by Vinh Trieu (Administrator)

To all readers: Please note that the SNK/Sammy information below was received from a Sammy, not an SNK employee.

The beginning of a revolution...

Any moderately experienced person in the gaming industry would know the one main element in a formula to produce a successful gaming system...software. Without it, the hardware would be just that, a piece of hardware.

Unless you lived under a rock in a cave somewhere, you must've at least come across a post, article or heard rumors from friends of what's been going on lately with mergers/IP takeovers involving some large video game manufacturer/developers.

As the article title claims, Sammy has made some bold steps in ensuring it's top position in the arcade gaming market. Having developed it's famed and Naomi based hardware system, The Atomiswave, a few years back, Sammy has found itself on a stranded island with nothing around to support itself. With little or no third party support of it's hardware, operators, fans, and Sammy see their mighty Atomiswave on life support.

Atomiswave Image Courtesy of Toby at (http://www.system16.com)

Despite employing former Capcom and SNK employees, development of new titles would mean years and years of programming, feedback from it's fans and a large sums of cash invested without assurance of profitability. With the given situation of the arcade markets worldwide, it is difficult (not profitable in $$ terms), even for a cash cow that Sammy is to take years to build it's own franchise(s). This is the step Sammy had to take thus far, developing titles such as Dolphin Blue (which has been in development for at least 2 years, Metal Slug type shooter), Demolish Fist (3-D Final Fight style beat 'em up), Maximum Speed (Driving), Sushi Bar and a few other titles, which Sammy has only seen moderate success. Sammy is aware that the only way to be "King of the Hill" is to play Bill Gates and gobble up what they need, licenses from companies that have had a proven and successful track record, not just acquisition of mediocre IP's (Intellectual Properties), but obtain valuable and recognizable IP's that will take their hardware to the next level.

So where do they start? Well, as reported by Replay Magazine (www.replaymag.com):

"SAMMY BUYS LARGE STAKE IN SEGA

(posted Wednesday, December 10, 2003 -- 10:30AM)

Sammy Corp. bought over 39 million shares in Sega last month in a $420 million deal that effectively passes control of the company from information services firm CSK Corp., who sold the shares, to Sammy. Earlier this year, the companies had announced plans to merge their operations, but that deal fell apart over a number of disagreements, one of them apparently being price. ``CSK wanted to do whatever possible to get the highest price for Sega, so it really didn't work out then,'' Sammy topper Hajime Satomi told Reuters in an interview. ``But I told CSK to come to me first when it really wanted to unload Sega.'' According to the Reuters report, Sammy paid 1,158 yen for each Sega share, representing a 13 percent premium to Monday's closing price. Satomi told reporters that the stock acquisition was one of the avenues he began to consider after the traditional merger talks collapsed. ``I can't imagine this happening, but if our vision does not agree with that of Sega then we might have to consider taking more shares,'' Satomi went on to say in the Reuters interview while characterizing Sammy's relationship with Sega as friendly. Satomi, who is expected to soon join the Sega board of directors, said one of the biggest benefits of joint cooperation between the companies will be the ability to leverage Sega's library of video titles for the coin-op game system launched last year, Atomiswave."

For months, possibly longer, Sega and Sammy were under heated negotiations on a possible merger; however, with negotiations breaking down as of late, Sammy's last resort was to simply purchase a majority stock share within Sega.

As gamers have known for years, Sega's Arcade line-up has been possibly the most dominant force in the arcade gaming arena, mostly well known for it's 3-D Driving Sims. This "acquisition" gives Sammy the loaded weapon they've thirsted for. One would think having Sega's arcade firepower would suffice in elevating Sammy beyond leaps and bounds, but does it end there? Nah, if it did this article would be completely unnecessary.

So before Sammy's quest of control over Sega, they already were already shopping around for any third party help they could get, not necessarily taking over other companies, but merely just either acquiring or licensing some IP's. Enter in Capcom. Capcom, known for cross licensing characters from Marvel and SNK, pulls out a helping and allows Sammy to license it's characters, which we and fighting game fans from all over would agree gives Sammy the boost for arcade market share. So the result now, as we know it will be a Sammy vs. Capcom title to be programmed and released by Sammy.

Acquire rights to Capcom's Street Fighter Characters, then take over Sega....Sammy should be satisfied, right? Not!!....three's a charm.

Both SNK Playmore and Sammy had officially announced an agreement to release a version of King of Fighter on Sammy's Atomiswave. At the time of this negotiation (September 2003), that was the only title SNK Playmore would allow Sammy to create, but in this struggling video game business, things change. And oh, this change is going to be huge.

We consider SNK Playmore's IP's more valuable than Capcom or Sega's. Now, before you start pouring the emails down my throat, take a step back and give it some thought. The name of the game is clear cut, cha-ching, profit. Unless you're the ARC (American Red Cross), not only do you make games from the goodness of your own heart, but you also want to make some money. Pretty logical, I'd say.

(Edit 01/20/04): Out of respect Sega and Capcom, we need to make ourselves clear on the statements below. Our whole theory on this IP issue is, with Sammy's position, with the IP's they're receiving from Sega, Capcom and SNK Playmore, which would benefit them most when ported over to the Atomiswave? So our theory/explanation is below. This little detail we left out portrayed us in a different light, which we have corrected.

Furthermore, what we have been able to confirm is that NOT ALL the IP's will be sold. Some titles will remain the property of SNK Playmore, so this leaves an opening for future plans. The IP's that are going to Atomiswave for sure are King of Fighters, Metal Slugs and Samurai Shodown series. The rest, we'll just have to see. (End of Edit 01/20/04)

Now that we've gotten our philosophy across, let's take a look at each of the big wig's more popular titles individually:

Capcom's more popular franchises: 1) Street Fighter Series, 2) Megaman Series, 3) Biohazard/Resident Evil Series, etc.

(Edit 01/20/04): The Versus series for Capcom is discounted, since Capcom has the rights to Marvel characters. Sammy cannot license Marvel characters through Capcom, hence I did not put them on the list above. (End of Edit 01/20/04)

And now, Sega's: 1) Virtua Fighter Series, 2) Driving Sims (numerous ones), 3) Sport Sims, etc.

Finally, SNK Playmore's: 1) King of Fighters Series, 2) Metal Slug Series, 3) Samurai Shodown Series, 4) Fatal Fury Series, 5) Art of Fighting Series, 6) Last Blade Series, 7) Super Side Kicks Series, etc.

Now, we're not comparing quantities here. Take a closer look at the titles and more importantly, the Arcade potential of each title.

With Capcom, you're pretty much limited to the SF characters/series, which has so far, been the only true and proven success for them in the arcades. Keep in mind that we didn't count their Versus series, since the IP's in them are not soley theirs, but licensed from Marvel. Megaman has been tried and tested with different coin-op versions, with little success. Let's beat the dead horse one more time and just say, the arcade market is on life support, hence Capcom has geared all their efforts in the home market and not in the arcade sector, which has been the case for the past few years.

Sega's arcade titles are even tougher to make a buck. If you've ever wondered how much each of those driving sim arcade set ups cost, er, it's expensive, some over $10,000.00 USD. As an arcade operator, seeing black numbers (profit) from an investment like that would take months, possibly years, possibly never. Let's not talk about Virtua Fighter, please. We love Sega as well, but you've come to the 2-D site, so you know how we feel about 3-D Fighters. Looks great, but doesn't play particularly well, hence hasn't performed well. So despite the graphical advanced games Sega has produced, their business model for it's arcade market isn't geared towards the smaller arcades, which dominates the market, but the larger ones that have been struggling and year after year have been more cautious of it's larger purchases, hence, would buy less of the more expensive Sega set ups.

So finally, from the King of the Hill, Sammy, we have the King of the IP's, SNK Playmore. If I ever win the lottery (75 Million in USD will do), I'd first leave the wife, pick up some of those SNK Tokyo game show girls, then purchase SNK Playmore's IP's over any elses (in the gaming industry), that is. Okay, maybe pick up IP's first then the other two....

Here's the reasons why:

1) King of Fighters Series, 2) Metal Slug Series, 3) Samurai Shodown Series, 4) Fatal Fury Series, 5) Art of Fighting Series, 6) Last Blade Series, 7) Super Side Kicks Series, etc.

Yes, it's a repeat. Simple fact: These titles make money in the arcades, year after year. These names are recognizable worldwide, it's character IP's are extremely popular and well known. SNK (now SNK Playmore) has done one thing right that many arcade companies have not, created numerous successful franchises, while most other companies struggle and leave the market with only 1 or 2 franchises under their belt. To reiterate, if SNK keeps pumping out KOF's every year, there must be a market for this title then, huh? Despite what the majority may think, and personally, I didn't know this myself until I read and heard that the core of the KOF fans are those in Mexico. Market research shows that Mexico and South America have more Neo Geo hardware boards/software games than all of the other countries combined, which includes Japan and the U.S. Furthermore, development of fighting games doesn't mean new set ups have to be built (like Sega's games), so it's in the cost range of the smaller arcade operator.

There are two views to the titles SNK/SNK Playmore has produced. It's true their hardware is older than Yoga, and well under the industry standard, but unlike more graphically appealing titles, Neo Geo titles have made more money for them, year after year. Gamers laugh at the Neo for it's outdated graphics, aging hardware system and followers, but the simple fact is, arcade operators love the Neo, and to some it may be a big surprise, but the Neo has one of the largest followings worldwide, simply from it's Hispanic fan base alone.

So getting down to the nitty gritty, an official announcement has not been made yet, but from our sources, the tentative deal between SNK Playmore and Sammy is the sale of SNK Playmore's IP's (within the arcade sector) and NOT a merger. Sorry folks, SNK Playmore doesn't go down that easily. As SNK Playmore announced a few days back with it's stand-off-ish approach with the arcade market and focus towards Pachinko gaming, Sammy will be producing more than just the King of Fighters for it's Atomiswave system.

At this point, what we know is that this deal is for the coin-op titles only, so SNK Playmore will still have full control over it's home market, which means SNK NEOGEO USA Consumer will still be in operation under SNK Playmore. It's possible (we don't know yet) SNK Playmore will continue it's MVS run with limited titles, but at this point, unless they find a method of 100% copy protection for it's games (we know a company that can guarantee their games full copy protection for two years, but who's listening?), we see it as unlikely or to more appropriately put it, frivilous for them to continue to produce PCBs/MVS carts that are easily dumped.

The reasoning is simple. SNK Playmore is getting hammered with the bootleg market. With boots coming out a week after the official release, it's tough/impossible to see a profit when parallel boards are selling for 1/4 the price of the authentic product. So instead of losing money quarter after quarter, selling their IP's (Coin-op only) to Sammy is a smart and timely move. If anything, SNK could make an agreement (this is not written in their contract as it's my opinion here) with Sammy to allow them to release KOF's, Metal Slugs, etc. to the arcade market, while these same titles (under the control of their home division) can port/release them on the high powered home systems, which would be highly cost effective and in return, bring SNK Playmore back to it's promising NES days as a third party supporter.

This business plan/deal SNK Playmore has with Sammy will pay off more (for SNK Playmore) than they may realize. If the deal is for Sammy to release coin-op and allow SNK Playmore to retain rights to port these over to home consoles, the cash cow is only going to get fatter for them. Pumping out games on the MVS, only to later try to port them over to the PS2, X-Box simply won't cut it. Having Sammy develop the games on Atomiswave (Naomi based, high powered Dreamcast) would enable the top notch graphics it's fighters and shooters have long deserved all these years, and these titles WILL be successful on the PS2, XBox and future next gen systems.

To Neo MVS/AES fans, there are a few titles that are confirmed to be released beyond what has been announced officially, but as to how much longer the MVS will run is beyond our knowledge and also dependent on the day to day/month to month situation of how "things" turn out. If all arcade titles are to be produced exclusively for the Atomiswave, well, that answers the question for the AES fans.

At face value, this may not seem like such a huge acquisition, but to give you an idea of what value IP's hold, well, it's the backbone of any company, especially SNK Playmore's. Look at Marvel. A few years back, they were in the process of filing for bankruptcy. And today, ahem, their IP's are the most sought after in the movie industry. We see SNK Playmore in a similar position and time will tell how this will pay off for Sammy. The hardware is there, the tools are there, now it's all about the games. Bring it on!! we say. Bring it on!!

The clock is ticking and SNK Playmore realizes it. The inevitable will happen.

We're guessing an official announcement with full details to be made at an upcoming show in Japan. The next big show in Japan is in February which is the AOU. So we'll wait and see what happens.

So hail to Sammy for it's quest to resurge the arcade biz and congratulations to SNK Playmore (for it's victory over Aruze).

Dreams do turn into reality.