Game Market 1983

Chapter 127: Production Announcement

"Although our company's president, Mr. Kawaguchi, is supposed to explain this part, I'll take the liberty to answer while I'm on the stage. First of all, Final Frontier 4 and Dragon Emblem, as I showed you earlier, are not being developed for the Super Family!" I exclaimed.

"What? So, it's not for the NEGA Drive?" someone in the audience questioned.

"Well... Don't you think the graphical demands for the NEGA Drive are too extreme? It's not entirely impossible, but it would be incredibly challenging," I replied.

"So, what platform are you planning to release it on?" another voice in the crowd asked.

"It's still 'undecided' at the moment. In fact, the console we intend to release hasn't even been launched yet," I explained.

At that moment, the developers at the table looked shocked.

My statement, made on an official stage, was equivalent to revealing the existence of another console apart from the Super Family and the NEGA Drive.

"So, are you saying there's another next-gen console in development, apart from Mintendo and NEGA?" Yooji asked, inquiring about my earlier statement.

After observing the reactions around me for a moment, I slowly continued, "Before I address that, let me explain why we invited all of you here today. Do you wonder why we sent private invitations to those who work in the gaming industry, rather than regular gamers, for an event of this scale?"

"Well, that part does pique my curiosity. With a production announcement like this, you could get an incredible response from regular users. Why did you invite us?" someone in the audience asked.

"Ironically, the representatives from Mintendo and NEGA declined to attend our presentation today. Well... as you may have heard, the gaming industry is quite small, and there is a bit of tension between Mintendo and our Pentagon Soft," I explained.

"Does that mean Pentagon rejected Mintendo's second-party proposal?" another person questioned.

"Yes, that's correct," I responded.

My answer set off a flurry of murmurs among the audience. From their perspective, it was difficult to understand why Pentagon Soft would refuse a proposal from Mintendo, the most prestigious console development company not only in Japan but worldwide.

I waited for the conversations to subside and then continued, "The reason I gathered all of you here today is to propose a new business to those who are currently leading the gaming industry. Could you dim the lights a bit?"

In response to my request, the overhead lights dimmed, and a graph illustrating the revenue structure of the current gaming industry appeared on the bright white screen.

"If you work in the industry, just by looking at this graph, you probably understand what it signifies," I said.

A staff member sitting at the table spoke up, "Isn't this the revenue distribution structure for third-party developers offered by Mintendo and NEGA?"

"Exactly. As you can see in this chart, the revenue structure between first-party and third-party games is significantly different. Of course, the prices of games that users buy are also completely different," I continued.

"Well, that's only natural, right? First-party games can omit the royalty portion, and cartridge production costs are much lower," the same staff member replied.

I nodded in agreement and continued, "That's right. The disparity between first-party and third-party is created from there. According to our research, Mintendo is gradually raising the cartridge production costs and royalties, thanks to the success of the Super Family."

"As we enter the next generation, with increased graphical capabilities and larger cartridge capacities, the production costs are also rising. Currently, we can manage it somehow, but what about next year? And the year after that?"

After hearing my words, nobody at the table had any objections.

"We are third-party developers, but our work is almost no different from Mintendo's first-party. If there are game companies preparing to develop games for consoles other than Mintendo, feel free to raise your hand."

Once again, no one raised their hand.

To break even or profit more than that, they had to release games on the most popular console among users, the Super Family, even if they had to pay a high royalty fee.

Some people might think that third-party companies are pitiable when looking at it this way.

However, third-party developers don't bear the entire cost of royalties they pay to Mintendo. They are, after all, in the business to make money. Would they sell at a loss?

So, who ultimately bears the cost of royalties?

It's the consumers.

That's why game prices between first-party and third-party differ by approximately 4,000 yen.

"If this continues, before long, each title released by third-party developers will cost 10,000 yen. However, the profit you receive will remain the same. After all, there is a separate company that earns that money," I continued.

"That's true. Users don't understand our circumstances, and since entering the Super Family, they've become increasingly dissatisfied with game prices," one of the developers commented.

When Capcom released "Final Fight 89" for the arcade last month, complaints arose at the Capcom table. Similar grievances started to emerge at several other tables, like sparks flying on dry leaves.

"But you can't lower the game price as much as Mintendo games, can you? In the end, the market structure forces us to endure criticism while paying the price," another developer added.

"As the prices increase, the relatively cheaper secondhand market will grow. Game cartridges, even as used items, won't wear out or deteriorate the program, so ultimately, it's self-destructive as it is now," someone else pointed out.

It was an accurate assessment.

In the world of Korean and Japanese gamers, the stage was set for a gathering like no other.

The audience was already filled with Super Family's enthusiasts who were on the hunt for secondhand software. It was a growing trend, after all.

Then, Hooujima from Fox Soft, known for his strict personality, raised his hand.

"May I ask a question, Kang?" he said.

Hooujima had always been a tough nut to crack, and I was eager to hear what question he had in store.

"We, Fox Soft, released a game called 'Full Metal Gear' on NEGA Drive and MSX in protest of Nintendo's unfair royalties, but our sales were quite dismal. It all boils down to the console's market share. I mean, what's the point of a new console if it doesn't have the reach and marketability to support third-party developers like us? So, my question is, does the console company that Pentagon Soft is planning to launch have the recognition it needs among users?"

The question from Hooujima grabbed the attention of all the developers in the room. I wondered what kind of response I should give to this, knowing how sensitive this topic was.

"Kang, please go ahead," Hooujima said, seeking an answer.

"I can certainly empathize with Hooujima's concerns. While we can't reveal all the details about the new next-gen console, one thing is clear," I began.

I paused for a moment, allowing the tension in the room to build.

"We have the full support of Pentagon Soft."

The room fell silent as the developers processed my words.

"Pentagon Soft is supporting the console business?"

"That's right! So, that's why Pentagon Soft turned down Nintendo's second-party proposal?"

"Indeed, Pentagon Soft's involvement could guarantee the recognition we need. Does this mean that games developed by Pentagon Soft will become the first-party titles for the new console?"

It was clear that when professionals from the same industry got together, they could connect the dots with just a little information.

Then Hooujima asked me again, seeking a more detailed explanation.

"What does it mean for Pentagon Soft to provide full support to the next-gen console company?"

"You've hit the nail on the head, Hooujima. We share your concerns. That's precisely why we invited each of you here today. The new console we are launching will provide a third option for developers, a chance to coexist," I explained.

"The third option?"

The developers looked puzzled by my business proposal.

This was a completely uncharted territory. No console company had ever given up the benefits of first-party titles for third-party support, as I was suggesting.

At that moment, Yooji from Phoenix Soft, who had been quietly listening, asked me another question.

"So, are you saying you want to create a new distribution structure? What kind of approach are you considering?"

"I understand your concerns, Yooji," I replied. "That's why we've gathered all of you here today. We're going to provide a new solution that benefits Pentagon Soft, you, and most importantly, our players."

As I spoke, a visual representation of the proposed distribution structure appeared on the screen behind me.

Then, I walked to the center of the stage, unveiling something I had hidden in my suit pocket.

"This, my friends, is the new storage medium that will allow us all to thrive and coexist."

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