A/N : A "Small Goal" is 100 million.
"An exclusive licensing fee of five million dollars, plus fourteen million for ten thousand arcade units—that's a total cost of nineteen million dollars."
"Atari's top-selling arcade machines in the U.S. currently retail for as high as $2,500 each, around $800 higher than the lower-end ones at $1,700. That difference is mainly brand premium. Still, even lesser-known machines can fetch up to $2,200."
"We've observed Hong Kong Blocks in several arcades here in Hong Kong—there's a constant stream of players. According to survey results, players unanimously praised it, and people of all ages enjoy it."
"Let's assume we don't sell at Atari's top price but at the market low of $1,700. That's still $300 profit per unit."
"Excluding the $14 million purchase cost for the machines and other small operational costs, our only major expense is the $5 million exclusivity fee. That means we can break even after selling fewer than 20,000 units."
"In today's domestic market, any halfway decent arcade game sells at least 50,000 units per year. Given how popular this one already is, it's entirely possible to hit that mark."
"Besides, we're assuming the lowest price of $1,700 per unit. But in reality, we can easily sell them for $2,000. That's $600 profit per unit—after the first 10,000 units, we're already in the green."
"Even if our predictions are off and the game isn't as big as we hope, as long as we move 10,000 units within five years, we won't lose money. It's worth the gamble."
"What do you think, Uncle Tony?"
On the notepad were neat rows of estimated figures. The more Phil Smith looked at them, the more excited he became. The arcade machines from Hong Kong were surprisingly cheap—far cheaper than what they paid Atari or other companies. More importantly, those companies only gave them regional licenses covering a few states, never nationwide exclusivity.
"If your calculations hold up, this deal could make serious money," said Tony Brown with a chuckle. "I almost want to take the agency myself. But remember—the key is whether the game really catches on. Your test group loved it, sure, but that's a small sample. Once you roll it out nationwide, who knows? If sales stumble, you could lose tens of millions."
"Uncle Tony, you know I love this industry—and I love games. I truly believe this one won't disappoint me."
Phil knew exactly what Tony meant. He had turned down his family's traditional businesses and received a $50 million "separation fund" from his father. If he lost that, he'd be forced to live off the family trust—enough for a comfortable life, but never enough to control real capital again.
He'd already spent over $10 million buying an old distribution firm. If he lost another ten million here, he'd have less than half of his fortune left.
Having made up his mind, Phil turned to Lin Baicheng.
"Mr. Lin, I'm willing to pay five million dollars for five years of exclusive North American distribution rights—and I'll place an initial order for ten thousand units."
"Happy cooperation, Mr. Smith!"
Lin stood up, delighted, and extended his hand.
"Happy cooperation!"
They shook hands, both beaming.
Once seated again, Lin said, "Mr. Smith, regarding payment terms: the exclusivity fee must be paid upon signing. For the machines, 50% of the payment is due after signing, 20% upon receiving the shipment, and the remaining 30% one month after delivery."
"No problem," Phil agreed without hesitation.
Lin continued, "One more thing—our earliest delivery window is in three months. I should tell you that upfront."
"Three months? Isn't that too long?"
Phil frowned. "Mr. Lin, can't you move the delivery up a bit?"
Lin shook his head. "Mr. Smith, shipments go out based on order dates. Taidō Corporation and others placed their orders earlier, so we have to fulfill theirs first."
"Hmm…"
Phil paused to think, then said, "Mr. Lin, what if I pay the entire amount upfront after signing?"
"In that case," Lin replied after a brief mental calculation, "we could begin shipping in as little as two weeks, and all deliveries would be completed within a month after that."
Phil didn't even hesitate. "Deal."
He was already betting big on Hong Kong Blocks—he didn't mind betting a little bigger to get an early start.
Lin couldn't have been happier. After doing some quick math in his head: aside from the $5 million licensing fee, he'd earn around $8 million in profit on the 10,000 units.
Bulk purchasing had lowered his component costs to around $600 per complete machine. That was about as low as it could go—he'd need a 50,000-unit parts order to drop it further.
All told, it was roughly $13 million in profit. Converted to Hong Kong dollars at an exchange rate of 1 USD = 4.2 HKD, that was nearly 55 million HKD.
One deal—half a hundred million in revenue.
After the verbal agreement, Lin called in his lawyer to draft a contract using the Taidō deal as a template.
Phil's own lawyer, Tony Brown, reviewed the terms and confirmed everything was in order. Phil then signed the document and stamped it with his company seal.
With that, the contract was official. Phil immediately contacted Los Angeles, instructing his finance department to wire $19 million to Xinghe Games' Standard Chartered Bank account.
International transfers took time, and since Phil wasn't leaving Hong Kong immediately, Lin personally accompanied him to visit Hong Kong's famous landmarks.
They were of similar age and both eager to make a friend in the other. Before long, they were on a first-name basis—whether they'd truly become friends, only time would tell.