The PC Engine's first-week sales of 500,000 units reached Nintendo's Kyoto headquarters like wildfire.
Hiroshi Yamauchi promptly summoned his executives for an urgent meeting.
His face remained stern, but a rare gravity flickered in his eyes.
His fingers tapped the table rhythmically, each *tap-tap* like a hammer striking the hearts of those present, without the usual thunderous outburst.
"Five hundred thousand units," an executive echoed hoarsely, disbelief lacing his voice. "Just with an anime tie-in like *Sengoku Mahjong* in two weeks."
"It's beyond our initial estimates," Gunpei Yokoi said, adjusting his glasses, his analytical gaze sharp. "This proves again the massive pull of popular anime tie-ins for early market traction."
"But, as we predicted, the PC Engine's 24,800-yen price and mere two launch titles are glaring weaknesses. How long *Sengoku Mahjong*'s hype lasts is unclear. Once the novelty fades, without a robust game pipeline, their momentum will crash."
Shigeru Miyamoto nodded, his tone steady. "Yes, the short-term surge is impressive, but the console war is a long game. It's about sustained high-quality game output and a stable ecosystem."
Yamauchi's tapping ceased.
His piercing gaze swept the room, his voice low but commanding. "The PC Engine's emergence and early performance are a wake-up call. But they're not enough to shake Nintendo's foundation."
"However, they expose flaws in our third-party management."
An executive handling third-party relations shifted uncomfortably. "President, our 'game content advisors' were meant to boost quality and align with Nintendo's platform vision. But in practice, they've caused friction."
He chose his words carefully, shouldering some blame while defending the intent. "Take Konami—some young developers there grumbled about our advisors' changes, saying they stifled creativity and slowed progress."
"This direct oversight," he admitted, "may have been excessive, eroding trust with key partners."
Yamauchi gave a cold snort, acknowledging the issue. "If direct content guidance backfires and breeds resentment," he said, eyes narrowing with resolve, "we'll shift tactics."
"To ensure Nintendo's software quality leads the industry and our third-party partners thrive without financial missteps that could disrupt our game supply, we'll adjust our approach."
His tone turned deceptively "sincere," as if for their benefit. "Effective immediately, we're revising our third-party management model. No more 'game content advisors' overseeing design details."
A few executives exhaled, thinking Yamauchi was easing control.
Then his next words yanked their hearts back into their throats.
"Instead, we'll shift oversight from game content to 'project financial health.' Starting next month, all third parties under our royalty agreements must regularly report detailed financials for all Famicom or future Nintendo platform projects—initial budgets, funding inflows, and regular expenditure breakdowns."
A chilling smirk curved Yamauchi's lips, as if he already saw third parties trapped in Nintendo's grip. "Our finance team will 'assist' by assessing these reports, helping them avoid risks so they can 'focus' on developing for Nintendo, ensuring every project strengthens our shared market."
Nintendo's legal, finance, and third-party teams moved swiftly. Within days, a meticulously worded, authoritative *Notice on Enhancing Transparency in Collaborative Project Funding* reached the desks of every third-party president tied to Nintendo. Dripping with "for your benefit" goodwill, it stressed "focused" development and "shared market stability."
Yet, every recipient felt a piercing chill and deep humiliation.
In Tokyo, at SNK's headquarters, President Eikichi Kawasaki stared at the fax, his face twitching with rage. He snatched the paper, eyes blazing. "Outrageous!" he roared, rattling the office's glass.
He slammed the notice onto his mahogany desk, the paper bouncing before settling. "What do they take SNK for? A Nintendo subsidiary? Their accounting department?"
"We report every penny of our books to them? What's Yamauchi playing at? Does he think he's a shogun?"
Pacing furiously, chest heaving, he fumed, "We pour sweat and blood into games, earn our money, and now Nintendo dictates how we spend it? Who's the president here?"
At Namco's headquarters, President Masaya Nakamura's brows furrowed as he reread the notice, his anger quieter but darker than the stormy sky outside. "Initial budgets, funding status, detailed expenditures," he murmured, a bitter smile forming. "Yamauchi doesn't see us as independent companies. This is naked financial control—a veiled takeover."
He set the paper down, gazing out the window, thoughts turning to the PC Engine's 500,000-unit debut. Perhaps it was time for deeper talks with Hudson and NEC. Betting everything on Nintendo's increasingly tyrannical grip was too risky.
At Konami, young developers huddled, buzzing. "Heard the Nintendo 'advisor' who nitpicked our project got pulled back?"
"Really? Good riddance! I was sick of him."
"Now we can polish our games our way."
Their relief was palpable, unaware of the heavier burden now on President Kagemasa Kozuki's shoulders. Staring at the notice, his face was ashen, silent.
That night, in a discreet Tokyo ryotei, presidents of major third-party console game companies gathered—an unprecedented summit. SNK's Kawasaki, still seething, had called it. Attendees included Namco's Nakamura, Konami's Kozuki, Capcom's Kenzo Tsujimoto, and Taito's president.
After rounds of sake and dishes, the mood remained heavy.
Kawasaki slammed his cup down. "Everyone got Nintendo's notice, right?"
Silent nods, faces grim.
"Yamauchi's gone too far!" Kawasaki's voice burned. "Before, their 'advisors' meddled with our games—fine, it's their platform, we swallowed it for quality. But now they demand our books?"
"Are we thieves to them? Or children to be disciplined? What gives Nintendo the right to control our finances? Who's the president here?"
His humiliated, furious question ignited the room's pent-up resentment.
"Exactly!" Capcom's Tsujimoto, usually reserved despite rivalry with SNK's Takayoshi Kodo, slapped his thigh. "We fund, build, and risk everything. Nintendo takes royalties, and now they want to inspect our wallets? It's an insult!"
Taito's president sighed, voice thick with frustration. "The Famicom's market share forces us to bow. But this parental financial oversight tramples our dignity and autonomy. Are we just Nintendo's factories?"
Nakamura sipped sake, eyes deep. "Anger aside, we must face reality. The Famicom and NES dominate the console market. Openly defying Nintendo benefits no one."
The room cooled, the harsh truth sinking in.
Kozuki set down his chopsticks, voice low. "Nakamura's right. But do we just let Yamauchi puppet us? Financial control today—what's next? Handing over our company seals?"
His sardonic jab voiced their deeper fears.
Nakamura set his cup down, scanning the group. "Yamauchi's iron grip shows he feels the market shifting. The PC Engine, flawed as it is, proves Nintendo isn't the only option."
He lowered his voice. "I've kept private contact with Hudson's Kudo brothers and NEC. If you're interested, I can arrange introductions. At least, gathering more intel can't hurt."
The room's air turned electric.
Kozuki's eyes gleamed. "Speaking of options, word is Sega's secretly developing a 16-bit console—far stronger than the PC Engine, maybe even a real threat to Nintendo's future plans."
The news hit like a bombshell.
Sega? The arcade giant that stumbled in consoles? Could they challenge Nintendo's hegemony?
Doubts swirled, but a seed took root in these stifled presidents' minds: you don't put all your eggs in one basket—especially when its owner treats you like dirt.