Recaps

Nakayama Takuya pushed Sega to secure NEC’s low-power color screen for its next-generation handheld and ordered Yuji Naka to lead the software foundation. Meanwhile, Hoshino moved Sega’s Thai investments offshore as the assault on the Thai baht intensified.

• Nakayama Takuya ordered Sato Hideki to obtain NEC display samples and test their power use, promising an initial order in the millions if mass production proved viable.
• Sato Hideki estimated that the screen could let Sega’s sixteen-bit handheld run for over fifteen hours on two AA batteries, and Nakayama Takuya demanded a second-version prototype running Pokémon in color.
• Nakayama Takuya told Sato Hideki to bring Yuji Naka into the project to lead work on the operating system and development-software compatibility.
• In April, Hoshino watched Thailand’s currency defenses buckle as Moody’s downgraded the country and Soros’s Quantum Fund increased its short position.
• Hoshino ordered Sega’s team to liquidate its Thai domestic derivatives and move the capital into offshore Singapore and Hong Kong markets to build positions in NDFs.

At a Sega board meeting, Hoshino reported that the Investment Department had withdrawn Sega’s funds from Thailand before the crisis and secured early gains. Nakayama Takuya agreed to let the directors invest alongside Sega, limiting their total pool to one hundred million US dollars, which they quickly claimed.

• Hoshino told the board that Sega had moved its risk exposure offshore and safely withdrawn its Thai funds with roughly thirty percent in early gains.
• Director Takahashi praised Hoshino’s warnings, explaining that Sumitomo Bank faced defaults on Bangkok loans and had reduced its risks after his wife received an advance warning.
• Takahashi proposed that the directors entrust idle funds to Sega’s Investment Department, and other directors eagerly supported him.
• Nakayama Takuya agreed to let the directors invest, but capped the total pool at one hundred million US dollars to protect operational flexibility and secrecy.
• Takahashi and the other directors called out their subscriptions, and they filled the allotment in less than ten minutes.

Nakayama Takuya met with Jensen Huang to review NVIDIA's RIVA128 production plans and discuss a future partnership. The chapter ended with Nakayama asking NVIDIA to exclusively customize a next-generation graphics chip for Sega's next console.

• Hoshino recorded the Sega directors' investment amounts and said the funds would be routed through offshore accounts to evade oversight.
• Nakayama Takuya left the board meeting and learned that Jensen Huang had been waiting to see him.
• Jensen Huang presented NVIDIA's NV3 progress and RIVA128 mass-production plan, reporting strong yields and thanking Sega for securing TSMC capacity.
• Nakayama Takuya and Jensen Huang discussed how abandoning NV1's quadrilateral rendering and adopting Direct3D5 and OpenGL had put NVIDIA on a better path.
• Nakayama Takuya revealed that Sega had begun preliminary research on its next-generation console and asked NVIDIA to exclusively customize a graphics chip for it.

Nakayama Takuya proposed that NVIDIA build a custom graphics chip for Sega’s next console, but Jensen Huang postponed a commitment until RIVA128’s market performance and NVIDIA’s finances were clear. Nakayama later visited Sunrise to find Hideo Kojima and discovered he was helping another production team.

• Nakayama Takuya pitched Jensen Huang on bringing PC graphics architecture to Sega’s new console, with Sega funding development and TSMC backing production.
• Jensen Huang said NVIDIA could not commit until RIVA128’s shipments and cash flow proved successful, and Nakayama agreed to wait.
• Nakayama reviewed a report showing Mobile New Century Gundam X had ended successfully and drawn strong VHS and LD preorders.
• Nakayama went to Sunrise to check on Hideo Kojima’s Space Cop project, but found Production Team Seven empty and dusty.
• A production assistant told Nakayama that Hideo Kojima was helping out Production Team Two.

Nakayama Takuya discovered Hideo Kojima had set aside Sega’s Space Cop project to help Shinichiro Watanabe and Keiko Nobumoto develop Cowboy Bebop. After hearing how Kojima’s ideas had strengthened the project, Nakayama ordered half of Space Cop’s unused budget transferred to Cowboy Bebop.

• Nakayama Takuya entered Sunrise’s meeting room and found Hideo Kojima helping Shinichiro Watanabe and Keiko Nobumoto with their new project.
• Nakayama questioned Kojima about Space Cop’s suspension, and Kojima presented a proposal titled Cowboy Bebop.
• Kojima explained that his concepts for Space Cop had joined Watanabe and Nobumoto’s bounty-hunter story and that he had chosen to contribute to their project instead.
• Watanabe and Nobumoto praised Kojima’s contributions to the storyboards and script.
• Nakayama ordered half of Space Cop’s remaining budget transferred to Cowboy Bebop, stunning Watanabe.

Nakayama Takuya visited Sunrise, pushed for stronger Cowboy Bebop production values, and praised the studio’s active projects. He discussed Gundam’s upcoming twentieth anniversary with Yamaura Eiji, who reported that Gundam X had recovered its reputation after Sega helped extend its run.

• Nakayama Takuya urged Hideo Kojima and Shinichiro Watanabe to tighten Cowboy Bebop’s pacing, allow more animation frames, hire Yoko Kanno, and avoid skimping on the budget.
• Nakayama Takuya toured Sunrise and saw the King of Braves GaoGaiGar team debating its storyboards and the City Hunter: Goodbye, My Sweetheart team reviewing animation.
• Nakayama Takuya met Yamaura Eiji, praised Sunrise’s busy production teams, and asked about plans for Gundam’s twentieth anniversary.
• Yamaura Eiji said Yoshiyuki Tomino was considering a new framework that would overturn the Universal Century setting, but had not yet developed a concrete proposal.
• Yamaura Eiji told Nakayama Takuya that Gundam X’s ratings stabilized after Sega extended its run from thirty-nine to forty-three episodes, and that its final episodes restored fan approval.

Nakayama Takuya reassured Yamaura that Sega would support Director Tomino’s Gundam twentieth-anniversary project. At Bandai, executives learned that Sega was negotiating to acquire Sotsu, leaving them afraid of losing access to Gundam merchandise and unable to admit their earlier opposition to a merger had been a mistake.

• Yamaura thanked Nakayama Takuya for saving Gundam X, and Nakayama said Sega had invested because the project could make money.
• Nakayama told Yamaura to notify him when Director Tomino’s twentieth-anniversary project took shape so Sega could help expand it.
• Yamashina Makoto presented Bandai’s executives with news that Sotsu’s five founding shareholders had met with Daiwa Securities and Sega’s Hattori Kiyoshi.
• Mitsui Chuta warned the executives that Sega could block Bandai’s Gundam model licensing and halt its production lines if Sega acquired Sotsu.
• Bandai’s executives stayed silent, unwilling to acknowledge that their earlier rejection of a merger with Sega had been wrong.

Yamashina Makoto urged Bandai’s executives to restart merger negotiations with Sega before Sega acquired Sotsu, but no one would take responsibility for contacting Sega. He ended the meeting without a decision as anxiety spread among Bandai employees.

• Yamashina Makoto confronted the executives and warned that Bandai’s Gundam production could stall without Sotsu’s licensing approval.
• The head of the Toy Division explained that Sotsu’s contact had gone on sick leave and no one there would approve the license documents.
• Yamashina Makoto ordered Bandai to offer Sega its game division and overseas toy channels, but every executive avoided volunteering to negotiate.
• Yamashina Makoto adjourned the meeting, leaving Bandai’s executives to face the looming threat of Sega’s acquisition of Sotsu.
• Bandai employees whispered about the acquisition and worried about the Gundam license and their bonuses while Yamashina Makoto ignored calls in his office.

Bandai president Yamashina Makoto delayed contact with Sega and hoped an upcoming anime season would revive sales, while Mitsui Chuta secretly approached Nakayama Takuya with evidence of Bandai’s worsening finances. Mitsui offered to help Sega acquire Bandai more cheaply and hinted that he knew about Sega’s secret acquisition of Sotsu.

• Yamashina Makoto told Bandai executives to postpone contact with Sega, wait for the new anime season, and cut the game division’s budget.
• Mitsui Chuta decided he could not let Bandai’s collapse ruin his family’s investment or his own prospects, so he called Nakayama Takuya.
• Mitsui Chuta met Nakayama Takuya in a private Akasaka cigar bar and described Bandai’s divided leadership and worsening business.
• Mitsui Chuta gave Nakayama Takuya documents showing that Bandai’s North American inventory backlog was three times greater than reported and its cash flow was stretched thin.
• Mitsui Chuta offered Sega further assistance and asked Nakayama Takuya whether Sega was secretly acquiring Sotsu.

Nakayama Takuya agreed to Mitsui Chuta’s plan to oust Yamashina Makoto and fold Bandai into Sega, securing Mitsui a protected share exchange and control of a new merchandise subsidiary. The next morning, Nakayama visited Director Hattori, whose response left their purpose unstated.

• Mitsui Chuta proposed using Sega’s announcement of its Sotsu acquisition and a low offer to trigger a boardroom coup against Yamashina Makoto.
• Mitsui demanded that his family’s Bandai shares be exchanged at a guaranteed price and that he receive a senior role after the acquisition.
• Nakayama offered a five percent premium on the shares and the presidency of a new Sega merchandise subsidiary, and Mitsui accepted.
• Mitsui left to prepare Bandai’s directors for the coup and planned to force Yamashina out when the Sotsu news became official.
• The next morning, Nakayama entered Director Hattori’s office, and Hattori asked what had brought him there.

Nakayama Takuya told Hattori that Mitsui Chuta had offered to help Sega pressure Bandai into submission, and Hattori devised a strategy to weaken Bandai’s valuation without alienating its employees. They left Mitsui waiting while Sega advanced its Sotsu acquisition first.

• Nakayama Takuya told Hattori that Mitsui Chuta had secretly revealed Bandai’s financial troubles and proposed helping Sega pressure Yamashina Makoto.
• Hattori said Sega had to finalize its acquisition of Sotsu before moving against Bandai.
• Nakayama Takuya explained that Mitsui wanted Sega to spread rumors to lower Bandai’s valuation and force Yamashina Makoto to submit.
• Hattori rejected openly disparaging Bandai and proposed letting the Sotsu deal and objective financial reports make Bandai’s value fall while presenting Sega as a rescuer to its employees.
• Nakayama Takuya decided to leave Mitsui waiting for several days so he would become more desperate to cooperate.

Nakayama Takuya reviewed Sega’s E3 preparations and described the company’s advantage over Sony and Nintendo. He appointed Hisao Oguchi Director of Operations for Sega’s Game Division and tasked him with managing development and preparing for Bandai’s eventual integration.

• Nakayama Takuya told Hattori to monitor Sotsu’s progress while Sega continued its preparations.
• Hisao Oguchi reported that E3 preparations were running smoothly and that Sony and Nintendo had made no major moves.
• Nakayama Takuya said Sega’s Jupiter console had gained an advantage through Final Fantasy VII and its growing installed base.
• Nakayama Takuya told Hisao Oguchi that his appointment as Director of Operations would be issued the next morning, giving him authority over game projects, schedules, budgets, marketing, and sales.
• Nakayama Takuya instructed Hisao Oguchi to prepare a plan for integrating Bandai’s game division and exploiting its Gundam and Dragon Ball properties.
• Hisao Oguchi agreed to assemble a team to assess Bandai’s game IP library and develop its commercial potential.

Nakayama Takuya and Eri visited Nakagawa Jun and Nakagawa Takako with Kazuki and Miki, where Kazuki proudly showed off his new schoolbooks. Later, Nakagawa Jun discussed Japan’s worsening consumer market and praised Takuya’s accurate prediction about Southeast Asia, leaving their business conversation poised to continue.

• Hisao Oguchi accepted Nakayama Takuya’s instructions to hand over his duties and move into the director’s office the following week.
• Nakayama Takuya and Eri arrived at the Nakagawa family estate with Kazuki and Miki, and Kazuki proudly told his grandparents he had started elementary school.
• Kazuki showed Nakagawa Takako his textbooks and described his new friend Kenta and the game-based tricks he used to teach him arithmetic.
• After lunch, Eri put Miki to sleep while Nakayama Takuya and Nakagawa Jun discussed the consumption tax increase and its damaging effect on retail and household spending.
• Nakagawa Jun changed the subject to Southeast Asia and told Takuya that events there had unfolded just as he had predicted.

Nakayama Takuya urged Nakagawa Jun to use TV Tokyo’s financial reporting and acquire the Hong Kong drama The Greed of Man to warn viewers about the Southeast Asian financial crisis and attract ratings. Nakagawa Jun decided to investigate broadcast and dubbing costs, leaving the plan ready for consideration.

• Nakagawa Jun complained that major Japanese banks had failed to hedge against the coming Southeast Asian crisis, while Nakayama Takuya suggested TV Tokyo produce an in-depth financial report.
• Nakayama Takuya proposed acquiring and dubbing TVB’s The Greed of Man, explaining its stock-market story and the legend of the Ting Hai effect.
• Nakayama Takuya argued that the drama could appeal to both financial workers and ordinary viewers, and offered to connect TV Tokyo with Toho for dubbing support.
• Nakagawa Jun agreed to check the broadcast-rights price and estimate dubbing costs when he returned to the station.

Nakayama Takuya reviewed Silicon Valley Online’s first-quarter 1997 results as the U.S. market rebounded and the company’s online services surged. Frank Marshall reported that strong earnings had vindicated his decision to hold the company’s shares, which had recovered their losses.

• Nakayama Takuya read a briefing on the Federal Reserve’s rate hike, the market selloff, and the subsequent rebound in U.S. stocks.
• He saw that go.com’s daily visitors and clicks had reached records, Passport registrations were growing rapidly, and Dungeons & Dragons Online was generating substantial subscription and prepaid-card revenue.
• Frank Marshall called Nakayama Takuya and said he had resisted pressure to reduce Silicon Valley Online’s holdings during the downturn.
• Frank said he had used real-time user data to convince Donald Valentine to hold on, and the share price had rebounded after the company released its results.

Nakayama Takuya learned that NEC’s reflective LCD project was years from mass production, while Sharp was nearing a viable color reflective TFT display. He began explaining how the company’s old hardware strategy had left its intelligence network unprepared for new component developments.

• Frank told Nakayama Takuya that SVOL’s stock had reached a new high and that Dungeons & Dragons Online discs had sold out at major retailers.
• Nakayama Takuya ordered Tom to expand disc production and told Frank to support Blizzard’s Battle.net with funding and technology.
• Sato Hideki reported that NEC’s reflective LCD had severe defects and would take two or three years to meet mass-production standards.
• Sato Hideki revealed that Sharp was developing reflective color TFT LCDs and expected to be ready for mass production early next year.
• Nakayama Takuya questioned why the company had missed Sharp’s progress, and Sato Hideki admitted the Hardware Department’s intelligence network had major gaps.
• Nakayama Takuya began describing how the company’s earlier hardware strategy had relied on mature, inexpensive components.

Nakayama Takuya ordered Sato Hideki to secure an engineering sample and firm specifications from Sharp, then visited Yuji Naka to check on the handheld’s software development. Yuji explained that adapting the Mega Drive’s tools to the new handheld’s dual-chip architecture was proving more complicated than expected.

• Nakayama Takuya told Sato Hideki to visit Sharp Headquarters for an engineering sample and confirm the display’s interface, dimensions, and peak power consumption.
• Sato Hideki agreed that settling the display specifications would let Sega begin motherboard and mold work sooner.
• Nakayama Takuya said Sega would accept Sharp’s terms if the display was finalized and delivered on schedule, and offered to reserve the full capacity of its first production line.
• Nakayama Takuya brought Yuji Naka food and coffee while checking on the new handheld’s software progress.
• Yuji Naka explained that the handheld’s MC68000 and Z80 architecture differed from the Mega Drive in memory addressing and audio I/O scheduling.

Yuji Naka reported that his team had built a middleware toolchain that could run Mega Drive games on the new handheld with over ninety percent compatibility, despite some performance loss. The work awaited final screen specifications from Sato’s negotiations with Sharp before the development kit and flagship game could move into final testing.

• Yuji Naka explained that his middleware translated Mega Drive hardware calls for the handheld and achieved over ninety percent compatibility, with a projected ten-to-fifteen-percent performance loss.
• Yuji Naka demonstrated an early Sonic test running stably and said the compiler could automatically handle most game ports for third-party developers.
• Nakayama Takuya ordered Yuji Naka to finalize the toolset and prepare Sega’s development teams to build games in the simulated environment.
• Yuji Naka said the team could not finish UI and display logic without exact screen specifications from Sato’s side.
• Nakayama Takuya revealed that Sato was negotiating with Sharp for a reflective color TFT display and expected its specifications soon.
• Yuji Naka promised to perfect the development software kit within half a month after the screen parameters arrived.

Sato Hideki brought Nakayama Takuya Sharp’s LCD samples and production terms for Sega’s new handheld. Nakayama approved the deal, rejected the highest-resolution panel for now, and gave Yuji Naka half a month to produce a working development unit.

• Sato Hideki presented Sharp’s LCD samples and reported that its new production line would begin operating in early 1998.
• Sato Hideki described the panels’ sizes, resolutions, thinness, and low power consumption.
• Nakayama Takuya rejected the 3.9-inch high-resolution panel and ordered tests of the 3.0-inch and 3.5-inch versions.
• Sato Hideki reported Sharp’s one-million-panel minimum order and 30 percent deposit, and Nakayama Takuya accepted the terms.
• Nakayama Takuya ordered Sato Hideki to deliver the displays and specifications to Yuji Naka, giving him half a month to produce a working development unit.

Yuji Naka received the handheld screen specifications and tested both sizes, while Sato Hideki arranged a power-consumption comparison. The larger screen delivered a stronger visual impact, but its shorter battery life left Sega facing a significant tradeoff.

• Sato Hideki brought Yuji Naka the three-inch and three-and-a-half-inch screens, both with 240-by-160 resolution, and Yuji ordered the programmers to revise their display logic.
• Yuji Naka and Sato Hideki tested Sonic on both screens and found the colors vivid and the motion smooth, while Yuji favored the three-and-a-half-inch screen if its power use stayed manageable.
• Sato Hideki returned two days later with test results showing the three-inch prototype ran for twenty hours on two AA batteries, while the three-and-a-half-inch version lasted about fourteen hours.

Sato Hideki and Nakayama Takuya weighed the 3.0-inch prototype’s twenty-hour battery life against the 3.5-inch model’s larger screen. They tested detailed character art on both displays, and the chapter ended as they turned to the 3.0-inch screen to judge its image quality.

• Sato Hideki reported that the 3.0-inch prototype lasted twenty hours while the 3.5-inch version lasted fourteen hours and fifteen minutes.
• Nakayama Takuya argued that the smaller screen’s higher pixel density could make its image more detailed and address players’ complaints about grainy visuals.
• Nakayama Takuya and Sato Hideki went to Yuji Naka and asked him to load detailed character illustrations onto both prototypes.
• Yuji Naka found discarded Phantasy Star concept art and loaded it onto the two units.
• Sato Hideki powered on both prototypes, and the 3.5-inch screen showed visibly jagged, grainy artwork before the group shifted its attention to the 3.0-inch screen.

Nakayama Takuya finalized the new handheld’s 3.0-inch screen after Sato Hideki and Yuji Naka were impressed by its image quality and battery life. The chapter then followed Kazuki’s Boy’s Day celebration with his family, ending as Nakayama Hayao and Nakayama Miyuki arrived for dinner.

• Yuji Naka and Sato Hideki were impressed by the 3.0-inch screen’s detailed visuals and the handheld’s long battery life.
• Nakayama Takuya ordered Sega to abandon the 3.5-inch plan and settle on a 3.0-inch screen.
• Kazuki celebrated Boy’s Day with Nakagawa Jun and Nakagawa Takako, showing off his Cyclone Magnum model car and the carp streamers he helped hang.
• Nakayama Takuya and Eri joined the celebration with Miki and served chilled watermelon.
• Nakayama Hayao and Nakayama Miyuki arrived at Nakayama Takuya’s home, and Miyuki hurried to greet her granddaughter Miki.

At a family dinner, Nakagawa Jun told Nakayama Takuya and Nakayama Hayao how the station’s financial program had drawn intense audience engagement and how quickly TVB had agreed to license The Greed of Man. TV Tokyo planned a network-wide broadcast with shared costs and targeted promotion, leaving the drama’s rollout in preparation.

• Nakayama Takuya hosted Nakayama Hayao and Nakagawa Jun for dinner with their family.
• Nakagawa Jun reported that the program on Southeast Asia’s financial turmoil had triggered calls and letters from financial professionals demanding more live audience seats.
• Nakagawa Jun said TVB had submitted a favorable licensing price for The Greed of Man after the station assessed its appeal to Japanese viewers.
• Nakagawa Jun outlined a plan for TV Tokyo and four TXN Network stations to share licensing and production costs and air the drama simultaneously.
• Nakagawa Jun said the WBS production team would promote the drama to professional viewers in financial circles.

Nakagawa Jun praised Nakayama Takuya’s proposal for a television drama and said TV Tokyo could afford to produce it even without support from regional stations. He then asked about Sega’s planned acquisition of Sotsu, while Takuya kept the deal’s details confidential and Nakayama Hayao explained he had stepped back from work to focus on his health.

• Nakagawa Jun argued that TV Tokyo could fund the drama itself and said financial companies had shown interest in sponsoring it.
• Nakagawa Jun credited Takuya’s earlier ideas with bringing TV Tokyo successful programs and industry prestige.
• Nakagawa Jun asked Nakayama Hayao about rumors that Sega planned to acquire Sotsu, and Hayao said Hattori and Takuya were handling the matter.
• Nakayama Takuya said the Sotsu negotiations were progressing smoothly, with key shareholders softening and most terms settled, but disclosed no further details.
• Nakagawa Jun asked about Hayao’s health, and Hayao said he was taking his medicine and preferred spending time at home with his grandson.

Nakayama Hayao told Nakagawa Jun that he was preparing to hand Sega’s presidency to Nakayama Takuya after the Sotsu acquisition and Southeast Asian ventures bolstered the company’s finances. As rumors of Sega acquiring Sotsu spread through financial circles, Bandai’s stock plunged and its employees feared for the company’s Gundam business.

• Nakayama Hayao said he was ready to leave the presidency to Nakayama Takuya, who said Sega’s internal reforms and leadership transition were already complete.
• Nakayama Hayao explained that the Sotsu acquisition and Takuya’s Southeast Asian plans could provide profits that would support Takuya’s succession, and Nakagawa Jun promised favorable TV Tokyo coverage.
• A Daiwa Securities supervisor told a trader that Sega was rumored to be acquiring Sotsu, whose shareholders had met Sega executives and drafted a preliminary letter of intent.
• Investors rushed to sell Bandai shares as news of the potential acquisition spread, wiping out tens of billions of yen in market value within half a day.
• Bandai employees worried that Sega’s possible purchase of Sotsu could threaten their Gundam model production lines and the company’s ability to pay salaries.