SEC Chapter 38 Royalty System
Chapter 38 Royalty System
Milpitas, Santa Clara County, California.
This small city, covering less than 36 square kilometers, is home to a significant semiconductor industry.
Zilog's headquarters building also stands here.
The meeting room, with its fresh and modern decor, features a full-length glass curtain wall that offers a direct view of the parking lot.
The long table divided the people in the meeting room into two sides.
On one side was Lin Lixin, who led Gerald, He Guoyuan, and Vivian, representing GAMENOVA's hardware department.
On the other side, of course, are Zilog's engineering team and Vice President Richard.
Richard put down the documents in his hand, his surprise evident in his eyes.
"Mr. Lin, this is truly an ingenious structure."
The document provided by Lin Lixin describes a design concept called SoC.
That is, an integrated circuit designed for a specific purpose, containing a complete system and embedding the required software.
As the designer of the Z80, the best-selling 8-bit processor on the market, Zilog is naturally well aware of the advantages of this system.
Compared to the traditional method of bridging various chips through interfaces, SoC can achieve comprehensive superiority in terms of performance, size, and power consumption.
"Our purpose in visiting this time is to reach a cooperation agreement with Zilog to develop a special version of the Z80."
Lin Lixin gave Gerald a look, signaling him to present another document.
Richard took it and glanced at it briefly, raising an eyebrow slightly.
"Mr. Lin, I thought you were planning to make arcade game chips. Is NovaBox your company's home console project?"
Lin Lixin made no attempt to hide anything and readily nodded in acknowledgment.
Richard hesitated for a moment, his tone becoming more uncertain.
Developing a modified microprocessor is no small project, and he had to be extremely careful when making the decision.
Lin Lixin's proposed home console plan made him sense a strong sense of crisis.
Although Zilog has always held a significant market share in the 8-bit microprocessor market, it has virtually no presence in the home computer market.
The reason is simple: it's expensive.
Compared to cheaper processors like the 6502, which cost only a dozen dollars, the Z80 doesn't have much of a price advantage.
Their main market has always been personal computers and mid-to-high-end arcade machines.
Home consoles, on the other hand, are a field that is completely incompatible with theirs.
"Mr. Lin, if I may be so blunt, an Atari 2600 only costs $199, and even so, gamers still don't buy it."
"What makes you think you can sell a more expensive machine? Arcade machines and game consoles are not the same thing."
Replacing the processor with a Z80 from a 6502 would increase the material cost by nearly $50.
This is undoubtedly fatal for consumers who are very sensitive to price differences of a few dollars, such as those buying home consoles.
Coupled with the severe lack of market confidence caused by the Atari crash, Richard could not convince himself to trust the draft.
Even if Lin Lixin's proposed new architecture is indeed very tempting, it doesn't matter.
"We don't make money from hardware; we sell the main unit at cost price, or even at a loss."
Lin Lixin shook his head, uttering a startling statement.
However, Richard was a worldly man, and after a brief moment of astonishment, he recovered and still did not think highly of it.
"I understand what you mean. You plan to quickly seize the market by leveraging price advantages and make money by selling game cartridges?"
"Atari thought the same thing, Mr. Lin. Now those cassette tapes are buried in the landfill."
Atari is the best negative example in the gaming industry.
Admittedly, from a business perspective, Lin Lixin's proposed plan is indeed absolutely correct, but it has a huge hidden danger.
In 1982, nearly 10,000 poorly made, homogenous works emerged in the North American market.
These works destroyed the gaming market.
While "E.T." was certainly bad, it was ultimately just a scapegoat that ignited the fuse.
The real disaster was caused by Atari and Warner.
Lin Lixin spoke slowly and deliberately: "The royalty system."
"Sorry?" Richard didn't understand what he meant.
"This is a new development model I've conceived. Unlike Atari's completely open development and distribution, this system will be more 'domineering' and more stringent."
Lin Lixin picked up another document from the table, turned it over, and presented it to Richard, explaining each document in turn.
"The first and most crucial point is that all cartridges must be manufactured by GAMENOVA, and the release quantity and release time are determined by us. Unauthorized production is prohibited."
This is naturally aimed at the catastrophic stockpiling caused by mass production of games like "E.T."
"Secondly, developers need to estimate sales volume and pay 'royalties' in advance, which is a share of the profits."
Richard listened to Lin Lixin's explanation, carefully reviewed the regulations recorded in the document, and his expression changed slightly.
This rule is very clever, ensuring that developers don't just release large quantities of inventory as a formality, while also stimulating their enthusiasm.
For example, if a small development team believes that their game can sell 100 million copies, they will have to prepay the revenue share for those 100 million copies.
If they eventually sell two million or even ten million units, they won't need to pay any additional commission!
This system not only ensured GAMENOVA's dominant position, but also promoted the slogan "quality is king".
This is almost the complete opposite of Atari's approach of "quantity over quality".
Lin Lixin was also very confident that this system would work.
Because this is the path Nintendo took to dominate the future gaming market.
Lin Lixin waited quietly for Richard to finish reading the detailed regulations before continuing:
"As for how to reignite the players' passion, Mr. Richard, if you know GAMENOVA, you should understand that this is the least of your worries."
……
The negotiations went even more smoothly than expected, and GAMENOVA officially reached a collaborative R&D agreement with Zilog to jointly develop a dedicated processor based on the Z80 and a complete SoC for home consoles.
Returning to the former site of VideoSoft, or rather, GAMENOVA's current office in Santa Clara.
Sam was busy unpacking a box of things.
On the table to the side, there was a small plastic machine.
Its outer shell is entirely white, with only a few buttons and decorative strips in rose red.
In addition to the video cable connecting to the monitor, there are two other cables extending from the body, connecting to two equally magenta handles.
Sam heard the voice behind him, wiped the sweat from his brow, and his face lit up with joy:
"You guys are finally back. I've got the Famicon. I asked a friend to go to Japan to pick it up."
Lin Lixin's eyes lit up, and he quickly went to the machine.
This is the legendary Famicon, commonly known as the FC (Famicom).
As the saying goes, "Know yourself and know your enemy, and you will never be defeated." Since they are going to make their own console, the FC is naturally worth their careful study.