Chapter 372 Royalty System
Nintendo stipulates that the minimum order quantity for cartridges from third-party game manufacturers is 10,000 discs, and will not sell any less!
And the payment comes first and the goods come later, and the delivery time is more than two months!
The previous royalties are still okay, but the last two points are deeply hated by the majority of third-party game producers.
If a game is expected to sell 100,000 copies, Nintendo's production costs and royalties are 2,000 yen.
Then the manufacturer would have to advance 200 million yuan first, and then wait for two months for the capital to return.
When you find that the game is selling well and want to buy more, wait, wait for two or more.
If it collides with Nintendo's own games, it will have to be postponed.
By the time you get the game cartridge, the game may have become outdated and no longer sellable.
Of course, if the game doesn't ultimately reach the expected 100,000 copies, will Nintendo refund you the extra money for the cartridges?
That's wishful thinking. There is no such thing as returns at Nintendo.
Therefore, for many game manufacturers, correctly predicting game sales is a matter of life and death .
Ordering too much will be a waste, it will seriously tie up funds and you will lose money if you can't sell them. Ordering too little will miss the best selling opportunity.
Moreover, how much goods can be obtained and how much can be sold depends on the mood of Nintendo and the New Heart Association.
Of course, the original intention will play a role in this, but that is another story.
But unlike Nintendo's various regulations, Shirakawa Kaede's conditions are quite simple and crude.
There is no such thing as royalties, nor is there any operation of selling the produced cartridges to game companies.
The condition he proposed was to take a commission, but of course the production rights of the game cartridges were still in his hands.
Firstly, Shirakawa Electric has the ability to manufacture cassettes. Rather than letting other OEMs earn processing fees, it would be better for him to do it himself.
Secondly, by controlling the production rights of game cartridges, one also controls the right to plan the shipment and distribution of the game.
What's the benefit? When HAL's own games and third-party games are released close to each other, Shirakawa Electric can reasonably adjust the release dates between them.
After all, I control the pace of product delivery, and I have the final say on when to distribute the products.
To put it bluntly, it is just like Nintendo, which can give priority to its own games when necessary.
Because compared to the commissions from third parties, the profits earned from their own games will be greater.
Of course, this can only be done when the quality of your own game is similar to that of third-party games.
Otherwise, it would be obvious that third-party games sell better, and Shirakawa Kaede would have lost his determination and insisted on supporting his own shabby game.
He is a capitalist and he won't go against money.
Seeing that Kudo Yuji was still hesitating, Shirakawa Feng felt it necessary to give him another shot of confidence.
"Mr. Kudo, Shirakawa Electric has sufficient production capacity, and the production cycle of game cartridges will not exceed two weeks.
And the payment cycle will be controlled within one month, so please don’t worry about this.”
Shirakawa Electric has large factories in Kawasaki and Chiba, and according to the latest statistics, the number of workers alone exceeds 10,000.
With such a large scale, it would be very easy to process a small game cartridge.
This is qualitatively different from Nintendo's model, as Nintendo does not have its own factory.
All of its products and game cartridges are manufactured by other factories, which results in Nintendo having trouble controlling the shipment of many products.
Therefore, the delivery cycle it agreed with for third-party games is two months, which is also for the sake of insurance.
Although Nintendo's home game console has not yet been released, its royalty system has not been officially established.
However, Shirakawa Electric's two-week delivery time and one-month payment cycle are definitely very favorable conditions.
Even though Kudo Yuji didn't know much about the electronics manufacturing industry, he understood that few companies could offer such conditions.
As expected of a big company, while offering harsh conditions, they also gave reasons that were hard to refuse.
Gritting his teeth, the fat, round-faced Kudo Yuji nodded vigorously.
"Okay, let's do as Shirakawa-san said. Hudson can accept the above two conditions."
Alas, I have to agree.
Hudson Software's business situation has been getting worse and worse. Although it has produced hundreds of computer games, each one is losing money.
If this situation does not improve, Hudson will probably go bankrupt in the first half of the year.
Seeing the other party nodded in agreement, Baichuan Feng also smiled.
Very good, we have reached an agreement with the first company. We can then negotiate with other manufacturers based on this template.
With someone taking the lead, the attitudes of others will naturally soften.
"But Kudo-san, regarding the production of cassettes, the first batch must not be less than 5,000 discs. And Hudson needs to pay 1,000 yen per disc in advance for the production cost."
The cost of processing the cassette at Shirakawa Electric is around 500 yen, so it's not too much to charge you 1,000 yen for the processing fee.
Although there will be commissions later on, the initial production costs still need to be paid.
You can't expect to sell out all the games in the end and then get the money back to pay the processing fees.
Don't even think about getting something for nothing.
It would be fine if the game sells well, but if it flopped, it would be impossible to even recoup the investment. Wouldn’t that mean Shirakawa Electric would have worked in vain?
There is no such good thing in the world, and Baichuan Feng is not doing charity.
As expected, after hearing his conditions, Kudo Yuji looked embarrassed, "Shirakawa-san, can you be flexible about the cost of the production?"
Yuji Kudo understood that even if he found other OEM factories to produce game cartridges, he would still have to pay the advance deposit.
But given Hudson Software's current situation, it really cannot come up with 5 million yen.
We are almost bankrupt, so how can we have any extra money to pay for the labor costs?
Looking at his embarrassed expression, Baichuan Feng already had a rough idea of Hudson Software's current situation.
“How about this, the production cost of the first batch of Gold Diggers game cartridges will be paid in advance by Shirakawa Electric.
When the game returns, the relevant production costs and commissions will be deducted from it. Of course, this is only a special case for the first batch of games, and other games in the future will still be implemented according to the terms just mentioned."
"Of course! Of course!" Kudo Yuji nodded hurriedly.
This is equivalent to Shirakawa Electric providing him with a free start-up capital of 5 million yen. How could he not be grateful for such a good thing?
As for the first shipment of 5,000 game cartridges, even Yuji Kudo had no objection.
If a game doesn't even sell the expected 5,000 copies, then why develop it? Isn't it a sure-fire money-loser?
So this number is acceptable to both parties, and the cost of 5 million yen is not excessive for the company.
To put it bluntly, with regard to the 35% commission, Shirakawa Feng took two steps.
The 1,000 yen processing fee for game cartridges is calculated as 18.2% of the commission, and the remaining 16.8% is deducted from subsequent game returns.
The advantage of doing this is that even if the game doesn't sell well, Shirakawa Electric will definitely not lose money.
Shirakawa Electric has already earned 500 yen from the processing fee for each game cartridge.
This has nothing to do with the sales of the game, but rather the shipment volume.
With Baichuan Feng's personality, how could he do business at a loss?
But he is not an unreasonable person. For potential game developers like Hudson, he doesn't mind lending a helping hand when necessary.
"By the way, Kudo-san, I'd like to ask you a question. Your company used to make computer games, but why did you switch to home console games now?"
This is also what Shirakawa Kaede is a little curious about. According to Iwata Satoshi, it seems that the other party took the initiative to come to him.
Facing his question, Kudo Yuji stammered, "Because... because I have no money~"
This... this is really a simple and plain reason. Baichuan Feng laughed in silence.
"So your company tried to transform and developed "Gold Diggers"?"
"In fact, Gold Diggers is not a game developed by Hudson Software," added Yuji Kudo.
"Hmm?" Baichuan Feng turned his head and looked at the big fat face beside him.
“Gold Digger is a computer game from the United States, and Hudson ported it to the FES platform.
Of course, please rest assured, Mr. Shirakawa, we have obtained the authorization and there will be no infringement disputes."
Seeing that Shirakawa Kaede was a little suspicious, Kudo Yuji quickly explained.
"So that's how it is." Baichuan Feng nodded. No wonder the development of a game was completed in such a short time.
If it was a transplant, it would make sense.
However, this did serve as a reminder to him that Shirakawa Electric should be more careful in the disclaimers of third-party games in the future.
Don’t get sued in court for no reason and not know where the problem lies.
“In fact, Hudson Software’s main business is not games, but software design.”
While Shirakawa Kaede was considering the legal terms, Kudo Yuji said something that surprised him.
"Hudson Software, it actually makes software?" Bai Chuanfeng widened his eyes.
"Uh," Kudo Yuji smiled awkwardly, "It is true."
This is a gaming company held back by its software. Baichuan Feng feels that Hudson Software is not doing its job properly.
“We have developed various application software for Sharp computers, including programming language software, graphics assistance software and other supporting products.
We can even do preliminary design for hardware such as CPU, sound chip, and image processing chip.
We at Hudson have also studied SIC's 8089A numerous times. Based on its platform, we have also written some instruction set software for development. "
"Wait a minute," Shirakawa Feng motioned for him to wait a moment, "Kudo-san means that Hudson can develop both software and hardware at the same time?"
"Yeah!" Kudo Yuji nodded confidently.
Hudson's real strength is software development, otherwise the word "software" would not be in its name.
At the same time, they also have their own achievements in the design of chip semiconductors.
Although those are products related to game development, the R&D strength is there.
Shirakawa Kaede turned to look at Iwata Satoshi beside him, and the latter nodded in approval.
I can’t say anything else, but Iwata was familiar with Hudson’s strength in software, and it was indeed amazing.
If he is so capable, then why is Hudson doing so badly?
That's because the software and hardware they develop are basically based on Sharp's MZ series and X1 series platforms.
The popularity of Sharp computers is far behind that of Fujitsu, let alone the leading NEC.
Nowadays, every computer has a different system, which means that their software cannot communicate with each other.
So even though Hudson was quite capable, it was limited to Sharp computers and ultimately became less well-known.
However, when Baichuan Feng heard this, his eyes lit up.
"Mr. Kudo, shall we discuss another business?"
"Eh" Kudo Yuji, who had been mumbling, looked at him in surprise.
