The Conglomerate Family Became A Villain [EN]: Chapter 78

78. The Giant’s Counterattack (2)

When convenience stores started appearing in neighborhoods previously dominated by supermarkets, one positive aspect emerged: price transparency.

Smaller, local supermarkets often didn’t clearly mark prices on their goods. In such cases, customers had to ask the owner to find out the cost.

Convenience stores, however, prominently displayed the price of every item.

This clear pricing was a significant advantage for consumers. It allowed them to know exactly how much money they needed and easily compare prices of similar items.

However, many things in the world lacked such clear pricing. Content assets, like game Intellectual Properties (IPs), were particularly difficult to value, with various calculation methods yielding different results.

“If you’re looking for serious negotiation… do you believe our offer thus far hasn’t been serious?”

The Activision team’s expressions darkened at Jung Hyun-woo’s question.

Unlike the executives who were grumbling, Activision CEO Jerome Nell responded in a measured tone.

“Serious or not? If you phrase it that way, I’m inclined to say the latter.”

“In what way do you find it unserious?”

Sarah thought to herself,

‘This negotiation is likely to collapse.’

There was little chance Jung Hyun-woo would offer the amount Jerome Nell desired.

‘Because we don’t have sufficient funds at the moment.’

It wasn’t that Victoria Corporation’s accounts were empty. However, with the potential deal with Bank of America on the horizon, they needed to conserve capital.

‘If the Bank of America service is confirmed, we’ll need to hire more staff and invest in additional network infrastructure.’

Jerome Nell, unaware of these constraints, stated their position frankly.

“The IPs we possess hold immense value. Robert’s attempt to acquire them for a mere $3 million is, frankly, insulting.”

Jung Hyun-woo steepled his fingers and inquired,

“If $3 million is insufficient, what figure would you consider adequate?”

He understood why Robert had offered less than his authorized amount.

‘He must have intended to gradually increase the offer through multiple rounds of negotiation.’

JP Morgan and Bank of America had also initially presented lower offers. This incremental negotiation tactic was common practice in business.

Jerome Nell didn’t immediately name a price. Instead, he wanted to emphasize the inherent value of Activision’s IPs.

“Before we discuss the total sum, let’s focus on ‘Metal Soldier.’ Would that be acceptable?”

Jung Hyun-woo extended his right hand, palm up.

“Anything is possible.”

Jerome Nell nodded and continued.

“‘Metal Soldier’ is our flagship title, with approximately 13 million copies sold. At a cartridge price of $20, Activision’s revenue, excluding retailer and wholesaler margins, amounted to $150 million.”

$150 million in sales was comparable to JP Service’s annual revenue. In essence, Activision had generated the equivalent of JP Service’s yearly income with a single game, ‘Metal Soldier.’

“Mr. Jung, what do you estimate the IP value of ‘Metal Soldier’ to be? A sequel would likely generate at least $100 million in sales. Even after deducting development and marketing costs, the net profit would exceed $30 million. I believe an IP like ‘Metal Soldier’ is worth at least half of that net profit, or $15 million.”

The total sales of Activision IPs that Robert aimed to acquire amounted to 30 million cartridges. Applying Jerome Nell’s valuation to these IPs, the total value would be at least $40 million.

‘So Robert offered less than 10% of their perceived value.’

Even using the amount Jung Hyun-woo had authorized for Robert, it was still less than 20%.

“Mr. Nell, I appreciate your explanation. However, isn’t that calculation based on a time when the game industry was thriving?”

The current situation is vastly different.

Jerome Nell sighed softly.

“Hoo… I’m aware. That’s precisely why I’m meeting with you, Mr. Jung, isn’t it?”

If the game industry were healthy, Activision wouldn’t need Jung Hyun-woo’s assistance and would be on track to achieve a market capitalization of $10 billion.

However, the North American game industry’s collapse, triggered by the Atari shock [the video game crash of 1983], had plunged them into a severe management crisis. Activision had recorded tens of millions of dollars in losses in the previous year alone, causing significant instability.

The situation hadn’t improved at all this year.

“How much of a reduction are you willing to consider?”

“For the IPs Robert suggested, we can’t go below $20 million.”

Jerome Nell believed he was offering a surprisingly low price, given their dire circumstances. But Jung Hyun-woo shook his head at the offer.

“That’s too high.”

“$20 million is too high?”

Jung Hyun-woo countered, his voice hardening.

“Mr. Nell, how much revenue can you realistically generate with those games today? Is even 10% of the figures you cited achievable?”

The Atari shock hadn’t just reduced cartridge sales; it had also driven down prices. Most cartridges currently sold in the market were trading for less than $5.

Considering that ‘Metal Soldier’ originally sold for $20, that represented a -75% decrease.

‘Even if sales volume remained the same, revenue would be down 75%. And sales have also declined…’

Achieving even 10% of their past sales was a challenge.

“Well, that’s…”

Jerome Nell was momentarily speechless.

Jung Hyun-woo pressed his advantage.

“If those IPs were truly so valuable, Activision would have already produced sequels to boost sales. The reason you haven’t is because those IPs can’t generate that level of revenue, isn’t it?”

He was essentially asking why they hadn’t simply developed the IPs into games themselves if they were so lucrative.

“Keuk.”

Activision Vice President Camille Henderson clenched his fist and interjected.

“Mr. Jung, I don’t believe it’s appropriate to denigrate the other party.”

Jung Hyun-woo turned his gaze towards him.

“I’m not denigrating. I’m simply stating the reality.”

Camille Henderson raised his voice in response.

“Reality?”

Jung Hyun-woo didn’t back down.

“Yes. The North American game industry is in ruins. Do you know how much revenue the ‘Zero’ series [likely referring to a game series developed by Victoria Corporation] is currently generating? If we had invested in the game industry like Activision, we would have gone bankrupt.”

Camille Henderson’s face flushed red.

“How can you say such a thing…”

Jung Hyun-woo cut him off.

“It’s not an exaggeration. We are not developers; we are managers. Developers dream, but managers must face reality. If we fail to recognize the true state of our company, our employees will lose their jobs, and our partners will go bankrupt.”

His words struck Camille Henderson like a sharp spear.

‘Kueuk, I can’t argue in this situation.’

If the current recession persisted for another six months, Activision would likely face bankruptcy.

Jung Hyun-woo surveyed the Activision executives and stated,

“If I’m mistaken, I welcome rebuttals.”

Jerome Nell sighed deeply once more.

“Hoo… We’re all aware of the market’s difficulties, so there’s no need to belabor the point. Mr. Jung, please tell us the amount Victoria Corporation is willing to offer.”

He was determined to sell the IPs at any cost.

‘Securing $10 million from the sale of these IPs would allow us to survive for a few more months.’

Jerome Nell and the Activision executives’ primary goal was to make it through 1984.

‘I think about 12 million dollars would be okay.’

Jung Hyun-woo lowered his voice and said,

“The game industry is facing challenges, but considering our relationship with Activision, I’m willing to offer up to $5 million.”

$5 million was the amount he had authorized for Robert.

“Th, that’s!”

The Activision executives were aghast at Jung Hyun-woo’s offer.

“That’s an absurd amount.”

“Mr. Jung, are you trying to insult us?”

“Think again! Why do you think we flew all the way to LA to negotiate?”

“It has to be at least $10 million.”

Jung Hyun-woo remained unmoved, even as their voices rose.

“Didn’t I make it clear? We’re offering $5 million with Activision’s best interests in mind. If we waited for Activision to go bankrupt, we could acquire the game IPs for significantly less.”

Camille Henderson, unable to contain his anger, stood up abruptly.

“I refuse to negotiate with someone who speaks of bankruptcy.”

As he stormed out, the other executives followed suit.

“Mr. Jung, that’s incredibly rude!”

“Since you’re remaining silent, I assume Miss Hilton shares Mr. Jung’s sentiments.”

Jerome Nell, the CEO of Activision, didn’t attempt to stop them. He shared their outrage.

“Mr. Jung, I’ve heard some harsh words.”

Jung Hyun-woo responded with a respectful gesture.

“Mr. Nell, those who deny reality are destined to fail.”

Jerome Nell, considering himself a successful businessman, smiled condescendingly at the teenager’s advice.

“Those who deny reality… Time will reveal who is truly detached from reality.”

He was the last of the Activision executives to leave the room.

After they had all departed, Sarah asked Jung Hyun-woo,

“What are you going to do now?”

Jung Hyun-woo remained seated, unchanged from before the Activision executives’ departure.

“I should have dinner and rest.”

“Charlie?”

“Sarah, don’t worry. They’ll be back.”

Sarah frowned.

“After leaving like that, they won’t return, even if the company faces dire straits.”

She believed the Activision executives’ pride had been deeply wounded.

‘Even if the price is the same rock-bottom amount, they won’t sell to us.’

Jung Hyun-woo lowered his hands and stood up.

“If Sarah is correct, we’ll save $5 million.”

“Are you okay with that? Charlie was determined to secure those game IPs.”

“Later, we just need to acquire the Zero series IP [Intellectual Property, referring to the rights to the Zero game series].”

Jung Hyun-woo had no intention of acquiring Activision’s IP at a high price.

‘I’m not indifferent to the game industry, but now is the time to focus on JP Services and Bank of America.’

He didn’t think it was the right time to waste energy negotiating with Activision.

“How were the results today?”

Sarah asked, organizing the data.

“Results?”

“You fought three times.”

Jung Hyun-woo held up three fingers on his right hand.

“It seems like we won against Commodore, but I’m not sure about Bank of America yet.”

The outcome of the Bank of America negotiation would be decided tomorrow.

“One win, one draw? What about the last one then?”

Jung Hyun-woo sighed briefly.

“I don’t think we lost.”

“You maintained your pace despite the other party’s unreasonable demands?”

“Could you see it that way?”

Sarah made a gun shape with her right hand and said,

“Today is a winning series with two wins and one draw!”

Winning series.

A term commonly used in professional baseball when a team wins two out of three games against the same team.

‘She’s a Red Sox fan.’

Sarah was an avid fan of the Boston Red Sox, a popular Major League [MLB] team.

* * *

Chairman Carlo Giannini burst into hearty laughter after receiving a call from his granddaughter.

“Hahaha, they asked for $10 billion?”

“He was a very bold young man.”

Chairman Carlo Giannini tilted his head at Lyra Marine’s response.

“A young man?”

“Yes, I heard he just became a college student, but he looks even younger.”

“So, a CEO who is younger than you.”

Chairman Carlo Giannini was not one to underestimate someone just because they were young.

‘If he built a sizable company at a young age, his innate talent must be overwhelming.’

Overwhelming talent could never be ignored.

‘The most difficult thing to deal with in the world is heaven-sent talent.’

He wasn’t someone who disregarded effort. However, he believed that innate talent was necessary for that effort to shine.

“He was playing with Tony, even though he’s much younger.”

“Hmm.”

Chairman Carlo Giannini groaned softly at her words.

Tony Allen was the person he had chosen to assist his granddaughter.

‘Is his demeanor different when he’s working as a secretary versus as a manager?’

If he lacked the qualities of a manager, he would have to consider replacing him.

“To be honest, he was no match.”

“Is it that bad?”

Chairman Carlo Giannini couldn’t hide his disappointment in Tony Allen’s shortcomings. On the other hand, Lyra Marine seemed to have been strongly impressed by Jung Hyun-woo, as her tone of voice was high.

“I wish that kid was on my side.”

“You seem to like that boy quite a bit.”

“I liked his boldness? Or maybe I’m drawn to the fact that he doesn’t do what I want? Anyway, he seemed much better than Tony.”

Chairman Carlo Giannini asked.

“How about scouting that boy instead?”

Lyra Marine stuck out her tongue and replied.

“He’s difficult to even get a deal with. There’s no way he’d come over to our side.”

“What if Grandpa uses his power?”

“Grandpa, don’t overdo it for me. Your health isn’t good as it is.”

Chairman Carlo Giannini chuckled softly.

“Hahahaha, there are times when you take care of your grandpa.”

“Who else would take care of Grandpa if not me?”

Chairman Carlo Giannini had several grandsons and granddaughters, but he especially cherished her.

“We’re meeting again tomorrow.”

“And?”

“I’m going to try to lower the price.”

“Did they ask for a high price?”

Lyra Marine nodded and replied.

“They’re asking for 30% more than JPMorgan.”

“Isn’t that because JPMorgan started the business first?”

“Whose side are you on right now, Grandpa?”

Lyra Marine snapped, and Chairman Carlo Giannini scratched his head.

“I’m sorry.”

“We need to suppress JPMorgan for good this time.”

Chairman Carlo Giannini’s voice lowered.

“Lyra, our paths are different from theirs.”

JPMorgan and Bank of America.

Both were among the largest banks in the United States, no, the world, but their paths were different.

“You mean we shouldn’t be all about money like them.”

“It’s fortunate if you know that…….”

“I won’t ruin things because of greed.”

Chairman Carlo Giannini recalled the past and said.

“My father said, ‘Banks leave people behind, not money.'”

His father was Amadeo Giannini, the first chairman of Bank of America and a warm-hearted banker. Amadeo Giannini was always a banker who stood by the common people.

“Don’t worry. I won’t overdo it.”

Chairman Carlo Giannini nodded and replied.

“Lyra, always think of the customers first.”

He meant that if the deal would harm Bank of America’s customers, it was okay to give up. It was a statement worthy of Amadeo Giannini’s son.

* * *

9 a.m.

Jung Hyun-woo met Sarah and had a somewhat late breakfast.

“My mouth feels dry.”

“You must be tired since you had three meetings yesterday.”

“Sarah was there too.”

Sarah put down her fork and said.

“I was just listening.”

Jung Hyun-woo led the negotiations all three times. Of course, Sarah didn’t just listen as she said.

She prevented Jung Hyun-woo from going on a rampage during the meeting with Luke Bernard, and she emphasized the existence of JPMorgan to Jung Hyun-woo during the negotiations with Bank of America.

“Today’s meeting is at 12, right?”

“That’s right.”

At 12, it was common to have a meal together and talk. However, neither side seemed to have any intention of doing so.

“Where is the meeting place?”

“They’re coming here today.”

“The seminar hall?”

“They said it’s a suite?”

Jung Hyun-woo tilted his head.

“Is there a room big enough to have a meeting?”

“They said there’s a table where twelve people can talk together.”

The suite that Lyra Marine booked was not a typical suite with a small living room in the room. The suite she rented was a presidential room with over 200 pyeong [approximately 7,100 square feet], a kitchen, a large living room, and a conference room.

“There’s a big difference between that and our deluxe room.”

The deluxe room where Jung Hyun-woo and Sarah were staying was the most basic room in this hotel.

“They’re a chaebol [a large South Korean business conglomerate], after all.”

“And we’re a startup?”

Sarah smiled and replied.

“For now.”

She didn’t think it was the time to imitate a chaebol.

‘Once you increase your spending, you can never reduce it.’

It was her grandfather, not her father, who told her this.

3 hours later.

Jung Hyun-woo, Sarah, Lyra Marine, and Tony Allen met again in the presidential room.

“Hello.”

“Have you had your meal?”

“I ate breakfast late.”

“Same here. Shall we go straight into the meeting?”

Both sides greeted each other lightly and resumed the negotiations that had been interrupted yesterday.