As July approached, Capcom's financial situation continued to deteriorate.
The blame for this lay squarely on Kobayashi Tetsu, though he was truly innocent in the matter.
To accelerate the development of Demon Tower for arcade release, Kobayashi Tetsu had directly caused a further spike in the procurement costs of arcade cabinets this year. However, since Capcom hadn't yet developed its own cabinet, it was forced to purchase the now more expensive motherboards and then develop games for them.
This exacerbated Capcom's already dire situation, adding insult to injury.
According to an unnamed Osaka-based employee, Tsujimoto Kenzo had already called three times to request a loan.
Kobayashi Tetsu stood up and stretched his shoulders.
It's time to go to Osaka and meet Tsujimoto Kenzo face-to-face!
In truth, Kobayashi Tetsu estimated that Capcom could likely survive until the end of the year, but he decided to act sooner rather than later.
In July, Kobayashi Tetsu arrived at Capcom's Osaka headquarters.
Upon their reunion, Tsujimoto Kenzo appeared noticeably more dejected than before.
"President Kobayashi, if this is about the previous matter, we can discuss it. But if you have other ideas, please leave."
Tsujimoto Kenzo forced himself to sit up straight, trying to appear less defeated as he faced Kobayashi Tetsu, maintaining a confident demeanor.
Kobayashi Tetsu shook his head.
"Mr. Tsujimoto, we both know Capcom's current predicament. Wouldn't it be better to find a reliable partner instead of fighting alone?"
Tsujimoto Kenzo stared intently at Kobayashi Tetsu, his eyes bloodshot.
"How can I trust Atlas to be a reliable partner?"
Kobayashi Tetsu shrugged.
"Based on this."
Seeing Kobayashi Tetsu's gesture, Tsujimoto Kenzo said, "Based on your fingers?"
Kobayashi Tetsu shook his head.
"Based on yen."
Yen brings people together.
"I have three proposals for you to consider: two investments and one acquisition."
"Proposal one: Atlas will take a stake in Capcom and provide a 200 million yen interest-free loan, repayable in installments."
"Proposal two: Atlas will invest 500 million yen in Capcom, becoming its largest shareholder. I know Capcom isn't publicly traded, but it must have internal equity. What I want is controlling interest—66% of Capcom's shares held in Atlas's name."
"Proposal Three: Atlas will acquire Capcom in full, including all assets under the Capcom name—creative works, inventions, employees, everything."
The proposals grew increasingly radical, a deliberate arrangement by Kobayashi Tetsu.
Tsujimoto Kenzo didn't reject the offer outright; he was genuinely considering it.
Tsujimoto Kenzo had experienced failure before. Capcom itself was the result of his second venture after being forced out of his previous company. If truly cornered, he might accept such terms.
What he wasn't sure about was whether Capcom could hold out any longer.
Kobayashi Tetsu tapped his fingers rhythmically on the table like a clock's pendulum, subtly exerting pressure.
Then, as if casually, he dropped a bombshell:
"The development of the mainframe platform... that must be burning through funds, right?"
Tsujimoto Kenzo's head snapped up, his bloodshot eyes widening.
"President Kobayashi! How do you know—?"
Kobayashi Tetsu remained silent.
Tsujimoto Kenzo's lips twitched like a patient's, his mind racing as his heart pounded.
Could there be a mole within Capcom?
That was the only explanation Tsujimoto Kenzo could fathom. Otherwise, he couldn't believe how President Kobayashi could possibly know about their secret project!
From there, it was possible to deduce other nonexistent things.
The darker Tsujimoto Kenzo's expression grew, the more relaxed Kobayashi Tetsu's expression became.
Finally, Tsujimoto Kenzo sighed.
"Alright, since you already know everything, I have nothing to hide. Capcom's business operations have always been solid, but hardware development has nearly crippled us. The development timeline for the arcade motherboard we're currently working on is hopelessly delayed, and I can't guarantee its success. This funding commitment could last for years. While Atlas could achieve full ownership of Capcom, the cost would have to be borne by Atlas. Are you certain you want to proceed?"
Kobayashi Tetsu smiled.
Why not?
He knew that CPS1 was successfully developed in 1987 and officially deployed in 1988, with the first compatible game released.
But that progress was made under Capcom's resource constraints.
With sufficient funding and manpower, development could be accelerated before diminishing returns set in, potentially even matching the timeline for Street Fighter I.
"Mr. Tsujimoto," Kobayashi Tetsu said, rising and extending his hand.
"Before the legal team arrives, let me reiterate my terms: You remain the President of Capcom, Capcom will not change its name, and it will not become Atlas's third development department. You can keep everything in Osaka. In principle, Atlas will not interfere with Capcom's operational policies, but some game development projects will require Capcom's cooperation."
Tsujimoto Kenzo felt a strange sense of relief. He suddenly realized that these terms weren't as stringent as he'd feared.
The two shook hands and walked out of the office.
"Would you mind showing me the main board Capcom is developing?"
"Of course, please!"
As they walked out of the building, they were greeted by a visitor.
Caught slightly off guard, the visitor recognized Kobayashi Tetsu first.
"Atlas... President Kobayashi!"
Kobayashi Tetsu looked thoughtful. "And you are?"
The visitor, impeccably dressed in a suit, wore an uneasy expression.
"I'm from Namco."
As Namco's representative, he had come to assess Capcom's situation. Having developed several arcade games, Capcom had long been on Namco's radar. Before Capcom grew too large, Namco had considered acquiring the company on multiple occasions.
Of course, history had taken a different course: Namco was later acquired by Bandai, while Capcom maintained its independence.
Kobayashi Tetsu couldn't help but chuckle mockingly. "Namco arrived too late. You can go back and continue your Iron Plate Formation."
As Kobayashi spoke, he glanced at Tsujimoto Kenzo, who immediately understood the implication. "Capcom has already reached an acquisition agreement with Atlas. Please see yourself out."
The Namco employee was practically beside himself.
They had come all the way to Osaka, only to arrive a step too late?
Of course, it couldn't be called "late," only "unlucky." Namco had merely come to gauge Capcom's situation, and any serious acquisition talks wouldn't have been possible for at least another month.
Even if they hadn't encountered Kobayashi Tetsu today, the outcome would have been the same.
Still, the bitter taste lingered.
Especially with Kobayashi Tetsu standing beside Tsujimoto Kenzo, his amiable smile making him seem like a devil incarnate.
In the end, all the pent-up frustration boiled down to a long sigh. The Namco employee bowed deeply and turned to leave.
"Go ahead," Kobayashi Tetsu said, raising his hand. "Let's see the mastermind behind Capcom's downfall."
Tsujimoto Kenzo couldn't help but chuckle inwardly at the thought of what he was about to show Kobayashi Tetsu.
He was free now, unburdened. It was time for CPS1 to crush Atlas!
He doubted Kobayashi Tetsu could keep pouring in infinite funds until CPS1 development was complete!
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