The royalty system

California, Santa Clara County, Milpitas.

This small city, covering less than 36 square kilometers, was home to quite a few semiconductor businesses.

Zilog's headquarters also stood here.

The freshly decorated, modern conference room had an entire wall of floor-to-ceiling glass, offering a direct view down over the parking lot.

A long table divided the people in the conference room into two sides.

On one side were Lin Lixin and the team he led-Gerald, Ho Kwok Yuen, and Vivian-attending as GAMENOVA's hardware department.

On the other, naturally, were Zilog's engineering team and its vice president, Richard.

Richard put down the document in his hands, making no attempt to hide the surprise on his face.

"Mr. Lin, this really is an ingenious architecture."

The document Lin Lixin had provided described a design approach called SoC.

That was an integrated circuit intended for a specific purpose, containing a complete system with the necessary software embedded in it.

As the designer of the Z80, currently the bestselling 8-bit processor on the market, Zilog naturally understood just how great this system's advantages were.

Compared with the traditional approach of bridging various chips through interfaces, an SoC could surpass it across the board, whether in performance, size, or power consumption.

"We came here hoping to work with Zilog to develop a specially supplied version of the Z80."

Lin Lixin gave Gerald a look, signaling for him to hand over another document.

Richard took it and gave it a cursory scan, raising an eyebrow slightly.

"Mr. Lin, I thought you intended to make an arcade chip. Is this NovaBox your company's home console project?"

Lin Lixin had no intention of concealing it and nodded in frank acknowledgment.

Richard hummed thoughtfully, his tone growing a little uncertain.

Developing a modified microprocessor was no small project, and he had to exercise the utmost caution in making a decision.

The home console plan Lin Lixin proposed gave him a strong sense of danger.

Although Zilog had always held a considerable share of the 8-bit microprocessor market, it was virtually absent from home consoles.

There was no other reason for it: naturally, it was the price.

Compared with inexpensive processors such as the 6502, which cost only a little over ten dollars, the Z80 had no price advantage.

Their main markets had always been personal computers and mid- to high-end arcade machines.

Home consoles, on the other hand, were precisely a field with which they were ill-starred.

"Mr. Lin, forgive my bluntness. An Atari 2600 sells for just $199, and even then, players still aren't buying."

"What makes you think you can build a more expensive machine and sell it? Arcade machines and game consoles aren't the same."

Replacing the 6502 with a Z80 would add nearly fifty dollars to the material costs alone.

For home console consumers, who were sensitive even to a price difference of a few dollars, that would undoubtedly be fatal.

Coupled with the severe lack of market confidence caused by the Atari Shock, Richard simply could not convince himself to trust this proposal.

That remained true even though the new architecture Lin Lixin proposed was indeed very tempting.

"We won't make money from the hardware. We'll sell our consoles at cost, or even at a loss."

Lin Lixin shook his head and made a startling declaration.

But Richard was, after all, a man who had seen the world. After a brief moment of astonishment, he recovered, still unconvinced.

"I understand what you mean. You intend to quickly seize the market through a price advantage, then make money selling game cartridges?"

"Atari thought the same thing, Mr. Lin. Those cartridges are now buried in a landfill."

Atari was the game industry's best cautionary example.

Granted, from a business perspective, Lin Lixin's proposed approach was absolutely correct, but it carried an enormous hidden risk.

In 1982, nearly ten thousand shoddily made, derivative titles had flooded the entire North American market.

It was precisely those titles that had destroyed the game market.

"E.T." was certainly terrible too, but ultimately, it was merely a scapegoat that had lit the fuse.

The true disaster had been brought about by Atari and Warner themselves.

Unhurried, Lin Lixin said slowly, "A royalty system."

"Sorry?" Richard had not understood what he meant.

"This is a new development model I've conceived. Unlike Atari's completely open development and publishing, this system will be more 'overbearing,' more stringent."

Lin Lixin picked up another document from the table, turned it around, and presented it to Richard, explaining each point in turn.

"First, and most importantly, all cartridges must be manufactured by GAMENOVA. We will determine production quantities and release dates. Unauthorized manufacturing will be prohibited."

This point was naturally aimed at the disastrous stockpiling caused by mass production, as with "E.T."

"Second, developers must estimate their sales and pay 'royalties' in advance-in other words, our share."

Listening to Lin Lixin's explanation, Richard carefully read through the provisions recorded in the document, and his expression shifted slightly.

This rule was extremely clever, ensuring that developers would not simply go through the motions and flood the market with stock, while also spurring their enthusiasm.

For example, if a small development team believed its game could sell one million copies, it would first have to prepay the revenue share for those one million copies.

If it ultimately sold two million, or even ten million copies, it would not need to pay any additional share!

While guaranteeing GAMENOVA's dominant position, this system also raised the banner of "quality is king."

It was almost the complete opposite of Atari's approach of "quantity over quality."

And Lin Lixin was very certain that this system would work.

Because this was the very path Nintendo had taken to dominate the future game market.

Lin Lixin quietly waited for Richard to finish reading the detailed provisions before continuing:

"As for how to reignite players' enthusiasm, Mr. Richard, if you know GAMENOVA, you should understand that this is the least of our worries."

The negotiations went even more smoothly than expected. GAMENOVA formally reached a joint research and development agreement with Zilog to develop a dedicated processor based on the Z80, as well as a complete SoC chip for a home console.

Back at VideoSoft's former premises-or rather, GAMENOVA's current Santa Clara office.

Sam was busy unpacking a box of things.

On a nearby table sat a small plastic machine.

Its casing was entirely white, with only a few buttons and decorative strips in rose red.

Besides the video cable connecting it to the display, two other cables extended from the machine, connected to a pair of controllers in the same rose red.

Hearing the sound behind him, Sam wiped the sweat from his forehead, delight showing on his face:

"You're finally back. I got the Famicon. I asked a friend to make a special trip to Japan to pick it up."

Lin Lixin's eyes lit up, and he hurried over to the machine.

This was none other than the legendary Famicon, commonly known as the FC Famicom.

As the saying went, know yourself and know your enemy, and you could fight a hundred battles without defeat. Since they were going to make their own console, the Famicom naturally deserved a thorough study.