From its release at the end of 1993 to the present—a full two years—the cumulative sales of the Atari Jaguar in the North American market stalled at 125,000 units.
Corresponding to this were the 100,000 units sitting in Atari's warehouses.
"125,000." Takuya Nakayama read out the number and shook his head. "The fraction of Jupiter's new installations over the past two months is more than this number. This machine is completely hopeless."
"It's said that the Atari board of directors has already passed a resolution," Hisao Oguchi reported on the latest developments. "They are ceasing production and sales of the Jaguar this year and shutting down the hardware business entirely. Their only task moving forward is to figure out how to dispose of those 100,000 units in inventory."
For 100,000 unsold consoles, the storage costs alone were a significant expense.
From a business logic perspective, these were no longer just non-performing assets; they were pure liabilities.
"How are we going to deal with this?" Takuya Nakayama tossed the fax onto the table. "We can't just find another desert to bury them in, can we? The landfill in Alamogordo, New Mexico, had over a million copies of *E.T.* buried in it back then—do you think there's enough room left to bury a hundred thousand consoles?"
Hisao Oguchi was amused by this gallows humor. "According to reports from North America, Atari plans to package these machines and sell them off to a liquidator. The price is extremely low, less than a tenth of the cost. They'll probably end up being sold as cheap electronic toys, flooding the secondhand market or Third World countries."
A pioneering brand that had launched the home video game industry was now being reduced to selling its stock by the pound like scrap metal.
Takuya Nakayama leaned back in his chair, folding his arms in front of his chest.
The scene from last year's E3, where that Atari product manager had stood on stage in a defeatist black T-shirt to demo the Jaguar CD expansion, now felt absurdly tragic in retrospect.
"How is Ubisoft reacting?" Takuya Nakayama suddenly asked.
"The French must be regretting it so much their guts are turning green right now," Hisao Oguchi said, flipping through another memo in his hand. "The launch sales of 'Rayman' on the Jaguar platform were disastrous. Atari's pitiful install base simply couldn't support even the most basic software sales. Fortunately, they were smart enough to port the project to Jupiter and PlayStation ahead of time. Thanks to the sales on our side, Ubisoft not only recouped their costs but also made a profit. Yves Guillemot even sent a thank-you letter to the distribution department the day before yesterday."
Too clever by half.
Ubisoft initially used Atari's dev kit for the project, hoping for lower development costs and subsidies from Atari.
As it turned out, they almost got dragged down by that sinking ship.
"This is a cautionary tale," Takuya Nakayama said, tapping his index finger on the table, making a crisp sound. "Why did Atari die? Their bizarre hardware architecture and terrible development environment—these were just the surface symptoms. The root cause was their arrogance toward players."
Takuya Nakayama tapped his index finger against the desktop, making a crisp sound. "Why did Atari die? Their bizarre hardware architecture and poor development environment—these were all just symptoms. The root cause was their arrogance toward players."
Oguchi Hisao listened intently.
He understood that the Managing Director was using the Atari incident to teach him, the future steward of the gaming division, a lesson.
"Back when they monopolized the market, they were so greedy that they would shove any piece of trash game into a cartridge, which eventually led to the Great Crash of Atari." Now, in making the Jaguar, they were still stuck in that old mindset, thinking that by stacking a few so-called '64-bit' gimmicks, players would obediently open their wallets. They failed to realize that players today have already had their appetites whetted by Nintendo, Sega, and Sony." Nakayama Takuya's tone was calm, without much emotional fluctuation, simply stating an objective fact. "Without good games to support it, even the most powerful hardware is just a pile of useless plastic. We must be vigilant at all times. As a platform holder, we must maintain respect for the players. Only by committing to providing quality works will players not abandon you. This is not just a slogan; it is Sega's bottom line for survival."
Oguchi Hisao nodded in agreement.
Sega's investment in its third-party ecosystem and its refinement of first-party titles over the past few years were based precisely on this philosophy.
"That's enough about Atari.
A dead man isn't worth wasting too much of our energy on."
Takuya Nakayama sat up straight. "Let's talk about the living."
"The Atari matter is behind us. A dead man isn't worth us wasting too much energy on," Takuya Nakayama said, sitting up straight. "Let's talk about the living. What's the latest from Sony?"
Mentioning business, Hisao Oguchi immediately switched into work mode.
"The informants we've planted within distributors and third-party manufacturers have sent back some intelligence," Oguchi said, opening his notebook. "Ken Kutaragi has been very active lately. After the DVD standard was established within the Sony Group, the financial pressure on the Electronic Entertainment Division was greatly relieved. They are now holding large amounts of cash and are reaching out to small and medium-sized manufacturers everywhere."
"Throwing money at them?"
"Yes. And the terms they're offering are very generous." Oguchi read out several terms, "Waiving some development kit fees, providing technical support, and even promising to cover a portion of the marketing costs. The only condition is that the games must be exclusive to the PlayStation, or at least a timed exclusive."
Takuya Nakayama was not surprised.
Sony's hardware sales were lagging, and the most direct way to catch up was to throw money at acquiring content.
"This is a standard maneuver in capital operations."
"Small and medium-sized manufacturers can't carry the market," Takuya Nakayama hit the nail on the head. "If Sony wants a comeback, they must acquire 'nuclear weapons' capable of competing with *Final Fantasy VII*, *Resident Evil*, or even *Toy Story*. Ken Kutaragi isn't stupid; he must be in talks with top-tier manufacturers."
Hisao Oguchi closed his notebook. "You're right. Word is that Ken Kutaragi had dinner with Enix President Yasuhiro Fukushima in Ginza last week."
Enix.
Takuya Nakayama rubbed his chin.
Square is already fully committed to the Jupiter bandwagon.
As the other pole of the Japanese RPG world, Enix and *Dragon Quest* have naturally become a highly coveted target for Sony.
"Nintendo's N64 insists on using cartridges, which have limited capacity and high costs," Takuya Nakayama analyzed the situation. "The scale of *Dragon Quest* is growing, and it won't fit on a cartridge anymore. There has long been dissatisfaction within Enix regarding Nintendo's conservative strategy. Ken Kutaragi chose the perfect time to poach them."
"Do we need to intervene?" Hisao Oguchi asked. "If *Dragon Quest* falls into Sony's hands, the PlayStation's install base in Japan will skyrocket instantly. That's a significant threat to Jupiter."
Takuya Nakayama stood up and walked to the floor-to-ceiling window, looking down at the street below.
"Intervening is a must, but we can't just blindly throw money at it," Nakayama turned around. "Enix is not Square. Masafumi Miyamoto is a businessman who values profit and technology; Keiji Honda is more conservative, valuing stability and install base. The fact that they haven't engaged with Sega all these years is simply because they're cautious. We currently hold an install base of nearly nine million—that's our biggest bargaining chip."
He walked back to his desk, picked up a pen, and wrote a few words on a blank document.
"Go make the arrangements. I will visit President Honda myself next week." Nakayama handed the note to Hisao Oguchi.
Hisao Oguchi took the note, glanced at the schedule written on it, and tucked it securely into his pocket.
"Ken Kutaragi thinks money can buy everything," Takuya Nakayama said, adjusting his tie. "The second half of the business war has only just begun. Atari has already bowed out; now, it's time to end this generation of the console wars."
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