1988 Retro Game Tycoon - Chapter 86



Only Noblemtl

Episode 86 – Myeongseong Capital

Before Jewoo Electronics developed and sold Jemix in Korea, the Korean video game industry was virtually confined to arcades.

At least that’s what it looked like on the outside, because all the game consoles distributed in Korea were in the shadows.

On the other hand, arcades had already been established with pride(?) since the 70s. Atari’s and Taito’s were said to have been very popular in Korea as well.

As expected, video games were a universal language.

But it wasn’t just the console market that was dominated by the dark side. In fact, most arcades also used pirated boards.

Except for a few American games, most of the games in the arcade were made in Japan. No arcade would pay full price for expensive arcade boards from Japanese game companies that did not even have official import rights.

Numerous arcade clone boards were made at the Seun Shopping Mall in Cheonggyecheon. The trend that has continued since the 70s has not changed much even now in 1989.

, a sensory game where the cabinet itself moves according to the game, was impossible to copy, but most of the general arcade games were made with pirated boards. As a result, there were many games that were strangely different from the original games.

In this situation, I was planning to produce and sell an arcade game called on an expensive board that used two 16-bit CPUs.

In an arcade where the majority of consoles are still pirated, selling original games worth millions of dollars seems ambitious, if not reckless.

I also thought that the A1 board would be expensive, but it ended up being more expensive than I expected.

It was a crisis situation where a danger signal was coming in for those who were just starting out in the arcade game business, but there was a way out.

I would rather turn a crisis into a new opportunity.

Anyway, I have decided to completely change the Korean gaming culture. That includes arcades. Before the 90s come, I want to get rid of the dark energy in arcades as much as possible.

In order to do that, I need to sell as many copies of as possible and solve the problem of the price of the A1 board. So I headed to Yeouido.

A few years ago, Myeongseong Group acquired a company called Saebak Investment Securities and added financial services. In addition to Myeongseong Securities, it also operates a financial company called Myeongseong Capital.

Even at this time, Yeouido, the financial center of Korea, already had quite a few high-rise buildings lined up. Not to mention the golden 63 Building, there were twin towers and apartment complexes lined up near the high-rise buildings.

There were many people who came out to the Yeouido Gosu Beach to escape the summer. The parasols lined up in the Gosu Beach made me feel like I was at a beach.

“Hello, CEO. It’s an honor that you came to see me like this!”

“What are you talking about? How have you been?”

I had already met the president of Myeongseong Capital at a luncheon meeting for executives. It was definitely easier to talk to him because we had met before.

When I first met the president of Myeongseong Planning, it was bound to be awkward, and when I met the president of Myeongseong Electronics, my father was there to help me.

Now, there is no one among the executives of Myeongseong Group who does not know my existence, and since my activities have created a lot of buzz, it has become easy to meet people.

In addition, Myungsung Capital CEO Shin Myeong-seop was relatively young, in his early 40s, compared to other affiliate CEOs who were mostly in their 50s. There was relatively more room for communication.

“I heard that this year’s total car loan amount has already surpassed last year’s level. Congratulations.”

“Does your Majesty know such detailed information?”

“Yes. I heard that your father was pleased with the outstanding performance of Myeongseong Capital this morning.”

“Hahaha, I’m embarrassed. Well, the economy is really good right now, and the MyCar craze has been at its peak since the Olympics last year, so we’re all riding a good wave. So everyone is excited and working hard.”

Before visiting Myeongseong Capital, I looked into its business structure and recent performance. Since I have a special position in the group, it was much easier to talk to the CEOs if I showed even a little interest.

The reason I visited Myeongseong Capital was because they were successfully running the car installment finance business. I explained why I visited Myeongseong Capital.

“The reason I came to see you, sir, is because I heard that Myungsung Capital is an expert in consumer installment finance. I need your help with a new business I am currently preparing.”

“If you need my help, I’m more than happy to help you. How can I help you specifically?”

There was no one in the Myungsung Group who did not know the results that Myungsung Planning and Myungsung Electronics had produced by joining hands with me. At the luncheon meeting of executives, there were more than a few CEOs who asked me to contact them whenever there was something they could do together.

Now, I was known as the golden hand of some new business within the Myeongseong Group. So it was only natural that Myeongseong Capital CEO Shin Myeong-seop showed interest as soon as he heard my story.

“I should show you this first.”

I took the A1 board out of my bag. It wasn’t a prototype with chips soldered onto a universal board, but a prototype that had been redesigned and even had its components placed.

“Starbeat is now preparing a game to be released in arcades after Game Pocket. It’s an action game called , and it’s a dynamic game where you fight Japanese yakuza in Gyeongseong in the 1930s.”

“Oh, really? I don’t know much about video games, but this is for arcades, so it’s much bigger than the Game Pocket.”

“Yes, because it has to be installed in a large arcade cabinet. It has much more sophisticated and complex games with much cleaner and more colorful graphics than the Game Pocket. All the developers in the company are working on it now. But there’s one problem.”

“What is the problem?”

“The board is too expensive. Except for a few arcades in the center of Seoul, Korean arcades are still small and have not yet been able to move beyond that level. If we sell this for a few million won, people will not be able to afford it even if they want to.”

“I think I know what you’re saying. Are you asking Myeongseong Capital to provide financial services so that arcade owners can purchase this board on installment?”

“That’s correct.”

“How much does this cost?”

“It’s not confirmed yet, but I think it will be at least 3 million won.”

“This one board? The Excel, the next-generation Pony 2 model that came out this year, costs around 450. That’s almost the price of a car.”

The president of Myeongseong Capital asked in surprise.

“The speed of computer development is so fast these days that even this has dropped significantly. If I had tried to make and sell it with the same specs last year, I would have had to get 500 to 600 at best.”

“Do prices fall that quickly? Then the depreciation must be considerable.”

“You’re in the financial industry, so you’re sensitive to that kind of thing. Don’t worry too much. We’re not just selling this system board, but we’re also going to sell the game software called . If it becomes a popular game in the arcade, it can easily last for at least 2-3 years. And this board is a product developed with the next 5 years in mind.”

I explained, pointing to the slots mounted on the A1 board.

“You can run the game by inserting it into this slot like a ROM pack into a game console. If you want to change it to a different game later, you can leave the board as is and insert a different game.”

“What kind of other games are possible?”

“No, that’s not true. Only the games we make specifically for this A1 board are allowed. If another game company wants to make a game that runs on the A1 board, they have to get a license from us.”

“In any case, any game that hasn’t gone through Starbeat’s hands can’t be used on this board.”

“Yes.”

“Well, I heard, I’m sorry to say this, but the video game industry has a lot of piracy problems. And it’s not just serious with home consoles, but also in arcades.”

“Ah…! I’m surprised. You know exactly what I’m talking about?”

“If you want to make a living as the president of Myeongseong Group, you need to know a little about the gaming industry, hahahaha!”

The president of Myeongseong Capital made a joke and laughed heartily.

I was surprised. He was a relatively young CEO, and the financial industry requires more interest in other industries than others, but I didn’t know he would study this hard.

Of course, he was a man who rose to the position of president of a financial company at a young age. He was not someone to be taken lightly.

“I’m sorry if you feel offended. But risk aversion is the most basic thing for us. That’s how people who deal with money are. We try to avoid risky paths as much as possible.”

“No. I feel more secure and happy that you have figured it out in advance. As you said, the Korean game market is currently overflowing with piracy. Although Hyunmyeong Electronics took out a knife this time, there has not been a major problem with piracy in the arcades yet. However, at least in Korea, it is almost impossible to copy and sell .”

“Why are you so confident? Do you have any strong defenses?”

“Yes. The very configuration of the A1 board can actually be considered a preventive device. Someone is trying to steal the data from the slot and manufacture an illegal copy board? It is quite possible.”

“Huh? Didn’t you just say it would be difficult?”

“So you can try. But even if you take some of our game code and somehow piece it together, it’s virtually impossible to run it on another board. Because look here.”

I pointed to the two CPUs on the A1 board.

“This is a 16-bit CPU developed by Motorola. The A1 board has two of these. These two CPUs complement each other and perform numerous calculation tasks. Even if a cloner tries to steal the data and make a cloned board, they won’t be able to run the game properly unless they use at least two CPUs of similar level.”

“This CPU will be the most expensive chip on the board.”

“It’s the most important component. From the cloner’s perspective, since they have to use two expensive 16-bit CPUs, it won’t be cost-effective even if they try to clone it. Naturally, they’ll try to use a compatible 16-bit CPU that’s cheaper than the Motorola 68k, but then the game performance won’t be good.”

“Rather, would the high price be a barrier to counterfeiters?”

“That’s right. There may still be someone who tries to do it to the end, but it will still be impossible. More important than the two CPUs is how to control the two CPUs and manage the computational processes. The two CPUs can’t divide up the work they do on their own.”

“You need something to divide up the work, like a middle manager in a company?”

“It’s similar. In technical terms, it’s called a parallel processing process, and I’m sure there’s no place in Korea that can do it at the level of our company. To be honest, if you have the skills to do that, you shouldn’t be duplicating boards. I’m going to scout you to our company right away.”

“It would be difficult for a business to replicate this, and even if they did, it wouldn’t make any money. There are already two mountains to climb.”

“Actually, there are three. We will encrypt all the game code and data. First, we will have to crack the encryption and copy it, and then we will have to use two 16-bit CPUs with Motorola performance and create a parallel processing process. I don’t think that will happen in Korea.”

“That’s great. After hearing your words, I feel a little more relieved now. I worked hard to create an installment plan and sell it, but if there are counterfeit boards circulating in other arcades, honestly, there’s no chance of success.”

“Illegal copying is a problem that is directly related to my business, so I am very concerned about it. You don’t have to worry too much.”

and prevented illegal copying by drastically lowering the game prices so that copycats could copy and sell the games with almost no profit.

On the other hand, the A1 system board has set a wall with very high specifications. Even if this system is difficult to replicate, it is difficult to make money by making only a few hundred units. It will not be possible to make a profit unless you have mass production facilities.

Anyway, illegal copying is all about making money. If it seems like there is no way to make money, the attempts themselves will decrease.

“Then, since we assume that piracy won’t be a big problem and that the game you’re developing will be a hit, can we create an installment payment program for arcade owners?”

“Yes, that’s right. Please suggest a few scenarios, such as installment periods and profit rates.”

“All right.”

“And I would like you to create another program other than installment payments.”

“What else do you want?”

“I would like to try operating an A1 board lease program while I am at it.”

“Lease?”

This time, the president of Myeongseong Capital was as surprised as I was earlier. He seemed to have no idea that I would go one step further than the installment plan.

While installment is paying the price of a product in installments rather than paying all at once, leasing is a method of renting.

If you choose installment, the ownership of the product belongs to the buyer, but if you choose lease, the ownership belongs to the leasing company, Myeongseong Capital.

If the owner of the arcade A chooses to lease, he must first pay a certain amount as a deposit, and then pay the monthly lease fee and interest. Since it is a lease, the monthly payment is much lower.

This makes it easier for cash-strapped owners to bring in our boards.

“There is an installment program, so why are you even considering leasing?”

“Although installment payments are a much more familiar concept, there is still a great burden of having to spend millions of won to buy something. If you lease, you can operate the game at a lower cost than with installment payments, so it will be easier to persuade hesitant business owners. If a large company like Myeongseong Capital takes care of it, the business owner will also have confidence.”

“But leasing also involves some initial costs. It will likely be a burden to business owners.”

“So, I would like the leasing program to lower the initial payment as much as possible. Maybe 5 to 10 percent.”

“Ah… that’s a very low level. If they run away with the money in the middle of a lease, or even a installment loan, we’ll have a huge headache cleaning up the mess.”

“I know it’s not an easy decision. Adjust your interest rate accordingly. If you lower your initial payment and increase your interest rate, you’ll definitely find a suitable range.”

“I’ll have to do the math···.”

“I know what you’re worried about. Are you worried about how Myungsung Capital can make any profit with such a small amount of money?”

“That’s because we are people who look at numbers.”

“My goal is to sell over 10,000 A1 boards in Korea within a year. I think most of them will be through Myeongseong Capital’s financing program.”

“If it’s true, you said at least 300 per unit, so the total would be over 30 billion. Of course, this is assuming that they’re all leased. But is it really possible to have 10,000 units? How many arcades are there in the country right now? No matter how many you estimate, it probably won’t be 10,000.”

“No, sir. Why do you think they only sell one board per arcade?”

“ah···?!”

“I plan to install at least a few dozen of our A1 boards in every arcade in Korea. Starbeat will dominate the Korean arcade market in no time.”

I revealed my ambitious plan with a confident expression.

Only then did the president of Myeongseong Capital look like he realized what my plan was.