Supply chain compromises, Production Committee tug-of-war

Rebirth in the Golden Age of Games: I Became the Sega, Chapter 1017

Nakayama Takuya put the two agreements into the drawer and pulled out two other documents from his briefcase.

The cover was made of light blue cardboard, with the double receipt stamps of Sega's Legal Department and Europe office on the corner.

Nakayama Takuya pushed the documents in front of Hatano.

"Take it."

Hatano paused for a moment, then turned to the first page.

Preliminary Report on Site Selection Assessment for Regional Manufacturing Centers in Europe.

"Aren't they still finalizing distribution channels in Europe?" Hatano pressed his finger against the edge of the paper.

"Distribution channels are one thing, logistics are another." Nakayama Takuya, his arms crossed over his legs. "Rotterdam is building a super warehouse; it's a transit hub. But the entire GP2 system, plus the sophisticated peripherals for the next- Bandai's high-priced model kits, all rely on East Asia shipping. The shipping time is too long. Who knows what unforeseen circumstances might arise in the Red Sea and the Suez Canal? If the shipping routes encounter problems, even if air freight is used as a temporary fix, the impact on the entire route will be significant."

Terauchi glanced at him from the side but remained silent.

Nakayama Takuya continued, "Some time ago, I had the Europe office and local think tanks do some research. Workers in Western Europe are prone to large-scale strikes, and labor costs are ridiculously high, so we can't touch them. Eastern Europe has only been transitioning for a few years, so its labor force is abundant, and costs are only a quarter of those in Germany and France."

Hatano turned the page, his gaze falling on the two countries highlighted in red.

"Hungary, Poland," Hatano.

"The office recommends prioritizing Hungary," Nakayama Takuya tapped his index finger on the table. "They offer a three-year tax exemption for foreign-invested factories, and their import/export customs channels are smooth. More importantly, they have a foundation in the electronics and instrumentation industry from the Cold War era, making it easy to recruit skilled workers for precision components. The location is right next to Austria; trucks can directly access the E60 Expressway, delivering assembled precision peripherals to the Netherlands warehousing center within two days. With the establishment of the European Union, it might just become the Tijuana of Europe."

Hatano's heart skipped a beat.

Having just lost the manufacturing rights for core components in North America, Nakayama Takuya and slapped its heavy asset layout in Europe in his face.

This is not just compensation; it's taking over the entire hardware production sector across the Europe continent.

"Poland is an alternative," Nakayama Takuya added. "Poland has lower wages, but its road infrastructure is slightly worse."

You should personally handle these two deals.

Terauchi Nei picked up his teacup, blew away the foam, glanced sideways at the documents in Hatano's hand, and his knuckles twitched almost imperceptibly.

"President," Hatano, closing his folder and straightening up, "I've had my deputy monitor the production line in Tijuana 24/7. Once the GP2 is fully stocked at Best Buy and Walmart in April, and the supply is completely stable, I'll fly directly from San Francisco to Budapest."

"Take a thorough look at the research." Nakayama Takuya buttoned up his suit jacket and stood up from his seat. "Get to know every detail: local government policies, union rules, peak electricity prices for industrial use, customs clearance checkpoints, and so on. Sega won't be a sucker; every penny invested must produce a tangible result."

"Understood!" Hatano replied readily.

Meeting adjourned.

Nakayama Takuya opened the conference room door and strode towards the elevator at the end of the corridor.

Only Hatano and Terauchi remained in the meeting room.

Terauchi, he closed his briefcase, the zipper zipping up loudly.

"Congratulations, Hatano- san." Terauchi picked up his bag. "Budapest's hot springs are quite famous; don't just stare at the molds when you go."

Hatano stuffed the Europe assessment report into his briefcase and patted it twice.

"Don't worry, Terauchi- san. If even one of the core semi-finished products from East Asia has a faulty solder joint, my inspection report from Tijuana will be sent directly to the president's office."

The Terauchi didn't reply, but stepped out the door.

Back in his office, Nakayama Takuya stuffed the preliminary assessment report for building a factory in Europe into his drawer.

The office door was pushed open.

Hattori strode in without even knocking.

He loosened the Silk tie that was tightly around his neck, walked straight to the sofa, plopped down, and sank into the Genuine Leather cushion, letting out a long sigh.

Nakayama Takuya stopped organizing the documents he was doing.

"Just came from the Dentsu building?"

Nakayama Takuya got up, walked to the water dispenser, took a paper cup, filled it with warm water, and handed it to Hattori.

"A mere wrangling. Pure wrangling."

Hattori took the paper cup, tilted his head back, and took a big gulp.

"These guys are used to throwing their weight around in the domestic TV industry. When they heard that Sega was going to send in legal counsel to investigate their finances and take away all the overseas rights, those old guys in the meeting room turned pale."

Nakayama Takuya sat down on the single sofa opposite him, crossing his legs.

"We've had three meetings already, and we're still stuck on the Production Committee's revenue-sharing ratio and financial oversight authority?"

"How could they possibly relinquish control?" Hattori crumpled the empty paper cup and tossed it into the nearby wastebasket. "The Dentsu representative even slammed his fist on the table today. He pointed his finger at me and said Sega was overstepping its bounds, didn't understand the rules of the television industry, and was breaking industry norms."

"The rules are set by money," Nakayama Takuya said calmly. "If they want to follow the rules, then they'll have to pay for it themselves."

Hattori let out a cold laugh.

"They don't have the guts or the resources. Miyahara has privately consulted an actuary to check the accounts."

Hattori counted on his fingers.

"If we were to follow your original plan, President, abandoning that rigid, traditional fighting style and hiring a top-notch martial arts choreography team from Hong Kong Island, with high-altitude wire work throughout, plus some post-production explosions and special effects, the production cost per episode would easily multiply."

Hattori paused for a moment, his tone carrying a hint of disdain.

"Without Sega's financial backing, and without our distribution channels in North America and Southeast Asia to recoup this astronomical production cost, TBS and Dentsu wouldn't have been able to fill this hole even if they sold their underwear, relying solely on the pitiful late-night viewership in Japan and offline video rentals."

Nakayama Takuya tapped his knee lightly with his finger.

This is an unsolvable deadlock.

TBS and Dentsu lacked the capability to operate independently, yet they were unwilling to relinquish control.

This group of people is used to the outdated practices of domestic Production Committee, such as taking kickbacks, bribing officials with connections, and falsifying accounts.

Now Sega wants to get them to the poker table to play international games, and not only are they afraid to call, they're also trying to steal Sega's chips from the sidelines.

Next Wednesday.

Hattori leaned forward, placing his hands crossed on his knees.

"Next Wednesday is the final briefing on the project's approval. Miyahara made this statement before the meeting ended today: if Sega insists on these conditions, then the Rurouni Kenshin Live-Action Adaptation Project will have to be indefinitely postponed."

"Set aside?" Nakayama Takuya chuckled lightly. "They're gambling. Gambling that we won't give up the effort we've invested so far, and that we'll eventually compromise and give in."

"Sega Galaxy has plenty of cash flow right now," Hattori stated. "We can make money from any new project we start, so losing one live-action manga adaptation is no big deal. If we still can't reach an agreement by next Wednesday, I'll just leave. We can always bypass them and find TV Tokyo to collaborate on other projects. Anyway, it's your father-in-law's territory, so they're very easy to talk to."

Nakayama Takuya shook his head.

"If it's completely shelved, we'll suffer too. All the time spent negotiating the copyright and doing research in the early stages has been wasted. I can certainly speak to TV Tokyo, but TBS has a solid foundation in producing period dramas like this, and their costumes, props, and location resources are much better than TV Tokyo's. If we change the team, we'll have to readjust for another month or two."

Hattori somewhat surprised and straightened up.

So you mean... to back down?

Sega is investing heavily in expanding its overseas channels and will absolutely not back down an inch on copyright or financial matters.

Nakayama Takuya stood up and walked to the floor-to-ceiling window.

Outside the window, Tokyo is filled with towering skyscrapers and bustling traffic.

"Since we can't break through their stubbornness head-on, let's find someone who can handle them from the side."

Nakayama Takuya turned around and looked at Hattori.

Hattori couldn't keep up.

"Looking for someone indirectly?" Hattori frowned. "The higher-ups at the TV station? If Dentsu insists on sticking to their revenue-sharing agreement, even TBS executives getting involved might not be effective. They're partners with shared interests."

"I won't contact TV stations or advertisers." Nakayama Takuya walked back to his desk, pulled out a Genuine Leather chair, and sat down.

"Find the original author."

Hattori was stunned.

"Nobuhiro Watsuki?" Hattori blurted out, "But he's just a manga artist. Shueisha's editors are more likely to handle the Production Committee matters. What can he possibly do?"

Nakayama Takuya placed his hands on the table, crossed.

"Have you forgotten how I obtained these film and television adaptation rights in the first place?"

Hattori recalled the last time Nakayama Takuya went to Shueisha to discuss copyright matters.

"You said it was his own request. He didn't want to make ' Rurouni Kenshin ' into a traditional Japanese sword-fighting film."

"Yes." Nakayama Takuya nodded. "Sitting upright, glaring at each other, drawing their swords and slashing, then sheathing them. Nobuhiro Watsuki detested this slow, drawn-out fighting style. What he wanted was the high-intensity wire work, the visceral close-quarters combat, and the action scenes flying everywhere, like in China Martial Arts Drama."

Hattori continued along this line of thought.

"To meet his requirements, the production cost per episode would be astronomical. Japan film and television production teams simply don't have the technical capabilities. We'd have to hire professional martial arts instructors from Hong Kong Island, and even utilize foreign special effects teams."

"That's right." Nakayama Takuya snapped his fingers.

Before you attend the briefing next Wednesday, make sure to drop by Shueisha Nobuhiro Watsuki for coffee.

Hattori immediately grasped the core intention.

Should I go and complain to him?

"You're a director of Sega Galaxy, go in person, give him plenty of face." Nakayama Takuya leaned forward. "Once you meet him, be sincere. Tell him that Sega really wants to help him realize his Martial Arts Dream. We've even scouted the top martial arts choreography team in Hong Kong Island. Funds can be injected at any time."

Hattori picked up the conversation.

"Then the tone shifted. But those people at TBS and Dentsu clung to the opaque accounting practices common in China. They refused to accept compliance audits from Sega's international legal and financial departments."

"Those old guys, their faces tremble at the mere mention of auditing. They're terrified we'll touch their shady income," Hattori complained.

Nakayama Takuya let out a cold laugh.

"Tell Nobuhiro Watsuki directly. Since there's no way to audit the accounts, and since the finances aren't transparent, Sega's exorbitant overseas marketing budget for special effects and action sequences is absolutely not going to be thrown into the water easily. That would be a complete waste."

"He's a smart man." Hattori stroked his chin. "Without Sega's huge sum of money as a safety net, TBS's own budget for regular late-night dramas simply wouldn't have been enough to hire an overseas team."

"Without money, TBS can only go down the old path." Nakayama Takuya tapped his fingers on the table, making a clicking sound.

"They could only film it according to the lowest-budget, traditional sword-fighting movie standards. They'd put on some cheap samurai costumes, hire some third-rate stunt doubles, strike a few poses, and casually slash a couple of times with their swords. They even changed the script into a drawn-out soap opera just to pad it out."

Hattori couldn't help but smile.

"Creators all have tempers," Nakayama Takuya, softening his tone. "Especially popular manga artists. If their hard work is made into a poorly made, low-quality drama, it's not only embarrassing, but it will also directly hurt the sales of their manga volumes. Nobuhiro Watsuki would absolutely not stand for that."

Hattori has completely figured out this combo.

"He'll definitely be furious when he hears this news. As long as he, the original author, makes a strict clause in the licensing agreement—absolutely no low-budget traditional sword-fighting films—and even directly requests to sit in on next Wednesday's Production Committee meeting, Dentsu and TBS will be completely stuck."

"That's the rule in the Japanese Anime and Manga Industry." Nakayama Takuya picked up his water glass and took a sip. "Shueisha and the authors have absolute copyright veto power. As long as he doesn't agree and sign off, all the preliminary plans and preparations by Dentsu and TBS are just worthless."

Hattori added, "Shueisha's editorial department will definitely favor the original author. After all, the Rurouni Kenshin manga is their cash cow. Dentsu and TBS are the ones who are anxious because they can't get the license."

Nakayama Takuya placed the water glass back on the table with a crisp sound.

"Shift the blame. Let the original author put pressure on the TV station and advertising agencies. We can just watch from the sidelines."

Hattori thought the move was brilliant, but he still raised concerns.

"What if Mr. Watsuki can't withstand the pressure from Shueisha's higher-ups, or what if TBS promises him more royalties and he compromises?"

Nakayama Takuya's expression remained completely unchanged.

"Then let's put the project on hold for good."

He answered without the slightest hesitation.

"At worst, we can shut down. Anyway, the first round of First-Priority Adaptation Agreement is in our hands. The initiative is with Sega."

Nakayama Takuya stood up and straightened the hem of his suit jacket.

"Sega has a ton of cash in its accounts right now. Sega Galaxy has a bunch of top-tier IPs in its hands; they could make money just by launching any one of them. A six-month or year hiatus for Rurouni Kenshin won't bother us much, since our contract still has a long way to go."

He walked up to Hattori and patted him on the shoulder.

"But TBS's schedule can't wait. Dentsu's annual performance plan can't wait either. ' Rurouni Kenshin ' is currently at the peak of its popularity, and Shueisha is also eager to use the live-action drama's popularity to boost the sales of the collected volumes. If this drags on, let's see who gets impatient first."

Hattori understood completely.

All the frustration I'd endured in the Dentsu conference room over the past few days finally dissipated at this moment.

"Using a borrowed knife to kill someone, cutting off the fuel supply at the root." Hattori picked up the navy blue folder that almost fell off the table. "The president's methods are ruthless. I'll contact the editor in charge at Shueisha tomorrow morning and arrange a meeting with Watsuki."

"Bring some dried goods with you when you go," Nakayama Takuya instructed.

Hattori chimed in, "I'll bring the resumes of the Hong Kong Island Martial Arts Stunt Team that Sega Galaxy's Planning Department drafted earlier. I'll show Mr. Watsuki the sincerity that Sega has shown with real money."

Nakayama Takuya nodded.

"Go ahead and do it. You decide the extent of the consequences. Remember, at the negotiating table, whoever is more eager to secure cooperation must kneel down and obey."

Hattori bowed, turned and strode out of the office.