Tengen

By 1988, the Nintendo Entertainment System was immensely popular and held the majority market share in the home video game console market.  Atari Games wanted their new subsidiary Tengen, Inc. to begin creating and releasing games for the Nintendo Entertainment System.  When Nintendo introduced the Nintendo Entertainment System in North America, they established the Nintendo Seal of Quality and a set of rules that third-party development studios had to follow in order to publish games for the Nintendo Entertainment System.   They entered the video game market after the video game crash of 1983 and had to establish relationships with retailers and rebuild their confidence in the market for video games.  One of the main reasons for the video game crash of 1983 was the overabundance of poor-quality games on the market for 2nd generation video game consoles such as the Atari VCS, ColecoVision and Intellivision.

The Nintendo Seal of Quality was meant to stop low quality games from being released for the Nintendo Entertainment System in mass and to avoid the same outcome as the Atari VCS and other 2nd generation home consoles.  One of the rules that Nintendo put in place was that third-party companies were limited to publishing up to five games per year for the Nintendo Entertainment System in North America, mandated that Nintendo handled cartridge manufacturing, and required games to be exclusive to the Nintendo Entertainment System for two years.   These same rules were not put in place in Japan as the Japanese market was not affected by the video game crash.  These strict rules affected Atari Games business model they had planned for Tengen, Inc.  Following the Nintendo Seal of Quality set of rules would limit their ability to port games for the North American market and limit the company’s overall revenue potential.

Atari Games tried to negotiate with Nintendo to obtain a less restrictive license agreement to produce games for the Nintendo Entertainment System however Nintendo refused to budge from their already established license policies.  Atari Games reluctantly agreed to Nintendo’s standard licensing terms so that they could start creating games for the Nintendo Entertainment System in early 1988.  Tengen began working on R.B.I. Baseball, Gauntlet and Pac-Man for the Nintendo Entertainment System while also secretly working on a way to bypass Nintendo’s lockout chip.

Nintendo designed their console with a Checking Integrated Circuit (CIC) to act as a lock to give Nintendo complete control over the software released for the Nintendo Entertainment System.   The lockout chip prevented unlicensed and pirated game cartridges from running as well as to facilitate regional lockout.  Since Nintendo manufactured all license cartridges for the Nintendo Entertainment System, they were able to include a chip embedded in the cartridge that acted as a key to authenticate with the system’s lockout chip.  When the Nintendo Entertainment System is powered on it checks the inserted cartridge for authentication, and a matching chip in the cartridge that provides the correct code upon demand.  If the cartridge does not successfully provide the authentication, then the CIC repeatedly resets the CPU preventing the game from being playable.

The program used in the Nintendo Entertainment System’s CIC was called 10NES which the team at Tengen tried to reverse engineer to get around having to license games with Nintendo.  Atari Games began development of a chip called “Rabbit” that would allow them to circumvent Nintendo’s lockout system.  At the time numerous manufactures managed to override Nintendo’s lockout chip by incorporating a circuit in their cartridges that would create a voltage spike to knock the authentication unit offline.  Tengen’s engineers did not want to proceed in this fashion as they feared this could potentially cause damage to the console and expose them to unnecessary liability.  Another concern with proceeding with this same technique was that Nintendo made frequent modifications to their console hardware to prevent this technique from working and their games made not function on newer released consoles.

Tengen proceeded with trying to reverse engineer the chip and decipher the code required to authenticate passed the lockout chip.  Tengen struggled with reverse engineering the 10NES in a timely manner and unable to do so by the launch date of its first batch of games.  Due to time constraints the team at Tengen decided to take another approach to reverse engineering Nintendo lockout system by contacting the United States Copyright Office and requesting a copy of the Nintendo lock-out source code.  Tengen’s lawyers contacted the copyright office to request the copy of the code claiming that they needed it for potential litigation against Nintendo.  Once the code was obtained, it was used to program and create their own chip that would authenticate with Nintendo lockout chipset.

In December 1988, Tengen announced that they were going to manufacture and release their own cartridges for the Nintendo Entertainment System going forward.   When Tengen released their first unlicensed game for the Nintendo Entertainment System, Nintendo immediately filed a lawsuit against Tengen for copyright and patent infringement.   This began a series of lawsuits between the two companies that would not be settled until 1994.

Tengen ended up releasing only three Nintendo licensed games before successfully creating their own chipset that could authenticate passed Nintendo’s lockout chip.  Tengen began manufacturing their own unlicensed game using a rounded matte-black cartridge that had some resemblance of an Atari VCS cartridge which stood out from Nintendo’s official grey cartridge.  Tengen decided to manufacture unlicensed versions of the three officially licensed games they previously released through Nintendo while working to develop a chipset that would bypass Nintendo’s lockout system.  The three Tengen published games, R.B.I. Baseball, Gauntlet and Pac-Man had an official Nintendo license version and unlicensed version released for the Nintendo Entertainment System. Tengen also decided to re-release an unlicensed version of Indiana Jones and the Temple of Doom which was developed by Tengen however published by Mindscape prior to the developer having a publishing license from Nintendo.

In addition to the lawsuit Nintendo filed regarding Tengen copying their 10NES lockout program they also filed another lawsuit in 1989 when Tengen released a version of Tetris for the Nintendo Entertainment System.   Tengen was brought to court by Nintendo over copyright controversy over the two companies’ versions of Tetris for the Nintendo Entertainment System.   Tengen lost the suit and was forced to recall all unsold copies of its version of Tetris which was estimated to be hundreds of thousands of cartridges.

While Tengen initial started with releasing home conversions of Atari Games’ arcade games they also published conversions of other manufacturers’ arcade games such as Sega, Namco and Toaplan.  On October 21, 1988 Tengen Ltd. was established by Atari Games as the Japanese subsidiary of Tengen Inc.  In addition to releasing games for the western market, they also began developing games for the Japanese market.

Tengen began to move its focus to develop and publish games for Sega systems during the 16-bit era.   Sega had a two-year head start over Nintendo in the 16-bit era and gained a sizeable market share in the home console market, allowing Tengen to start developing and publishing games by the Nintendo Entrainment System.  Tengen began separating themselves from Nintendo and started producing games for the Sega Genesis, Mega Drive, Master System, Game Gear, Sega CD, TurboGrafx-16 and PC Engine.  In addition to releasing games for home consoles they also licensed games for home computers such as the Amiga and Atari ST.

In 1994 the lawsuit filed by Nintendo was settled and after Time Warner reacquired a controlling stake in Atari Games, Tengen was consolidated into Time Warner Interactive.  In 1996 WMS Industries acquired Time Warner Interactive Inc. and the name was reverted back to Tengen, Inc. however the company remained inactive until it was finally dissolved in 1999.