Palcom Software was a video game publishing company owned by Konami.  The company was established as a shell corporation in 1990 to bypass Nintendo of Europe’s strict licensing rules that were in place for the European market.  

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 2^nd generation video game console 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 2^nd 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.   Similar rules were put in place when Nintendo began distributing the Nintendo Entertainment System through out Europe.

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 Konami as they were already publishing more than ten games a year for both the Nintendo Famicom and Famicom Disk System in Japan.  Following the Nintendo Seal of Quality set of rules would limit their ability to port games for the European market and limit the company’s overall revenue potential.