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In July of 1983 Nintendo released their first console on the Japanese market, the Famicom. Famicom, short for Family Computer, was sold for around $100 ($25 more than originally intended, but still less than half the price of the competitors.) The console sold well in Japan and became very popular, but due to the video game crash of early 1984, Nintendo had a difficult time releasing the system in America. During this "crash," the market was flooded by a huge quantity of poor to mediocre products. Atari games, for example, were sold for only 10% of the suggested retail price. The American retailers were losing interest in selling video game consoles or computers.

Atari's major fault was that they had no control over the quality or quantity of games released by third party developers. To prevent the same thing from happening to their console, Nintendo enforced a software licensing program. The famous Nintendo Seal of Quality verified licensed games and prevented third-party developers from releasing NES compatible games without meeting the company's standards of quality.

The gaming market crash palyed an integral part of Yamauchi's plan. He knew that if Nintendo released their system when the video game market was in depression, there would be no competition and if successful, the NES would be literally the only choice for gamers!

What few people know is that one of the first companies that Nintendo turned to for help in the American launch of their console was Atari. When the Japanese approached them in 1983, Atari had a huge share of the American video and computer game market. Nintendo were ready to sell Atari the rights of distributing the NES outside of Japan. An agreement was so close that they actually planned to sign it on C.E.S. in June of the same year.

At the C.E.S, Coleco displayed an unlawful prototype of Donkey Kong for their home computer Adam. Atari refused to sign the deal since they assumed that Nintendo was also forging a deal with their competetors. A lot can be speculated regarding what would have happened if Atari hadn't seen that Donkey Kong prototype and actually went ahead with the deal. Instead, they concentrated solely on their own 8-bit flop, Atari 7800 Pro System. Regardless that the 7800 had backwards compatibility with the contemporary library of Atari 2600 CVS games, it marketed horribly. Atari was, in fact, already a doomed company at the time when they were negotiating with Nintendo. They were loosing an incredible amount of $2 million, daily. The only factor that kept the crashing company from going bankrupt, was the fact that 20% of the company was owned by Warner Communications (known today as Time Warner.)