It was an incredibly tempting figure. A 30% premium was enough to make the shareholders of any publicly traded company's heart race.
Keiji Honda looked at the amount on the letter of intent, his expression unchanged. "Sony's financial strength is well-known in the industry. The financial support is very sincere."
Nobuyuki Idei threw out his second bargaining chip, a trump card Sony had that Sega lacked. "Beyond capital, marketing is what determines the upper limit of a game's final sales. Sega's channels are limited to game retail stores. Sony is different. If Dragon Quest launches on PlayStation, Sony's consumer electronics division will make this game a standard for image quality demonstrations in experience stores worldwide. Columbia Pictures' theater advertisements and promotional brochures included in audiovisual product boxes can all be opened up to Enix. Sega cannot provide this scale of cross-industry promotion."
Keiji Honda picked up his teacup; the tea had already gone somewhat cold.
He took a sip, quickly calculating the actual value of these conditions in his mind.
There was a lot of money, and the channels were extensive.
Any small or medium-sized developer lacking funds would sign their name without hesitation when faced with this offer.
Enix was not a small or medium-sized developer.
"Director Idei's proposal is truly grand." Keiji Honda set down his teacup. "Sony's full industry chain advantage is indeed impressive. However, there is a realistic problem facing Enix. We have always maintained a light-asset business structure. The core planning is done in-house, while the actual coding and art are outsourced to external studios. This is the foundation of Enix's quality control and cost management."
He paused, throwing out the core question. "In the next-gen 3D environment, traditional 2D outsourcing teams cannot handle the development work. What kind of assistance can Sony provide at this level?"
Nobuyuki Idei had come prepared.
Before coming, Sony had conducted a detailed background check on Enix's operating model.
"Sony has strong appeal among third-party camps," Nobuyuki Idei offered as a solution. "The performance of Namco's Tekken and Ridge Racer on the PlayStation is obvious to all. A large number of small and medium-sized developers are flocking to Sony. Even Square has provided full-scale support for Sony's Fairy Warrior. Sony can step in to coordinate these external development resources familiar with the PlayStation architecture for Enix. We can even have Sony's technical support team move in directly to assist the outsourcing teams in overcoming the difficulties of low-level code."
This proposal sounds very reasonable.
The platform takes the lead, integrating its third-party resources to work for the top-tier manufacturers.
Keiji Honda compared Sony's proposal with Sega's in his mind.
Sega had directly provided a list of outsourced teams that had been practically tested and systematically trained, and they even had the underlying logic libraries ready.
Sony, on the other hand, had just painted a pretty picture, promising to "coordinate."
The execution efficiency and project risk of the two were not on the same level.
The deeper issue lay in Sony's additional conditions.
The promotional channels for home appliances and audiovisual products sounded wonderful.
Based on commercial common sense, it was impossible for Sony Group to provide such high-level core resources to a purely third-party game company for free.
To get these resources, the prerequisite was to accept Sony's strategic investment and let them take a stake in the company.
Once Sony became a major shareholder, interfering with operations would be a natural next step.
Columbia Pictures was the best precedent for this.
In 1994, Columbia Pictures suffered huge losses, and in 1995, Sony Headquarters directly took back control of its operations and sent in executives to carry out drastic restructuring.
The vast majority of executives inside Enix valued their independence, and no one wanted a "shadow emperor" above them, ready to issue orders at any time.
"Sony's proposal is very constructive," Keiji Honda replied with a standard business response. "Given that this concerns the company's future strategic direction, I cannot make this decision alone. It needs to be submitted to the Board of Directors for internal discussion. Once there is a result, I will notify Director Idei immediately."
This was a polite way of showing him the door.
Nobuyuki Idei did not press further.
Pushing too hard would only be counterproductive.
He left the letter of intent and departed Enix with his legal assistant.
Upon returning to headquarters in Minato Ward, Idei went straight to Norio Ohga's office, where Ken Kutaragi was also present.
"How did it go?" Norio Ohga asked.
Idei recounted the meeting. "Keiji Honda is indeed tempted by the funding and distribution channels. However, his attitude changed subtly when we brought up outsourcing support. I could sense that he wasn't entirely satisfied with the outsourcing coordination plan we offered."
Ken Kutaragi frowned. "Namco's technical capabilities are strong enough, and we have quite a few small and medium-sized teams at our disposal. What else could he possibly be dissatisfied with?"
"The issue isn't whether we have it, but what Sega has offered," Idei Nobuyuki analyzed. "Nakayama Takuya must have struck a nerve at Enix when he went there yesterday. Honda Keiji's reaction was too calm, which suggests he already has a fallback plan in hand. Sony's terms are just a benchmark for him to weigh against Sega's offer."
Oga Norio lit his pipe, and smoke diffused throughout the room. "The fact that he didn't refuse on the spot means there's still room for negotiation. Enix isn't a monolith; there are always people who value capital and resources. Have someone keep a close watch on internal developments at Enix and increase contact with their executives."
Idei nodded. "That's all we can do. This will be a tough battle; Sega has done the preparatory work very thoroughly."
Three days later.
Enix Headquarters, Shinjuku Ward.
Inside a large conference room on the top floor, the blackout curtains were drawn tight.
A projector cast complex financial statements and technical assessment documents onto the screen.
This was a closed-door meeting that would decide the fate of Enix for the next decade.
Founder Fukushima Yasuhiro sat at the head of the table, toying with a pen.
President Honda Keiji, star producer Horii Yuji, and core executive Chida Yukinobu sat on either side.
On the conference table lay two documents.
One was Sega's memorandum of understanding, and the other was Sony's letter of intent for investment.
Keiji Honda, as the facilitator, spoke first. "Everyone is clear on the situation. Both platform holders have laid their chips on the table. We need to decide on a direction today."
He opened the Sony document. "Sony is offering a lot of money. A 30% premium for an equity stake, covering initial R&D expenses, and opening up their entire industry chain for marketing. This is classic capital-led expansion."
A senior executive in charge of finance chimed in: "Looking at the numbers on paper, Sony's offer is impeccable. With this money, we could triple the marketing scale for Dragon Quest."
"And the cost?" Yukinobu Chida tapped the table, his voice echoing in the conference room. "The cost is giving up 15% of our equity. We all know Sony's style. When Columbia Pictures was losing money, they sent people in to take over directly. Once Sony becomes a major shareholder, everything—how our project proposals are set, how our release dates are scheduled, even how our merchandise is sold—will be subject to Sony's whims."
Please Support me by becoming my patreon member and get 30+ chapters.
[email protected]/Ajal69
change @ with a
Thank You to Those who joined my Patreon