Chapter 42

After a round of hype, Dongfang Electronics was almost certain to succeed in the local sales of the new game console in Hong Kong, but the market in Hong Kong was ultimately limited. Li Xuan estimated that selling 500 arcade machines in the next month would be the limit.

In comparison, the markets in Taiwan and Southeast Asia were much larger, but Li Xuan had no plans to develop them himself. Instead, he still intended to hand over the distribution rights to Scarface Qiang.

These places were not comparable to Europe and America or Japan, where there was no well-established intellectual property protection system. If the official distribution channels were used, the tariffs plus the profits of various distributors would make the price of an arcade machine, when it reached the hands of the arcade owners, at least 15,000 Hong Kong dollars.

The average income levels in these regions could not compare to those in developed countries like Europe and America. Taiwan was a bit better, but such a high price was still too much for arcade owners.

This left a huge operational space for counterfeit factories. They did not need to develop new games themselves; they just needed to crack the popular games from other companies, just as Li Xuan's Keji Company had done before.

Although the quality of the game machines was inferior to the original arcade machines, they had the advantage of being cheaper. Li Xuan, who had started with piracy, naturally would not leave such an opportunity for others.

He had made full preparations from the beginning of the new game development, paying special attention to anti-cracking of game data during the development process. He even added a control chip with a self-destruct program to the circuit board design, significantly increasing the difficulty for pirates to crack the games.

However, as the saying goes, "When the way is high, the devil is higher." Li Xuan did not delude himself into thinking that these methods could completely prevent others from pirating Dongfang Electronics' games. His approach only slightly raised the technical threshold, and skilled technicians could still solve these problems.

Therefore, the key to completely eliminating piracy was to make it unprofitable for pirates. Li Xuan set the wholesale price for Scarface Qiang at 7,000 yuan per machine. Through the smuggling channels of the He Tang, he aimed to control the price of the game machines in arcades to below 10,000 Hong Kong dollars.

This way, other counterfeit arcade factories would have to set even lower prices to compete with Dongfang Electronics' original arcade machines, effectively squeezing their profit margins.

This was the best method Li Xuan could think of to develop immature markets. This was not just a challenge for Dongfang Electronics; it was also a common issue for large game companies like Sega, Taito, and Atari. Li Xuan had previously taken advantage of the lax intellectual property protection in Hong Kong to quickly accumulate his first pot of gold.

Even thirty years later, this issue remained a significant challenge for many large companies in Europe and America. For example, Microsoft, in the Chinese market, could prevent software piracy in the whole machine sector by forcing computer manufacturers to pre-install Windows. However, in the assembled machine market, it could only watch and urge the Chinese government to strengthen copyright protection each year.

While Li Xuan's colleagues in Hong Kong were enjoying the victory, Li Ning was driving around San Francisco with three subordinates, far across the Pacific in California.

Although the Western Electronic Show was not opening until January 3rd in Mountain View, Li Ning had been sent to San Francisco by Li Xuan before Christmas to do some preliminary reconnaissance. He and the other three employees packed two sets of arcade machine parts and flew directly from Hong Kong to San Francisco.

In the first few days after arriving in San Francisco, the four of them worked separately, driving around various cities in the greater San Francisco area. They stopped at all places where arcade machines were placed, such as grocery stores, supermarket entrances, bars, cinemas, and gas stations, to gather information.

From the owners, they learned about many arcade distributors. Li Ning then contacted these secondary distributors, collecting a large amount of information about the arcade machine sales industry. Most importantly, he obtained the information of their superiors, several primary distributors.

Next, Li Ning did something Li Xuan had recently done: he contacted the owner of a supermarket in a densely populated area. The owner, named York, had a store in a small town called Daly City, located in the southern suburbs of San Francisco. Daly City was a middle-class town with a population of 100,000.

Li Ning placed the two newly assembled "Tank Battle" and "Hong Kong Blocks" arcade machines at the entrance of York's store for players to try out, with all the revenue going to York.

Unlike their counterparts in Hong Kong, these new arcade machines had no shills, no newspaper soft articles, and no team behind them for planning and promotion. They could only rely on the charm of the games themselves, their interesting and solid playability, to gain popularity through word of mouth among players.

At the same time, Li Ning began actively contacting the owner of the largest arcade distribution company in the western United States, Cousins Entertainment, Mr. Tony Cousins. Li Xuan also finally boarded a flight to the United States before New Year's Day.

"Brother Ning, you've worked hard!"

Li Xuan came out of the arrival gate and met Li Ning, who had come to pick him up. After not seeing each other for over ten days, Li Xuan noticed that Li Ning looked much more haggard, and he could guess how hard Li Ning had been working in the United States, which moved him.

"Hehe, Young Master Xuan, just give me a big red envelope as a year-end bonus!" Li Ning said with a smile.

"How did the talks with Cousins Entertainment go?"

Before boarding the plane, Li Xuan had his last phone call with Li Ning, during which Li Ning said he was preparing to meet the owner of the largest arcade distributor on the West Coast, Cousins Entertainment. Therefore, Li Xuan was most concerned about the outcome of this meeting after landing.

"This time, I experienced what it means to be treated with initial arrogance and later respect, just like the managers of record companies in Hong Kong!" Li Ning, who had previously played in an underground band and tried to develop a regular commercial career, had been rejected by Hong Kong record companies several times, and still harbored resentment.

"My initial plan was to assemble the two game machines and directly transport them to Cousins Entertainment, as you, Young Master Xuan, said, 'actions speak louder than words.' Our company relies on the quality of our games!

But those Americans were too infuriating. I had already made an appointment with their boss in advance. When we arrived at Cousins Entertainment, a big-buttocked, fat woman at the front desk said that their boss was playing golf with an important client and had no time to see me.

She told me to talk to another sales manager, who didn't even let us unload the game machines. He only listened to me describe the two game machines, one a tank shooting game and the other a block puzzle game, and then directly rejected us!

I was really angry. Later, you said on the phone that you were planning to set up trial play sessions in cinemas in Hong Kong. I thought this was a good idea, so I decided to find a high-traffic grocery store to try it out. Once our arcade machines gained some popularity, I would go back to these distributors.

At first, our two game machines, along with a game called 'Little Bee' and another called 'Balloon Pop,' didn't attract much attention. But from the second day, many people started to try them out. By the third day, there was a queue, and on the fourth day, which was a weekend, the line was even longer!

So I rented a Polaroid camera, took some photos, and then went to Cousins Entertainment. The next day, they called me, and their attitude had completely changed, becoming so enthusiastic that it was unbearable!"

Li Ning walked out of the airport, recounting his experiences in the United States to Li Xuan, who was walking beside him.

PS: Everyone, who in the book review section can tell me which "Old Wang" recommended my book, making my collection increase by 200 this morning? I want to dedicate my chrysanthemum to him, hahaha!

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