The shock came in the second year of the company's operation, 1983. Nintendo unveiled their game-oriented computer, the NES (or "Famicom" as it was known in Japan). It sold for the devastatingly low price of 15,000 yen.
"Please let me write games for it."
Iwata's feet naturally took him to the company's headquarters in Kyoto. It was the beginning of a beautiful relationship.
At the time, game programmers like Iwata were still quite rare. For Nintendo, whose internal software development system was not yet sorted out, his sudden appearance was a godsend.
Golf, Pinball, F1 Race... HAL Laboratory successfully undertook software development for Nintendo to publish legendary games that supported the NES in its early days -- and by doing so, the smaller company earned the larger one's trust. In 1984, Nintendo invested in HAL, underscoring HAL's importance as a crucial second-party developer.
HAL grew steadily, one employee at a time, gradually expanding the scale of its business. In addition to developing several titles for Nintendo to release under their own name, their peripherals for the NES -- including controllers with autofire capability -- were a hit, and they quickly became a known name in gaming. As Iwata took on more managerial responsibilities, his title changed -- to board member.
But in 1992, despite its rapid growth, HAL Laboratory was faced with a crisis. They filed for bankruptcy protection under the Civil Rehabilitation Act, and were functionally insolvent.
The previous year, having grown to employ nearly 90 people, the company had moved from Tokyo to Yamanashi in an attempt to strengthen the software development section. However, it was just then that the economic bubble burst. They had borrowed most of the money to fund the new location's construction, and compounded with a recent lack of hits and the difficulty of raising short-term funding, declaring bankruptcy was the only option.
It was Nintendo that came to the rescue and supported continuing development.
Yamauchi, then president of Nintendo, had a high regard for HAL's development skills and attached a condition to Nintendo's aid: Iwata would become president of HAL upon the company's restructuring.
It was Iwata's first stint as the manager of a business -- so far he'd been immersed in game creation. Though the company's outstanding liabilities had been lessened, they still owed 1.5 billion yen. Part of that debt would become Iwata's personal responsibility if the company were unable to repay it. But because his thirst to make great games had not been quenched, he trod that thorny path.
In Iwata's own words:
"I feel there's a depth, a wonder to the act of making games. Creating a single game involves constant trial and error, integrating control and play while remaining true to your theme, your concept. You wade through the vast possibilities, converging on a product. I really don't think there's anything else quite like it."
To Iwata, game design was a quest for truth. That truth could be found at the end of a long, hard development process akin to spiritual training. The endless depth of that progression captivated Iwata. Ever since high school, he had loved games more than anyone else he knew, and his desire to create them had led him here.
So despite the path of thorns -- despite the great risk -- Iwata had no choice but to try to turn HAL around. Once he became president, Iwata's almost simple-minded passion for creating games led to two hits for the company: 1992's Kirby's Dream Land, a Game Boy game, and 1999's Super Smash Bros. for the 64. Both were released as Nintendo games, but HAL Laboratory had developed them behind the scenes, with Iwata occasionally writing code himself to finish them.
Kirby's Dream Land was an action game featuring Kirby, a pink balloon-like creature. He could inhale enemies and items like a vacuum cleaner, then spit them back out as an attack. The new style of gameplay helped it sell five million copies, HAL's biggest hit at the time.
Nintendo and HAL would go on to produce a whopping eight more titles over the next six years, including Kirby's Adventure for the NES, which popularized the hero into one that stood shoulder-toshoulder with the likes of Mario and Pokémon. The series has sold over 20 million copies worldwide.
Super Smash Bros. sold 2 million copies, the second best outing for the 64. It's a fighting game, a genre which generally involves two characters attacking each other with punches, kicks, and weapons to bring the opponent's health to zero.
But in Smash Bros., the object was simply to knock your opponent out of the battle area -- and battles weren't necessarily one-on-one. There might be several characters in the ring at a time -- characters from other games, like Mario, Donkey Kong, and Kirby. A new genre had been born.
By making hits out of these eccentric titles, HAL had paid back its 1.5 billion yen debt in just six years, and Iwata had turned the company around.
"Thanks to your help, we've been able to recover," said Iwata to Nintendo president Yamauchi during a visit to Nintendo.
"Will you come work for us?" was Yamauchi's reply to Iwata, who'd gained experience as a business manager. It was a difficult time; Sony was pressing in. This would be a new quest. Iwata felt it was time to return the favor Nintendo had done him, and immediately agreed.
There was another reason for his ready agreement -- Iwata was only too happy for a chance to work side-by-side with a game developer he respected deeply: Shigeru Miyamoto.