Delicious Buns

Chapter 88 Delicious Buns

Five minutes later, Ethan slipped into the second-floor reception room of Kismet Game.

Upon his arrival, the middle-aged man sitting on the sofa immediately stood up, extended his right hand to Ethan in a friendly manner, and introduced himself.

"Hello, Mr. Jones, I am David Rosen, CEO of Sega. It's a pleasure to meet you."

As the saying goes, you can't hit someone who's smiling.

Ethan responded politely to the warm welcome, extending his right hand for a brief handshake. At the same time, he didn't stop talking, saying directly, "Mr. Rosen, it's a pleasure to meet you. I've heard of you, and I greatly admire your legendary experiences."

Ethan wasn't exaggerating.

After all, the person in front of him was the founder of Sega, the guy who dared to fight a guerrilla war against the U.S. Army in history.

When Sega slot machines appeared in US military bases in Hawaii, Japan, and Southeast Asia, their unparalleled sales ability was truly astonishing.

"Oh, Mr. Jones, you flatter me. Compared to your creativity, my sales are negligible," David Rosen said with a smile and a shake of his head.

After a few simple pleasantries, Ethan invited the other person to sit down and asked the administrative clerk, Euryth Noble, to serve two cups of tea.

That's Twinings black tea, brewed with cold water.

Ethan doesn't like drinking, but when it comes to business hospitality, it's all about catering to a wide range of tastes.

After Euryth Noble disappeared, David Rosen stated his purpose directly.

"Mr. Jones, I am here to discuss something with your company regarding Snake Game."

"Mr. Jones, Sega has noticed that since you ended your partnership with Atari, no company in North America has produced Snake Game arcade machines."

"Although current market feedback suggests that retailers are relatively satisfied with the existing stock of Snake Game arcade machines, as the more than 10,000 arcade machines on the market can meet people's current gaming needs, to be honest, there is still some room for Snake Game arcade machines to be sold in the North American market. According to our estimates, this number should be around 3,000 to 5,000 units."

"If it's left empty... that would really be a waste..."

David Rosen smiled and spoke sincerely.

Although he did not explicitly state his intentions, Ethan already understood why he had come.

They just want to become the distributor of "Snake"!

In fact, after ending his collaboration with Atari, Ethan also considered whether the game Snake still had value and whether it should continue to be produced and sold. However, at that time, the patent for video games and training devices was like a sword of Damocles hanging over his head, making him dare not do anything about arcade production.

So he put the problem aside.

But when he finally broke through the patent blockade and was able to continue his production business, he realized that making new games was the best option at that time.

Firstly, although Snake was profitable, its sales volume was only three to five thousand units at most, just as David Rosen said.

If it's just arcade machines, the profit is quite considerable, with a maximum gross profit of 1.8 million. But if it's half motherboards and half motherboards, the profit will have to be reduced by at least 1%.

When such large fluctuations occur, setting up a factory to develop "Snake" would be very difficult to control in terms of cost.

Because nobody knows how many of these things should be produced.

Even less is anyone aware of which other place on the American continent needs a large number of Snake games.

If it's a precise, one-to-one sales approach, then this business can still be profitable.

If all the rice were to be restocked, then there would be no point in doing this business at all.

Selling dozens or even hundreds of units in a single state—this kind of money built purely on time—is a business that all companies hate.

The efficiency is too low!

As for the second point, it is that the new company needs new products.

Currently, all the Snake arcade machines on the market display the Atari logo.

Or rather, almost anyone who has heard of the game "Snake" will know that it is an Atari game.

Because Ethan used Atari's distribution channels and brand, he capitalized on Atari's market value.

When Ethan chooses to take shortcuts and make quick money, he inevitably has to pay a price.

He could indeed re-release Snake under the name of his own company, Destiny Games, but such a release would be meaningless for building the company's brand.

If Ethan didn't have memories of his past life and was just a native North American, he believed he could definitely squeeze every last drop out of the Snake IP. But with three trump cards in hand and more than enough funds, it was better to present a new game than to confuse players by releasing an old one!

With these two reasons in mind, Ethan decided to temporarily halt the production of the Snake game. However, when he stopped working on it, Sega's founder, David Rosen, secretly told him that Sega wanted to acquire the distribution rights for Snake Game.

Go dream!

Everything is in my dreams!

Ethan thought about it briefly, then refused outright.

"Mr. Rosen, Snake Game was the first game I made, and it has a very special meaning to me."

"I originally thought that the collaboration with Atari would be a great start, but no one expected it to end like this."

"Atari hurt me, and it hurt the games I made even more, which caused me a lot of pain. But thankfully, the people who love Snake Game were not hurt, which is probably the best outcome."

"If nothing unexpected happens, I think we won't be able to cooperate for the time being, because we don't plan to continue producing 'Snake Game' anytime soon. If people like it, they can find enjoyment in the existing arcade machines on the market. If people forget it, then let history go with the wind..."

Ethan's words were tinged with sadness.

The reason he presented himself as an artsy youth was to discourage David Rosen from pursuing him.

Because he knew that successful businessmen all share one trait: they never give up until they achieve their goal.

What he hates most is when someone talks on and on about something for ages.

After listening to his words, David Rosen, sitting on the sofa, nodded and said with deep emotion—

"Oh, Ethan, I've heard about your dealings with Atari too. Nolan Bushnell's behavior is absolutely despicable; his vile methods and shameless character have brought shame upon Atari, the glorious brand that pioneered the arcade industry!"

"I understand how you feel, I understand your pain, so..."

I'm sorry.

"great!"

Ethan nodded in response with a smile, but in his heart, he was secretly snapping his fingers with delight.

As long as we don't get entangled, everything is fine!

However, just when he thought that David Rosen, who had already given up, would at most exchange a few more polite words and then get up to leave,

After a moment of silence, the man sitting opposite him said, "Mr. Jones, while I understand your thoughts and respect your decision, I also feel that an excellent game shouldn't end like this."

"While Snake Game has brought immense joy to the people of our country, the rest of the world has yet to witness its brilliance!"

"Our United States has 200 million people, but the world has 4 billion!"

"There are still 3.8 billion people who haven't played your game yet!"

"There are still 3.8 billion people who haven't experienced the joy you bring!"

"So...we still have room for cooperation, right?"

David Rosen looked at Ethan with a smile, and as he finished speaking, he raised his right eyebrow.

His subtle facial expressions and gestures revealed his humor, while the sudden rise in his voice made Ethan laugh.

This time he really understood!

Sega isn't actually looking for the North American distribution rights for Snake this time! They clearly want to acquire the overseas distribution rights for Snake!

And this is indeed a huge market.

Putting everything else aside, just considering the MacBook alone, its purchasing power is no less than that of arcade games in North America.

Although it's not well-known in Europe, it still has a market worth hundreds of millions.

This is all pure, hard-earned money; there's no reason not to make it.

That's right!

At this point, Ethan stopped being sentimental!

There's nothing we can do; he just has a flexible moral bottom line.

Hehe ~

But how exactly should we earn this money...?

He doesn't actually have a complete idea yet; he needs to think about it.

So Ethan smiled and said, "Excuse me, Mr. Rosen, Snake Game isn't just my game, so I need to talk to my sister before I can give you an answer."

David Rosen smiled and nodded at the answer, "No problem, I'll patiently wait for your call."

As he spoke, he looked around again, and when he saw the handbag on the sofa, he picked it up directly.

Then, he took out a stack of documents and handed them to Ethan. "Mr. Jones, this is the cooperation plan that Sega has proposed."

"Please take a look with your sister."

"Okay, definitely." Ethan nodded with a smile.

After seeing David Rosen off, Ethan returned to his office.

Place the documents on the table, then lock the door and leave.

Although the overseas release of "Snake Game" is important, he's currently in a bit of a rush to pee.

As for the cause of the incident, he guessed it was from drinking that Twinings cold tea.

I went to the toilet and spent ten minutes taking care of it.

When he came out after washing his hands, he felt completely refreshed, both physically and mentally.

However, just as he was about to return to his office to check the documents, a figure suddenly appeared downstairs.

Upon closer inspection, it turned out to be another administrative staff member, Damio Dean.

Not only that, upon seeing Ethan, he went straight to the point and said, "Mr. Jones, there are two Asians visiting our company downstairs who say they want to see you. They also said they are from Japan, and the one in the lead even claimed to be the president of Nintendo."

"What is that?"

Ethan, who was shaking off the water, was startled.

"Nintendo is here?"

"Could this also be related to 'Snake Game'?"

With this in mind, Ethan had Damio Dean lead the two men into the reception room.

When he reappeared, two middle-aged men came into his view.

One of them, dressed in a black suit and tie, sat upright.

The other person was wearing a beige plaid suit and holding a pair of light brown aviator sunglasses.

Upon seeing Ethan arrive, the two promptly stood up and bowed slightly to him.

Then, the man in the beige plaid suit said, "Hello Mr. Jones, we are representatives from Liben Nintendo. I am Hiroshi Yamauchi, the current president of Nintendo, and this is my colleague. Thank you very much for taking the time out of your busy schedule to receive us."

These words prompted Ethan to nod slightly in response.

Since we weren't familiar with each other, we didn't exchange many polite words.

When Ethan asked about their purpose, Hiroshi Yamauchi, who in Ethan's previous life had led Nintendo to the pinnacle of video games, immediately smiled and said, "Mr. Jones, our purpose is very simple. Your invention, Snake Game, is an excellent game, and we want to bring it to Liben so that more players can experience the joy of video games."

As he spoke, his companion opened his briefcase and took out a stack of documents.

Hiroshi Yamauchi took it and handed it directly to Ethan.

"This is the plan we have proposed. We would be grateful if you could take a look at it, Mr. Jones."

"really!"

"These people are here for Snake Game too!"

Ethan smiled and nodded, taking the document.

Since the bidding process had changed from a single quote to a call auction, Ethan decided to wait and see.

Without opening the documents in front of Hiroshi Yamauchi, they chatted briefly before getting up to see the guest out.

After he returned to his office with the documents, he was filled with curiosity and immediately opened the proposals from both companies.

After a quick glance, Ethan closed them again.

look up.

Looking up at the sky.

As far as the eye could see, it was all white.

After staring at the ceiling for a while, Ethan looked down again.

When he opened the plan again—

Good guy!

He immediately swallowed a mouthful of saliva.

Because he could only see one word—

There's money!

Sega offered two cooperation plans: one was a buyout, and the other was a revenue-sharing arrangement.

The buyout plan was simple: Sega wanted to offer three million dollars a year for a five-year partnership.

At the same time, they demanded exclusive rights to sell the Snake arcade game in countries outside North America.

Although this price is far from the value of the Snake IP, if we consider Ethan's previous contract with Atari, when Sega quoted a cooperation price of 15 million, it meant that they were confident of selling at least 100,000 arcade machines within five years!

What does this mean?

Based on Atari's previous shipping speed, even with distributors, they could only generate sales of 20,000 motherboards per year!

And now, Sega believes it can sell 100,000 arcade machines globally! Not circuit boards!

This shows complete confidence in their own supply chain system!

But that's normal. Sega has been making arcade games for decades. If they didn't even have that much ability, they would have gone out of business long ago.

"Is this the strength of a long-established company?" Ethan remarked with a smile.

Further down the line, the revenue-sharing contract becomes more complicated.

In terms of revenue sharing, Sega also sought a five-year contract. To this end, they promised that if the global shipment of Snake arcade machines was less than 40,000 units, Ethan would receive a game licensing fee of 16% of the price of each arcade machine.

When the global shipments of electronic arcade machines exceed 40,000 units but are less than 80,000 units, the commission rate for game licensing fees is 14%.

When the global shipments of electronic arcade machines exceed 80,000 units but are less than 120,000 units, the commission rate for game licensing fees is 12%.

After Snake's global shipments exceeded 120,000 units, the royalty rate for game licensing fees was uniformly calculated at 10%.

Ethan initially thought it was a range contract.

For the first 40,000 machines, let him take 16%; for the 40,000th to the 80,000th machines, let him take 14%, and so on, decreasing in amount.

But after he looked closely, he realized that it was actually a decreasing contract similar to a sales-betting agreement.

If Sega only sells 20,000 arcade machines in the first year of the partnership due to production issues, then they will give Ethan a 16% cut of the selling price.

However, if in the second year, due to the production chain catching up, their output comes through and they sell 40,000 units, and the cumulative sales over two years reach 60,000 units, then the licensing fees for the 60,000 electronic arcade machines will be recalculated at 14%.

The extra two percent paid for the 20,000 electronic arcade machines in the first year's settlement will be deducted from the second year's settlement.

The same applies afterward; as the quantity increases, the royalty rate decreases.

At first glance, this method of deducting licensing fees is indeed unpleasant.

However, at the same time, Sega was actually making a tacit promise regarding the number of machines to be shipped.

They only dared to make this plan when they were certain that the arcade game "Snake" could sell 120,000 units within five years!

Moreover, there was a handwritten note at the end of the document.

"Mr. Jones, I am very sorry that we did not provide you with the best possible hospitality during your last visit. The staff member who received you felt he was not suited to work for our company and therefore resigned yesterday. I have approved his resignation. —David Rosen"

These words made Ethan laugh.

"Hey, Sega, so you've finally met your match!"

"I asked you to be my agent before, but you wouldn't do it. Now... hehehehe~"

To be honest, Ethan still remembered how Sega had turned him away when he tried to sell the Snake Game arcade game.

He didn't mention this to David Rosen, not because he was magnanimous, but because he hadn't yet decided whether to cooperate with Sega.

If cooperation is truly desired, he will definitely bring up this matter during negotiations, trying to gain more benefits.

But now...

David Rosen is quite sensible!

However, being sensible was useless, because compared to Sega, Nintendo's plan was actually more explosive.

Similarly, there are two options: buyout and splitting.

However, Nintendo and Sega differ in their regional agreements; they only accept consoles from their own regions.

Even so, Nintendo was willing to pay 20 million for five years for the sake of the single market of the notebook.

In terms of revenue sharing, they were more ruthless than Sega.

A five-year contract, a fixed price of 14% of the selling price, and they also promised to ship at least 50,000 units.

That number truly reflects our sincerity.

Because once Ethan signs the contract, Nintendo will be guaranteed to pay him a minimum licensing fee of $8.4 million.

Compared to a fixed price of 20 million, it may be a little less, but it's a revenue-sharing contract, and it's all about the volume of shipments.

When these two proposals came out, Ethan said he wasn't surprised, but that would be a lie.

At the same time, he had a deep feeling in his heart—

"The prostitution, gambling, and pornography industries are absolutely lucrative!"

"These people who make gambling equipment are all incredibly wealthy!"

Note: ① One thing needs special mention: only North America sold arcade machines separately. According to Minoru Arakawa, son-in-law of former Nintendo president Hiroshi Yamauchi and former president of Nintendo of America, selling arcade machines in North America was extremely troublesome because of the vast land and sparse population. Directly selling arcade machines would result in huge losses, so they would sell arcade board boards, even though the profit margin for the whole machine was higher than that of the board. Arakawa himself did indeed assemble arcade machines, just like I mentioned earlier when selling "Snake." This passage comes from a Playboy interview with Arakawa in the 1990s. ② The sales figures for arcade machines in North America are indeed a mystery. When I explained the data in Chapter 39, I mentioned that "Space Invaders" could sell 100,000 units a year in Japanese, but North America didn't sell that many. The most outrageous thing is that "Donkey Kong," which was a huge hit in North America, only shipped 68,000 units after several years. I've never really understood this number, and no professional has analyzed the reason behind it. Therefore, the data I've written in this article is just an estimate. You might think the difference between the world and North America is too great, and you might find it outrageous. Actually, I think it's outrageous too, but I really don't know the reason. ③ The Hanafuda cards sold by Nintendo, while called playing cards, are essentially the same thing.

P.S., just one chapter today. I had a really bad night. The couple living upstairs were arguing, and they argued from midnight to 3:30. The whole thing was just arguing, smashing, stopping, arguing, smashing, stopping, in a never-ending cycle. My brain is completely fried today, and I can't write anything at all.

(End of this chapter)