CH123 - Visit Japan

To be honest, when Hiroshi Yamauchi expressed his willingness to give up a portion of the chip company's shares for chip authorization, his ambition was already written all over his face. In Ethan's past life, this guy, who established the system of game royalties, clearly saw the enormous benefits brought by hardware monopoly. He could control the necks of all his peers and enjoy the lowest production costs for his creativity.

When this guy realized this, continuing to reject would be the optimal choice.

But...

Ethan admitted that he was tempted by Hiroshi Yamauchi's proposal.

Because Hiroshi Yamauchi's actions were practically the same as giving away money.

Oh no, there was a difference.

The difference between Hiroshi Yamauchi's invitation and giving away money was—

This collaboration would allow Ethan to extend his influence into the world of consoles! The day before yesterday, while exploring the New England Aquarium with Evelyn, Ethan mentioned that the reason for not entering the overseas market temporarily was not only due to a lack of suitable manpower but also because of a crucial issue. As he had told Evelyn before, the console industry was a very closed economic system.

Previously, he had given Evelyn examples, mentioning how Atari faced serious setbacks when entering the console market, and Nolan Bushnell ultimately admitted defeat and left. Besides that, he was well aware that the console industry had a characteristic of being unwilling to engage in trade and investment. They were willing to export but not import; they were willing to invest overseas but disliked foreign investments.

In his past life, during Ethan's course on international finance and trade, the professor analyzed the reasons why the console industry was unwilling to import, covering topics such as the island mentality, post-war industrial protection, and the Foreign Investment Law enacted in 1950. If Ethan remembered correctly, a student stood up and questioned whether the reluctance of the console industry to import was due to the competitiveness of their products.

In response to this question, the professor presented the most classic example.

That was mobile phones in electronic consumer goods.

Back then, Nokia faced a siege from Sony and Sharp when entering the console market. Despite being the global king, it was powerless and had to retreat. Although Nokia's practice of changing phone casings was infamous, a globally popular product only entered the console market with closed characteristics.

Although Apple succeeded in the console market later, defeating Sony, Sharp, and Fujitsu, the success of the iPhone was not directly related to the console industry. After SoftBank's agency, they localized the iPhone significantly, breaking the previous closed-loop pattern of the console.

To put it bluntly, the success of the iPhone was still an internal struggle within the console industry.

It's just that SoftBank used an outsider's weapon.

When these facts appeared in front of Ethan, he had to be cautious—very cautious. That was his code of conduct. It's not that he was unwilling to spend money; he just didn't want to waste money.

In this situation, when Hiroshi Yamauchi expressed willingness to absorb his funds into the console industry?

Damn...

What's the difference between this behaviour and being led by the nose?

"So, are you tempted?"

When Ethan returned to his room and told Evelyn about Hiroshi Yamauchi's proposal, Evelyn, who was watching TV in the living room, turned off the TV directly and smiled, saying, "Do you think the opportunity has come?"

"Yes." Ethan nodded without hesitation. "An excellent opportunity."

"If Hiroshi Yamauchi is willing to let me control the production of MOS 6502 in the console and is willing to absorb our funds, then this will be the best opportunity for our company to contact the console."

"Of course, I also have to admit that this step does not represent our successful entry into the console."

"The greatest significance of this step is that we can appear in front of various forces in the console world in a gentle way because it was Hiroshi Yamauchi who invited us."

Evelyn nodded with a smile. She understood her brother's meaning.

Although Ethan had shown completely opposite attitudes on one thing within three days, Evelyn didn't think he was fickle. Instead, she felt he was thoughtful.

If Ethan only cared about money, the most straightforward way would be to make a deal—money in exchange for goods. Behind this simple transaction was satisfaction with current life.

But Evelyn knew...

Even though Ethan played games every day, his ambition couldn't be satisfied with millions of dollars.

Isn't that good?

He's only twenty-one!

If there's no ambition, how will the next few decades be spent?

"You decide for yourself."

Thinking of this, Evelyn pursed her lips and said, "If you ask me technical questions, I can answer you, but in terms of business, I probably don't know as much as you."

"But, I support any decision you make."

"Because I believe that every decision you make is the result of careful consideration."

"Right?"

Evelyn turned her head, and dimples appeared on her fair cheeks.

"Yeah." Ethan nodded with a light smile. "I'm not a fool, sis."

While acknowledging this, Ethan approached the phone again and dialed Chuck Peddle's number once more.

When Chuck Peddle learned that Nintendo was willing to accept Ethan's supervision, his attitude softened. However, due to Ethan's previous talk, Chuck Peddle couldn't give an immediate response. He stated that he needed to discuss this with his colleagues in the company and would call Ethan back later.

This conversation took three hours. When the phone next to Ethan rang again, he received a positive response, "We have discussed it. If Nintendo is willing to accept your supervision, we can authorize them, or specifically, authorize your subsidiary."

"In terms of licensing fees, we tentatively set it at two million dollars per year, or based on the selling price of each chip, extract twenty percent as a fee. This is the bottom line. Whether it can be increased is your job. We entrust this authority to you, okay?"

"But there is one point we must write into the contract. Nintendo can enjoy the priority purchase right of chips in the console, but cannot maliciously purchase. For example, if they used one hundred thousand chips this year, and to block other companies next year, they set the purchase quantity to two hundred thousand chips, we cannot accept such a situation. I know it's challenging to supervise, but it must be clearly written in the contract."

"If we find that they are using the monopoly power of chips to maintain their market position, then we have the right to tear up the authorization. The rest... we'll slowly go through legal battles, okay?"

Ethan was relieved to hear Chuck Peddle's words.

This kind of trust, which follows a person wherever he goes, is really comfortable.

"Okay."

He promised with a smile, "Chuck, rest assured, I hate monopolies more than you in this matter."

"Of course!" The guy on the other end of the phone laughed, "Ethan, your realm is admirable to us."

"When Atari and Magnavox came to purchase, you let us negotiate on our own. You agreed to sell chips to Atari. We could see from this incident alone that you genuinely hope for a bright future in the electronics industry. So, we believe in you."

This statement made Ethan smile. "Thank you. It's truly an honour to gain your trust."

Now that MOS has given Ethan the authority, he can naturally negotiate with Hiroshi Yamauchi on behalf of MOS. But before the formal business negotiations...

He wanted to take this opportunity to visit Japan.

He wanted to see that closed-off market.

He wanted to witness the incredibly vibrant world of consumption.

Before departing, he made calls to those around him.

He called Thomas and Linda, informing them that he had decided to travel abroad upon the invitation of a partner. He asked the two elders not to worry about his safety.

He called Ralph H. Baer, Barbara Babcock, and others, letting them know about his plans to go abroad for some time. He requested their assistance in keeping an eye on the company and taking care of things in case of any unexpected events.

He phoned Steve Jobs and Eulise Noble, asking them to lend a hand if there were any troubles. He also called Steven Spielberg, telling him that he would be away from North America for some time and encouraging him to enjoy "Pac-Man" without getting distracted by new games.

Because he didn't do such things at all.

Most people had no objections to this arrangement, except for Spielberg, who had some thoughts.

When he learned that Ethan was going to Japan, there was suddenly an excited voice on the other end of the phone.

"You're going to Japan? Will you meet Akira Kurosawa? If you can meet him, you must help me get a signed photo of him! No, wait! Make it two! Because George also really likes him!"

What on earth?

Ethan was baffled by this statement.

But after Spielberg explained, he learned that Spielberg and Lucas were both fans of Akira Kurosawa; they really loved his works.

Upon discovering this fact, Ethan readily agreed.

George Lucas wanted a signed photo of Akira Kurosawa. Simple! In his view, there was no need for him to be busy with this. He could just leave it to Haku Yamauchi.

After all, this was a great opportunity for Haku Yamauchi to prove Nintendo's strength!

(Laugh~

And Ethan, busy with instructions, made Evelyn a bit helpless.

After Ethan hung up the phone, the girl directly asked, "Oh, Ethan, do you not trust me?"

"What?" Ethan didn't understand why his sister would say that.

The next moment, Evelyn explained to him.

"You didn't need to make those calls because I will be watching over the company."

However, when this statement appeared, Ethan immediately smiled.

"Oh, my dear sister, you won't be watching over the company in California."

"Because you'll be going to Japan with me."

"Why?" Evelyn was shocked!

She didn't even know she was going to Japan!

"Because I don't understand technology."

Ethan shrugged, hands outstretched, saying, "I only understand a little bit of business, don't understand technology at all. In this situation, going to Japan alone is a waste of time, right?"

"Besides, it's only July now, a month and a half before you start school."

"Even if you accompany me on a trip, it won't delay your classes."

"So, think of it as a vacation, okay?"

Ethan grinned at Evelyn.

When this absurd reasoning came up, Evelyn's face immediately showed a few black lines.

She really wanted to punch this guy who took matters into his own hands, but after staring at that damn smiling face for a while, she gave up. "Okay, okay, I'll accompany you on this trip."

"But the expenses this time will be on your account!"

Her sister's response made Ethan very happy.

However, at the same time, he wanted to correct his sister's mistake.

"No, it's Nintendo's money."

"Because they invited us."

TL Note:

The theory of the closed nature of the Japanese market is derived from the article "The Closed Nature and Protection Structure of the Japanese Market" in the sixth issue of the "Japan Studies Journal" in 1990.

Sega's production line in Japan actually started with the support of the US military base. Initially, they weren't in the Japanese business, but later they were acquired by Japan.