The original Namco Ltd. was founded in 1955 as Nakamura Seisakusho. In 2006, Namco absorbed the video game division of its sister company Bandai and formally renamed itself Namco Bandai Games . The same day, its existing amusement division split to form a new company called Namco Ltd.
Namco was a front-runner during the golden age of arcade video games. Pac-Man went on to become the best-selling arcade game in history and an international popular culture icon. Namco is also known for creating successful franchises such as Galaxian, Dig Dug, Xevious, Ridge Racer, Ace Combat, Tekken, Soulcalibur and Tales.
Masaya Nakamura founded the company as Nakamura Seisakusho Co., Ltd. in 1955. Based in Tokyo, the company started out by running children's rides on the roof of a department store in Yokohama. The business eventually expanded throughout the Tokyo area. Nakamura Seisakusho underwent in 1959 a name change to Nakamura Manufacturing Co, Ltd. Nakamura Manufacturing Company would later be used to form the acronym "Namco" as a brand name in 1971 which eventually became the company's own corporate name in 1977. In 1970, the company produced a coin-operated mechanical driving simulator called Racer.
Atari Japan, the Tokyo-based subsidiary of Atari, was struggling financially by 1974. General manager Hide Nakajima was left in charge of the company after his boss had quit. Nakajima claims that employees had been stealing money and that he had contributed funds from his personal savings in order to pay creditors and stave off bankruptcy. Though Nakajima wanted to try saving Atari Japan, owner Nolan Bushnell was already struggling to keep the parent company afloat due to undercapitalization and was looking to sell the Japanese subsidiary for some badly needed cash. Sega, at the time a manufacturer of pinball machines, offered to acquire Atari Japan for $50,000. Nakamura put in a bid for $800,000 and shocked others out of competition. The deal was finalized at $500,000 and Bushnell was glad to take it. Debts inherited from Atari Japan would take Nakamura two years to pay off, but the deal had also secured for him an exclusive license to distribute Atari's games in Japan for ten years. Nakamura would follow up by opening video arcades featuring Atari games.
Everyone thought was mad when he paid so much for Atari, but it turned out to be a very wise investment.
Nakajima was promoted to vice president in 1978, and on his recommendation Namco opened a subsidiary, Namco America, in the United States. The location he chose was across the street from Atari's former headquarters in Sunnyvale, California. At the time, games were not released in the U.S. under the Namco label. Namco America existed mainly to license Namco's games to companies such as Atari and Midway Games for distribution in the U.S.
Namco's first original video game was Gee Bee (1978). Galaxian (1979) revolutionized the industry as the first video game to use RGB color graphics. It was Pac-Man (1980), however, that would become definitive of Namco's legacy, going on to become a fixture in popular culture. Galaga (1981), a follow-up to Galaxian, was one of the most successful sequels of the era. Dig Dug (1982), Xevious (1982), and Pole Position (1982) continued Namco's success in establishing iconic franchises during the Golden Age. During this period, Namco published video games for home consoles and personal computer under the Namcot brand name.