Planning for the Next Generation

In mid-April, hot on the heels of news about Sega's esports tournament.

Nintendo and Enix officially announced a new Famicom title, Dragon Quest.

The promotional slogans were simple and blunt.

"Character designs by Akira Toriyama!"

"A brand-new game genre—RPG!"

"A world where you can play as the protagonist and go on adventures!"

The announcement of Dragon Quest sent shockwaves through the entire gaming industry, ones far more profound than Sega's esports tournament.

The esports tournament had merely innovated within existing game formats.

Dragon Quest, on the other hand, was carving out an entirely new genre.

RPG? Role-playing game?

For Japanese home console players at the time, it was a concept they had never even heard of.

But the name "Akira Toriyama" possessed an unrivaled power to draw people in.

He was the man who had drawn Dragon Ball.

His name alone was a guarantee of quality.

The industry was instantly on edge.

The Legend of Zelda, with its large capacity and save function, had already demonstrated the potential of deep games.

Now Nintendo had unveiled another entirely new genre, bolstered by a top-tier IP.

Third-party developers felt as though they could barely breathe.

The games they had originally delayed now faced even greater pressure to launch.

The Legend of Zelda was selling like crazy.

Dragon Quest was on its way.

The release window left for them between those two titles was so narrow it could practically be ignored.

An atmosphere of chaos and anxiety spread throughout the market.

Many companies hurriedly decided to push their shelved games onto the market before Dragon Quest launched.

All so they could recoup at least some of their funds.

And avoid being completely drowned by Nintendo's consecutive blows.

Tokyo, Sega headquarters, large conference room.

It was mid-April.

The air seemed frozen, heavy with pressure.

The polished surface of the enormous oval mahogany conference table reflected one solemn face after another.

Even David Rosen from the United States branch had made a special trip back. Clear signs of jet lag lingered in his eyes, yet he sat perfectly straight, underscoring the extraordinary importance of this meeting.

A thick stack of documents sat before every seat.

On its pages was the sharply rising sales curve of The Legend of Zelda since its release.

There was an analysis of the astonishing rate at which the Famicom Disk System had spread through Japanese households.

There were player interviews showing an almost fanatical enthusiasm for the "save" function.

And a yearning for the kind of deep gaming experience one could sink dozens of hours into.

There was also news of Nintendo and Enix joining forces to release Dragon Quest, along with the panic-selling it had already triggered among third-party developers.

Nakayama Hayao sat at the head of the table, his fingers silently tapping against its surface.

He did not begin with the esports frenzy sparked by Fatal Fury; that success seemed somewhat delicate at this moment.

His gaze swept over the directors present, and his voice was low.

"Everyone has seen it."

"Nintendo is using the Famicom Disk System, along with The Legend of Zelda, to dig a deep and wide moat around their home console empire."

"The 'save' function may seem simple, but it has completely changed player habits."

"What it cultivates is long-term immersion and emotional investment."

"That kind of user retention is unprecedented."

"Once players become used to spending dozens or even hundreds of hours exploring a world on a home console, how much longer can our arcade-style bursts of excitement keep them?"

"For the Master System, which does not currently possess equivalent functionality, this is fatal."

"In the long run, it may even affect the arcade business we regard as our foundation."

His words were like cold stones dropped into water, stirring silent ripples.

Seeing that no one spoke, he distributed materials on the arcade business and esports project to each shareholder.

"The initial response to the first Sega Esports Tournament has been unprecedentedly enthusiastic! The number of registrations at designated arcades nationwide has far exceeded even our highest expectations! Public attention is extremely high, and multiple television stations have covered it. There have even been strange incidents resembling martial artists traveling around to challenge different schools. The lifespan of Fatal Fury has been greatly extended, and Sega's brand image has received an unprecedented boost!"

After reading the materials, the shareholders' expressions eased somewhat.

David Rosen cleared his throat and added in accented Japanese.

"We have observed similar enthusiasm in the North American market."

"The combination of animation and game tutorials has preliminarily proven viable."

"I believe the esports tournament model can be fully replicated in North America, further expanding our influence."

However, the optimistic atmosphere was quickly shattered.

A highly experienced director with graying hair slowly spoke, his tone plainly cautious.

"The success of esports deserves recognition."

"But it has not resolved the fundamental difficulties in our home console market."

"Our Master System still lags far behind Nintendo's Famicom in the global market, especially here in Japan."

"Nintendo is currently riding high on the FDS and The Legend of Zelda, while Dragon Quest is waiting in the wings."

"At a time like this, is it really not too risky to invest an astronomical sum into developing an entirely new 16-bit console?"

"Shouldn't we consider a more prudent strategy?"

"We could concentrate our resources on developing several competitive major titles for the Master System."

"No, we should take a different path and develop some affordable, practical peripherals to improve the experience for existing users."

Every shareholder had their own ideas, but most of them favored relatively conservative plans.

They feared that the investment would be enormous, yet still fail to shake Nintendo's dominance, ultimately dragging down the entire company.

The air in the conference room grew stagnant once more.

Seeing the shareholders hesitate, Nakayama Hayao took a small sip of tea and slowly said, "It seems everyone has their own considerations regarding the current situation, but our opinions do not appear to be very unified."

Everyone's gaze turned toward Nakayama Hayao.

Narrowing his eyes slightly, Nakayama Hayao continued, "Would everyone like to hear the advice of the person who has generated the most revenue for the company over the past year?"

Quite a few shareholders remembered then that the president had a young son who was especially good at making money for Sega.

"I'm only recommending talent without regard for family ties. If no one objects, I'll call Takuya in and let him explain."

In the face of the consecutive, highly profitable successes of Tetris and Fatal Fury, none of the shareholders voiced any objection.

So Nakayama Hayao had someone summon Takuya to the conference room.

Takuya arrived shortly afterward. His youthful face stood out sharply among the mature, composed faces around him, but his gaze was steady, without the slightest hint of stage fright.

He first gave a slight nod, showing respect for the old director's opinion, before speaking in a clear, forceful voice.

"Before I came in, I heard several directors' concerns and proposals. I understand them completely. But as my father just said, what Nintendo is building is a new ecosystem barrier based on 'save data' and 'deep content.'"

"The success of The Legend of Zelda lies not merely in its being an excellent game, but in its proving that players are willing to spend time and money on more complex, grander experiences. The upcoming Dragon Quest will push that experience into an entirely new dimension—role-playing, a genre that lets players truly 'live' in a game world."

"Against an opponent like that, patching up our existing platform or porting arcade games will be nowhere near enough. We cannot defeat Nintendo on the battlefield they have defined. If Sega wants to break through, the only way is to achieve a generational lead!"

"A 16-bit console will bring far more than better graphics and sound. It means greater processing power, more memory, and the ability to support entirely new game genres and gameplay that we cannot yet imagine. That is the key weapon for opening up a new battlefield beyond Nintendo's 'moat'!"

"Moreover, through developing Fatal Fury, we have already completed development of a mature new-generation 16-bit arcade board: System 16!"

"On one hand, we can develop arcade games around this board whose mechanics and technical capabilities far surpass those of 8-bit consoles, strengthening our arcade business while also offsetting, to a certain degree, the impact of disk systems and save-enabled games. On the other hand, during the time we spend developing our console, hardware manufacturing processes will continue to improve. By the time our console is complete, the Motorola 68000 CPU used by System 16 will surely have fallen to a very affordable price. And if our new console also uses the Motorola 68000, then the arcade games we developed for System 16 can be ported to the new console quickly and effortlessly. When the time comes, our launch lineup will boast an enormous range of game genres. That will be tremendously beneficial for rapidly building a sufficiently large player base and reaching the safety threshold needed to ensure the new console's survival! Then we can start poaching Nintendo's territory! Look at Pac-Man from the beginning of the year, then look at the stampede-like rush of game software publishers releasing titles these past few days. I believe they have suffered under Nintendo for long enough!"

"As for the possibility that the massive investment in developing a new console could create financial strain, I have already prepared a new plan that can create new revenue streams!"

His words struck the ground with force. His gaze swept across the room, carrying an unquestionable confidence.