Time moved into August.
August 25th, 1983—Sega's payday.
And on the 26th, the Block Tournament would begin.
Kentarō urged Tetsu Kobayashi, "Come on, come on, let's go to the bank together. I also need to check whether there are any issues with my account. And besides—let's see how much money you made!"
Tetsu Kobayashi straightened his Zhongshan suit. It made him look very much like a DK.
DK—Dragon Knight. Meaning: he looked like a dragon knight.
Dragon Knight Tetsu Kobayashi got in the car with Kentarō.
The driver remained silent as always, and brought the two to the bank.
Kentarō checked his account first and showed his balance to Tetsu.
"Ah, what can you do? Sometimes I really feel like money is just a cold string of numbers."
Kentarō rubbed his forehead and showed Kobayashi the long line of zeroes.
"I feel the same," Tetsu responded as he handed his own account info to the clerk for checking.
"Your account balance is…"
The clerk looked up at the two of them.
Kentarō rubbed his ears and turned toward Tetsu.
Tetsu spread his hands.
"You can still regret this, you know."
"Regret? Why would I regret? It's your money. It's not like I've lost the ability to make my own."
Kentarō nudged the clerk. "Go on."
"Yes. You have received a wire transfer from Sega… totaling five million, three hundred ninety-four thousand, two hundred twenty-two yen."
Shff!
Both Kobayashi and Kentarō snapped their heads up.
Tetsu was shocked at how little it was.
Kentarō was shocked at how much it was.
"Little?! It's not little at all! Don't forget you still have to pay taxes!"
Kentarō quickly did some mental math.
"Your studio isn't a corporation, and you don't have corporate status or a legal representative. So your taxes are collected as personal income: 23% + 5%. So ending up with this amount is completely expected."
When Tetsu heard this, he finally understood.
Right.
He had to pay taxes.
"No wonder everyone wants to avoid taxes! In the blink of an eye, a third of the money I worked so hard for is gone!"
Tetsu felt like crying.
Kentarō slung an arm around his shoulder and sighed.
"Don't worry. At the end of the year, you still have to pay an extra 10% of your total income. That's called resident tax. Everyone has it. Tokyo's rate is even higher, I think."
Tetsu searched his pockets and felt even worse.
Suddenly Kentarō straightened his posture.
"You know, now I actually think I made a mistake. I shouldn't have told you to register a studio. I should've told you to register a company. A studio pays individual tax. A company pays corporate tax. Under the studio system you'll pay as high as 45%. Corporate tax tops out at 36.8%."
That was true.
But back then, Kentarō also never imagined the game would sell this much.
He was more shocked that the game had sold tens of thousands of copies.
He originally thought a few thousand copies would be good enough just to encourage the kid!
Japan did have some reasonable tax-reduction systems, such as the Blue Tax Return System, where you could record all transaction details, calculate cost and income, and receive certain deductions.
But making games was not a business with fixed or easily calculated costs.
And there wasn't really any official framework to support it.
For example: Kobayashi had spent more than three million yen on equipment to develop Kobayashi Puzzle, but there was no way to account for the cost of his development time.
He didn't even pay himself a salary!
Kentarō nudged Tetsu with his elbow.
"If you're going to keep making games, find a time to convert your studio into a company. You can keep the same name, but its operating nature has to change."
Kentarō grew serious again. "And don't expand too fast! Many companies with real potential collapsed because of blind expansion. If you absolutely need people, try borrowing some outsourced staff from Sega first."
…
…
At Dixies Family Restaurant.
After bringing two glasses of ice water, the waiter quietly stepped away.
Yuji Naka held his glass with both hands, feeling a small knot of worry in his stomach.
He was, after all, technically a Sega employee.
Not a full-time employee, but still—leaving the office during work hours just to eat felt wrong.
"Isn't this kind of bad? It's work hours, and we're out here eating."
"Work requires eating too. Eating is part of working," Tetsu said. "Besides, we're discussing work right now."
He pushed a brown envelope across the table.
Fifty thousand yen—no more, no less—the buyout fee for the music rights.
Yuji Naka touched the thick envelope and felt a wave of relief.
His salary from Sega that month hadn't even reached this amount.
"Last month, the sales for Kobayashi Puzzle came in. Not bad."
Tetsu took a sip of his ice water and casually said, "Seems like it sold a few tens of thousands of copies."
"That's really impressive," Yuji Naka said honestly.
Tetsu continued. "SG's performance has improved too. I'm thinking of developing some new games. I've heard SG will soon adopt a new type of storage cartridge, which will increase the storage capacity. With that, we could make some larger-scale games."
"Large-scale" only within 2D, of course.
But compared to Tetris-type single-screen games, the scale indeed would be bigger.
Yuji Naka suddenly blurted out, "Then you'll need a lot of people, right?"
As soon as he said it, he regretted it and waved his hands. "Sorry!"
Tetsu sipped his ice water and didn't answer.
Yuji Naka grew anxious waiting for a response.
He couldn't hold it in anymore.
"Kobayashi-kun, the truth is… I really like making games. I have many hobbies. I like Ryuichi Sakamoto. I like electronic synthesizer music. I've played many games. I have a lot of ideas… very rich ideas…"
Tetsu replied, "Can you be more direct?"
"Direct?" Yuji Naka suddenly sat straight.
"Does Atlas Studio need me?"
Only then did Tetsu finally smile.
Need him?
Of course he did! He'd been waiting for Yuji Naka to take the initiative.
"Naka-kun, I think Sega is great, and you shouldn't give up such a promising job. But… I'll ask my father to speak with Sega and arrange for you to be outsourced to me. You won't get Sega's salary during that time, but I'll pay you accordingly."
Yuji Naka held the brown envelope, already determined.
A month at Sega had given him less than fifty thousand yen.
One piece of electronic music had brought him fifty thousand in royalties.
He desperately wanted to improve.
Tetsu smiled and began ordering food.
On the outside, they all looked like teenagers.
It was just that he happened to have a slight head start.
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