Recaps

Nakayama Takuya laid out plans for Sega’s next-generation console, emphasizing higher-capacity DVD-ROM storage and built-in internet connectivity. He sent Sato Hideki to study DVD technology and arranged for engineers to visit Silicon Valley Online, while Sega began exploring partnerships with telecommunications providers.

• Nakayama Takuya instructed Sato Hideki to prepare for the next-generation console by studying DVD-ROM technology and its specifications.
• Sato Hideki warned that Sony might restrict access to DVD components, and Nakayama Takuya said Sega could work with other DVD alliance manufacturers, including Toshiba and Panasonic.
• Nakayama Takuya called for the console to include a modem and reserve an Ethernet port, and he directed Sega to explore partnerships with major telecommunications providers.
• Sato Hideki identified network protocols and server capacity as key challenges, so Nakayama Takuya ordered engineers to visit Silicon Valley Online and study its online game infrastructure.
• After Sato Hideki left to prepare the visit, Hisao Oguchi remarked on how far ahead Nakayama Takuya’s plans looked.

Nakayama Takuya urged Sega’s developers to prepare for online games, and Sato Hideki’s team visited Silicon Valley Online to study network constraints and design choices. Mark Cerny explained how Dungeons & Dragons Online handled slow, unstable connections, including what would happen to a character when its player disconnected.

• Nakayama Takuya told Hisao Oguchi that Sega needed to develop online-game design expertise alongside new hardware.
• Sato Hideki and three Sega hardware engineers traveled to Silicon Valley Online to study network technology for Sega’s next-generation console.
• Mark Cerny showed Sato’s team that dial-up connections were slow and unstable, making real-time action games prone to lag and dropped packets.
• Mark explained that Dungeons & Dragons Online used turn-based combat to accommodate network latency.
• Mark described a thirty-second turn countdown that skipped a player’s turn if their command did not arrive in time.
• Mark explained that players could configure automatic character behavior to keep disconnected characters acting during party battles.

Sato Hideki and Mark reviewed how Silicon Valley Online’s server handled disconnections, and Sato’s team stayed to observe the Dungeons & Dragons Online wipe beta. As the beta began, Brian explored the game while the monitoring center demonstrated automated control of a disconnected character.

• Mark explained the game’s reconnection and server-side systems, and Sato Hideki said Sega could use the findings to coordinate its next-generation console hardware with game software.
• Mark urged Sato Hideki’s team to stay for the public beta, and Sato changed their travel plans so they could observe real network conditions.
• Brian received his beta disc, installed the game, and created a warrior using the virtual dice.
• Brian entered the Novice Trial, passed a Strength check to open a chest, and fought goblins in turn-based combat.
• When a cleric’s connection failed during a party battle, the server used its preset command to heal the teammate with the lowest HP while the others continued playing.

Sato Hideki, Mark, and Sega engineers discussed speeding up disconnect detection with a hardware warning packet, while Brian and other testers demonstrated how Dungeons & Dragons Online handled unstable dial-up connections. The three-day beta ended with players praising the game and asking when it would release.

• A Sega engineer proposed a hardware buffer that would notify the server immediately when a connection dropped, and Mark and Sato Hideki discussed adding the feature and making it optional for players.
• Brian joined a temporary party in the Kobold Lair and found that the game handled complicated DND calculations for players.
• Mark gave Sato Hideki the first-day report showing that the test accounts averaged four and a half hours online, and Mark said players tolerated dial-up flaws when the gameplay suited the network.
• During the final fight of the three-day beta, David's mage disconnected, so the system took over and helped Brian's party defeat the goblin chief before the server shut down.
• Brian praised the game on ICQ and BBS, where testers shared stories about disconnect control and bugs while other players asked when the game would release.

Silicon Valley Online prepared to launch Dungeons & Dragons Online after a successful public test, announcing flexible fees and a free trial to attract both dedicated and casual players. As the July 29 release approached, players and internet café customers began wondering how they could play.

• Mark Cerny and Sato Hideki reviewed the public test results and found that the game had few serious bugs and that its reconnect system handled network problems well.
• The public test drew growing attention from players and gaming media, and Frank confirmed that Sega North America could distribute one hundred thousand discs within a week of receiving the master.
• Brian read the monthly subscription and time-card prices on the official BBS, and forum users welcomed the flexible payment options.
• Frank set the release date for July 29 and confirmed that players would receive a one-week free trial after activating the game with a Silicon Valley Online account.
• At the Cyberspace internet café, customers discussed the upcoming release and asked Reno whether his computers could run the game.

Reno described how Dungeons & Dragons Online addressed tabletop gaming’s barriers and attracted players ahead of its July 29 launch. At Sega, Nakayama Takuya ordered preparations for a backward-compatible sixteen-bit handheld, with its screen design ready to switch to color LCD when the technology improved.

• Reno explained that Dungeons & Dragons Online’s dedicated network and automated calculations made tabletop gaming more accessible, while Silicon Valley Online promoted the July 29 launch across the United States.
• Sato Hideki reported to Nakayama Takuya on Silicon Valley Online’s disconnect-hosting system and Sega’s plans to add a dedicated hardware cache to its next console’s network module.
• Nakayama argued that handhelds competed through ownership and social circles, so Sega needed to plan its next handheld before GamePocket’s lead could be challenged.
• Nakayama required the new handheld to support all GamePocket games and rejected an immediate color LCD because of its cost and power consumption.
• Nakayama told Sato to develop the system using mature screen technology while leaving room to adopt color LCD once its cost and battery life became acceptable.

Nakayama Takuya ordered Sato Hideki to form a team for Sega’s sixteen-bit handheld while Hoshino briefed him on Thailand’s worsening economic indicators and Sega’s preparations to profit from a currency crisis. Hoshino planned to present a cautious short-selling strategy at the next board meeting.

• Nakayama Takuya instructed Sato Hideki to establish a sixteen-bit handheld project team and coordinate with the Software Development Department.
• Hoshino reported that Thailand’s exports and markets were weakening, property projects were stalled, and the Bank of Thailand had spent three billion US dollars defending the baht.
• Hoshino explained that Sega had established offshore shell companies, funding channels, and investment-bank interfaces for potential foreign-exchange short positions.
• Nakayama Takuya approved Hoshino’s preparations, and Hoshino said he would present the operational plan at next Tuesday’s board meeting.

Nakayama Takuya saw that the simultaneous VHS and game release had helped Ghost in the Shell succeed in North America, then visited Hideo Kojima and Mamoru Oshii as they discussed Kojima’s new project, Space Cop. He advised Kojima not to settle for a text adventure and urged him to wait until the gameplay could support the story’s ambitions.

• Hoshino told Nakayama Takuya that Sega had completed the legal procedures for an eight-percent stake in TSMC’s new Washington State wafer fab project.
• Nakayama Takuya read a North American sales brief showing that the simultaneous VHS and game release had driven steady sales of Ghost in the Shell and traffic between the two products.
• Nakayama Takuya called Mamoru Oshii to congratulate him, then learned Oshii was at Sega Headquarters watching Escape from New York with Hideo Kojima.
• Nakayama Takuya joined Kojima and Oshii and saw Kojima’s concept for Space Cop, a hard-core science-fiction story about a space police officer.
• Kojima explained that he was considering making Space Cop a text adventure, but Nakayama Takuya warned that it would invite comparisons to Ace Attorney and urged him to develop gameplay that could support the story.

Nakayama Takuya proposed that Kojima Hideo adapt his story as a Sega-funded OVA, with Mamoru Oshii advising and a strict budget. Over dinner, Kojima Hideo wrestled with the trade-offs between animation and an interactive game, and Oshii urged him to stop worrying and reconsider after resting.

• Nakayama Takuya suggested that Kojima Hideo wait for better game hardware or adapt the story into an OVA, with Mamoru Oshii helping produce it.
• Nakayama Takuya required Kojima Hideo to control the animation budget and identify a clear selling point for the videotapes.
• At dinner, Kojima Hideo weighed the OVA’s cinematic storytelling against the game’s interactive mystery and considered making both versions.
• Mamoru Oshii recounted his own filmmaking and distribution experiences, then repeatedly poured sake for Kojima Hideo to help him relax.
• Nakayama Takuya questioned whether Oshii was getting Kojima Hideo drunk, and Oshii said Kojima should revisit the decision with a clear head the next day.

Mamoru Oshii got Hideo Kojima drunk so he would stop working overnight and rush a proposal to Nakayama Takuya. At Sega’s Tuesday board meeting, Director Hoshino explained the growing risk of a Southeast Asian currency crisis and its possible effects on Japan.

• Mamoru Oshii took Hideo Kojima’s drink and gave him warm water after Kojima became too drunk to continue talking.
• Mamoru Oshii left the izakaya, and Nakayama Takuya arranged a taxi to take the sleeping Hideo Kojima home.
• Sega’s directors attended a routine briefing whose financial figures had been strengthened by outside audits and Nakayama Takuya’s cross-audit system.
• Director Hoshino presented an exchange-rate risk and hedging plan for Thailand, Malaysia, Indonesia, and the Philippines, beginning with Thailand’s worsening economic indicators.
• Director Hoshino warned that Thailand’s foreign-exchange reserves might not withstand concentrated short-selling and said the larger danger was Southeast Asian defaults spreading bad debts to Japanese financial institutions.

At a board meeting, Nakayama Takuya revealed that Sega planned to use the proceeds from its investment operation to pursue a merger with Bandai. He began outlining how Sega might move forward, turning the discussion toward Sotsu Agency.

• Director Hattori asked where Sega would spend the returns from its investment plan, and Nakayama Takuya agreed that the money should support Sega's core industry.
• Nakayama Takuya told the board that Bandai was his intended target, citing its struggling game division, declining toy franchises, and costly inventory.
• Nakayama Takuya explained that Sega had waited for Bandai to accept the merger but had grown frustrated with its indecision and internal divisions.
• Nakayama Takuya asked the board what they knew about Sotsu Agency and placed a document about it on the table.

Nakayama Takuya proposed that Sega acquire Sotsu to gain control over anime licensing and merchandise channels, putting pressure on Bandai while expanding Sega Galaxy’s IP business. The directors discussed the acquisition’s benefits and risks, then asked how Sotsu would be organized after integration.

• Nakayama Takuya explained that Sotsu controlled Sunrise’s licensing channels, which allowed Bandai to keep obtaining Gundam and other merchandise licenses despite Sega owning Sunrise.
• Hattori outlined Sotsu’s licensing and production committee operations, and Nakayama Takuya argued that combining them with Sega Galaxy would improve IP commercialization and marketing.
• Nakayama Takuya said acquiring Sotsu would force Bandai to negotiate licensing through Sega and weaken its bargaining position over time.
• Nakayama Takuya described Sotsu’s concentrated private ownership, suggested its management might accept a favorable sale, and said antitrust risks should be manageable.
• Hattori asked whether Sotsu’s production committee operations would move into Sega Galaxy or remain independent after integration.

Nakayama Takuya set plans in motion for Sega’s preliminary acquisition of Sotsu while keeping it operational as an independent brand. Meanwhile, Dungeons & Dragons Online launched in North America with strong sales and player traffic, and analysts began examining its subscription-based business model.

• Nakayama Takuya kept Sotsu’s name and operations intact during the initial stage and assigned Director Hattori to lead acquisition contacts and evaluation ahead of a later board vote.
• On July 29, Dungeons & Dragons Online officially launched, and its first 100,000 physical copies had sold through 70 percent of stock over the weekend.
• Frank Marshall’s team reported more than 20,000 concurrent connections as players rushed to activate seven-day free trials.
• Reno’s San Francisco internet café filled with players running DND dungeons on its Pentium computers.
• Michael Moritz told Frank Marshall that Wall Street analysts were impressed by Silicon Valley Online’s subscription and time-card model.
• Goldman Sachs analysts reviewed Silicon Valley Online’s first-week user and revenue figures as they reassessed the electronic entertainment industry.

Investors, publishers, and Sega recognized that PC games were becoming a major market, driven by online services and improving hardware. As anticipation for Red Alert and Diablo grew ahead of their year-end releases, Sega began exploring online gameplay and Internet cafés.

• Investors linked Silicon Valley Online's recurring revenue and social platform to rising sales of high-end PC components, viewing PC games as a growing commercial ecosystem.
• Frank Marshall reviewed competitors' release schedules and marked Blizzard's Diablo and Battle.net as potential forces that could reshape online PC gaming.
• Computer Gaming World staff David and Paul discussed reader excitement for Red Alert and Diablo as retailers promoted PC systems built for the games.
• Nakayama Takuya and Hisao Oguchi assessed the PC market's challenge to consoles, and Nakayama called for Sega to develop networked gameplay and share online-game research with Mercury Technology.
• As autumn 1996 progressed, players, investors, and hardware makers followed the two games, and PC gaming emerged as an independent business sector.

As Investiture of the Gods: Legend of Nezha entered its final bug-fixing stage, Fu Zan studied Sega’s research on online games and internet cafés. He arranged to investigate the domestic market and network infrastructure, leaving Mercury Technology poised to explore a new business direction.

• Fu Zan identified two clipping errors in the Red Armillary Sash simulation and told the lead programmer to fix them while keeping the game locked at sixty frames.
• Fu Zan read Sega’s materials on North American PC games, online gaming, and internet cafés, then considered the limits of Mercury Technology’s domestic market.
• Fu Zan called Nine-Tattoo Dragon, who said Sega Hong Kong Branch had also urged him to examine computer rental businesses in the mainland.
• Fu Zan and Nine-Tattoo Dragon agreed that Dragon’s people would survey computer rooms and internet access shops, and that Dragon would bring the findings to Fuzhou in mid-August.
• Fu Zan planned to ask the city authorities about network expansion and considered online games and PC networking essential areas for Mercury Technology to investigate.

Fu Zan and Nine-Tattoo Dragon assessed whether Mercury Technology could pursue online games in China, where scarce computer rooms, expensive hardware, and inadequate networks made the market impractical. They decided to prioritize Legend of Nezha while continuing to research LAN multiplayer.

• Old Zhang reported that the clipping bug in Legend of Nezha had been fixed, and Fu Zan gave him a North American report on online games.
• Fu Zan told Old Zhang to finish Legend of Nezha and form an advance research group to study LAN multiplayer, while he planned to seek support from City Hall.
• Two weeks later, Nine-Tattoo Dragon presented research showing that computer rooms were rare and that dedicated network lines and computers cost too much for internet cafés to be profitable.
• Fu Zan shared information from the Post and Telecommunications Bureau showing that civilian internet access in Fuzhou was slow, limited, and unable to support large-scale online games.
• Fu Zan and Nine-Tattoo Dragon agreed that standalone games remained the priority, and Fu Zan directed Old Zhang's group to study LAN battles without delaying Legend of Nezha.

Mercury Technology celebrated its growing success in Taiwan and planned to promote Legend of Nezha there next. In San Francisco, Computer Gaming World’s Paul and David discussed 3DO’s plans to cut its Hardware Department and sell assets, leaving the company’s next move unresolved.

• Old Zhang recorded that Mercury Technology would begin with LAN multiplayer before tackling the networking and anti-cheat demands of a wide-area MMO.
• At lunch, Supervisor Chen described how Mercury Technology’s Traditional Chinese edition of Investiture of the Gods: Yang Jian's Tale and generous distributor rebates had taken market share from Little Genius in Taiwan.
• Nine-Tattoo Dragon and Fu Zan planned to push Legend of Nezha into Taiwan, and Supervisor Chen agreed to handle its publicity and distribution.
• Paul gave David a tip that 3DO was preparing to cut its Hardware Department, and they reviewed the company’s declining manufacturing and game-development support.
• David said 3DO planned to sell the exclusive rights to its M2 technology, probably to Panasonic, while Samsung was discussing other Hardware Department assets.

3DO abandoned its hardware business as Meridian 59 prepared to launch, leaving Trip Hawkins to refocus the company on software. The chapter ended as Kevin began loading Meridian 59 on his 3DO console.

• David and Paul criticized Meridian 59's prospects on the doomed 3DO console and its late arrival to the online game market.
• Nakayama Takuya discussed 3DO's failure with Hisao Oguchi and ordered Sega North America to prepare to attract players from the online game market it would leave behind.
• Trip Hawkins reviewed 3DO's sale of M2 to Panasonic, hardware shutdown, and layoffs, then ordered Meridian 59 released with promotion focused on the PC version.
• Reno and a customer at a San Francisco internet café treated 3DO's collapse with indifference while players focused on Dungeons & Dragons Online.
• Kevin slid a newly unsealed Meridian 59 disc into his 3DO console.

Kevin abandoned Meridian 59 on his 3DO after learning that the company had ended its hardware business, while former 3DO players shifted toward PC online games. Silicon Valley Online gained a surge of new subscribers, and Sega confirmed that Meridian 59's launch had failed to retain players.

• Kevin read that 3DO had sold its M2 technology and decided to cancel his subscription and switch to Dungeons & Dragons Online on PC.
• Players across the United States lost confidence in the 3DO platform, causing Meridian 59's console sales to collapse and sending prospective subscribers to PC games.
• Frank Marshall reviewed a surge in new Dungeons & Dragons Online accounts and ordered server expansion and PC tutorials for former console players.
• Hisao Oguchi reported Meridian 59's poor first-week results to Nakayama Takuya, who noted that players would not invest in an unreliable platform.
• Hisao Oguchi said Sega's pass registrations were growing as former Meridian 59 prospects switched to Dungeons & Dragons Online.

Nakayama Takuya emphasized that Sega’s next-generation console needed strong online features, then worked with Hattori Kiyoshi to choose a Japanese intermediary for Sega’s planned acquisition of Sotsu. They left the advisory selection open, with Daiwa Securities’ connections to Sotsu considered useful but the final choice dependent on performance.

• Nakayama Takuya told Hisao Oguchi that Jupiter needed to connect players through a network and that Sega had to match the PC market’s online experience.
• After Sega’s board unanimously approved the Sotsu acquisition, Nakayama Takuya and Hattori Kiyoshi discussed selecting a financial adviser to manage the deal.
• Hattori Kiyoshi argued that a local Japanese institution would better win over Sotsu’s managers than a foreign investment bank, since the acquisition depended on preserving relationships and retaining the company’s people.
• Hattori Kiyoshi recommended considering Daiwa Securities because its M&A department head was a Waseda classmate and golf-club companion of Sotsu’s vice president.
• Nakayama Takuya said Sega would judge the advisers by their ability and could replace any firm that provided poor service.

Hattori Kiyoshi briefed Nakayama Takuya on North America's booming movie market and the rushed game adaptations of Independence Day and Mission: Impossible. Nakayama argued for building durable cross-media IPs and began outlining remasters and remakes as ways to earn from classic games.

• Hattori Kiyoshi reported that Radical Entertainment was developing a rushed Independence Day game for multiple platforms, and he expected the project to perform poorly.
• Hattori Kiyoshi said Nintendo had secured the rights to make Mission: Impossible an N64 exclusive, though its development and release schedule remained uncertain.
• Nakayama Takuya contrasted those licensed adaptations with Sega's John Wick 2 game, which was being developed for Jupiter with more attention to quality and gameplay.
• Nakayama Takuya advocated expanding IPs across games, films, and merchandise while controlling costs and maintaining quality.
• Hattori Kiyoshi questioned whether nostalgia could drive sales, and Nakayama Takuya introduced high-definition remasters and complete remakes as forms of classic reconstruction.

Nakayama Takuya explained how Sega could profit from Sotsu’s classic anime IP through high-quality games and cross-media sales, and Hattori Kiyoshi moved to accelerate the acquisition. He then remembered that Neon Genesis Evangelion’s rebroadcast and physical-disc sales were about to unleash its greatest commercial boom.

• Nakayama Takuya argued that remaking classic games and developing Sotsu’s mecha IP could bring Sega strong returns and attract both nostalgic fans and new players.
• Nakayama Takuya outlined plans to connect games, anime releases, and remastered animation, while Hattori Kiyoshi agreed to accelerate the Sotsu acquisition through Daiwa Securities.
• Nakayama Takuya told Hattori Kiyoshi to pay intermediaries enough to ensure a smooth handover and mentioned the Development Department’s work on John Wick 2.
• After Hattori Kiyoshi left, Nakayama Takuya checked his memory notebook and realized he had overlooked Neon Genesis Evangelion’s coming commercial peak.
• Nakayama Takuya recalled that EVA’s autumn rebroadcast and videotape and LD releases would drive strong sales and spread the series’ popularity across Japan.

Nakayama Takuya visited Sunrise as Gundam X struggled against EVA’s popularity and the production committee deadlocked over shortening the series. He challenged the committee’s three-week dispute over whether the show should run for thirty-eight or thirty-nine episodes.

• Nakayama Takuya reviewed Gundam X’s falling ratings and merchandise sales, then went to Sunrise to address the turmoil affecting Sega’s plans.
• At Sunrise, Nakayama Takuya found animators stalled while TV Asahi and Dentsu pressed to cut the series to thirty-eight episodes, and Takamatsu Shinji and Kawasaki Hiroyuki argued for thirty-nine.
• Nakayama Takuya joined the committee meeting and heard that the original forty-nine-episode plan had been reduced to a dispute over one episode.
• Nakayama Takuya pushed the meeting minutes aside and questioned why the committee had spent three weeks arguing over thirty-eight versus thirty-nine episodes.

Nakayama Takuya persuaded Dentsu and TV Asahi to preserve Gundam X’s core story despite the planned episode cuts, offering Sega’s financial backing in exchange for a larger share of future disc and game revenues. With the sponsors agreeing to cooperate, Takamatsu Shinji and Kawasaki Hiroyuki faced the task of reworking the remaining episodes, and Nakayama began suggesting they study fast-paced American dramas.

• Nakayama Takuya argued that cutting Gundam X’s story would damage the franchise and undermine future disc sales.
• Nakayama proposed preserving the core plot and mecha battles while cutting side plots and speeding up the remaining episodes.
• Nakayama offered Sega’s financial support to cover short-term broadcast losses in exchange for a larger share of LD revenue and exclusive game adaptation rights.
• The Dentsu and TV Asahi representatives agreed to cooperate after Sega promised to shoulder the financial pressure.
• Takamatsu Shinji and Kawasaki Hiroyuki thanked Nakayama, who suggested they study fast-paced American dramas; Kawasaki admitted he had little experience with them.

Nakayama Takuya persuaded Sunrise’s staff and sponsors to compress Gundam X’s television run while preserving cut material for later LD releases. After winning the animators’ support, he told Yamaura Eiji that he wanted to discuss another matter.

• Nakayama Takuya urged Takamatsu Shinji and Kawasaki Hiroyuki to study fast-paced American television dramas and use dense storytelling to drive interest in Gundam X’s home-video releases.
• Nakayama Takuya ended the sponsor meeting and told Takamatsu Shinji and Kawasaki Hiroyuki that cut scenes, storyboards, and settings would be completed for the later LD version.
• Yamaura Eiji returned to Sunrise and thanked Nakayama Takuya for Sega’s support.
• Nakayama Takuya announced to the animation staff that Gundam X would be restructured but still delivered as a polished, complete story, with Sega supporting the production.
• Sunrise’s animators applauded Nakayama Takuya, who then told Yamaura Eiji he wanted to discuss something else.