The two-week deadline passed in the blink of an eye.
On the day of the Board of Directors meeting, Hatano wore a new suit and had his hair meticulously styled. He arrived twenty minutes early and took his seat.
Before him lay a thick stack of data reports detailing the Tijuana Factory's operational data for the past year and a half: yield rates, labor cost comparisons, logistics turnover days, and detailed tariff savings—each item clearly labeled.
Hatano cut straight to the chase.
He broke down the pain points of the North American Catridges supply chain one by one, using numbers to illustrate every detail: the shipping cycle from Shenzhen, the rise in trans-Pacific freight costs, and the congestion at California ports.
After his presentation, the conference room fell silent for a few seconds.
Yamamoto from the Finance Department was the first to speak.
"Director Hatano, I have no objections to the North American market data. But the question is, how many years can this new line be used? MD sales are already declining, and Jupiter uses optical discs. If we invest heavily in a catridge production line now, and optical discs completely replace catridges in three years, what will happen to the line then?"
Yamamoto's concerns were shared by many in the room.
The directors exchanged glances without speaking, but their stance was clear: wait and see.
Hatano's response was direct: "MD sales are indeed declining, but third-party Catridges manufacturing orders haven't decreased significantly. And demand for handheld console cartridges is even stronger. With GamePocket's installed base, these users consume a substantial number of tapes annually."
"But who can predict the future growth of the handheld market?" another director interjected. "What if the handheld market also starts to shrink?"
Just as Hatano was about to retort, Nakayama Hayao cleared his throat.
"Let's look at this first."
He picked up a simply bound report from the table and signaled his secretary to distribute copies to each director.
The report's cover bore a single title: "Summary of Sega Product Terminal Sales Data in Key South American Markets," with TecToy's name and date in the lower right corner.
The rustling of pages filled the conference room.
The report was short, only about ten pages long.
But the data it contained was solid.
The section on the Brazilian market needed no explanation; everyone present was already familiar with it.
What truly caught everyone's attention was the latter part of the report—data compiled by TecToy from various channels and terminals in Spanish-speaking countries in South America.
Argentina, Chile, Colombia, and Peru.
Consumer awareness and purchase intent for Sega products in these countries were significantly higher than most had anticipated. Brazilian-market Sega consoles and Catridges had flowed into these nations through various unofficial channels, with prices in the secondhand market even exceeding those in Brazil itself.
Yet, at the same time, official channels in these Spanish-speaking countries were virtually nonexistent.
There were no authorized distributors, no localized Spanish-language products, and no official Sega presence whatsoever.
In other words, it was a market with demand but no supply.
After reading the report, Yamamoto pushed his glasses up his nose. "Mr. President, what does this report imply?"
"South America isn't just Brazil," Nakayama Hayao replied calmly. "The Spanish-speaking market is no smaller than the Portuguese-speaking one. Argentina, Colombia, Chile, and Peru combined have twice the population of Brazil. And right now, this market is essentially being neglected."
He paused, then tapped a page in the report with his finger.
"And what about Mexico? It's a Spanish-speaking country. Its trade relations with the major Spanish-speaking nations of South America are far closer than ours. The Catridges produced at our Tijuana factory have the entire Spanish-speaking Latin American region as their hinterland."
Hatano's expression changed.
He glanced down at the report, then looked up at Nakayama Hayao.
This data hadn't been prepared by him. Having spent six months in Mexico, he hadn't even considered contacting TecToy. After all, the licensing had been directly granted to TecToy for production, and all settlement and related work was handled by Shu Nakayama's Sales Department.
But he didn't ask further questions, nor did he probe the report's origins.
The data was there. Who prepared it didn't matter; what mattered was its usefulness.
The atmosphere in the conference room began to ease.
The directors who had been hesitant earlier now reopened the report, scrutinizing the terminal feedback data.
At this point, Takuya Nakayama took over.
"Regarding the concerns about the Catridges's lifespan, I'd like to add a few points."
He remained seated, speaking at a steady, unhurried pace.
"For home consoles, Catridges are indeed being replaced by optical discs. This trend is irreversible. But handheld consoles are different."
He held up a hand and began counting on his fingers.
"First, the power consumption of optical disc drives is too high. With current battery technology, they wouldn't last long in a handheld console. Second, optical discs are fragile. Handheld consoles are portable devices; a bump on the subway or a drop from a pocket could easily cause read errors. Third, the physical size of optical disc drives is a major obstacle. Even if we miniaturize them, they'd turn the console into a brick. Moreover, the cost of optical disc drives is prohibitive; integrating them into a handheld console would make the price uncompetitive.
He lowered his hand.
"Flash memory is a potential alternative, but currently, a single flash memory chip costs as much as several boxes of Catridges. This cost won't drop significantly within the next five years. So the conclusion is clear: until at least 2000, handheld consoles will continue to use Catridges. Whether it's our current GamePocket or any new handheld Sega might develop, they'll all rely on Catridges.
He surveyed the board members.
"Therefore, a Catridges production line in Mexico, eligible for tariff benefits under the North American Free Trade Agreement, would have a stable output of at least five years. Five years of orders would be enough to recoup the construction costs and generate substantial profits."
Yamamoto flipped through the report in his hand, then reviewed the operational data Hatano had previously sent, and raised no further objections.
However, another director raised a practical concern: "The initial investment for a new line is substantial. Equipment procurement, personnel training, and facility expansion will all add up to a significant expense."
Takuya Nakayama had been waiting for this exact question.
"We can save over half of that cost."
He turned his gaze toward Terauchi.
Terauchi took over: "The Catridges assembly lines in Japan are currently operating at less than 60% capacity. Most of our catridge production for the Japanese, East Asian, and Southeast Asian markets is already handled by our factories in China. As Jupiter's shipments increase, the demand for optical disc pressing will only grow. It's only a matter of time before our domestic factories shift to focus primarily on optical discs."
Takuya Nakayama continued: "Instead of letting our idle catridge lines sit until they're scrapped, we should dismantle the equipment and move it to the Tijuana Factory."
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