Yokoi Gunpei was never one to beat around the bush.
He simply slid the folder he had brought with him across the table for everyone to see.
Miyamoto Shigeru glanced at it—then nearly flung it out of his hands.
"Our in-development technology… was preemptively patented?! And the registrant used a pseudonym—calling himself 'Ten Cent'?!"
He closed the folder and quietly scanned the faces of the executives around him.
Now Miyamoto felt he needed to revise his earlier assumptions.
The one who had stolen their patent was "Ten Cent."
The one who had published the exposé article was also "Ten Cent."
Perhaps this wasn't a disgruntled third-party developer at all—
but a Nintendo insider, a corporate spy.
Otherwise, how could anyone patent the technology before Nintendo had even finished the design—much less implement it immediately?
Yokoi continued,
"The solutions we've tried so far either perform poorly, lack stability, or cost too much. This television-luminance–triggered design is currently the best option—highest performance, lowest cost. If we insist on developing our light gun, we'll need to license their patent. If we refuse, we'll have to rebuild the game, rewrite the luminance-triggering system, and design an entirely new light gun. Otherwise Nintendo will face an intellectual property lawsuit."
The large conference room fell silent.
This month truly had been cursed.
The Famicom, selling brilliantly, had to be recalled due to hardware defects.
Yamauchi's decisive actions salvaged some public goodwill—only for Kadokawa's magazine to stab them in the back.
And now this.
Ten Cent was absolutely ruthless.
After a long pause, Yamauchi Hiroshi finally spoke.
"Nintendo must establish a dedicated legal department to handle intellectual property litigation."
"Miyamoto-kun, postpone the light gun shooting game. Reallocate resources to another project."
"Yokoi-kun, within one month, I want to see a new light gun design. Maintain basic performance—and reduce costs as much as possible."
The executives voiced their acknowledgement.
Only Miyamoto dared raise a concern.
"Kachō… what about third-party developers? And what about the royalty system?"
This time, Yamauchi shook his head with absolute confidence.
"We cannot retreat. Nintendo introduced this system—we set the standard. If we abandon it halfway, we lose influence in the industry. Even if we have to grit our teeth, we will maintain the royalty system."
He had barely finished speaking when an assistant rushed in, placed a new file on the table, and whispered a few hurried words.
Yamauchi's expression twisted instantly.
Miyamoto cautiously accepted the file and read the headline.
"Hhhh…!"
He sucked in a sharp breath.
Sega had published a newspaper announcement today.
Sega's Home Console Division Director, Satō Hideki, had personally taken the stage to confirm the existence of the royalty system.
Then he declared that Sega would take the first step, modifying their revenue split and lowering the royalties required of developers.
At the same time—
Taito Corporation announced that their next title would be developed for Sega's platform, and that Sega would publish Taito's upcoming arcade game.
Taito—later famous for Elevator Action, Front Line, Kick Master, Renegade, and more.
Not yet a top-tier studio—but this announcement was unmistakably a signal.
Third-party developers had begun choosing the more favorable side.
Yamauchi could only rub his forehead, frustration spilling through his voice.
"…Lower the parameters of our royalty system. Match Sega's changes—slightly lower than theirs."
"And send a new invitation to Taito. Tell them Nintendo will always welcome them."
---
…
…
Atlas Garage
Kobayashi Tetsu was holding a copy of the new Kadokawa Game Express magazine.
Beside it lay an envelope.
Inside: 300,000 yen in manuscript fees, and a large headshot photo.
Nakamura Yuji leaned over—then recoiled dramatically.
"Who is this?! Why is it a man?!"
"That's Kadokawa Haruki," Kobayashi said, rubbing his temples.
"He's… extremely self-admiring."
He tore the photo to pieces and tossed it into the trash.
But the 300,000 yen?
He gladly accepted it—payment for a single article.
"What concerns me more is Sega's response," he continued. "I didn't expect Satō Hideki to react so quickly. Looks like the department head isn't just some corporate fool. Anyone who can reach that position in Sega can't be completely incompetent."
Nakamura still looked confused.
"But won't Sega lose money doing this?"
"Superficially, yes."
Kobayashi spread his hands.
"But consider their lineup. This past half-year, Sega primarily published third-party arcade titles. As for home-console third-party games, the only one was ours—and Atlas is operating under Sega's label, using first-party resources. We're not a true third party."
"In other words—this year, all twelve SG titles were first-party.
Meanwhile, of Nintendo's six releases, two were from third-party developers."
"With both companies relying on first-party titles as their moat, Nintendo actually has more third-party partners. That makes royalties more valuable to them."
"So when the royalty rate goes down—Sega barely feels it, but Nintendo loses much more. And by lowering royalties first, Sega sends a signal—a thousand gold coins for the bones of a fine steed."
Which explained Taito's swift response.
Kobayashi suspected Sega had reached a private agreement with Taito—something never intended for public disclosure.
With Taito setting the example, future third-party developers would naturally lean toward Sega.
Finally, Kobayashi summarized:
"So yes… Satō Hideki is actually quite formidable. Not a Yokoi-level engineering genius, perhaps, but he has sharp instincts."
Unfortunately, Satō was ultimately too conservative.
During his tenure, the SG line never really broke through.
Ironically, only after he stepped down did Sega find massive success—the Mega Drive sweeping North America and forcing Nintendo onto the defensive.
"There are only three days left until New Year's. SG-2000 will launch bundled with the light gun. When that day comes, everything we've worked for this past month will show its results."
Kobayashi was about to stand when the phone rang.
He picked it up casually—
And froze for an instant.
The caller was unexpected.
Sega Home Console Division Director—
Satō Hideki.
"This is Atlas, correct? Kobayashi-kun? This is Satō Hideki."
"Please come to Sega headquarters… I'd like to renegotiate the revenue split for Atlas' games on Sega's platform."
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