A New Player Takes a Seat at the Table

Mid-September, Redwood City, California.

The autumn sun shone warmly in a building a few blocks away from Sega North America headquarters.

The newly hung sign bears an unremarkable name: SanMateoSoftwareGames, abbreviated as SMSG.

There was no ribbon-cutting, no champagne, and not even any media.

But if any Silicon Valley reporter could sneak in here, he would be willing to give up everything he owns for a single photograph of the scene.

Although there weren't many people present, those sitting in the conference room were all big shots who could make Wall Street tremble.

Trip Hawkins, the founder of EA who had just resigned, stood in front of a whiteboard, looking excited, like a missionary about to usher in a new era.

His audience was truly impressive.

Kenji Aso, vice president of Matsushita Electric Industrial Co., sat upright, his eyes revealing undisguised ambition.

Frank Fiorina, vice president of American Telephone and Telegraph Company &T, tapped his fingers lightly on the table.

They are clearly assessing something.

Time Warner CEO Jeff Beckers and Universal Pictures President Sidney Sheinberger exchanged a glance, as they were more concerned with content distribution channels.

In a corner, Lee Jae, the only son of Samsung Group Lee Kun-hee, quietly observed everything like a keen hunter.

Each of these names is enough to send shockwaves through Wall Street.

These people are giants in various fields such as home appliances, semiconductors, communications, media, and film and television.

Today, they have gathered here for one common goal—playing games.

Or rather, money.

These people were all attracted by the insane profits of the gaming market in the past two years.

They watched as Sega, with the Mega Drive and Game Pocket, created a global frenzy in the past two years, raking in profits like a money-printing machine.

They also watched as Sega, despite being Nintendo by Sega and suffering repeated defeats, still managed to collect astronomical royalties every year thanks to the massive existing stock of the Famicom.

Who wouldn't want to take a bite of this piece of fatty meat, dripping with milk and honey?

"Welcome to the future, everyone." Hawkins opened his arms, his voice brimming with infectious enthusiasm. "We've all seen how Sega and Nintendo make money. They use a razor and blade model to sell their consoles, then use exorbitant royalties to strangle all software developers! A game's profits are 30% handed over to the platform—what arrogance and greed!"

He changed the subject, pointing to a word on the whiteboard—"standard".

Why is the PC industry so prosperous? Because of the open standard of IBM PC! Why can't we establish a standard in the gaming industry as well? A standard that belongs to all of us!

He took a deep breath and unveiled his grand vision.

"I call this standard the '3D0 System.' It doesn't belong to any one company; it's an open architecture. Everyone here, Panasonic, Samsung, you can all produce consoles that conform to this standard. We at the SMSG are only responsible for developing the architecture and system, and we charge a negligible licensing fee for each console produced. As for games, we only charge a US dollar 3 licensing fee!"

US dollar 3!

As soon as the number was announced, a slight commotion arose in the conference room.

Kenji Aso's eyes lit up instantly.

He knew all too well that Nintendo and Sega took a cut of 20% or 30%, so compared to that, US dollar 3 was practically free!

"Mr. Hawkins," Kenji Aso leaned forward, speaking eagerly, "You mean, Panasonic can produce our own '3D0' main unit and put it on our Panasonic brand?"

"Of course!" Hawkins snapped his fingers. "Not just Panasonic, Samsung too! Any hardware manufacturer with the capability can do it! We are no longer slaves working for Nintendo or Sega; we are the builders of a new order!"

He pointed to several other big names. "And Time Warner and Universal Pictures, your movies and music can all be released in 3D."

Play now! AT&T, your technology will unlock endless possibilities for our network capabilities! This isn't just a game console, it's a home entertainment hub!

This blueprint is described in a way that is far too tempting.

Becoming the "IBM" of the gaming industry and mastering industry standards—the prospect alone is enough to make these seasoned giants' hearts race.

"Interesting." Lee Jae now, suddenly spoke. His English had a slight, almost imperceptible accent, but his pronunciation was clear. "Mr. Hawkins, your idea is bold. But how can you guarantee that there will be enough games to support this platform? Players buy games, not a bunch of metal boxes."

"Good question!" Hawkins gave him an approving look. "That's why I left EA! I have enough friends in that industry who have had enough of Nintendo's unfair terms! Even Sega's terms are more lenient, but the amount they have to pay is still a considerable sum. If we give them a fairer, more open platform, they'll flock to us like a tidal wave! And our 3D0 system can support far more than just games in terms of entertainment content; the invisible market demand is far greater than the single market of games."

He paused, then added, as if to reassure everyone.

"What's more, we have two geniuses."

He turned and introduced the two somewhat reserved engineers behind him.

Dave Riddell, designer of Commodore Amiga 1000. Robert Mikal, Atari handheld game console Lyn.

One of the creators. With them, our hardware is absolutely world-class!

The atmosphere was completely ignited.

"On behalf of Panasonic, I'm the first to join!" Kenji Aso stood up and declared without hesitation.

He had been eyeing the lucrative video game console market for far too long. After all, Nintendo and Sega were right under his nose, and he had seen how much money they were making. He was also envious of their profits.

Not to mention, seeing his arch-rival Sony making a fortune by developing a dance machine for Sega, promoting the CD format, and boosting sales for its own record label, he couldn't sit still any longer.

"Samsung is making great strides in the electronics industry, so naturally we're very interested," Lee Jae a smile and a nod.

"We have no problem with the content," representatives from Time Warner and Universal Pictures echoed.

A grand feast to divide the future has begun in this small office.

A terrifying alliance, comprised of North America software geniuses, Japan home appliance giants, South Korea semiconductor upstarts, and United States media moguls, has quietly taken shape.

They chatted happily, raised their glasses in celebration, as if they could already see Nintendo and Sega trembling at their feet.