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is a Japanese multinational
video game Video games, also known as computer games, are electronic games that involves interaction with a user interface or input device such as a joystick, controller, keyboard, or motion sensing device to generate visual feedback. This feedba ...
and entertainment company headquartered in
Shinagawa is a special ward in Tokyo, Japan. The Ward refers to itself as Shinagawa City in English. The Ward is home to ten embassies. , the Ward had an estimated population of 380,293 and a population density of 16,510 persons per km2. The total are ...
, Tokyo. Its international branches, Sega of America and Sega Europe, are headquartered in
Irvine, California Irvine () is a master-planned city in South Orange County, California, United States, in the Los Angeles metropolitan area. The Irvine Company started developing the area in the 1960s and the city was formally incorporated on December 28, 197 ...
and
London London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...
, respectively. Its division for the development of both
arcade games An arcade game or coin-op game is a coin-operated entertainment machine typically installed in public businesses such as restaurants, bars and amusement arcades. Most arcade games are presented as primarily games of skill and include arcad ...
and home video games, Sega Games, has existed in its current state since 2020; from 2015 to that point, the two had made up separate entities known as Sega Games and Sega Interactive Co., Ltd. Sega is a subsidiary of
Sega Sammy Holdings (also known as the Sega Sammy Group and generally Sega Sammy, stylized as SᴇɢᴀSammy) is a Japanese holding company formed from the merger of Sega and Sammy Corporation in 2004. Both companies are involved in the amusement industry (Seg ...
. From 1983 until 2001, Sega also developed
video game consoles A video game console is an electronic device that outputs a video signal or image to display a video game that can be played with a game controller. These may be home consoles, which are generally placed in a permanent location connected to a ...
. Sega was founded by American businessmen Martin Bromley and Richard Stewart as on June 3, 1960; shortly after, the company acquired the assets of its predecessor, Service Games of Japan. Five years later, the company became known as Sega Enterprises, Ltd., after acquiring Rosen Enterprises, an importer of coin-operated games. Sega developed its first coin-operated game, ''
Periscope A periscope is an instrument for observation over, around or through an object, obstacle or condition that prevents direct line-of-sight observation from an observer's current position. In its simplest form, it consists of an outer case with ...
'', in 1966. Sega was sold to
Gulf and Western Industries Gulf and Western Industries, Inc. (stylized as Gulf+Western) was an American conglomerate. Originally, the company focused on manufacturing and resource extraction. Beginning in 1966, and continuing throughout the 1960s and 1970s, the company ...
in 1969. Following a downturn in the arcade business in the early 1980s, Sega began to develop video game consoles, starting with the
SG-1000 The is a home video game console manufactured by Sega. It was Sega's first entry into the home video game hardware business. Developed in response to a downturn in arcades starting in 1982, the SG-1000 was created on the advice of Hayao Nak ...
and
Master System The is an 8-bit third-generation home video game console manufactured by Sega. It was originally a remodeled export version of the Sega Mark III, the third iteration of the SG-1000 series of consoles, which was released in Japan in 1985 an ...
, but struggled against competitors such as the
Nintendo Entertainment System The Nintendo Entertainment System (NES) is an 8-bit third-generation home video game console produced by Nintendo. It was first released in Japan in 1983 as the commonly known as the The NES, a redesigned version, was released in America ...
. In 1984, Sega executives David Rosen and
Hayao Nakayama is a Japanese businessman and was the former President and CEO of Sega Enterprises, Ltd from 1983 to 1999. Early life and career Nakayama was born into a family of doctors, and was expected to pursue medicine as a career. However, Nakayama de ...
led a
management buyout A management buyout (MBO) is a form of acquisition in which a company's existing managers acquire a large part, or all, of the company, whether from a parent company or individual. Management-, and/or leveraged buyout became noted phenomena o ...
, with backing from CSK Corporation. Sega released its next console, the
Sega Genesis The Sega Genesis, known as the outside North America, is a 16-bit Fourth generation of video game consoles, fourth generation home video game console developed and sold by Sega. It was Sega's third console and the successor to the Master Syst ...
(known as the Mega Drive outside North America), in 1988. The Genesis struggled against the competition in Japan, but found success overseas after the release of ''
Sonic the Hedgehog is a Japanese video game series and media franchise created by Sega. The franchise follows Sonic, an anthropomorphic blue hedgehog who battles the evil Doctor Eggman, a mad scientist. The main ''Sonic the Hedgehog'' games are platformers m ...
'' in 1991 and briefly outsold its main competitor, the
Super Nintendo Entertainment System The Super Nintendo Entertainment System (SNES), commonly shortened to Super NES or Super Nintendo, is a 16-bit home video game console developed by Nintendo that was released in 1990 in Japan and South Korea, 1991 in North America, 1992 in Eu ...
, in the U.S. Later in the decade, Sega suffered several commercial failures such as the
32X The 32X is an add-on for the Sega Genesis video game console. Codenamed "Project Mars", it was designed to expand the power of the Genesis and serve as a transitional console into the 32-bit era until the release of the Sega Saturn. The 32X u ...
,
Saturn Saturn is the sixth planet from the Sun and the second-largest in the Solar System, after Jupiter. It is a gas giant with an average radius of about nine and a half times that of Earth. It has only one-eighth the average density of Earth; h ...
and
Dreamcast The is a home video game console released by Sega on November 27, 1998, in Japan; September 9, 1999, in North America; and October 14, 1999, in Europe. It was the first sixth-generation video game console, preceding Sony's PlayStation 2, Nint ...
consoles. In 2001, Sega stopped manufacturing consoles to become a
third-party developer A video game developer is a broad term for a software developer specializing in video game development – the process and related disciplines of creating video games. A game developer can range from one person who undertakes all tasks to a large ...
and publisher, and was acquired by
Sammy Corporation is a Japanese developer and retailer of pachinko and pachislot machines, headquartered in Shinagawa, Tokyo. Its South Korean office, Sammy Amusement Service, is headquartered in Seoul, South Korea. Sammy is a subsidiary of the entertainment cong ...
in 2004. In the years since, Sega has been more profitable. Sega Holdings Co. Ltd. was established in 2015; Sega Corporation was renamed Sega Games Co., Ltd., and its arcade, entertainment and toy divisions separated into other companies. In 2020, Sega Games and Sega Interactive merged and were renamed Sega Corporation. Sega has produced several multi-million-selling game franchises, including ''
Sonic the Hedgehog is a Japanese video game series and media franchise created by Sega. The franchise follows Sonic, an anthropomorphic blue hedgehog who battles the evil Doctor Eggman, a mad scientist. The main ''Sonic the Hedgehog'' games are platformers m ...
'', ''
Total War Total war is a type of warfare that includes any and all civilian-associated resources and infrastructure as legitimate military targets, mobilizes all of the resources of society to fight the war, and gives priority to warfare over non-com ...
'' and ''
Yakuza , also known as , are members of transnational organized crime syndicates originating in Japan. The Japanese police and media, by request of the police, call them , while the ''yakuza'' call themselves . The English equivalent for the ter ...
''.
Sonic Sonic or Sonics may refer to: Companies *Sonic Drive-In, an American drive-in fast-food restaurant chain * Sonic (ISP), an Internet provider and CLEC, serving more than 100 California communities * Sonic Foundry, a computer software company wh ...
, Sega's mascot, is internationally recognized. Sega is one of the world's most prolific arcade game producers, with long-running series such as ''
Virtua Fighter is a series of fighting games created by Sega-AM2 and designer Yu Suzuki. The original '' Virtua Fighter'' was released in October 1993 and has received four main sequels and several spin-offs. The highly influential first ''Virtua Fighter'' ga ...
'' and ''
Initial D Arcade Stage ''Initial D Arcade Stage'' (D アーケード ステージ) (commonly referred to as ''IDAS'', followed by the game's version number) is an arcade racing game series developed by Sega, based on the anime and manga series ''Initial D''. In the ...
''. Its name and branding are used for affiliated companies that operate
amusement arcade An amusement arcade (often referred to as a video arcade, amusements or simply arcade) is a venue where people play arcade games, including arcade video games, pinball machines, electro-mechanical games, redemption games, merchandisers (such as ...
s and produce other entertainment products, including
Sega Toys is a Japanese toy company and animation studios, owned by Sega Sammy Holdings. The company was founded when Yonezawa Toys, Japan's largest post-war toy manufacturer, was absorbed into Sega in 1991 as Sega-Yonezawa. Sega Toys have created toys fo ...
; however, these are largely separate ventures. Sega is recognized for its video game consoles, creativity and innovations. In more recent years, it has been criticized for its business decisions and the quality of its creative output.


History


1940–1982: Origins and arcade success

In May 1940, American businessmen Martin Bromley, Irving Bromberg, and James Humpert formed Standard Games in
Honolulu Honolulu (; ) is the capital and largest city of the U.S. state of Hawaii, which is in the Pacific Ocean. It is an unincorporated county seat of the consolidated City and County of Honolulu, situated along the southeast coast of the isla ...
, Hawaii. Their aim was to provide coin-operated amusement machines, including
slot machine A slot machine (American English), fruit machine (British English) or poker machine (Australian English and New Zealand English) is a gambling machine that creates a game of chance for its customers. Slot machines are also known pejoratively a ...
s, to military bases as the increase in personnel with the onset of
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
would create demand for entertainment. After the war, the founders sold Standard Games in 1945, and in 1946 established Service Games, named for the military focus. After the United States government outlawed slot machines in its territories in 1952, Bromley sent employees Richard Stewart and Ray LeMaire to Tokyo to establish Service Games of Japan to provide coin-operated slot machines to U.S. bases in Japan. A year later, all five men established Service Games Panama to control the entities of Service Games worldwide. The company expanded over the next seven years to include distribution in South Korea, the Philippines, and South Vietnam. The name Sega, an abbreviation of Service Games, was first used in 1954 on a slot machine, the Diamond Star. Due to notoriety arising from investigations by the US government into criminal business practices, Service Games of Japan was dissolved on May 31, 1960. On June 3, Bromley established two companies to take over its business activities, Nihon Goraku Bussan and The two new companies purchased all of Service Games of Japan's assets. Kikai Seizō, doing business as Sega, Inc., focused on manufacturing slot machines. Goraku Bussan, doing business under Stewart as Utamatic, Inc., served as a distributor and operator of coin-operated machines, particularly
jukebox A jukebox is a partially automated music-playing device, usually a coin-operated machine, that will play a patron's selection from self-contained media. The classic jukebox has buttons, with letters and numbers on them, which are used to sele ...
es. The companies merged in 1964, retaining the Nihon Goraku Bussan name. During the same time frame, David Rosen, an American officer in the
United States Air Force The United States Air Force (USAF) is the air service branch of the United States Armed Forces, and is one of the eight uniformed services of the United States. Originally created on 1 August 1907, as a part of the United States Army Si ...
stationed in Japan, launched a
photo booth A photo booth is a vending machine or modern kiosk that contains an automated, usually coin-operated, camera and film processor. Today, the vast majority of photo booths are digital. History The patent for the first automated photography ma ...
business in Tokyo in 1954. This company became Rosen Enterprises, and in 1957 began importing coin-operated games into Japan. In 1965, Nihon Goraku Bussan acquired Rosen Enterprises to form Rosen was installed as the CEO and managing director, while Stewart was named president and LeMaire was the director of planning. Shortly afterward, Sega stopped leasing to military bases and moved its focus from slot machines to coin-operated amusement machines. Its imports included
Rock-Ola The Rock-Ola Manufacturing Corporation is an American developer and manufacturer of juke boxes and related machinery. It was founded in 1927 by Coin-Op pioneer David Cullen Rockola to manufacture slot machines, scales, and pinball machines. The ...
jukeboxes,
pinball Pinball games are a family of games in which a ball is propelled into a specially designed table where it bounces off various obstacles, scoring points either en route or when it comes to rest. Historically the board was studded with nails call ...
games by Williams, and gun games by
Midway Manufacturing Midway Games Inc., known previously as Midway Manufacturing and Bally Midway, and commonly known as simply Midway, was an American video game developer and publisher. Midway's franchises included '' Mortal Kombat'', '' Rampage'', ''Spy Hunter'' ...
. Because Sega imported second-hand machines, which required frequent maintenance, it began constructing replacement guns and flippers for its imported games. According to former Sega director Akira Nagai, this led to the company developing its own games. The first arcade
electro-mechanical game Electro-mechanical games (EM games) are types of arcade games that operate on a combination of some electronic circuitry and mechanical actions from the player to move items contained within the game's cabinet. Some of these were early light gun ...
(EM game) Sega manufactured was the submarine simulator ''
Periscope A periscope is an instrument for observation over, around or through an object, obstacle or condition that prevents direct line-of-sight observation from an observer's current position. In its simplest form, it consists of an outer case with ...
'', released worldwide in the late 1960s. It featured light and sound effects considered innovative and was successful in Japan. It was then exported to malls and department stores in Europe and the United States and helped standardize the 25-cent-per-play cost for arcade games in the U.S. Sega was surprised by the success, and for the next two years, the company produced and exported between eight and ten games per year. The worldwide success of ''Periscope'' led to a "technological renaissance" in the arcade industry, which was reinvigorated by a wave of "audio-visual" EM novelty games that followed in the wake of ''Periscope'' during the late 1960s to early 1970s. However, rampant piracy led Sega to cease exporting its games around 1970. In 1969, Sega was sold to the American conglomerate
Gulf and Western Industries Gulf and Western Industries, Inc. (stylized as Gulf+Western) was an American conglomerate. Originally, the company focused on manufacturing and resource extraction. Beginning in 1966, and continuing throughout the 1960s and 1970s, the company ...
, although Rosen remained CEO. In 1974, Gulf and Western made Sega Enterprises, Ltd., a subsidiary of an American company renamed Sega Enterprises, Inc. Sega released ''Pong-Tron'', its first video-based game, in 1973. Horowitz 2018, pp. 14–16 Despite late competition from
Taito is a Japanese company that specializes in video games, toys, arcade cabinets and game centers, based in Shinjuku, Tokyo. The company was founded by Michael Kogan in 1953 as the importing vodka, vending machines and jukeboxes into Japan. I ...
's hit arcade game ''
Space Invaders is a 1978 shoot 'em up arcade game developed by Tomohiro Nishikado. It was manufactured and sold by Taito in Japan, and licensed to the Midway division of Bally for overseas distribution. ''Space Invaders'' was the first fixed shooter an ...
'' in 1978, Sega prospered from the arcade video game boom of the late 1970s, with revenues climbing to over  million by 1979. During this period, Sega acquired Gremlin Industries, which manufactured
microprocessor A microprocessor is a computer processor where the data processing logic and control is included on a single integrated circuit, or a small number of integrated circuits. The microprocessor contains the arithmetic, logic, and control circ ...
-based arcade games, and Esco Boueki, a coin-op distributor founded and owned by
Hayao Nakayama is a Japanese businessman and was the former President and CEO of Sega Enterprises, Ltd from 1983 to 1999. Early life and career Nakayama was born into a family of doctors, and was expected to pursue medicine as a career. However, Nakayama de ...
. Nakayama was placed in a management role of Sega's Japanese operations. In the early 1980s, Sega was one of the top five arcade game manufacturers active in the United States, as company revenues rose to $214 million. 1979 saw the release of ''Head On'', which introduced the "eat-the-dots" gameplay
Namco was a Japanese multinational video game and entertainment company, headquartered in Ōta, Tokyo. It held several international branches, including Namco America in Santa Clara, California, Namco Europe in London, Namco Taiwan in Kaohsiun ...
later used in ''
Pac-Man originally called ''Puck Man'' in Japan, is a 1980 maze action video game developed and released by Namco for arcades. In North America, the game was released by Midway Manufacturing as part of its licensing agreement with Namco America. Th ...
''. In 1981, Sega licensed ''
Frogger is a 1981 arcade action game developed by Konami and manufactured by Sega. In North America, it was released by Sega/Gremlin. The object of the game is to direct a series of frogs to their homes by crossing a busy road and a hazardous rive ...
'', its most successful game until then. In 1982, Sega introduced the first game with isometric graphics, ''
Zaxxon is an isometric shooter arcade game, developed and released by Sega in 1982, in which the player pilots a ship through heavily defended space fortresses. Japanese electronics company Ikegami Tsushinki is also credited for having worked on the de ...
''.


1982–1989: Entry into the game console market and arcade resurgence

Following a downturn in the arcade business starting in 1982, Gulf and Western sold its North American arcade game manufacturing organization and the licensing rights for its arcade games to
Bally Manufacturing Bally Manufacturing, later renamed Bally Entertainment, was an American company that began as a pinball and slot machine manufacturer, and later expanded into casinos, video games, health clubs, and theme parks. It was acquired by Hilton Hotel ...
in September 1983. Gulf and Western retained Sega's North American R&D operation and its Japanese subsidiary, Sega Enterprises, Ltd. With its arcade business in decline, Sega Enterprises, Ltd. president Nakayama advocated for the company to use its hardware expertise to move into the home consumer market in Japan. This led to Sega's development of a computer, the SC-3000. Learning that
Nintendo is a Japanese multinational video game company headquartered in Kyoto, Japan. It develops video games and video game consoles. Nintendo was founded in 1889 as by craftsman Fusajiro Yamauchi and originally produced handmade playing cards ...
was developing a games-only console, the
Famicom The Nintendo Entertainment System (NES) is an 8-bit Third generation of video game consoles, third-generation home video game console produced by Nintendo. It was first released in Japan in 1983 as the commonly known as the The NES, a redes ...
, Sega developed its first home video game system, the
SG-1000 The is a home video game console manufactured by Sega. It was Sega's first entry into the home video game hardware business. Developed in response to a downturn in arcades starting in 1982, the SG-1000 was created on the advice of Hayao Nak ...
, alongside the SC-3000. Rebranded versions of the SG-1000 were released in several other markets worldwide. The SG-1000 sold 160,000 units in 1983, which far exceeded Sega's projection of 50,000 in the first year but was outpaced by the Famicom. This was in part because Nintendo expanded its game library by courting
third-party developer A video game developer is a broad term for a software developer specializing in video game development – the process and related disciplines of creating video games. A game developer can range from one person who undertakes all tasks to a large ...
s, whereas Sega was hesitant to collaborate with companies with which it was competing in the arcades. In November 1983, Rosen announced his intention to step down as president of Sega Enterprises, Inc. on January 1, 1984. Jeffrey Rochlis was announced as the new president and COO of Sega. Shortly after the launch of the SG-1000, and the death of company founder
Charles Bluhdorn Charles George Bluhdorn (born Karl Georg Blühdorn; September 20, 1926 – February 19, 1983) was an Austrian-born American industrialist. Early life Bluhdorn was born in Vienna, Austria, to an Austrian Jewish mother Rosa Fuchs and father Paul ...
, Gulf and Western began to sell off its secondary businesses. Nakayama and Rosen arranged a
management buyout A management buyout (MBO) is a form of acquisition in which a company's existing managers acquire a large part, or all, of the company, whether from a parent company or individual. Management-, and/or leveraged buyout became noted phenomena o ...
of the Japanese subsidiary in 1984 with financial backing from CSK Corporation, a prominent Japanese software company. Sega's Japanese assets were purchased for $38 million by a group of investors led by Rosen and Nakayama.
Isao Okawa (May 19, 1926 – March 16, 2001) was a Japanese businessman and the former Chairman of Sega. History Okawa was born in Osaka, Japan. As a young adult, he studied at Waseda University in Tokyo. After graduating from Waseda, he formed Com ...
, head of CSK, became chairman, while Nakayama was installed as CEO of Sega Enterprises, Ltd. In 1985, Sega began working on the Mark III, a redesigned SG-1000. For North America, Sega rebranded the Mark III as the
Master System The is an 8-bit third-generation home video game console manufactured by Sega. It was originally a remodeled export version of the Sega Mark III, the third iteration of the SG-1000 series of consoles, which was released in Japan in 1985 an ...
, with a futuristic design intended to appeal to Western tastes. The Mark III was released in Japan in October 1985. Despite featuring more powerful hardware than the Famicom in some ways, it was unsuccessful at launch. As Nintendo required third-party developers not to publish their Famicom games on other consoles, Sega developed its own games and obtained the rights to
port A port is a maritime facility comprising one or more wharves or loading areas, where ships load and discharge cargo and passengers. Although usually situated on a sea coast or estuary, ports can also be found far inland, such as H ...
games from other developers. To help market the console in North America, Sega planned to sell the Master System as a toy, similar to how Nintendo had done with the Nintendo Entertainment System. Sega partnered with
Tonka Tonka is an American producer of toy trucks. The company is known for making steel toy models of construction type trucks and machinery. Maisto International, which makes diecast vehicles, acquired the rights to use the Tonka name in a line of ...
, an American toy company, to make use of Tonka's expertise in the toy industry. Ineffective marketing by Tonka handicapped sales of the Master System. By early 1992, production had ceased in North America. The Master System sold between 1.5 million and 2 million units in the region. This was less market share in North America than both Nintendo and
Atari Atari () is a brand name that has been owned by several entities since its inception in 1972. It is currently owned by French publisher Atari SA through a subsidiary named Atari Interactive. The original Atari, Inc., founded in Sunnyvale, Ca ...
, which controlled 80 percent and 12 percent of the market respectively. The Master System was eventually a success in Europe, where its sales were comparable to the NES. As late as 1993, the Master System's active installed user base in Europe was 6.25 million units. The Master System has had continued success in Brazil. New versions continue to be released by Sega's partner in the region,
Tectoy Tec Toy S.A., trading as Tectoy since late 2007, is a Brazilian toy and electronics company headquartered in São Paulo. It is best known for producing, publishing, and distributing Sega consoles and video games in Brazil. The company was fou ...
. By 2016, the Master System had sold 8 million units in Brazil. During 1984, Sega opened its European division of arcade distribution, Sega Europe. It re-entered the North American arcade market in 1985 with the establishment of Sega Enterprises USA at the end of a deal with Bally. The release of ''
Hang-On is an arcade racing game released by Sega in 1985 and later ported to the Master System. In the game, the player controls a motorcycle against time and other computer-controlled bikes. It was one of the first arcade games to use 16-bit graph ...
'' in 1985 would prove successful in the region, becoming so popular that Sega struggled to keep up with demand for the game. UFO Catcher was introduced in 1985 and as of 2005 was Japan's most commonly installed
claw crane A claw crane, claw machine, toy crane, or skill crane is a type of arcade game known as a merchandiser, commonly found in video arcades, supermarkets, restaurants, movie theaters, shopping malls, and bowling alleys. Machine components A cla ...
game. In 1986, Sega of America was established to manage the company's consumer products in North America, beginning with marketing the Master System. During Sega's partnership with Tonka, Sega of America relinquished marketing and distribution of the console and focused on customer support and some localization of games. ''
Out Run (also stylized as ''OutRun'') is an arcade driving video game released by Sega in September 1986. It is known for its pioneering hardware and graphics, nonlinear gameplay, a selectable soundtrack with music composed by Hiroshi Kawaguchi (comp ...
'', released in 1986, became Sega's best selling arcade cabinet of the 1980s. Former Sega director Akira Nagai said ''Hang-On'' and ''Out Run'' helped to pull the arcade game market out of the 1982 downturn and created new genres of video games.


1989–1994: Genesis, Sonic the Hedgehog, and mainstream success

With the arcade game market once again growing, Sega was one of the most recognized game brands at the end of the 1980s. In the arcades, the company focused on releasing games to appeal to diverse tastes, including
racing games Racing games are a video game genre in which the player participates in a racing competition. They may be based on anything from real-world racing leagues to fantastical settings. They are distributed along a spectrum between more realistic rac ...
and side-scrollers. Sega released the Master System's successor, the
Mega Drive The Sega Genesis, known as the outside North America, is a 16-bit fourth generation home video game console developed and sold by Sega. It was Sega's third console and the successor to the Master System. Sega released it in 1988 in Japan a ...
, in Japan on October 29, 1988. The launch was overshadowed by Nintendo's release of ''
Super Mario Bros. 3 ''Super Mario Bros. 3'' is a platform game developed and published by Nintendo for the Nintendo Entertainment System (NES). It was released for home consoles in Japan on October 23, 1988, in North America on February 12, 1990 and in Europe on ...
'' a week earlier. Positive coverage from magazines ''
Famitsu formerly ''Famicom Tsūshin'', is a line of Japanese video game magazines published by Kadokawa Game Linkage (previously known as Gzbrain), a subsidiary of Kadokawa. ''Famitsu'' is published in both weekly and monthly formats as well as in the f ...
'' and ''Beep!'' helped establish a following, with the latter launching a new publication dedicated to the console, but Sega shipped only 400,000 units in the first year. The Mega Drive struggled to compete against the
Famicom The Nintendo Entertainment System (NES) is an 8-bit Third generation of video game consoles, third-generation home video game console produced by Nintendo. It was first released in Japan in 1983 as the commonly known as the The NES, a redes ...
and lagged behind Nintendo's
Super Famicom The Super Nintendo Entertainment System (SNES), commonly shortened to Super NES or Super Nintendo, is a Fourth generation of video game consoles, 16-bit home video game console developed by Nintendo that was released in 1990 in Japan and South ...
and
NEC is a Japanese multinational information technology and electronics corporation, headquartered in Minato, Tokyo. The company was known as the Nippon Electric Company, Limited, before rebranding in 1983 as NEC. It provides IT and network soluti ...
's
PC Engine The TurboGrafx-16, known as the outside North America, is a home video game console designed by Hudson Soft and sold by NEC Home Electronics. It was the first console marketed in the fourth generation, commonly known as the 16-bit era, thoug ...
in Japanese sales throughout the
16-bit era In the history of video games, the fourth generation of game consoles, more commonly referred to as the 16-bit era, began on October 30, 1987, with the Japanese release of NEC Home Electronics' PC Engine (known as the TurboGrafx-16 in North Ame ...
. For the North American launch, where the console was renamed Genesis, Sega had no sales and marketing organization. After Atari declined an offer to market the console in the region, Sega launched it through its own Sega of America subsidiary. The Genesis was launched in New York City and Los Angeles on August 14, 1989, and in the rest of North America later that year. Kent 2001, p. 405 The European version of the Mega Drive was released in September 1990. Former Atari executive and new Sega of America president Michael Katz developed a two-part strategy to build sales in North America. The first part involved a marketing campaign to challenge Nintendo and emphasize the more arcade-like experience available on the Genesis, with slogans including "Genesis does what Nintendon't". Since Nintendo owned the console rights to most arcade games of the time, the second part involved creating a library of games which used the names and likenesses of celebrities, such as '' Michael Jackson's Moonwalker'' and ''
Joe Montana Football ''Joe Montana Football'' is an American football video game developed by Electronic Arts, and published by Sega for the Genesis in 1991. Although the game does feature Joe Montana (as the title respectively says) as a playable character, since ...
''. Nonetheless, Sega had difficulty overcoming Nintendo's ubiquity in homes. Kent 2001, pp. 424–431 Despite being tasked by Nakayama to sell a million units in the first year, Katz and Sega of America sold only 500,000. After the launch of the Genesis, Sega sought a new flagship line of releases to compete with Nintendo's ''Mario'' series. Its new character,
Sonic the Hedgehog is a Japanese video game series and media franchise created by Sega. The franchise follows Sonic, an anthropomorphic blue hedgehog who battles the evil Doctor Eggman, a mad scientist. The main ''Sonic the Hedgehog'' games are platformers m ...
, went on to feature in one of the
best-selling video game franchises This is a list of video game franchises that have sold or shipped at least twenty million copies. Unless otherwise stated, numbers indicate worldwide units sold, ordered alphabetically whenever two or more list the same amount. The exception are ...
in history. ''
Sonic the Hedgehog is a Japanese video game series and media franchise created by Sega. The franchise follows Sonic, an anthropomorphic blue hedgehog who battles the evil Doctor Eggman, a mad scientist. The main ''Sonic the Hedgehog'' games are platformers m ...
'' began with a
tech demo A technology demonstration (or tech demo), also known as demonstrator model, is a prototype, rough example or an otherwise incomplete version of a conceivable product or future system, put together as proof of concept with the primary purpose of s ...
created by
Yuji Naka , credited in some games as YU2, is a Japanese video game programmer, designer and producer. He is the former head of the Sega studio Sonic Team, where he was the lead programmer of the original '' Sonic the Hedgehog'' series on the Sega Mega ...
involving a fast-moving character rolling in a ball through a winding tube; this was fleshed out with
Naoto Ohshima (born February 26, 1964) is a Japanese artist and video game designer, best known for designing Sonic the Hedgehog and Dr. Eggman characters from Sega's ''Sonic the Hedgehog'' franchise. Although Yuji Naka created the original tech demo around wh ...
's character design and levels conceived by designer
Hirokazu Yasuhara (also credited as Carol Yas) is a Japanese video game designer. He is best known for designing the gameplay and stages of the initial ''Sonic the Hedgehog'' video games for Sega Genesis in the 1990s, based on technical demos and engines programme ...
. Sonic's color was chosen to match Sega's
cobalt blue Cobalt blue is a blue pigment made by sintering cobalt(II) oxide with aluminum(III) oxide (alumina) at 1200 °C. Chemically, cobalt blue pigment is cobalt(II) oxide-aluminium oxide, or cobalt(II) aluminate, CoAl2O4. Cobalt blue is lighter ...
logo; his shoes were inspired by
Michael Jackson Michael Joseph Jackson (August 29, 1958 – June 25, 2009) was an American singer, songwriter, dancer, and philanthropist. Dubbed the " King of Pop", he is regarded as one of the most significant cultural figures of the 20th century. Over ...
's boots, and his personality by
Bill Clinton William Jefferson Clinton (né Blythe III; born August 19, 1946) is an American politician who served as the 42nd president of the United States from 1993 to 2001. He previously served as governor of Arkansas from 1979 to 1981 and again ...
's "can-do" attitude. Nakayama hired
Tom Kalinske Thomas Kalinske (born July 17, 1944) is an American businessman, best known as having worked for Mattel from 1972 to 1987, where he was credited with reviving the Barbie and Hot Wheels brands, launching Masters of the Universe, then being promoted ...
as CEO of Sega of America in mid-1990, and Katz departed soon after. Kalinske knew little about the video game market, but surrounded himself with industry-savvy advisors. A believer in the razor-and-blades business model, he developed a four-point plan: cut the price of the Genesis, create a U.S. team to develop games targeted at the American market, expand the aggressive advertising campaigns, and replace the bundled game ''
Altered Beast ''Altered Beast'' is a 1988 beat 'em up arcade video game developed and manufactured by Sega. The game is set in Ancient Greece and follows a player character chosen by Zeus to rescue his daughter Athena from the demonic ruler of the underwo ...
'' with ''Sonic the Hedgehog''. The Japanese board of directors disapproved, but it was approved by Nakayama, who told Kalinske, "I hired you to make the decisions for Europe and the Americas, so go ahead and do it." In large part due to the popularity of ''Sonic the Hedgehog'', the Genesis outsold its main competitor, the
Super Nintendo Entertainment System The Super Nintendo Entertainment System (SNES), commonly shortened to Super NES or Super Nintendo, is a 16-bit home video game console developed by Nintendo that was released in 1990 in Japan and South Korea, 1991 in North America, 1992 in Eu ...
(SNES), in the United States nearly two to one during the 1991 holiday season. By January 1992, Sega controlled 65 percent of the
16-bit 16-bit microcomputers are microcomputers that use 16-bit microprocessors. A 16-bit register can store 216 different values. The range of integer values that can be stored in 16 bits depends on the integer representation used. With the two ...
console market. Sega outsold Nintendo for four consecutive Christmas seasons due to the Genesis' head start, lower price, and a larger library compared to the SNES at release. Nintendo's dollar share of the U.S. 16-bit market dropped from 60% at the end of 1992 to 37% at the end of 1993, Sega claimed 55% of all 16-bit hardware sales during 1994, and the SNES outsold the Genesis from 1995 through 1997. In 1990, Sega launched the
Game Gear The is an 8-bit Fourth generation of video game consoles, fourth generation handheld game console released by Sega on October 6, 1990, in Japan, in April 1991 throughout North America and Europe, and during 1992 in Australia. The Game Gear pri ...
, a
handheld console A handheld game console, or simply handheld console, is a small, portable self-contained video game console with a built-in screen, game controls and speakers. Handheld game consoles are smaller than home video game consoles and contain the con ...
, to compete against Nintendo's
Game Boy The is an 8-bit fourth generation handheld game console developed and manufactured by Nintendo. It was first released in Japan on April 21, 1989, in North America later the same year, and in Europe in late 1990. It was designed by the same t ...
. The Game Gear was designed as a portable version of the Master System and featured a full-color screen, in contrast to the
monochrome A monochrome or monochromatic image, object or palette is composed of one color (or values of one color). Images using only shades of grey are called grayscale (typically digital) or black-and-white (typically analog). In physics, monochr ...
Game Boy screen. Due to its short battery life, lack of original games, and weak support from Sega, the Game Gear did not surpass the Game Boy, having sold approximately 11 million units. Sega launched the
Mega-CD The Sega CD, released as the in most regions outside North America and Brazil, is a CD-ROM accessory for the Sega Genesis produced by Sega as part of the fourth generation of video game consoles. It was released on December 12, 1991, in Japan ...
in Japan on December 1, 1991, initially retailing at
JP¥ The is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar (US$) and the euro. It is also widely used as a third reserve currency after the US dollar and t ...
49,800. The add-on uses
CD-ROM A CD-ROM (, compact disc read-only memory) is a type of read-only memory consisting of a pre-pressed optical compact disc that contains data. Computers can read—but not write or erase—CD-ROMs. Some CDs, called enhanced CDs, hold both com ...
technology. Further features include a second, faster processor, vastly expanded system memory, a graphics chip that performed scaling and
rotation Rotation, or spin, is the circular movement of an object around a '' central axis''. A two-dimensional rotating object has only one possible central axis and can rotate in either a clockwise or counterclockwise direction. A three-dimensional ...
similar to Sega's arcade games, and another sound chip. In North America, it was renamed the Sega CD and launched on October 15, 1992, with a retail price of US$299. Kent 2001, pp. 449–461 It was released in Europe as the Mega-CD in 1993. The Mega-CD sold only 100,000 units during its first year in Japan, falling well below expectations. Throughout the early 1990s, Sega largely continued its success in arcades around the world. In 1992 and 1993, the new
Sega Model 1 Sega is a video game developer, publisher, and hardware development company headquartered in Tokyo, Japan, with multiple offices around the world. The company's involvement in the arcade game industry began as a Japan-based distributor of c ...
arcade system board showcased in-house development studio
Sega AM2 previously known as is a video game development team within the Japanese multinational video game developer Sega. Yu Suzuki, who had previously developed arcade games for Sega including '' Hang-On'' and ''Out Run'', was the first manager of t ...
's ''
Virtua Racing ''Virtua Racing'', or ''V.R.'' for short, is a Formula One racing video game developed by Sega AM2 and released for arcades in 1992. ''Virtua Racing'' was initially a proof-of-concept application for exercising a new 3D graphics platform u ...
'' and ''
Virtua Fighter is a series of fighting games created by Sega-AM2 and designer Yu Suzuki. The original '' Virtua Fighter'' was released in October 1993 and has received four main sequels and several spin-offs. The highly influential first ''Virtua Fighter'' ga ...
'' (the first 3D
fighting game A fighting game, also known as a versus fighting game, is a genre of video game that involves combat between two or more players. Fighting game combat often features mechanics such as blocking, grappling, counter-attacking, and chaining atta ...
), which, though expensive, played a crucial role in popularizing 3D polygonal graphics. In addition, complex simulator equipment like the rotational
R360 The R360 is a motion simulator arcade cabinet produced by Sega. It was first released in Japan in 1990, and internationally a year later. Being short for "Rotate 360", the R360 is noteworthy for its ability to spin 360 degrees in any direction on ...
kept Sega competing with machines by rival arcade companies, including
Taito is a Japanese company that specializes in video games, toys, arcade cabinets and game centers, based in Shinjuku, Tokyo. The company was founded by Michael Kogan in 1953 as the importing vodka, vending machines and jukeboxes into Japan. I ...
. New official region-specific distributors and manufacturers, including the UK's Deith Leisure, allowed Sega to sell its machines outside of Japan with ease. Sega's domestic operations division also opened hundreds of family-oriented suburban
Sega World Sega World (Japanese: セガワールド, Hepburn: ''Segawārudo''), sometimes stylized as SegaWorld, is a formerly international chain of amusement arcades and entertainment centres created by Sega. Though not the first venues to be developed ...
amusement arcades in Japan during this period, as well as large over-18s "GiGO" facilities in the high-profile urban areas of
Roppongi is a district of Minato, Tokyo, Japan, famous for the affluent Roppongi Hills development area and popular night club scene. A few foreign embassies are located near Roppongi, and the night life is popular with locals and foreigners alike. It ...
and
Ikebukuro is a commercial and entertainment district in Toshima, Tokyo, Japan. Toshima ward offices, Ikebukuro station, and several shops, restaurants, and enormous department stores are located within city limits. It is considered the second larges ...
. In 1993, this success was mirrored in overseas territories with the openings of several large branded entertainment centers, such as Sega VirtuaLand in
Luxor Las Vegas Luxor Las Vegas is a 30-story casino hotel situated on the southern end of the Las Vegas Strip in Paradise, Nevada. The hotel is owned by Vici Properties and operated by MGM Resorts International and has a casino with over 2,000 slot machines a ...
. In 1994, Sega generated a revenue of or . In 1993, the American media began to focus on the mature content of certain video games, such as ''
Night Trap ''Night Trap'' is a 1992 interactive movie developed by Digital Pictures and published by Sega for the Sega CD. Presented primarily through full-motion video (FMV), ''Night Trap'' tasks the player to observe teenage girls having a sleepov ...
'' for the Sega CD and the Genesis version of Midway's ''Mortal Kombat''. Kent 2001, p. 461–480 This came at a time when Sega was capitalizing on its image as an "edgy" company with "attitude", and this reinforced that image. To handle this, Sega instituted the United States' first video game ratings system, the
Videogame Rating Council The Videogame Rating Council (V.R.C.) was introduced by Sega of America in 1993 to rate all video games that were released for sale in the United States and Canada on the Sega Master System, Genesis, Game Gear, Sega CD, 32X, and Pico. The rating h ...
(VRC), for all its systems. Ratings ranged from the family-friendly GA rating to the more mature rating of MA-13, and the adults-only rating of MA-17. Executive vice president of Nintendo of America
Howard Lincoln Howard Charles Lincoln (born February 14, 1940) is an American lawyer and businessman, known primarily for being the former Chairman of Nintendo of America and the former Chairman and Chief Executive Officer of the Seattle Mariners baseball team ...
was quick to point out in the United States congressional hearings in 1993 that ''Night Trap'' was not rated at all. Senator
Joe Lieberman Joseph Isadore Lieberman (; born February 24, 1942) is an American politician, lobbyist, and attorney who served as a United States senator from Connecticut from 1989 to 2013. A former member of the Democratic Party, he was its nominee for ...
called for another hearing in February 1994 to check progress toward a rating system for video game violence. After the hearings, Sega proposed the universal adoption of the VRC; after objections by Nintendo and others, Sega took a role in forming the
Entertainment Software Rating Board The Entertainment Software Rating Board (ESRB) is a self-regulatory organization that assigns age and content ratings to consumer video games in the United States and Canada. The ESRB was established in 1994 by the Entertainment Software Ass ...
.


1994–1998: 32X, Saturn, falling console sales, and continued arcade success

Sega began work on the Genesis' successor, the
Sega Saturn The is a home video game console developed by Sega and released on November 22, 1994, in Japan, May 11, 1995, in North America, and July 8, 1995, in Europe. Part of the fifth generation of video game consoles, it was the successor to the su ...
, more than two years before showcasing it at the Tokyo Toy Show in June 1994. According to former Sega of America producer Scot Bayless, Nakayama became concerned about the 1994 release of the
Atari Jaguar The Atari Jaguar is a home video game console developed by Atari Corporation and released in North America in November 1993. Part of the fifth generation of video game consoles, it competed with the 16-bit Sega Genesis, the Super NES and th ...
, and that the Saturn would not be available until the next year. As a result, Nakayama decided to have a second console release to market by the end of 1994. Sega began to develop the
32X The 32X is an add-on for the Sega Genesis video game console. Codenamed "Project Mars", it was designed to expand the power of the Genesis and serve as a transitional console into the 32-bit era until the release of the Sega Saturn. The 32X u ...
, a Genesis add-on which would serve as a less expensive entry into the
32-bit era The fifth-generation era (also known as the 32-bit era, the 64-bit era, or the 3D era) refers to computer and video games, video game consoles, and handheld gaming consoles dating from approximately October 4, 1993 to March 23, 2006. For home ...
. The 32X would not be compatible with the Saturn, but would play Genesis games. Sega released the 32X on November 21, 1994, in North America, December 3, 1994, in Japan, and January 1995 in PAL territories, and was sold at less than half of the Saturn's launch price. After the holiday season, interest in the 32X rapidly declined. Sega released the Saturn in Japan on November 22, 1994. ''Virtua Fighter'', a port of the popular arcade game, sold at a nearly one-to-one ratio with the Saturn at launch and was crucial to the system's early success in Japan. Sega's initial shipment of 200,000 Saturn units sold out on the first day, and it was more popular than the new competitor
Sony , commonly stylized as SONY, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. As a major technology company, it operates as one of the world's largest manufacturers of consumer and professional ...
's
PlayStation is a video gaming brand that consists of five home video game consoles, two handhelds, a media center, and a smartphone, as well as an online service and multiple magazines. The brand is produced by Sony Interactive Entertainment, a di ...
in Japan. In March 1995, Sega of America CEO Tom Kalinske announced that the Saturn would be released in the U.S. on "Saturnday" (Saturday) September 2, 1995. Sega of Japan mandated an early launch to give the Saturn an advantage over the PlayStation. At the first
Electronic Entertainment Expo E3 (short for Electronic Entertainment Expo or Electronic Entertainment Experience in 2021) is a trade event for the video game industry. The Entertainment Software Association (ESA) organizes and presents E3, which many developers, publishe ...
(E3) in Los Angeles on May 11, 1995, Kalinske revealed the release price and that Sega had shipped 30,000 Saturns to
Toys "R" Us Toys "R" Us is an American toy, clothing, and baby product retailer owned by Tru Kids (doing business as Tru Kids Brands) and various others. The company was founded in 1957; its first store was built in April 1948, with its headquarters loca ...
,
Babbage's GameStop Corp. is an American video game, consumer electronics, and gaming merchandise retailer. The company is headquartered in Grapevine, Texas (a suburb of Dallas), and is the largest video game retailer worldwide. , the company operates 4,5 ...
,
Electronics Boutique EB Games (formerly known as Electronics Boutique and EB World) is an American computer and video games retailer. First established as an American company in 1977 by James Kim with a single electronics-focused location in the King of Prussia mall ...
, and Software Etc. for immediate release. A by-product of the surprise launch was the provocation of retailers not included in Sega's rollout;
KB Toys K·B Toys (also known as Kay Bee Toys) was an American chain of mall-based retail toy stores. The company was founded in 1922 as Kaufman Brothers, a wholesale candy store. The company opened a wholesale toy store in 1946, and ended its candy wh ...
in particular decided to no longer stock its products in response. The Saturn's release in Europe also came before the previously announced North American date, on July 8, 1995. Within two days of the PlayStation's American launch on September 9, 1995, the PlayStation sold more units than the Saturn. Within its first year, the PlayStation secured over twenty percent of the U.S. video game market. The console's high price point, surprise launch, and difficulty handling polygonal graphics were factors in its lack of success. Sega also underestimated the continued popularity of the Genesis; 16-bit sales accounted for 64 percent of the market in 1995. Despite capturing 43 percent of the U.S. market dollar share and selling more than 2 million Genesis units in 1995, Kalinske estimated that, if prepared for demand, another 300,000 could have been sold. Sega announced that Shoichiro Irimajiri had been appointed chairman and CEO of Sega of America in July 1996, while Kalinske left Sega after September 30 of that year. A former
Honda is a Japanese public multinational conglomerate manufacturer of automobiles, motorcycles, and power equipment, headquartered in Minato, Tokyo, Japan. Honda has been the world's largest motorcycle manufacturer since 1959, reaching a producti ...
executive, Irimajiri had been involved with Sega of America since joining Sega in 1993. The company also announced that Rosen and Nakayama had resigned from their positions at Sega of America, though both remained with Sega. Bernie Stolar, a former executive at Sony Computer Entertainment of America, became Sega of America's executive vice president in charge of product development and third-party relations. Stolar was not supportive of the Saturn, believing its hardware was poorly designed. While Stolar had said "the Saturn is not our future" at E3 1997, he continued to emphasize the quality of its games, and later reflected that "we tried to wind it down as cleanly as we could for the consumer." At Sony, Stolar had opposed the localization of certain Japanese PlayStation games that he felt would not represent the system well in North America. He advocated a similar policy for the Saturn, generally blocking 2D arcade games and role-playing games from release, although he later sought to distance himself from this stance. Other changes included a softer image in Sega's advertising, including removing the "Sega!" scream, and holding press events for the education industry. Sega partnered with GE to develop the
Sega Model 2 Sega is a video game developer, publisher, and hardware development company headquartered in Tokyo, Japan, with multiple offices around the world. The company's involvement in the arcade game industry began as a Japan-based distributor of c ...
arcade system board, building on 3D technology in the arcade industry at the time. This led to several successful arcade games, including ''Daytona USA'', launched in a limited capacity in late 1993 and worldwide in 1994. Other popular games included '' Virtua Cop'', ''
Sega Rally Championship ''SEGA Rally Championship'' is a 1994 racing video game developed by Sega AM3 and published by Sega. Originally released for arcades using the Sega Model 2 board, it was converted to the Sega Saturn in 1995 and Windows in 1997. The unique sellin ...
'', and ''
Virtua Fighter 2 is a 1994 fighting video game developed by Sega. It is the sequel to 1993's '' Virtua Fighter'' and the second game in the '' Virtua Fighter'' series. It was created by Sega's Yu Suzuki-headed AM2 and was released for the arcades in 1994. Po ...
''. ''Virtua Fighter'' and ''Virtua Fighter 2'' became Sega's best-selling arcade games of all time, surpassing their previous record holder ''Out Run''.
Translation
by Shmuplations. ).
There was also a technological
arms race An arms race occurs when two or more groups compete in military superiority. It consists of a competition between two or more states to have superior armed forces; a competition concerning production of weapons, the growth of a military, and ...
between Sega and
Namco was a Japanese multinational video game and entertainment company, headquartered in Ōta, Tokyo. It held several international branches, including Namco America in Santa Clara, California, Namco Europe in London, Namco Taiwan in Kaohsiun ...
during this period, driving the growth of 3D gaming. Beginning in 1994, Sega launched a series of indoor theme parks in Japan under a concept dubbed "Amusement Theme Park", including
Joypolis is a chain of indoor amusement parks created by Sega and run by CA Sega Joypolis. Beginning on July 20, 1994 with the original location sited in Yokohama, Japan, Joypolis centers have since opened in several cities in Japan and later China. T ...
parks sited in urban Tokyo locations such as
Yokohama is the second-largest city in Japan by population and the most populous municipality of Japan. It is the capital city and the most populous city in Kanagawa Prefecture, with a 2020 population of 3.8 million. It lies on Tokyo Bay, south of T ...
and
Odaiba today is a large artificial island in Tokyo Bay, Japan, across the Rainbow Bridge from central Tokyo. Odaiba was initially built in this area for defensive purposes in the 1850s. Reclaimed land offshore Shinagawa was dramatically expanded duri ...
. A rapid overseas rollout was planned, with at least 100 locations across the world proposed to be opened by 2000, however only two,
SegaWorld London SegaWorld London was an indoor theme park opened by Sega in the London Trocadero, London, in September 1996. At 110,000 square feet, it was claimed to be the largest indoor theme park in the world. It was Sega's flagship venue in Europe and the ...
and
Sega World Sydney Sega World Sydney was an indoor high-tech amusement park that operated for almost four years, in Sydney. The theme park was built as the flagship tenant of the Darling Walk complex in Darling Harbour, and was designed and themed by gaming compa ...
, would ultimately materialise in September 1996 and Match 1997, respectively. Following on from difficulties faced in setting up theme parks in the United States, Sega established the GameWorks chain of urban entertainment centers in a joint venture with
DreamWorks SKG DreamWorks may refer to: * DreamWorks Pictures, an American film production company of Amblin ** DreamWorks Television, an American television production company and division of the film studio ** DreamWorks Records, an American record label and f ...
and
Universal Studios Universal Pictures (legally Universal City Studios LLC, also known as Universal Studios, or simply Universal; common metonym: Uni, and formerly named Universal Film Manufacturing Company and Universal-International Pictures Inc.) is an Americ ...
during March 1997. In 1995, Sega partnered with
Atlus is a Japanese video game developer, publisher, arcade manufacturer and distribution company based in Tokyo. A subsidiary of Sega, the company is known for video game series such as '' Megami Tensei'', '' Persona'', '' Etrian Odyssey'' and ...
to launch ''
Print Club A photo booth is a vending machine or modern kiosk that contains an automated, usually coin-operated, camera and film processor. Today, the vast majority of photo booths are digital. History The patent for the first automated photography ma ...
'' (
purikura A photo booth is a vending machine or modern kiosk that contains an automated, usually coin-operated, camera and film processor. Today, the vast majority of photo booths are digital. History The patent for the first automated photography ma ...
), an arcade photo sticker machine that produces
selfie A selfie () is a self-portrait photograph, typically taken with a digital camera or smartphone, which may be held in the hand or supported by a selfie stick. Selfies are often shared on social media, via social networking services such ...
photos. Atlus and Sega introduced ''Purikura'' in February 1995, initially at game arcades, before expanding to other popular culture locations such as fast food shops, train stations,
karaoke Karaoke (; ; , clipped compound of Japanese ''kara'' "empty" and ''ōkesutora'' "orchestra") is a type of interactive entertainment usually offered in clubs and bars, where people sing along to recorded music using a microphone. The music is ...
establishments and bowling alleys. ''Purikura'' became a popular form of entertainment among youths across
East Asia East Asia is the eastern region of Asia, which is defined in both geographical and ethno-cultural terms. The modern states of East Asia include China, Japan, Mongolia, North Korea, South Korea, and Taiwan. China, North Korea, South Korea ...
, laying the foundations for modern selfie culture. By 1997, about 47,000 ''Purikura'' machines had been sold, earning Sega an estimated () or from ''Purikura'' sales that year. Various other similar ''purikira'' machines appeared from other manufacturers, with Sega controlling about half of the market in 1997. Sega also made forays in the PC market with the 1995 establishment of
SegaSoft SegaSoft, originally headquartered in Redwood City, California and later San Francisco, was a joint venture by Sega and CSK (Sega's majority stockholder at the time), created in 1995 to develop and publish games for the PC and Sega Saturn, p ...
, which was tasked with creating original Saturn and PC games. From 1994 to 1999, Sega also participated in the arcade
pinball Pinball games are a family of games in which a ball is propelled into a specially designed table where it bounces off various obstacles, scoring points either en route or when it comes to rest. Historically the board was studded with nails call ...
market when it took over
Data East , also abbreviated as DECO, was a Japanese video game, pinball and electronic engineering company. The company was in operation from 1976 to 2003, and released 150 video game titles. Its main headquarters were located in Suginami, Tokyo. The A ...
's pinball division, renaming it Sega Pinball. In January 1997, Sega announced its intentions to merge with the Japanese toymaker
Bandai is a Japanese multinational corporation, multinational toy manufacturer and distributor headquartered in Taitō, Tokyo. Its international branches, Bandai Namco Toys & Collectables America and Bandai UK, are respectively headquartered in Irvine ...
. The merger, planned as a $1 billion
stock swap In corporate finance a stock swap is the exchange of one equity-based asset for another, where, during the merger or acquisition, the swap provides an opportunity to pay with stock rather than with cash; see . Overview The acquiring company e ...
whereby Sega would wholly acquire Bandai, was set to form a company known as Sega Bandai, Ltd. Though it was to be finalized in October of that year, it was called off in May after growing opposition from Bandai's midlevel executives. Bandai instead agreed to a business alliance with Sega. As a result of Sega's deteriorating financial situation, Nakayama resigned as Sega president in January 1998 in favor of Irimajiri. Nakayama's resignation may have in part been due to the failure of the merger, as well as Sega's 1997 performance. Stolar became CEO and president of Sega of America. After the launch of the
Nintendo 64 The (N64) is a home video game console developed by Nintendo. The successor to the Super Nintendo Entertainment System, it was released on June 23, 1996, in Japan, on September 29, 1996, in North America, and on March 1, 1997, in Europe and ...
in the U.S. during 1996, sales of the Saturn and its games fell sharply in much of the west. The PlayStation outsold the Saturn three-to-one in the U.S. in 1997, and the latter failed to gain a foothold in Europe and Australia, where the Nintendo 64 would not release until March 1997. After several years of declining profits, Sega had a slight increase in the fiscal year ended March 1997, partly driven by increasing arcade revenue, while outperforming Nintendo during the mid-term period. However, in the fiscal year ending March 1998, Sega suffered its first financial loss since its 1988 listing on the
Tokyo Stock Exchange The , abbreviated as Tosho () or TSE/TYO, is a stock exchange located in Tokyo, Japan. It is the third largest stock exchange in the world by aggregate market capitalization of its listed companies, and the largest in Asia. It had 2,292 listed ...
as both a
parent company A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
and a corporation as a whole. Shortly before the announcement of the losses, Sega discontinued the Saturn in North America to prepare for the launch of its successor, the
Dreamcast The is a home video game console released by Sega on November 27, 1998, in Japan; September 9, 1999, in North America; and October 14, 1999, in Europe. It was the first sixth-generation video game console, preceding Sony's PlayStation 2, Nint ...
, releasing remaining games in low quantities. The decision to discontinue the Saturn effectively left the North American home console market without Sega games for over a year, with most of its activity in the country coming from arcade divisions. The Saturn lasted longer in some Europe territories and particularly Japan, with it notably outperforming the Nintendo 64 in the latter. Nonetheless, Irimajiri confirmed in an interview with Japanese newspaper ''Daily Yomiuri'' that Saturn development would stop at the end of 1998 and games would continue to be produced until mid-1999. With lifetime sales of 9.26 million units, the Saturn is retrospectively considered a
commercial failure Failure is the state or condition of not meeting a desirable or intended objective, and may be viewed as the opposite of success. The criteria for failure depends on context, and may be relative to a particular observer or belief system. One ...
in much of the world. While Sega had success with the
Model 3 The Tesla Model 3 is a compact executive sedan that is battery powered and produced by Tesla. Limited production of the Model 3 began in mid-2017, with the first production vehicle rolling off the assembly line on July 7, 2017. The offici ...
arcade board and titles like ''
Virtua Fighter 3 is the sequel to 1994's ''Virtua Fighter 2'' and the third fighting game in the ''Virtua Fighter'' series, developed by Sega AM2 and published by Sega in 1996. It was the first arcade game to run on the Sega Model 3 system board. Like its pred ...
'', Sega's arcade divisions struggled in the West during the late 1990s. Horowitz 2018, pp. 211–212 On the other hand, Sega's arcade divisions were more successful in Asia, with Sega's overall arcade revenues increasing year-on-year throughout the late 1990s, but it was not enough to offset the significant declining revenues of Sega's home consumer divisions.


1998–2001: Dreamcast and continuing struggles

Despite a 75 percent drop in half-year profits just before the Japanese launch of the Dreamcast, Sega felt confident about its new system. The Dreamcast attracted significant interest and drew many pre-orders. Sega announced that ''
Sonic Adventure is a 1998 platform game for Sega's Dreamcast and the first main ''Sonic the Hedgehog'' game to feature 3D gameplay. It follows Sonic the Hedgehog (character), Sonic the Hedgehog, Miles "Tails" Prower, Knuckles the Echidna, Amy Rose, Big the ...
'', the next game starring company mascot Sonic the Hedgehog, would be a Dreamcast
launch game This list includes terms used in video games and the video game industry, as well as slang used by players. 0–9 A ...
. It was promoted with a large-scale public demonstration at the Tokyo Kokusai Forum Hall. Due to a high failure rate in the manufacturing process, Sega could not ship enough consoles for the Dreamcast's Japanese launch. As more than half of its limited stock had been pre-ordered, Sega stopped pre-orders in Japan. Before the launch, Sega announced the release of its New Arcade Operation Machine Idea (NAOMI)
arcade system board An arcade video game takes player input from its controls, processes it through electrical or computerized components, and displays output to an electronic monitor or similar display. Most arcade video games are coin-operated, housed in an arc ...
, which served as a cheaper alternative to the Sega Model 3. NAOMI shared technology with the Dreamcast, allowing nearly identical ports of arcade games. The Dreamcast launched in Japan on November 27, 1998. The entire stock of 150,000 consoles sold out by the end of the day. Irimajiri estimated that another 200,000 to 300,000 Dreamcast units could have been sold with sufficient supply. He hoped to sell more than a million Dreamcast units in Japan by February 1999, but less than 900,000 were sold. The low sales undermined Sega's attempts to build up a sufficient
installed base Installed base (also install base, install ''ed'' user base or just user base) is a measure of the number of units of a product or service that are actually in use, as opposed to market share, which only reflects sales over a particular period. ...
to ensure the Dreamcast's survival after the arrival of competition from other manufacturers. Sega suffered a further ¥42.881 billion consolidated net loss in the fiscal year ending March 1999, and announced plans to eliminate 1,000 jobs, nearly a quarter of its workforce. Before the Western launch, Sega reduced the price of the Dreamcast in Japan by JP¥9,100, effectively making it unprofitable but increasing sales. On August 11, 1999, Sega of America confirmed that Stolar had been fired. Peter Moore, whom Stolar had hired as a Sega of America executive only six months before, was placed in charge of the North American launch. The Dreamcast launched in North America on September 9, 1999, with 18 games. Sega set a record by selling more than 225,132 Dreamcast units in 24 hours, earning $98.4 million in what Moore called "the biggest 24 hours in entertainment retail history". Within two weeks, U.S. Dreamcast sales exceeded 500,000. By Christmas, Sega held 31 percent of the U.S. video game market by revenue. On November 4, Sega announced it had sold more than a million Dreamcast units. Nevertheless, the launch was marred by a glitch at one of Sega's manufacturing plants, which produced defective
GD-ROM GD-ROM (an abbreviation of "Gigabyte Disc Read-Only Memory") is a proprietary optical disc format originally used for the Dreamcast video game console, as well as its arcade counterpart, the Sega NAOMI and select Triforce arcade board titles. I ...
s where
data In the pursuit of knowledge, data (; ) is a collection of discrete values that convey information, describing quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpret ...
was not properly recorded onto the disc. Sega released the Dreamcast in Europe on October 14, 1999. While Sega sold 500,000 units in Europe by Christmas 1999, sales there slowed, and by October 2000 Sega had sold only about a million units. Though the Dreamcast's launch was successful, Sony's PlayStation still held 60 percent of the overall market share in North America at the end of 1999. On March 2, 1999, in what one report called a "highly publicized,
vaporware In the computer industry, vaporware (or vapourware) is a product, typically computer hardware or software, that is announced to the general public but is late or never actually manufactured nor officially cancelled. Use of the word has broade ...
-like announcement", Sony revealed the first details of the
PlayStation 2 The PlayStation 2 (PS2) is a home video game console developed and marketed by Sony Computer Entertainment. It was first released in Japan on 4 March 2000, in North America on 26 October 2000, in Europe on 24 November 2000, and in Australia on ...
. The same year, Nintendo announced that its next console would meet or exceed anything on the market, and
Microsoft Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washi ...
began development of its own console, the
Xbox Xbox is a video gaming brand created and owned by Microsoft. The brand consists of five video game consoles, as well as applications (games), streaming services, an online service by the name of Xbox network, and the development arm by the ...
. Sega's initial momentum proved fleeting as U.S. Dreamcast sales—which exceeded 1.5 million by the end of 1999—began to decline as early as January 2000. Poor Japanese sales contributed to Sega's ¥42.88 billion ($404 million) consolidated net loss in the fiscal year ending March 2000. This followed a similar loss of ¥42.881 billion the previous year and marked Sega's third consecutive annual loss. Sega's overall sales for the term increased 27.4 percent, and Dreamcast sales in North America and Europe greatly exceeded its expectations. However, this coincided with a decrease in profitability due to the investments required to launch the Dreamcast in Western markets and poor software sales in Japan. At the same time, worsening conditions reduced the profitability of Sega's Japanese arcade business, prompting the closure of 246 locations. Moore became the president and chief operating officer of Sega of America on 8 May, 2000. He said the Dreamcast would need to sell 5 million units in the U.S. by the end of 2000 to remain viable, but Sega fell short of this goal with some 3 million units sold. Moreover, Sega's attempts to spur Dreamcast sales through lower prices and cash rebates caused escalating financial losses. In March 2001, Sega posted a consolidated net loss of ¥51.7 billion ($417.5 million). While the PlayStation 2's October 26 U.S. launch was marred by shortages, this did not benefit the Dreamcast as much as expected, as many disappointed consumers continued to wait or purchased a PSone. Eventually, Sony and Nintendo held 50 and 35 percent of the U.S. video game market respectively, while Sega held only 15 percent. The '' Puyo Puyo'' IP was acquired by Sega in 1998.


2001–2003: Shift to third-party software development

CSK chairman Isao Okawa replaced Irimajiri as president of Sega on May 22, 2000. Okawa had long advocated that Sega abandon the console business. Others shared this view; Sega co-founder David Rosen had "always felt it was a bit of a folly for them to be limiting their potential to Sega hardware", and Stolar had suggested Sega should have sold the company to Microsoft. In a September 2000 meeting with Sega's Japanese executives and heads of its first-party game studios, Moore and Sega of America executive Charles Bellfield recommended that Sega abandon its console business. In response, the studio heads walked out. Sega announced an official company name change from Sega Enterprises, Ltd. to Sega Corporation effective November 1, 2000. Sega stated in a release that this was to display its commitment to its "network entertainment business". On January 23, 2001, Japanese newspaper ''
Nihon Keizai Shinbun ''The Nikkei'', also known as , is the flagship publication of Nikkei, Inc. (based in Tokyo) and the world's largest financial newspaper, with a daily circulation exceeding 1.73 million copies. The Nikkei 225, a stock market index for the Tok ...
'' reported that Sega would cease production of the Dreamcast and develop software for other platforms. After an initial denial, Sega released a press release confirming it was considering producing software for the PlayStation2 and
Game Boy Advance The (GBA) is a 32-bit handheld game console developed, manufactured and marketed by Nintendo as the successor to the Game Boy Color. It was released in Japan on March 21, 2001, in North America on June 11, 2001, in the PAL region on June 22, ...
as part of its "new management policy". On January 31, 2001, Sega announced the discontinuation of the Dreamcast after March 31 and the restructuring of the company as a "platform-agnostic" third-party developer. Sega also announced a Dreamcast price reduction to eliminate its unsold inventory, estimated at 930,000 units as of April 2001. This was followed by further reductions to clear the remaining inventory. The final manufactured Dreamcast was autographed by the heads of all nine of Sega's first-party game studios, plus the heads of sports game developer
Visual Concepts Visual Concepts Entertainment is an American video game developer based in Novato, California. Founded in May 1988, the company is best known for developing sports games in the ''2K'' franchise, most recently ''NBA 2K'' and '' WWE 2K'', and pr ...
and audio studio Wave Master, and given away with 55 first-party Dreamcast games through a competition organized by ''
GamePro Gamepro.com is an international multiplatform video game magazine media company that covers the video game industry, video game hardware and video game software in countries such as Germany and France. The publication, GamePro, was originally ...
''. Okawa, who had loaned Sega $500 million in 1999, died on March 16, 2001. Shortly before his death, he forgave Sega's debts to him and returned his $695 million worth of Sega and CSK stock, helping the company survive the third-party transition. He held failed talks with Microsoft about a sale or
merger Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspec ...
with their Xbox division. According to former Microsoft executive Joachim Kempin, Microsoft founder
Bill Gates William Henry Gates III (born October 28, 1955) is an American business magnate and philanthropist. He is a co-founder of Microsoft, along with his late childhood friend Paul Allen. During his career at Microsoft, Gates held the positions ...
decided against acquiring Sega because "he didn't think that Sega had enough muscle to eventually stop Sony." A business alliance with Microsoft was announced where Sega develops 11 games for the new Xbox console. As part of the restructuring, nearly one third of Sega's Tokyo workforce was laid off in 2001. 2002 was Sega's fifth consecutive fiscal year of net losses. After Okawa's death, Hideki Sato, a 30-year Sega veteran who had worked on Sega's consoles, became company president. Following poor sales in 2002, Sega cut its profit forecast for 2003 by 90 percent, and explored opportunities for mergers. In 2003, Sega began talks with
Sammy Corporation is a Japanese developer and retailer of pachinko and pachislot machines, headquartered in Shinagawa, Tokyo. Its South Korean office, Sammy Amusement Service, is headquartered in Seoul, South Korea. Sammy is a subsidiary of the entertainment cong ...
–a
pachinko is a mechanical game originating in Japan that is used as an arcade game, and much more frequently for gambling. Pachinko fills a niche in Japanese gambling comparable to that of the slot machine in the West as a form of low-stakes, low-st ...
and
pachislot A slot machine (American English), fruit machine (British English) or poker machine (Australian English and New Zealand English) is a gambling machine that creates a game of chance for its customers. Slot machines are also known pejoratively a ...
manufacturing company–and video game company Namco. The president of Sammy,
Hajime Satomi is a Japanese business magnate. Satomi is known as the founder of Sammy Corporation, which merged with the Japan-based video game and arcade game producer Sega to form the holding company Sega Sammy Holdings. History Hajime Satomi withdrew fr ...
, had a history with Sega, as he was mentored by Isao Okawa and was previously asked to be CEO of Sega. On February 13, Sega announced that it would merge with Sammy; however, as late as April 17, Sega was still in talks with Namco, which was attempting to overturn the merger. Sega's consideration of Namco's offer upset Sammy executives. The day after Sega announced it was no longer planning to merge with Sammy, Namco withdrew its offer. Horowitz 2018, pp. 253–257 In 2003, Sato and COO Tetsu Kamaya stepped down; Sato was replaced by Hisao Oguchi, the head of the Sega studio Hitmaker. Moore left Sega in January 2003 following a meeting in which he was frustrated by Japanese executives refusing to adapt to industry changes, such as the demand for mature games such as ''
Grand Theft Auto III ''Grand Theft Auto III'' is a 2001 action-adventure game developed by DMA Design and published by Rockstar Games. It is the third main entry in the ''Grand Theft Auto'' series, following 1999's ''Grand Theft Auto 2'', and the fifth instalment o ...
''. Hideaki Irie, who had worked at
Agetec Agetec Inc. ("ASCII Game Entertainment Technology") is an American video game publishing company that is best known for bringing Japanese titles to the United States. The company was formed through ASCII Corporation, spinning off their American di ...
and
ASCII ASCII ( ), abbreviated from American Standard Code for Information Interchange, is a character encoding standard for electronic communication. ASCII codes represent text in computers, telecommunications equipment, and other devices. Because ...
, became the new president and COO of Sega of America in October 2003.


2003–2015: Sammy takeover and business expansion

In August 2003, Sammy bought 22.4 percent of Sega's shares from CSK, making Sammy into Sega's largest shareholder. In the same year, Hajime Satomi said Sega's activity would focus on its profitable arcade business as opposed to loss-incurring home software development. In 2004,
Sega Sammy Holdings (also known as the Sega Sammy Group and generally Sega Sammy, stylized as SᴇɢᴀSammy) is a Japanese holding company formed from the merger of Sega and Sammy Corporation in 2004. Both companies are involved in the amusement industry (Seg ...
, an entertainment conglomerate, was created; Sega and Sammy became subsidiaries of the new holding company, both companies operating independently while the executive departments merged. According to the first Sega Sammy ''Annual Report'', the merger went ahead as both companies were facing difficulties. Satomi said Sega had been operating at a loss for nearly ten years, while Sammy feared stagnation and overreliance of its highly profitable pachislot and pachinko machine business and wanted to diversify. Sammy acquired the remaining percentages of Sega, completing a
takeover In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...
. The stock swap deal valued Sega between $1.45 billion and $1.8 billion. Sega Sammy Holdings was structured into four parts: Consumer Business (video games), Amusement Machine Business (arcade games), Amusement Center Business (Sega's theme parks and arcades) and Pachislot and Pachinko Business (Sammy's pachinko and pachislot business). In response to the decline of the global arcade industry in the late 1990s, Sega created several novel concepts tailored to the Japanese market. ''
Derby Owners Club ' is a horse racing arcade game developed by Sega AM3 and published by Sega. Players are put into the roles of breeder, trainer, jockey, and owner of a thoroughbred racehorse. Statistics are saved on a IC card that can be put into any machine. The ...
'' was an arcade machine with memory cards for data storage, designed to take over half an hour to complete and costing JP¥500 to play. Testing of ''Derby Owners Club'' in a Chicago arcade showed that it had become the most popular machine at the location, with a 92% replay rate. While the eight-player Japanese version of the game was released in 1999, the game was reduced to a smaller four-player version due to size issues and released in North America in 2003. The machine considered was too expensive for the western market, and it did not perform consistently well at all locations. Similar issues were faced with trading card game machines such as ''
World Club Champion Football ' is a Japanese collectible card game and football/soccer sports arcade video game released by Sega. The game is officially abbreviated as WCCF. It is the first arcade game to combine trading cards with a video game, establishing a new genre of a ...
'' and '' Mushiking: The King of Beetles'' or bringing internet functionality to arcades with ALL.Net, a network system for arcade games. While the Japanese market retained core players, western arcades had become more focused on casual footfall, and Sega Amusements Europe, the entity created to officially distribute and manufacture Sega's machines on the continent after the consolidation of its regional divisions, subsequently decided to develop more games locally that were better suited to western tastes. The GameWorks chain of arcades came under the sole ownership of Sega, which previously was shared with
Vivendi Universal Vivendi SE is a French mass media holding company headquartered in Paris. Widely known as the owner of Gameloft, Groupe Canal+, Havas, Editis, Prisma Media, Vivendi Village and Dailymotion, the company has activities in television, film, video ...
. The chain was sold in 2011. In 2009,
Sega Republic The Dubai Mall ( ar, دبي مول "Dubai Mall") is a shopping mall in Dubai. It is the second largest mall in the world after the Iran Mall by total land area, and the 26th-largest shopping mall in the world by gross leasable area, tying with ...
, an indoor theme park, opened in
Dubai Dubai (, ; ar, wikt:دبي, دبي, translit=Dubayy, , ) is the List of cities in the United Arab Emirates#Major cities, most populous city in the United Arab Emirates (UAE) and the capital of the Emirate of Dubai, the most populated of the 7 ...
. Sega gradually reduced its arcade centers from 450 in 2005 to around 200 in 2015. However arcade machine sales incurred higher profits than the company's console, mobile and PC games on a year-to-year basis until the fiscal year of 2014. In order to drive growth in western markets, Sega announced new leadership for Sega of America and Sega Europe in 2005.
Simon Jeffery Simon Jeffery is the chief publishing officer of ngmoco's Plus+ Publishing group. Similar to EA Publishing Partners group, Plus+ Publishing is a combined technology, App Store publishing and custom support play for iPhone and iPod touch develope ...
became president and COO of Sega of America, and Mike Hayes president and COO for Sega Europe. In 2009, Mike Hayes became president of the combined outfit of Sega West which includes both Sega of America and Sega Europe, due to Simon Jeffery leaving. Mike Hayes is credited for re-inventing Sega's software strategy taking it from failing to 500 Million in revenue, focusing on PC with franchises like ''
Total War Total war is a type of warfare that includes any and all civilian-associated resources and infrastructure as legitimate military targets, mobilizes all of the resources of society to fight the war, and gives priority to warfare over non-com ...
'' and ''
Football Manager ''Football Manager'' (also known as ''Worldwide Soccer Manager'' in North America from 2004 to 2008) is a series of football management simulation video games developed by British developer Sports Interactive and published by Sega. The game bega ...
,'' selling ''
Mario & Sonic at the Olympic games is a Fictional crossover, crossover sports game, sports and party game developed by the Sega Sports R&D, Sega Sports R&D Department. It is the first installment on the ''Mario & Sonic'' series. It was published by Nintendo in Japan and by Sega ...
'' and at one point being one of the top 3 costumers on Steam. In the console and handheld business, Sega found success in the Japanese market with the ''
Yakuza , also known as , are members of transnational organized crime syndicates originating in Japan. The Japanese police and media, by request of the police, call them , while the ''yakuza'' call themselves . The English equivalent for the ter ...
,
Phantasy Star Portable is an action role-playing game co-developed by Sonic Team and Alfa System, and published by Sega for the PlayStation Portable. Sega released the game to Japan in July 2008, and to other markets in 2009. In addition to the game's single-player ...
'' and '' Hatsune Miku: Project DIVA'' series. Related to Hatsune Miku, in 2010, Sega began providing the 3D imaging for her holographic concerts. Sega also distributes games from smaller Japanese game developers and sells localizations of Western games in Japan. In 2013,
Index Corporation , formerly known as , is a Japanese corporate information and communications technology company owned by Sawada Holdings. "Index Corporation" was a corporate name used by three different Japanese companies, between 1997 and 2016, the last one be ...
was purchased by Sega Sammy after going bankrupt. The year before, Sega signed a deal to distribute Atlus titles in Japan. After the buyout, Sega implemented a
corporate spin-off A corporate spin-off, also known as a spin-out, or starburst or hive-off, is a type of corporate action where a company "splits off" a section as a separate business or creates a second incarnation, even if the first is still active. Charact ...
with Index. The latter's game assets were rebranded as
Atlus is a Japanese video game developer, publisher, arcade manufacturer and distribution company based in Tokyo. A subsidiary of Sega, the company is known for video game series such as '' Megami Tensei'', '' Persona'', '' Etrian Odyssey'' and ...
, a wholly owned subsidiary of Sega. In the mobile market, Sega released its first app on the
iTunes Store The iTunes Store is a digital media store operated by Apple Inc. It opened on April 28, 2003, as a result of Steve Jobs' push to open a digital marketplace for music. As of April 2020, iTunes offered 60 million songs, 2.2 million apps, 25,00 ...
with a version of ''
Super Monkey Ball ''Super Monkey Ball'' is a series of arcade platform video games initially developed by Amusement Vision and published by Sega. The series debuted in 2001 with the arcade game ''Monkey Ball'', which was ported to GameCube as ''Super Monkey Ba ...
'' in 2008. Due in part to the decline of packaged game sales worldwide in the 2010s, Sega began layoffs and closed five offices based in Europe and Australia on July 1, 2012. This was to focus on the digital game market, such as PC and mobile devices. Strong performers for Sega on these platforms include '' Sonic Dash'' in Western markets and ''
Phantasy Star Online 2 is a free-to-play online action role-playing game in the ''Phantasy Star'' series, developed and published by Sega. It was created as a successor to ''Phantasy Star Online'' and '' Phantasy Star Universe'', ''Phantasy Star Online 2'' features ...
'' and '' Chain Chronicle'' in Asian markets. In 2012, Sega also began acquiring studios for mobile development, studios such as Hardlight,
Three Rings Design Three Rings Design, Inc. was an online game developer that was founded on March 30, 2001, by Daniel James and Michael Bayne. The company was named in honor of the Three Rings of the Elven-kings in Tolkien mythology. The company's first product ...
, and Demiurge Studios becoming fully owned subsidiaries. 19 older mobile games were pulled due to quality concerns in May 2015. To streamline operations, Sega established operational firms for each of its businesses in the 2010s. In 2012, Sega established Sega Networks as a subsidiary company for its mobile games. The same year, Sega Entertainment was established for Sega's amusement facility business. In January 2015, Sega of America announced its relocation from San Francisco to
Atlus USA Atlus West, formerly known as Atlus U.S.A., Inc., is the North American publishing branch of Japanese video game company Atlus, primarily known for localizing games for both them and other third-party developers. Its first original role-playing ...
's headquarters in
Irvine, California Irvine () is a master-planned city in South Orange County, California, United States, in the Los Angeles metropolitan area. The Irvine Company started developing the area in the 1960s and the city was formally incorporated on December 28, 197 ...
, which was completed later that year. From 2005 to 2015, Sega's
operating income In accounting and finance, earnings before interest and taxes (EBIT) is a measure of a firm's profit that includes all incomes and expenses (operating and non-operating) except interest expenses and income tax expenses. Operating income and ope ...
generally saw improvements compared to Sega's past financial problems, but was not profitable every year.


2015–present: Restructuring

In April 2015, Sega Corporation was reorganized into Sega Group, one of three groups of Sega Sammy Holdings. Sega Holdings Co., Ltd. was established, with four business sectors under its control. Haruki Satomi, son of Hajime Satomi, took office as president and CEO of the company in April 2015. Sega Games Co., Ltd. became the legal name of Sega Corporation and continued to manage home video games, while Sega Interactive Co., Ltd. was founded to take control of the arcade division. Sega Networks merged with Sega Games Co., Ltd. in 2015. At the
Tokyo Game Show , commonly known as TGS, is a video game expo / convention held annually in September in the Makuhari Messe, in Chiba, Japan. It is presented by the Computer Entertainment Supplier's Association (CESA) and Nikkei Business Publications, Inc. T ...
in September 2016, Sega announced that it had acquired the intellectual property and development rights to all games developed and published by
Technosoft was a Japanese video game developer and publisher based headquartered in Sasebo, Nagasaki. Also known as "Tecno Soft", the company was founded in February 1980 as Sasebo Microcomputer Center, before changing its name to Technosoft in 1982. The c ...
. Effective from January 2017, 85.1% of the shares in Sega's theme park business became owned by China Animations Character Co., renaming the former Sega Live Creation to CA Sega Joypolis. Sega Sammy Holdings announced in April 2017 that it would relocate its head office functions and domestic subsidiaries located in the Tokyo metropolitan area to
Shinagawa-ku is a special ward in Tokyo, Japan. The Ward refers to itself as Shinagawa City in English. The Ward is home to ten embassies. , the Ward had an estimated population of 380,293 and a population density of 16,510 persons per km2. The total a ...
by January 2018. This was to consolidate scattered head office functions including Sega Sammy Holdings, Sammy Corporation, Sega Holdings, Sega Games, Atlus, Sammy Network, and Dartslive. Sega's previous headquarters in Ōta was sold in 2019 and will likely be torn down. In June 2017, Chris Bergstresser replaced Jurgen Post as president and COO of Sega Europe. In June 2018, Gary Dale, formerly of
Rockstar Games Rockstar Games, Inc. is an American video game publisher based in New York City. The company was established in December 1998 as a subsidiary of Take-Two Interactive, using the assets Take-Two had previously acquired from BMG Interactive. Foun ...
and
Take-Two Interactive Take-Two Interactive Software, Inc. is an American video game holding company based in New York City and founded by Ryan Brant in September 1993. The company owns two major publishing labels, Rockstar Games and 2K, which operate internal ...
, replaced Chris Bergstresser as president and COO of Sega Europe. A few months later, Ian Curran, a former executive at THQ and
Acclaim Entertainment Acclaim Entertainment, Inc. was an American video game publisher based in Glen Cove, New York. Originally formed by Greg Fischbach, Robert Holmes and Jim Scoroposki out of an Oyster Bay storefront in 1987, the company established a worldwide ...
, replaced John Cheng as president and COO of Sega of America in August 2018. In October 2018, Sega reported favorable western sales results from games such as ''
Yakuza 6 ''Yakuza 6: The Song of Life'' is an action-adventure video game developed by Ryu Ga Gotoku Studio and published by Sega for PlayStation 4. The game is the seventh main entry in the ''Yakuza'' series and the final main game to feature Kazuma Kiry ...
'' and ''
Persona 5 is a 2016 role-playing video game developed by Atlus. It takes place in modern-day Tokyo and follows a high school student known by the pseudonym Joker who transfers to a new school after being falsely accused of assault and put on probation ...
'', due to the localization work of Atlus USA. Despite a 35-percent increase in the sale of console games and success in its PC game business, profits fell 70 percent for the 2018
fiscal year A fiscal year (or financial year, or sometimes budget year) is used in government accounting, which varies between countries, and for budget purposes. It is also used for financial reporting by businesses and other organizations. Laws in many ...
in comparison to the previous year, mainly due to the digital games market which includes mobile games as well as ''
Phantasy Star Online 2 is a free-to-play online action role-playing game in the ''Phantasy Star'' series, developed and published by Sega. It was created as a successor to ''Phantasy Star Online'' and '' Phantasy Star Universe'', ''Phantasy Star Online 2'' features ...
''. In response, Sega announced that for its digital games it would focus on releases for its existing
intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...
and also focus on growth areas such as packaged games in the overseas market. Sega blamed the loss on market miscalculations and having too many games under development. Projects in development at Sega included a new game in the ''Yakuza'' series, the ''Sonic the Hedgehog'' film, and the
Sega Genesis Mini The Sega Genesis Mini, known as the Mega Drive Mini in regions outside of North America, is a dedicated console modeled on the Sega Genesis. The Mini emulates the original console's 16-bit hardware, and includes 42 games ported by M2. It was r ...
, which was released in September 2019. In May 2019, Sega acquired Two Point Studios, known for ''
Two Point Hospital ''Two Point Hospital'' is a 2018 business simulation game developed by Two Point Studios and published by Sega for Linux, macOS, and Windows. Console versions for the Nintendo Switch, PlayStation 4, and Xbox One were released in February 2020. ...
''. On April 1, 2020, Sega Interactive merged with Sega Games Co., Ltd. The company was again renamed Sega Corporation, while Sega Holdings Co., Ltd. was renamed Sega Group Corporation. According to a company statement, the move was made to allow greater research and development flexibility. In April 2020, Sega sold Demiurge Studios to Demiurge co-founder Albert Reed. Demiurge said it would continue to support the mobile games it developed under Sega. As part of the company's 60th anniversary of the brand name, Sega announced the Game Gear Micro microconsole, scheduled for October 6, 2020 in Japan. In announcement that was dubbed "revolutionary", Sega also announced its Fog Gaming platform, which will use the unused processing power of arcade machines in Japanese arcades overnight to help power
cloud gaming Cloud gaming, sometimes called gaming on demand or gaming-as-a-service or game streaming, is a type of online gaming that runs video games on remote servers and streams them directly to a user's device, or more colloquially, playing a game rem ...
applications. During the latter half of 2020, much of the financial gains Sega made in the earlier part of the year were wiped out due to the impact of the
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
on its Sega Entertainment division, which ran its arcades. In November, Sega Sammy sold 85.1% of its shares in the division to Genda Inc., though the Sega branding and coin-operated machines produced by the company continue to be found in the arcades. Arcade game development was unaffected by the move. By January 2022, Sega sold the remaining portion of this division to Genda. Contrasting its losses brought forth by amusement operations in 2020, sales and critical reception of Sega's home console games improved;
Metacritic Metacritic is a website that aggregates reviews of films, TV shows, music albums, video games and formerly, books. For each product, the scores from each review are averaged (a weighted average). Metacritic was created by Jason Dietz, Marc ...
named Sega the best publisher of the year in 2020. Of its 28 releases that year, 95% had "good" Metacritic scores (above 75%), including two with "great" scores (above 90% for ''
Persona 5 Royal is a 2016 role-playing video game developed by Atlus. It takes place in modern-day Tokyo and follows a high school student known by the pseudonym Joker who transfers to a new school after being falsely accused of assault and put on probation. ...
'' and ''
Yakuza 0 ''Yakuza 0'' is an action-adventure game developed by Ryu Ga Gotoku Studio and published by Sega. It is the sixth main entry in the '' Yakuza series'' and a prequel to the original game. It was released for PlayStation 3 and PlayStation 4 in J ...
''), with an average Metacritic score of 81.6% for all 2020 Sega releases.


Corporate structure

Sega's global headquarters are in
Shinagawa, Tokyo is a special ward in Tokyo, Japan. The Ward refers to itself as Shinagawa City in English. The Ward is home to ten embassies. , the Ward had an estimated population of 380,293 and a population density of 16,510 persons per km2. The total are ...
, Japan. The company was scheduled to move there in August 2018. Sega also has offices in Irvine, California (as Sega of America), in London (as Sega Europe), in Seoul, South Korea (as Sega Publishing Korea), and in Singapore, Hong Kong, Shanghai, and Taipei. In other regions, Sega has contracted distributors for its games and consoles, such as Tectoy in Brazil. Sega has had offices in France, Germany, Spain, and Australia; those markets have since contracted distributors. Relations between the regional offices have not always been smooth. Some conflict in the 1990s may have been caused by Sega president Nakayama and his admiration for Sega of America; according to Kalinske, "There were some guys in the executive suites who really didn't like that Nakayama in particular appeared to favor the U.S. executives. A lot of the Japanese executives were maybe a little jealous, and I think some of that played into the decisions that were made." By contrast, author
Steven L. Kent Steven L. Kent (born August 28, 1960), son of woodworker Ron Kent, is an American writer, known for both video game journalism and military science fiction novels. Career In 1993, Steven started work as a freelance journalist, writing monthly ...
said Nakayama bullied American executives and that Nakayama believed the Japanese executives made the best decisions. Kent also said Sega of America CEOs Kalinske, Stolar, and Moore dreaded meeting with Sega of Japan executives. In 2021, Sega Group Corporation was absorbed into Sega Corporation.


Subsidiaries of Sega Corporation

After the formation of Sega Group in 2015 and the founding of Sega Holdings, the former Sega Corporation was renamed Sega Games Co., Ltd. Under this structure, Sega Games was responsible for the home video game market and consumer development, while Sega Interactive Co., Ltd., comprised Sega's arcade game business. The two were consolidated in 2020, renamed as Sega Corporation. The company includes Sega Networks, which handles game development for
smartphone A smartphone is a portable computer device that combines mobile telephone and computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities and extensive mobile operating systems, whi ...
s. Sega Corporation develops and publishes games for major video game consoles and arcade cabinets, and has not expressed interest in developing consoles again. According to former Sega Europe CEO Mike Brogan, "There is no future in selling hardware. In any market, through competition, the hardware eventually becomes a commodity... If a company has to sell hardware then it should only be to leverage software, even if that means taking a hit on the hardware." Sega Toys Co., Ltd., originally known as Yonezawa Toys and acquired by Sega in 1991, has created toys for children's franchises such as '' Oshare Majo: Love and Berry'', '' Mushiking: King of the Beetles'', ''
Lilpri , also known as , is a Japanese shōjo anime directed by Makoto Moriwaki. It was adapted from the Sega arcade game of the same name. It was also adapted into two manga series by Mai Jinna. Plot Ringo Yukimori was walking with her mom and ...
'', ''Bakugan'', ''
Jewelpet is a Japanese media franchise and toy line created in 2008 as a joint venture between Sanrio and Sega Toys, produced by the third character designer of Hello Kitty, Yuko Yamaguchi and illustrated by the character designer of Cinnamoroll, Miyu ...
'', '' Rilu Rilu Fairilu'', ''
Dinosaur King is a Japanese card-based arcade game from Sega that uses similar gameplay mechanics to '' Mushiking''. The game was revealed in JAMMA 2005. A Nintendo DS version was also later released. In the fall of 2008, Upper Deck Company release ...
'' and ''
Hero Bank is a role-playing video game developed and published by Sega for the Nintendo 3DS. It was released in Japan on March 20, 2014. A sequel, ''Hero Bank 2'', was released in Japan on November 27, 2014. An anime television series adaptation by TMS ...
''. Products released in the West include the home planetarium Homestar and the robot dog
iDog The iDog was a robot dog toy designed and manufactured by Sega Toys. An iDog figure receives input from an external music source, such as an MP3 player, and will light up and "dance" to the music's rhythm. It is marketed as the eDog in Germany, ...
. The Homestar was released in 2005 and has been improved several times. Its newest model, ''Flux'', was released in 2019. The series is developed by the Japanese inventor and entrepreneur
Takayuki Ohira is a Japanese engineer and the creator of the Megastar, a planetarium projector which was recorded in Guinness World Records as the planetarium projector that can project the highest number of stars in the world. Ohira has also designed the Sega ...
. As a recognized specialist for professional planetariums, he has received numerous innovation prizes and supplies large planetariums internationally with his company Megastar. Sega Toys also inherited the
Sega Pico The Sega Pico, also known as is an educational video game console by Sega Toys. Marketed as " edutainment", the main focus of the Pico was educational video games for children between 3 and 7 years old. The Pico was released in June 1993 in Ja ...
handheld system and produced Pico software. Since the late 1960s, Sega has been affiliated with operations of
bowling alley A bowling alley (also known as a bowling center, bowling lounge, bowling arena, or historically bowling club) is a facility where the sport of bowling is played. It can be a dedicated facility or part of another, such as a clubhouse or dwelling ...
s and arcades through its former Sega Entertainment Co., Ltd. subsidiary in Japan, as well as a number of other smaller regional subsidiaries in other countries. Initiatives to expand operations in other territories, such as the US, UK, France, Spain, and Taiwan, have been more shortlived, and following the 85.1% majority acquisition of Sega Entertainment's shares in November 2020 to mitigate losses caused by the
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
, Sega's arcades in Japan since have been run under Genda Incorporated's Genda GiGO Entertainment division. Its DartsLive subsidiary creates electronic
darts Darts or dart-throwing is a competitive sport in which two or more players bare-handedly throw small sharp-pointed missiles known as darts at a round target known as a dartboard. Points can be scored by hitting specific marked areas of the bo ...
games, while Sega Logistics Service distributes and repairs arcade games. In 2015, Sega and Japanese advertising agency
Hakuhodo is a Japanese advertising and public relations company. It is headquartered at Akasaka Biz Tower in Akasaka, Minato, Tokyo. History Hakuhodo is one of the oldest advertising agencies in Japan and was founded by Hironao Seki at Nihonbashi-Hon ...
formed a joint venture, Stories LLC, to create entertainment for film and TV. Stories LLC has exclusive licensing rights to adapt Sega properties into film and television, and has partnered with producers to develop series based on properties including ''Shinobi'', ''Golden Axe'', ''Virtua Fighter'', ''The House of the Dead'', and ''Crazy Taxi''.


Software research and development

As a games publisher, Sega produces games through its research and development teams. The ''
Sonic the Hedgehog is a Japanese video game series and media franchise created by Sega. The franchise follows Sonic, an anthropomorphic blue hedgehog who battles the evil Doctor Eggman, a mad scientist. The main ''Sonic the Hedgehog'' games are platformers m ...
'' franchise, maintained through Sega's
Sonic Team is a video game developer owned by the Japanese video game company Sega as part of its Sega CS Research and Development No. 2 division. Sonic Team is best known for the long-running ''Sonic the Hedgehog'' series and games such as '' Nights int ...
division, is one of the best-selling franchises in the history of video games. Sega has also acquired third-party studios, including ordered by assigned division: * Sega Corporation: Atlus, Play Heart. * Sega Europe:
Amplitude Studios Amplitude Studios SASU is a French video game developer based in Paris. The studio was founded in January 2011 by former Ubisoft employees Romain de Waubert de Genlis and Mathieu Girard, and was acquired by Sega in June 2016. Amplitude is now a ...
,
Creative Assembly The Creative Assembly Limited (trade name: Creative Assembly) is a British video game developer based in Horsham, founded in 1987 by Tim Ansell. In its early years, the company worked on porting games to MS-DOS from Amiga and ZX Spectrum platfor ...
, Hardlight, Relic Entertainment, Sports Interactive, Two Point Studios; Sega's software research and development teams began with one development division operating under Sega's longtime head of R&D, Hisashi Suzuki. As the market increased for home video game consoles, Sega expanded with three Consumer Development (CS) divisions. After October 1983, arcade development expanded to three teams: Sega DD No. 1, 2, and 3. Some time after the release of ''
Power Drift is a kart racing game released in arcades by Sega in 1988. More technologically advanced than Sega's earlier 2.5D racing games, like '' Hang-On'' (1985) and ''Out Run'' (1986), in ''Power Drift'' the entire world and track consist of sprites. ...
'', the company restructured its teams again as the Sega Amusement Machine Research and Development Teams, or AM teams. Each arcade division was segregated, and a rivalry existed between the arcade and consumer development divisions. In what has been called "a brief moment of remarkable creativity", in 2000, Sega restructured its arcade and console development teams into nine semi-autonomous studios headed by the company's top designers. The studios were
United Game Artists (UGA) was a subsidiary of Sega headquartered in Shibuya, Tokyo, Japan. It was founded by Tetsuya Mizuguchi, a video game developer who had experience with Sega's AM3 division. After separating with Kenji Sasaki to form AM Annex, Mizuguchi le ...
,
Smilebit or Sega Sports R&D is a defunct development division of the Japanese video game company Sega. It was previously known as Smilebit, one of nine semi-autonomous studios which Sega established in 2000. Smilebit was previously known as R&D6 or AM6 w ...
, Hitmaker, Sega Rosso,
Sega Wow is a development department within Japanese video game developer Sega that also previously existed as Wow Entertainment and AM1 spent most of its early existence under the leadership of Rikiya Nakagawa and developed a number of arcade games f ...
, Overworks,
Amusement Vision is a video game developer housed within the Japanese video game company Sega as part of its division. It is known for developing the games in the ''Yakuza'' series, which the studio is named after, since ''Yakuza 5''. The studio's origins can b ...
, Sega AM2, and Sonic Team. Sega's design houses were encouraged to experiment and benefited from a relatively lax approval process. After taking over as company president in 2003, Hisao Oguchi announced his intention to consolidate Sega's studios. Prior to the acquisition by Sammy, Sega began the process of re-integrating its subsidiaries into the main company. Toshihiro Nagoshi, formerly the head of Amusement Vision, recalls this period, "in many ways a labour of love" from Sega, teaching the creatives the experience of managing a business. Sega still operates first-party studios as departments of its research and development division. Sonic Team exists as Sega's CS2 research and development department, while Sega's CS3 or Online department has developed games such as ''
Phantasy Star Online 2 is a free-to-play online action role-playing game in the ''Phantasy Star'' series, developed and published by Sega. It was created as a successor to ''Phantasy Star Online'' and '' Phantasy Star Universe'', ''Phantasy Star Online 2'' features ...
'', and Sega Interactive's AM2 department has more recently worked on projects such as smartphone game ''Soul Reverse Zero''. Toshihiro Nagoshi remained involved with research and development as Sega's chief creative officer or creative director while working on the ''Yakuza'' series until 2021.


Legacy

Sega is one of the world's most prolific arcade game producers, having developed more than 500 games, 70 franchises, and 20 arcade system boards since 1981. It has been recognized by
Guinness World Records ''Guinness World Records'', known from its inception in 1955 until 1999 as ''The Guinness Book of Records'' and in previous United States editions as ''The Guinness Book of World Records'', is a reference book published annually, listing world ...
for this achievement. Of Sega's arcade division, ''
Eurogamer ''Eurogamer'' is a British video game journalism website launched in 1999 and owned by alongside formed company Gamer Network. Its editor-in-chief is Martin Robinson. Since 2008, it is known for the formerly eponymous games trade fair EG ...
'''s Martin Robinson said, "It's boisterous, broad and with a neat sense of showmanship running through its range. On top of that, it has something that's often evaded its console-dwelling cousin: success." The Sega Genesis is often ranked among the best consoles in history. In 2014, ''USgamer'''s Jeremy Parish credited it for galvanizing the market by breaking Nintendo's near-monopoly, helping create modern
sports game A sports video game is a video game that simulates the practice of sports. Most sports have been recreated with a game, including team sports, track and field, extreme sports, and combat sports. Some games emphasize actually playing the spor ...
franchises, and popularizing television games in the UK. Kalinske felt Sega had innovated by developing games for an older demographic and pioneering the " street date" concept with the simultaneous North American and European release of ''
Sonic the Hedgehog 2 is a 1992 platform game developed by Sega Technical Institute (STI) for the Sega Genesis. It follows Sonic as he attempts to stop Doctor Eggman from stealing the Chaos Emeralds to power his space stationnamed The Death Egg. Like the first ''S ...
''. Sega of America's marketing campaign for the Genesis influenced marketing for later consoles. Despite its commercial failure, the Saturn is well regarded for its library, though it has been criticized for a lack of high-profile franchise releases. ''
Edge Edge or EDGE may refer to: Technology Computing * Edge computing, a network load-balancing system * Edge device, an entry point to a computer network * Adobe Edge, a graphical development application * Microsoft Edge, a web browser developed ...
'' wrote that "hardened loyalists continue to reminisce about the console that brought forth games like ''
Burning Rangers is a 1998 action game developed by Sonic Team and published by Sega for the Sega Saturn. ''Burning Rangers'' is set in a futuristic society in which fire is the remaining danger. Players control one of an elite group of firefighters, the Burn ...
'', ''
Guardian Heroes ''Guardian Heroes'' is a 2D side-scrolling beat 'em up video game in the vein of ''Final Fight'' or ''Golden Axe'', but with RPG elements. The development team called it a "fighting RPG". ''Guardian Heroes'' was developed by Treasure and release ...
'', '' Dragon Force'' and ''
Panzer Dragoon Saga ''Panzer Dragoon Saga'', known in Japan as is a 1998 role-playing video game developed by Team Andromeda and published by Sega for the Sega Saturn. The third in the ''Panzer Dragoon'' series, it replaced the games' rail shooter gameplay wit ...
''." Sega's management was criticized for its handling of the Saturn. According to Greg Sewart of '' 1Up.com'', "the Saturn will go down in history as one of the most troubled, and greatest, systems of all time". The Dreamcast is remembered for being ahead of its time, with several concepts that became standard in consoles, such as motion controls and online functionality. Its demise has been connected with transitions in the video game industry. In ''
1001 Video Games You Must Play Before You Die ''1001 Video Games You Must Play Before You Die'' is a video game reference book first published in October 2010. It consists of a list of video games released between 1970 and 2013, arranged chronologically by release date. Each entry in the list ...
'', Duncan Harris wrote that the Dreamcast's end "signaled the demise of arcade gaming culture ... Sega's console gave hope that things were not about to change for the worse and that the tenets of fast fun and bright, attractive graphics were not about to sink into a brown and green bog of realistic war games." Parish contrasted the Dreamcast's diverse library with the "suffocating sense of conservatism" that pervaded the industry in the following decade. In ''Eurogamer'', Damien McFerran wrote that Sega's decisions in the late 1990s were "a tragic spectacle of overconfidence and woefully misguided business practice". Travis Fahs of '' IGN'' noted that since the Sammy takeover Sega had developed fewer games and outsourced to more western studios, and that its arcade operations had been significantly reduced. Nonetheless, he wrote: "Sega was one of the most active, creative, and productive developers the industry has ever known, and nothing that can happen to their name since will change that." In 2015, Sega president Haruki Satomi told ''Famitsu'' that, in the previous ten years, Sega had "betrayed" the trust of older fans and that he hoped to re-establish the Sega brand. During the promotion of the Sega Genesis Mini, Sega executive manager Hiroyuki Miyazaki reflected on Sega's history, saying, "I feel like Sega has never been the champion, at the top of all the video game companies, but I feel like a lot of people love Sega because of the underdog image." Former Sega management cited the absence of ''
Dragon Quest previously published as ''Dragon Warrior'' in North America until 2005, is a franchise of Japanese role-playing video games created by Armor Project ( Yuji Horii), Bird Studio (Akira Toriyama) and Sugiyama Kobo ( Koichi Sugiyama) to its pu ...
'' and ''
Final Fantasy is a Japanese science fantasy anthology media franchise created by Hironobu Sakaguchi and developed and owned by Square Enix (formerly Square). The franchise centers on a series of fantasy and science fantasy role-playing video games. The ...
'' games on their home consoles as a reason for the console division's struggles, especially in Japan. In his 2018 book ''The Sega Arcade Revolution'', Horowitz connected Sega's decline in the arcades after 1995 with broader industry changes. He argued that its most serious problems came from the loss of its creative talent, particularly Yuji Naka and
Yu Suzuki is a Japanese game designer, producer, programmer, and engineer, who headed Sega's AM2 team for 18 years. Considered one of the first auteurs of video games, he has been responsible for a number of Sega's arcade hits, including three-dimen ...
, after the Sammy takeover, but concluded that "as of this writing, Sega is in its best financial shape of the past two decades. The company has endured." Horowitz 2018, p. 282


See also

*
List of Sega video game franchises This is a list of video game franchises by Sega or a subsidiary of the company. All series spanning multiple games are listed here. Games that were developed and published by third parties but released on Sega consoles are not listed here. Among t ...
* Lists of Sega games *
Sega, S.A. SONIC Sega, S.A. SONIC (also known as Segasa and Segasa d.b.a. Sonic) was a Spanish coin-operated amusement machines company established by Sega Enterprises-related shareholders incorporated by Bertram Leroy Siegel as MD in March 1968, which lasted until ...
*
Sega Technical Institute Sega Technical Institute (STI) was an American video game developer owned by Sega. Founded by the Atari veteran Mark Cerny in 1990, STI sought to combine elite Japanese developers, including the Sonic Team programmer Yuji Naka and his team, wit ...


Notes


References


External links

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