I always wondered this... or is this another one with an indefinite answer?
Responses (5 total)
1. The concept of "likeness rights" is quite different between the Japan and the U.S. (specifically, the U.S. is much more strict). Therefore, the boxer character of "Mike Bison" would clearly cause legal problems for Capcom in America.
2. At around the same time, some Capcom USA execs expressed concern that "Vega" would feel like too feminine of a name to Western audiences, and wouldn't be appropriate for the game's final boss character (the dictator). They felt that the name "Vega" would be more appropriate for the somewhat androgynous Spanish clawed character.
Therefore, those three characters' names were rotated. "Mike Bison" (the boxer) became "Balrog," "Balrog" (the clawed fighter) became "Vega," and "Vega" (the dictator) became "M. Bison" (which would be retconned to stand for "Master Bison.")
"In Japan, the character of Balrog is named M. Bison, with the letter being an initial for "Mike", and is intended as a parody of real-life boxer Mike Tyson. However, when the game was to be ported for worldwide audiences, under the suggestion that the character's name and likeness resembled Tyson to the point of infringement, the developers rotated the names of three of the boss characters for the English localization. As they felt the name Vega was better suited for the Spanish bullfighter, they gave him the character's previous name, Balrog, and changed the name of the game's final boss to M. Bison. In Street Fighter Alpha 3, Balrog tells some of his defeated opponents that he's going to "bite [their] ear off", a reference to Tyson's infamous "Bite Fight" with Evander Holyfield."
Japan has much much more lax copyright and parody laws than the US does. Balrog was clearly meant to be based upon Mike Tyson and he was given the name of M. Bison. This was fine for the original Japanese release, but as soon as they thought about bringing the game out in America, they realized they had a problem and that the name and likeness to Mike Tyson was too close. Tyson himself had his own licensing deals in place, so any company that wanted him in the game would have to get those rights.
Do you decide to pay thousands upon thousands of dollars to pay for the likeness rights to the real Tyson? No, most game companies will go the cheaper route, which in this case was just swapping the names around.
Rick Hurst is correct.
capcom we're worried about being sued for image issues of calling boxer Mike Bison so they switched the names around to what they thought fit best
(that's the reason I've heard anyway)