The following comes from http://videogamesdensetsu.tumblr.com/:
Fascination, an unreleased erotic game developed by Nintendo in 1974.
In 1974, Nintendo had to deal with financial difficulties after the commercial failure of the Laser Clay shooting system, a very expensive arcade game which used light guns and bowling alleys. In order to keep his company afloat, Hiroshi Yamauchi asked Gunpei Yokoi to develop a new title. Thus was born Wild Gunman, a game which looks and plays like Mad Dog McCree, a live-action shooting game released more than a decade later. The game itself is based on a pretty simple combination of tapes and optoelectronic technology. While it’s not as well known as the eponymous Famicom game released in 1984, it’s nothing compared to Fascination, an unreleased erotic game which used the same technology.
“I knew that there would be only male journalists during the presentation of Wild Gunman, so I wondered if there was not a way to pull off a major coup by making something unusual that would seduce them. That’s how I imagined Fascination (ファッシネーション).
In this game, you see a young woman waddling to the rhythm of the music. The film stops when the lady shows you a closure on her clothes. If you manage to hit the target, then the video resumes and you can see her clothes fall off. By succeeding in a perfect series of shots, it was even possible to see the young woman completely naked (laughs). As you can imagine, this iteration of our game was a real success and was even more popular than Wild Gunman!
Actually, we did not really intend to sell this game because it used a much more complicated and fragile mechanism than the other title. We did set up some prototypes in Shinjuku and, you know, it was a great success.
We had hired a young Swedish woman as a model and I wanted to take part in shooting the sequences. She was really beautiful! At that time, CG did not exist and the challenge of making the images interactive was particularly fun.”
Wow, who would’ve thought that Nintendo was thinking about releasing a game like this.