A Corporate Blunder, or How Konami Managed to Dominate Yu-Gi-Oh! Game Licensing (Part 1)

With Bandai in control of the Yu-Gi-Oh! Collectable Card Game (CCG) license, one must wonder how Konami managed to get said license from Bandai in a few months after their card game’s release? To answer this, we must first answer this important question: How did Konami become involved with Yu-Gi-Oh! in the first place? Answering this requires knowing about the loser in this 1998 affair.

Bandai began as the toy division of a textile company which spun off as Bandai-ya in 1950. Founded by Naoharu Yamashina, they spent the 1950s as a successful toy company which produced basic toys like the defective Rhythm Ball and toy cars like the 1956 Toyopet Crown. In 1961, Bandai-ya would rebrand into Bandai and would gain massive success with making Astro Boy toys. This completely changed Bandai’s business model from making their own creations to supporting new television shows as a sponsor so they could show commercials of their tie-in toys during their run. The Yu-Gi-Oh! Bandai CCG was likely created as a tie-in for Season Zero based on the popular Magic & Wizards. 

But if there was one place in toymaking where Bandai faltered, it was in the art of video games. This wasn’t the case in the 1980s. As one of the FAMICOM’s (known as the NINTENDO ENTERTAIMENT SYSTEM outside of Japan), they were responsible for publishing titles such as Tag Team Match: M.U.S.C.L.E. and Stadium Events (which has a complicated history of its own and goes beyond the scope of this post.) But other than being the publisher of some games in Japan and acting as Nintendo’s partner to publish games in the UK such as Street Fighter II in the early 1990s, Bandai hadn’t done much in the video game market. However, the mid to late 1990s would be a time of turmoil for the company starting with the ambitions of a US technology company and a massive corporate blunder that sent shockwaves through the video game world and are still felt to this day..

Enter APPLE. 

Like Stadium Events, Apple’s history is too far outside the scope of this post. What you need to know is that Apple was struggling to contain the rising juggernaut MICROSOFT and had been on a massive decline. As a part of their diversification strategy, Apple created the Pippin, a video game system based off of the classic MacOS that was licensed to other companies. However, the Pippin itself was Bandai’s idea, the brainchild of Mr. Naoharu’s son and then President Makoto Yamashita who’d taken over from his father in May 1980. The Mega Drive had proven a strong competitor to Nintendo’s Super FAMICOM (Super Nintendo Entertainment System outside of Japan) and so Mr. Makoto had seen an opening into console development and intended to begin production and release in 1995 before delaying to the next year.

To say the Pippin was a failure is an understatement. It failed massively in the US due to Apple’s tarnished reputation and the massive success of the Playstation. It did a little better in Japan where the console developers remained strong and SONY became one of the big 3 in Japan. But Bandai still lost ¥9 billion in 1996. To Bandai’s good fortune, another large company was struggling and offered a lifeline for both of them

In January 1997, Bandai agreed to a merger with a certain video game company by the name of SEGA. The mentioned Mega Drive was known in the West as the SEGA GENESIS and had broken Nintendo’s dominance of the video game market in the West off of Sonic the Hedgehog and challenged Nintendo in Japan off of Virtua Fighter. This merger would involve a billion dollar stock swap that would result in Sega acquiring Bandai and dissolving the company. President Makoto Yamashita believed that since Sega had American management and international offices, it would be a suitable company to merge with.

What he underestimated was the wholesale rejection within his own company.

In a show of unity, Bandai’s employees and middle level executives rejected the merger on the basis of different corporate cultures. Sega’s top-down culture was considered too different from Bandai’s family-friendly work ethic. Resistance was so strong that the merger would be called off in May 1997 in favor of a business alliance and ousted President Makoto, though he would remain as Chairman of the Board. While this failure had massive consequences, we’ll remain focused on the severe damage this did to Bandai. 

With the Sega merger a disaster and the wholesale failure of the Apple Pippin, Bandai was in a weakened state in 1998. Its toy line was as strong as ever thanks to Gundam Wing, but Bandai has stretched itself too thin in other avenues, including video games. The damage was so severe that Bandai was unwilling to take any video game licenses. 

This included Yu-Gi-Oh. So Toei had to find a new company to take on the license while Bandai supported the anime with its own version of Magic and Wizards.

Enter Konami