revenue of 47. 5 billion since 1981 and that figure doesn't include Donkey Kong which has produced 5 billion dollars on its own The Legend of Zelda's total revenue is recorded at 4 billion but that does not include merchandising and so what does Nintendo have Nintendo has some of the world's most valuable media franchises under its belt Nintendo is sitting on top of an unspeakably large gold mine have you ever asked yourself just what game freak and Nintendo are doing with Pokemon how they so desired they could be doing so much more with Pokemon related content different kinds of RPGs or adventure games and Tamagotchis and just so many things right in that even with the meager amount that game freak and Nintendo have done what fans often complain about as being the bare minimum Pokemon has generated more Revenue than Mickey Mouse and friends by a factor of Spider-Man and about a quarter of the time with this understanding we have the first piece of this puzzle we know that Nintendo owns some of the most valuable franchises in the world and that it Bears more resemblance to Disney than it does to Sony or Microsoft now we must look into what Nintendo fears [Music] imagine for a moment that you are a member of the upper middle class but not unspeakably wealthy you live in a nice place in a good neighborhood but life still has its struggles now one day you discover that your property sits on top of the largest oil Reserve in the world and that it is all light sweet crude of an extraordinary quality news of this breaks and you are suddenly flooded with offers companies and Nations alike want to buy your oil and you become fabulously wealthy with this wealth and attention though comes competitors big oil companies rear their heads at their new competitor with valuable property wealthy investment funds and short sellers Circle your business like metaphorical Hawks seeking opportunities to profit from you you even have a few close calls where it looks like you might lose everything but manage to survive by the skin of your teeth you see in the deep dark Forest of corporate capitalism you cannot trust anyone weaknesses are opportunities for profit and there are always Predators circling waiting for the right moment of weakness to strike Nintendo is sitting on top of that oil field on top of that gold mine it knows this Nintendo is also not relatively speaking a very big dog it's a very large company sure by market cap Nintendo is the 285th largest company in the world at time of writing it was Nintendo's richest company of 2020.