Recaps

Nakayama Takuya watched ordinary people help one another after the earthquake as Sega and Nintendo delivered supplies to Kansai shelters. Survivors credited Sega’s Disaster-Fighting Little Hero with teaching them practical ways to survive, and the story was spreading through the media.

• A man kept his emergency phone call brief so others in line could contact their families.
• Nintendo and Sega delivered Game Boys, batteries, and other supplies to shelters across the disaster zone.
• Yamada thanked a Sega employee and explained how the game had taught him to secure furniture, keep shoes by his bed, and prepare emergency supplies.
• Yamada used first-aid skills from the game to help his family escape and rescue injured neighbors before rescuers arrived.
• Reporters turned Yamada’s story into a major news item, and further accounts described a child and an elderly man using the game’s disaster advice to survive.

Nakayama Takuya rejected publicity around Sega’s disaster-relief work while rewarding the project team privately, then postponed Metal GearSolid2’s release amid Japan’s mourning and calls for self-restraint. The game’s release was left indefinite, with Nakayama pointing to the future E3 expo as another opportunity for exposure.

• Nakayama Takuya turned down media interviews and promotional posters, instructing Sega to describe its disaster aid as ordinary corporate responsibility.
• Nakayama Takuya ordered special bonuses for the Disaster-Fighting Little Hero project team and had thank-you letters displayed in the Development Department.
• Nakayama Takuya warned staff not to boast about Sega’s relief work or compare it favorably with the Self-Defense Forces.
• As Japanese society entered a period of self-restraint, Nakayama Takuya canceled the planned marketing campaign for Metal GearSolid2.
• Nakayama Takuya ordered Metal GearSolid2’s release delayed indefinitely and told the team to wait until the public could again treat explosions as entertainment.

Nakayama Takuya arranged for MGS2 to be shown at E3 despite its postponement in Japan, then greenlit MGS3 for Hideo Kojima. He rejected the Sonic 3D team’s proposed sequel and presented them with a fax from the United States.

• Nakayama Takuya told Hideo Kojima that MGS2 would be exhibited with a playable demo at E3 in Los Angeles and asked him to prepare an English version.
• Kojima described ideas he had cut from MGS2, including explorations of information control and memes and new Boss battles.
• Nakayama Takuya officially greenlit MGS3 and promised Kojima the staff and funding he needed.
• The Sonic 3D team’s supervisor proposed Sonic 3D 2, but Nakayama Takuya rejected the sequel proposal and handed the team a fax from the United States.

Nakayama Takuya assigned Yuji Naka to lead a Toy Story game project for the Jupiter console, aiming to prepare a trailer for E3 in three months. He then pulled Toshihiro Nagoshi away from the Phantasy Star IV meeting and began discussing a new project prompted by changing public perceptions of the Yamaguchi-gumi after Kobe.

• Nakayama Takuya explained that Bernard had secured the rights to adapt Pixar's Toy Story, and Yuji Naka agreed to lead the game development team.
• Nakayama Takuya and the developers brainstormed toy-scale levels, including an escape from a dog, while Yuji Naka proposed using toys as tools and collecting batteries for Buzz Lightyear.
• Nakayama Takuya set a goal of producing a Toy Story trailer for the Los Angeles E3 expo in three months, and Yuji Naka planned to build an initial level framework before visiting Hollywood.
• Nakayama Takuya took Toshihiro Nagoshi from Rieko Kodama's Phantasy Star IV meeting to the smoking area and urged him to start working on his own project.
• Nagoshi asked whether Nakayama meant the news about Kobe, and Nakayama pointed to the Yamaguchi-gumi's disaster relief as evidence that public opinion had shifted.

Nakayama Takuya approved Toshihiro Nagoshi’s plan for a realistic yakuza game called Yakuza and arranged for him to research Osaka’s underworld. He also reviewed Sega’s other projects and decided Virtua Fighter 3 and Fast & Furious 2 should not be rushed for a 1995 release.

• Nakayama Takuya pitched Toshihiro Nagoshi a Japan-focused yakuza game called Yakuza and urged him to portray a realistic world with a spirit of chivalry.
• Nakayama Takuya sent Nagoshi to Director Hoshino, whose family connections could help him gather material from Osaka yakuza.
• Nakayama Takuya reviewed Pro Soccer World and praised Yoshikawa’s success in securing real J.League team licenses.
• Nakayama Takuya saw Yu Suzuki push for terrain-dependent physics in Virtua Fighter 3 and a shared engine for Fast & Furious 2.
• Nakayama Takuya concluded that Virtua Fighter 3 and Fast & Furious 2 should not be forced to launch in 1995.

Nakayama Takuya reviewed Sega's new Shinobi and Motoko Ichikusa projects as the company prepared its E3 lineup. He left Development Department Three with a demonstration of Motoko's combat and Cyberbody Overclock Mode.

• Nakayama Takuya visited Koji Oba's team and saw its angled 2.5D Shinobi design, which combined tools and systems borrowed from other Sega games.
• Koji Oba explained how the team would use shadows and ground shading to help players judge jumps and planned to make ninjutsu visually spectacular.
• Nakayama Takuya ordered Koji Oba to finish the game for release that year and prepare an E3 trailer with a subtitle that clearly marked it as a Shinobi sequel.
• Nakayama Takuya visited Shimizu's team and watched Motoko Ichikusa perform scripted movements through the rainy streets of Niihama City.
• Shimizu demonstrated Motoko's close-quarters combat, QTE finishing moves, and Cyberbody Overclock Mode, which slowed the action while leaving the crosshair movable.

Nakayama Takuya approved Shimizu’s ambitious Ghost in the Shell game design and pushed Sega to distinguish major E3 titles from smaller projects. He then urged other game companies to prepare strong exhibits, while the question of who would speak at E3’s opening ceremony remained unresolved.

• Shimizu showed Nakayama Takuya the game’s slow-motion aiming, customizable cybernetic gear, and playable Tachikoma, impressing him with the design.
• Nakayama Takuya told Shimizu to give the game a serious tone and secured Masamune Shirow as supervisor and Kenji Kawai for its music.
• Nakayama Takuya moved smaller projects such as a Puyo Puyo spin-off and Hanafuda Club off Sega’s E3 main stage, assigning them to a promotional gallery instead.
• Nakayama Takuya instructed the External Relations head to privately urge major third-party publishers to prepare eye-catching games for E3.
• The External Relations head asked Nakayama Takuya who should speak at the opening ceremony, mentioning Nakayama Takuya, Mr. Kalinske, and Executive Managing Director Idei as possibilities.

Nakayama Takuya proposed inviting Shigeru Miyamoto to open the first E3, calculating that the move would make Sega appear broad-minded while helping set a creator-focused tone and divert attention from Nintendo’s delayed hardware. At Nintendo headquarters, Genyo Takeda recognized the invitation as a sign that Sega considered Nintendo no immediate threat.

• Nakayama Takuya rejected having Sega or Sony executives open E3 and proposed inviting Shigeru Miyamoto instead.
• Nakayama Takuya explained that Miyamoto’s reputation could reassure third-party developers and establish E3 as a gathering focused on creators.
• Nakayama Takuya ordered an invitation praising Miyamoto and told his staff to promote E3 as a developer-led event about returning to the essence of games.
• Nintendo’s elders received Sega’s proposal for Miyamoto to open E3 and debated its implications.
• Genyo Takeda said Sega’s invitation showed that it saw Nintendo’s delayed Project Reality hardware as no immediate threat.

Yamauchi Hiroshi answered Sega’s E3 strategy by ordering Nintendo to invest more heavily in game developers and prepare a strong software lineup, while directing hardware efforts toward Project Reality. At Sony, Ken Kutaragi cited Battle Arena Toshinden’s sales and rising PlayStation adoption as proof that 3D games could drive the business forward.

• Yamauchi Hiroshi agreed to send Shigeru Miyamoto to Los Angeles for E3 and ordered Nintendo to expand investment in third-party developers and prepare a rich game lineup.
• Yamauchi Hiroshi told Yokoi Gunpei to pause his idea and focus hardware development on Project Reality, warning that delays would jeopardize the next budget.
• Nobuyuki Idei worried that Sega’s E3 framing would make Sony look like an outsider focused only on hardware.
• Ken Kutaragi argued that Battle Arena Toshinden proved players wanted 3D graphics, citing its 400,000 sales and PlayStation’s 900,000 units sold.
• Ryoji Chubachi reported that PlayStation production costs were falling and losses were narrowing as the install base grew.

Sony, Konami, and Namco prepared their plans for E3, each seeking to draw attention and win players through technology, games, or both. They left the coming exhibition poised for a broad contest among console makers and third-party publishers.

• Ken Kutaragi urged Sony to counter Shigeru Miyamoto's planned speech with demonstrations of PlayStation technology, Tekken, and Psygnosis's anti-gravity racing game.
• Kozuki Kagemasa decided Konami would display its full lineup at E3 and continue releasing games across multiple platforms.
• Kozuki Kagemasa ordered Konami to prepare Winning Eleven, Tokimeki Memorial, Suikoden, Castlevania: Dracula X, and Live Crazy Shooting for their respective platforms.
• Nakamura Masaya ordered Namco to bring Tekken, Ridge Racer 2, and Ace Combat to E3, with Hideki Kanno preparing the latter.

Third-party companies prepared their games for E3, while Bandai’s struggling game division tested Gundam Battlefield Evolution as it tried to improve its standing against Sega’s popular Gundam Battle Operation. The Alpha demonstration exposed severe control and navigation problems, leaving the project’s future uncertain.

• Sakaguchi Hironobu focused Square’s efforts on Final Fantasy VII as Capcom’s Tsujimoto Kenzo approved Resident Evil’s E3 exhibition and Hudson’s Kudo Hiroshi urged the team to optimize Bomberman’s multiplayer.
• Bandai’s executives considered selling the game division to Sega, while a few holdouts pushed to make the company look more valuable first.
• Mitsui Chuta watched an Alpha test of Gundam Battlefield Evolution, where the RX-78-2 Gundam moved stiffly through space.
• The tester stopped the demonstration because the black background made it impossible to tell which direction was right, and the development lead had no answer.

Mitsui Chuta inspected Bandai’s space-combat game and found its black, featureless stages repetitive and nauseating despite the added targeting aids. He approved adding landmarks to give players visual references, but the developers discovered the game could not handle collisions with complex terrain.

• Mitsui Chuta watched a tester struggle with the empty space levels and criticized the game’s confusing, motion-sickness-inducing design.
• A tester cleared three stages and found them nearly indistinguishable, prompting Mitsui Chuta to order the team to improve the game.
• The planning team proposed adding landmarks such as Luna II, Solomon Fortress, and A Baoa Qu, and Mitsui Chuta approved the plan.
• The programming team realized the game lacked collision logic for complex terrain, so the player’s RX-78 passed straight through an asteroid during Mitsui Chuta’s inspection.

Bandai executives confronted the failure of their Gundam game and planned to disguise its shortcomings at E3 with a concept trailer and a flashy booth. The chapter left Bandai preparing for what might be its final independent E3 appearance, hoping to preserve its value before an expected negotiation with Nakayama Takuya.

• Mitsui Chuta watched the developers struggle with the game’s technical limits and ordered them to finish a demo before E3, masking weak sound effects with louder music.
• Mitsui Chuta told Yamashina Makoto and the executives that the game was unwatchable and warned that showing it to players would make Bandai a laughingstock.
• Yamashina Makoto proposed replacing gameplay demonstrations with a fast-cut concept trailer made from polished mobile suit models and dramatic audio.
• Yamashina Makoto ordered the booth filled with older playable games, Gundam models, and showgirls to distract visitors from the unfinished game.
• Mitsui Chuta agreed to stage a grand-looking E3 appearance, hoping Bandai would retain some value before negotiations with Nakayama Takuya.

The chapter showed how Sega employees and independent volunteers delivered aid to Kobe faster than the government, while media coverage exposed official failures and praised civilian efforts. It left Japan’s bureaucrats confronting a volunteer network that had become more efficient than the Cabinet Office.

• Sega distributed warm jackets and GamePockets to evacuees, while children used the games to stay calm and remember earthquake safety lessons.
• A Sega public relations head told reporters to focus on firefighters and missing-person notices rather than the company’s relief work.
• A shelter resident in Nagata Ward credited university students and other volunteers with bringing food and clearing roads before official forces arrived.
• A young volunteer defied an official’s warning and organized a rescue beside unstable ruins in Nagata Ward.
• More than one million volunteers entered Kobe and nearby areas within a month, building an informal rescue network through radios and bulletin boards.

The Kobe earthquake sparked a national debate over volunteer protections, disaster preparedness, and failures in Japan’s government and building policies. As public pressure mounted, ministries began considering legal and practical reforms.

• Opposition lawmakers demanded that the government protect volunteers and incorporate them into the disaster-prevention system.
• On a live television debate, Tahara Soichiro challenged a Finance Ministry official over tax deductions for volunteers’ travel and lodging costs, while a sociologist called for legal recognition and insurance for civic groups.
• A professor of architecture argued for housing-retrofit subsidies after noting that many collapsed Nagata Ward buildings predated the 1981 seismic standards.
• Public-health experts criticized crowded gymnasium shelters and called for better plans, while Tokyo office workers discussed the limits of government support and changing expectations about housing and insurance.
• The Ministries of Construction, Education, and Justice began considering building-code revisions, better-equipped disaster hubs, and faster legal recognition for nonprofit organizations.

In March 1995, Nakayama Takuya rushed to the hospital after learning Eri was pregnant again. Though Eri urged him to continue his trip to the United States for Sega’s Nasdaq ceremony and E3, he chose to stay with his family.

• Nakayama Takuya hurried from the airport route to Sugiyama Obstetrics and Gynecology Hospital after hearing Eri was pregnant.
• Nakayama Kazuki told his father that Eri had been examined and was about forty days pregnant, though he muddled the medical terms.
• Eri came out with a report showing her indicators were normal and told Nakayama Takuya to keep his original travel plans.
• Nakayama Takuya canceled his flight, arranged for Frank to represent him at the Nasdaq ceremony, and said he would stay with Eri.

After Eri learned she was forty days pregnant, her family arranged support while Nakayama Takuya reconsidered his trip to the United States. The chapter ended with Nakagawa Jun agreeing to come home early and help care for Kazuki so Eri could rest.

• Kazuki wondered whether he would have to share his Pikachu with his new sibling, and Nakayama Takuya told him to protect the baby from bullies.
• Nakayama Miyuki and Nakagawa Takako hurried to check on Eri, then relaxed after hearing her pregnancy indicators were normal.
• Nakayama Takuya said he had canceled his San Francisco flight, but Nakagawa Takako proposed sending Eri and Kazuki to Setagaya while he finished his work in the United States.
• Nakagawa Takako revealed that she planned to use Kazuki to make Nakagawa Jun leave the TV station on time, and Nakagawa Jun arrived and protested.
• Nakagawa Jun agreed to come home by six-thirty each evening and help care for Kazuki and Eri.

As Eri’s pregnancy remained stable, Nakayama Takuya left Tokyo for New York to join Tom and Frank ahead of Silicon Valley Online’s IPO. The roadshow had attracted investors with ICQ’s virtual goods, and Nakayama reviewed Goldman Sachs’ proposed offering range and valuation.

• Kazuki told Nakayama Hayao that Takuya planned to skip the IPO trip, while Nakagawa Jun and Hayao argued over where Kazuki would stay; Nakayama Miyuki decided Eri and Kazuki would spend the first half-month in Haneda and the second in Setagaya.
• Over five days, Eri’s checkups showed that she was healthy, and Nakagawa Jun took Kazuki to Setagaya, where the boy became absorbed in building a train track with him.
• Takuya said goodbye to Eri and left for the United States to join the IPO effort.
• On March 16, 1995, Takuya met exhausted Frank and Tom in Manhattan and asked how their roadshow had gone.
• Tom and Frank described how investors responded to ICQ users spending money on virtual sunglasses, and Takuya reviewed Goldman Sachs’ recommendation of a $14–$16 offering range and an $860 million valuation.

Nakayama Takuya pushed Frank to demand a higher IPO price for Silicon Valley Online, arguing its social network and cash flow justified a valuation near or above one billion dollars. Frank confronted George Fisher with the demand and threatened to move Sega’s future business to Morgan Stanley, leaving George wary of risking Goldman Sachs’s relationship with Sega.

• Nakayama Takuya rejected Goldman Sachs’s proposed valuation and told Frank to seek at least a twenty percent increase, negotiating above nine hundred million dollars.
• Nakayama Takuya told Frank to warn Goldman Sachs that Sega could give its future IPOs to Morgan Stanley.
• Frank met George Fisher at the Pierre Hotel and announced that Nakayama Takuya wanted the IPO price raised by twenty percent.
• George Fisher objected that investors might reject a valuation approaching one billion dollars for a company selling virtual goods.
• Frank claimed Morgan Stanley had offered better terms and was willing to firm-commit, making George Fisher worry about losing Sega’s business.

Nakayama Takuya pressured Goldman Sachs to raise Silicon Valley Online’s IPO valuation, while keeping his team secured in their hotel as negotiations continued. Goldman Sachs compromised at a valuation of 930 million dollars, short of his billion-dollar demand.

• Frank told George that Silicon Valley Online would take its IPO business to Morgan Stanley unless Goldman Sachs accepted a higher offer, and George agreed to make the case.
• Nakayama Takuya stayed at the Pierre Hotel and kept the IPO team focused on subscription indications, warning against unnecessary outings in New York.
• Tom Kalinske arranged an armored limousine for the team’s required investor receptions.
• Goldman Sachs assessed the risks of losing Silicon Valley Online’s IPO and the future internet-company underwriting business, then approved a higher price range.
• Frank received Goldman Sachs’s final offer of 930 million dollars and told Nakayama Takuya that the bank had compromised.

Nakayama Takuya and his team secured a $930 million offering valuation for Silicon Valley Online after Goldman Sachs accepted their demand to raise the price. As the company prepared to go public, its investors reflected on their returns and Nakayama explained why Sega had shared ownership with American venture capital firms.

• Nakayama Takuya accepted Goldman Sachs's $930 million valuation after the firm raised its offer by $70 million, and the team began finalizing the prospectus for the March 21 listing.
• Donald Valentine and John reviewed the pricing confirmation and calculated that their and KPCB's investments had grown to stakes worth nearly $140 million each.
• Donald asked Nakayama why Sega had given Sequoia Capital and KPCB thirty percent of Silicon Valley Online, and Nakayama said their backing helped the company gain credibility and access to Wall Street.
• John and Donald praised Silicon Valley Online's virtual goods business, noting that users spent an average of $12 a month in ICQ Hall at almost no marginal cost.

Nakayama Takuya, Frank Marshall, Tom Kalinske, Donald Valentine, and John prepared Silicon Valley Online’s Nasdaq debut and agreed to pursue acquisitions after the IPO. At the March 21, 1995 listing, Frank and the American investors rang the opening bell while Nakayama stayed out of sight, and the company presented itself to the press as an American startup backed by American venture capital.

• Donald Valentine and John said Sequoia and KPCB would create or adjust funds to invest more in internet startups after Silicon Valley Online’s financial success.
• Frank told Nakayama Takuya that Goldman Sachs had agreed to the pricing and that the Nasdaq bell-ringing ceremony was scheduled for the next morning.
• Nakayama Takuya locked away the pricing confirmation and said Silicon Valley Online should acquire promising technical teams and expand beyond WeBlog and ICQ; Donald Valentine and John agreed to support reasonable acquisitions.
• On March 21, 1995, Frank Marshall, Tom Kalinske, Donald Valentine, and John rang the opening bell as Silicon Valley Online began trading at $9.30 per share.
• Nakayama Takuya watched from the second-floor VIP area to downplay the company’s Japanese capital connections.
• Frank Marshall, Tom Kalinske, Donald Valentine, and John told reporters a story emphasizing California entrepreneurs, Silicon Valley innovation, and American venture capital, while describing Sega North America as an early investor.

Silicon Valley Online's first day on Nasdaq ended with its stock up 84 percent, while Nakayama Takuya and the investors celebrated the company's soaring valuation and discussed its next moves. Nakayama left the celebration plans to the American executives to avoid portraying the company as Japanese-controlled.

• Frank Marshall told reporters Silicon Valley Online operated independently from Sega's Tokyo headquarters.
• SVOL opened at $12.50 and closed at $17.13, giving the company a market capitalization of $1.713 billion.
• Frank Marshall, Tom Kalinske, Donald Valentine, John, and Nakayama Takuya celebrated the listing and discussed using the new funding for acquisitions.
• Nakayama Takuya told Tom Kalinske they could discuss Microsoft's ICQ preinstallation partnership without paying a fee.
• Nakayama Takuya declined Goldman Sachs's celebration dinner, explaining that his attendance could fuel headlines about Japanese capital taking over Nasdaq.

After Silicon Valley Online went public, American and Japanese newspapers celebrated its success, while Nakayama Takuya urged the company to manage its image and keep expanding. Two days later, the IPO's valuation drew a flood of investors and aspiring entrepreneurs to Redwood City, leaving the company overwhelmed by attention.

• Tom, Frank, and Donald read newspaper coverage praising Silicon Valley Online's listing and its prospects.
• Nakayama Takuya dismissed Japanese claims that Sega had led the Internet transformation and told Frank to promote Silicon Valley Online through university lab sponsorships and startup funds.
• John praised Nakayama Takuya for understanding business, and Tom said the company should grow until it reached Microsoft's level of influence.
• Two days later, investors crowded Silicon Valley Online's campus after its market value reached $1.7 billion and its IPO created a new wealth story.
• Frank described investors besieging the company, while Tom recounted calls to Sega North America and locals eager to start online businesses.

Nakayama Takuya pushed Silicon Valley Online to acquire promising technical teams before the dot-com bubble burst and proposed using a Dungeons & Dragons license to build a 2D online role-playing game. He left Frank and Tom with a plan for handling slow connections and player disconnections.

• Nakayama Takuya told Frank to raise pay and use stock options to retain engineers targeted by headhunters.
• Nakayama Takuya gave Frank an acquisition list and authorized high-premium cash-and-stock offers for teams with strong technical foundations.
• Nakayama Takuya asked Frank to contact TSR about securing exclusive Dungeons & Dragons game adaptation rights.
• Nakayama Takuya proposed a 2D, turn-based multiplayer online role-playing game linked to Silicon Valley Online accounts and monthly fees.
• Nakayama Takuya explained that the game should use server-side hosting during disconnections and restore players to their original positions when they reconnected.