Atari's management and Nolan Bushnell naturally had no idea that the Atari VCS would experience a massive sales boom the following year. Otherwise, they would never have offered Lin BaoCheng such generous terms.
A guaranteed 20 million USD was already an extremely high offer for Atari.
The reason Atari made such an offer was their internal judgment: porting Hong Kong Blocks to the VCS would greatly boost console sales. And once VCS sales rose, Atari could earn even more from other game cartridges.
Even with a 20% revenue share on Lin's two games, Atari would still profit — just less than from other titles.
"I'm sorry, Mr. Bushnell, but I still cannot agree," Lin BaoCheng said, shaking his head. Galaxy Games' console was already in development. Even if it wasn't finished next year, by 1980 it would be ready.
Licensing the games now might earn him 100 million USD or more in the short term, but it would strengthen Atari. That would make defeating Atari's console later far more difficult.
Compared to short‑term profits, the long‑term gains from Galaxy's own console were far greater. This was a critical strategic layout, and Lin could not afford mistakes.
"Why, Mr. Lin?" Bushnell asked, baffled. In his view, Atari's offer was already extremely high. Lin had no reason to refuse.
"Mr. Bushnell, I admit Atari's terms are excellent. I was tempted. But I must refuse."
Of course, Lin couldn't reveal the real reason — that he was developing his own console. He offered another explanation instead.
"Mr. Bushnell, you know Hong Kong Blocks and Pac‑Man were developed just last year. They've already been exclusively licensed to several companies. If I now authorize Atari to sell them on home consoles, it would severely impact arcade sales and harm my distributors' interests."
"My arcade machines are selling very well. I cannot sacrifice distributor profits for short‑term gain. If I did, no distributor would want to work with me in the future. Even if I found new ones, profits would be far lower."
This wasn't entirely an excuse. Even if Galaxy's console launched before summer 1980, Lin wouldn't port these two games. He would develop new titles instead.
Arcades had a golden sales window of three to five years. Lin intended to protect distributor interests for at least three years, maintaining strong partnerships.
Bushnell countered: "Mr. Lin, the Atari VCS is a home console, not an arcade machine. Your exclusive licenses should only apply to arcades. Authorizing us wouldn't violate contracts."
"This isn't about contracts," Lin replied firmly. "It's about protecting distributors and maintaining the system. That way, future games will be accepted immediately, earning me more profit."
He paused, then added: "Put simply, 20 million USD is a lot, but maintaining my distributor network is worth more. Unless Atari offers terms I cannot refuse — at least several times higher — I won't agree. And I doubt Atari can offer that, right Mr. Bushnell?"
"Multiples of 20 million? Impossible," Bushnell admitted, shaking his head. Even a 50% increase was out of reach. The current offer was already the maximum Warner, Atari's parent company, would allow. Developing the VCS had cost about 100 million USD. Paying 8 million for two licenses plus high cartridge royalties was already extreme. Warner would never approve more.
Bushnell, unwilling to give up, tried again: "Mr. Lin, won't you reconsider? 20 million USD is already a fortune!"
"I'm sorry, Mr. Bushnell," Lin said firmly, shaking his head. He refused to leave any hope.
Seeing Lin's determination, Bushnell realized Atari could not offer better terms. Further persuasion was useless. After a few polite words, he rose to leave.
Lin and Isabella escorted Bushnell and his secretary out, then returned to the office.
Isabella hesitated: "Boss, that was 20 million USD. Isn't it a pity to give it up?"
Lin replied seriously: "You know Galaxy is developing a console. Atari will be our competitor. Strengthening them is unacceptable, even for 20 million or more."
"I understand, Boss. I just felt it was a shame," Isabella said, nodding.
Lin nodded back: "I just thought of something. Atari and Fairchild Semiconductor have many console engineers. See if you can recruit some to Hong Kong for Galaxy. Offer higher pay if needed."
This idea had just occurred to him — poaching talent could accelerate Galaxy's console development.
"I'll try, Boss, but I can't guarantee success. These engineers are well‑paid, and many won't want to move to Asia. To Americans, Hong Kong is a remote place."
"Do your best. But remember, leadership must remain with Yokoi Gunpei. Unless you recruit truly heavyweight talent, everything stays under his management."
Lin valued Yokoi Gunpei's ability highly. Unless extraordinary talent was found, he wanted Yokoi to remain in charge, ensuring the console matched his vision.
"I'll note that, Boss," Isabella said.