Sega (セガ?) (originally short for Service Games), officially styled as SEGA, is a Japanese multinational video game developer, publisher, and hardware development company headquartered in Tokyo, Japan, with multiple offices around the world. Sega developed and manufactured numerous home video game consoles from 1983 to 2001, but the financial losses incurred from their Dreamcast console caused the company to restructure itself in 2001, and focus on providing software as a third-party developer, exiting console manufacturing completely. Sega is the world's most prolific arcade producer, with 530 games in 73 franchises on 23 different arcade system boards since 1981.
Sega, along with their many substudios, are known for their multi-million selling game franchises including Sonic the Hedgehog, Virtua Fighter, Phantasy Star, Yakuza, and Total War, amongst many others. Sega's head offices are located in Ōta, Tokyo, Japan. Sega's North American division, Sega of America, is headquartered in Southern California, having moved there from San Francisco, California in 2015. Sega's European division, Sega Europe, is headquartered in the Brentford area of London, England. Sega Publishing Korea is headquartered in Jongno, Seoul, Korea. Sega's Australian and European operations outside of the United Kingdom closed on July 1, 2012, due to world economic pressures.
- 1 History
- 2 Other media
- 3 Company executives
- 4 See also
- 5 References
- 6 External links
Company origins (1940–1982)
Sega's roots can be traced back to a company based in Honolulu, Hawaii named Service Games, which began operations in 1940. In 1951, Raymond Lemaire and Richard Stewart moved the company to Tokyo, Japan to develop and distribute coin-operated jukeboxes, games, and slot machines. Within a few years Service Games began importing these machines to American military bases throughout Japan.
In 1954, David Rosen, an American officer in the Air Force, launched a two-minute photo booth business in Tokyo. This company eventually became Rosen Enterprises, and in 1957 began importing coin-operated games to Japan. By 1965, Rosen Enterprises grew to a chain of over 200 arcades, with Service Games its only competitor. Rosen then orchestrated a merger between Rosen Enterprises and Service Games, who by then had their own factory facilities, becoming chief executive of the new company, Sega Enterprises, which derived its name from the first two letters of Service Games.
Within a year, Sega began the transition from importer to manufacturer, with the release of the Rosen-designed submarine simulator game Periscope. The game sported light and sound effects considered innovative for that time, eventually becoming quite successful in Japan. It was soon exported to both Europe and the United States, becoming the first arcade game in America to cost 25¢ per play.
In 1969, Rosen sold Sega to Gulf+Western which also owned Paramount Pictures which later became Paramount Communications Inc. (whose media properties had since been absorbed by Viacom), remaining on as CEO of the Sega division. Under Rosen's leadership, Sega continued to grow and prosper, and in 1972 G&W made Sega Enterprises a subsidiary, taking the company public. Sega's current logo dates back to 1976. Sega prospered heavily from the arcade gaming boom of the late 1970s, with revenues climbing to over $100 million by 1979.
Entry into the home console market (1982–1989)
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In 1982, Sega's revenues would surpass $214 million, and they introduced the industry's first three-dimensional game, SubRoc 3D. The following year, an overabundance of arcade games led to the video game crash, causing Sega's revenues to drop to $136 million. Sega then pioneered the use of laser disks in the video game Astronbelt, and designed and released its first home video game console, the SG-1000 for the second generation of home consoles. Despite this, G&W sold the U.S. assets of Sega Enterprises that same year to pinball manufacturer Bally Manufacturing, and in January 1984 Rosen resigned his post with the company.
The Japanese assets of Sega were purchased for $38 million by a group of investors led by Rosen, Robert Deith, and Hayao Nakayama, a Japanese businessman who owned Esco Boueki (Esco Trading) an arcade game distribution company that had been acquired by Rosen in 1979. Nakayama became the new CEO of Sega, Robert Deith Chairman of the Board, and Rosen became head of its subsidiary in the United States. In 1984, the multibillion dollar Japanese conglomerate CSK bought Sega, renamed it to Sega Enterprises Ltd., headquartered it in Japan, and two years later, shares of its stock were being traded on the Tokyo Stock Exchange. David Rosen's friend, Isao Okawa, the chairman of CSK, became chairman of Sega.
Sega would also release the Sega Master System and the first game featuring Alex Kidd, who would be Sega's unofficial mascot until he replaced by Sonic the Hedgehog in 1991. While the Master System was technically superior to the NES, it failed to capture market share in North America and Japan due to highly aggressive strategies by Nintendo and ineffective marketing by Tonka, who marketed the console on behalf of SEGA in the United States. However, the Master System was highly successful in Europe, Australia, New Zealand, and Brazil with games still being sold well into the 1990s alongside the Mega Drive and Nintendo's NES and SNES.
In the mid 80s, Sega released Hang-On and After Burner, the first "full body experience" titles that make use of hydraulic cabinet functionality and force feedback control. Sega also released the 360 degree rotating machine R-360. For arcade system boards, Sega released the System series and the Super Scaler series. UFO Catcher was introduced in 1985 and is Japan's most commonly installed claw crane game. Sega was also one of the first to introduce medal games with World Bingo and World Derby in the 1980s, a sub-industry within Japanese arcades up to its current day.
Expansion and mainstream success (1989–2001)
With the introduction of the Sega Genesis in America, Sega of America launched an anti-Nintendo campaign to carry the momentum to the new generation of games, with its slogan "Genesis does what Nintendon't." This was initially implemented by Sega of America President Michael Katz. When Nintendo launched its Super Nintendo Entertainment System in 1991, Sega changed its slogan to "Welcome to the next level."
The same year, Sega of America's leadership passed from Michael Katz to Tom Kalinske, who further escalated the "console war" that was developing. As a preemptive strike against the release of the SNES, Sega re-branded itself with a new game and mascot, Sonic the Hedgehog. This shift led to a wider success for the Genesis and would eventually propel Sega to 65% of the market in North America for a brief time. Simultaneously, after much previous delay, Sega released the moderately successful Mega-CD as an add-on feature, allowing for extra storage in games due to their CD-ROM format, giving developers the ability to make longer, more sophisticated games, the most popular of which was Sega's own Sonic CD. Sonic the Hedgehog 2 was also released at this time, and became the most successful game Sega ever made, selling six million copies as of June 2006.
In 1994, Sega released the Sega 32X in an attempt to upgrade the Mega Drive to the standards of more advanced systems. It sold well initially, but had problems with lack of software and hype about the upcoming Sega Saturn and Sony's PlayStation. Within a year, it was in the bargain bins of many stores. Also in 1994, Sega launched the Sega Channel, a subscription gaming service delivered by local cable companies affiliated with Time-Warner Cable, or TCI, through which subscribers received a special cartridge adapter that connected to the cable connection. At its peak, the Sega Channel had approximately 250,000 subscribers.
On May 11, 1995, Sega released the Sega Saturn (with Virtua Fighter), Sega's first CD console that was not an add-on. It utilized two 32-bit processors and preceded both the Sony PlayStation and the Nintendo 64. However, poor sales in the West (including the traditional stronghold markets in Europe) led to the console being abandoned. The lack of a strong Sonic title or titles based on other Genesis franchises, and its high price in comparison to the PlayStation, were among the reasons for the console's failure.
Notable titles include several exclusives to the Japanese market, like Radiant Silvergun and Sakura Taisen, fighting games like Last Bronx, rail shooters such as Panzer Dragoon and The House of the Dead and a few well regarded RPGs; Panzer Dragoon Saga, Grandia, Albert Odyssey: Legend of Eldean, Shining Force III, Dragon Force, Shining Wisdom, Shining the Holy Ark and Magic Knight Rayearth. Tomb Raider was initially developed with the Sega Saturn in mind, but was quickly ported to the Sony PlayStation. With the Saturn's failure to attract the greater market share, development for the sequels were focused on Sony's console, and Lara Croft ironically became an unofficial mascot for the system. In 1997, Sega entered into a short-lived merger with Bandai. However it was later called off, citing "cultural differences" between the two companies.
On November 27, 1998, Sega launched the Dreamcast, their final console, in Japan. The console was competitively priced, partly due to the use of off-the-shelf components, but it also featured technology that allowed for more technically impressive games than its direct competitors, the Nintendo 64 and PlayStation. An analog 56k modem was also included, allowing for online multiplayer. It featured titles such as the action-puzzle title ChuChu Rocket!, Phantasy Star Online, the first console-based MMORPG, "Quake 3 Arena" and Alien Front Online, the first console game with online voice chat. The Dreamcast's launch in Japan was a failure; launching with a small library of software and in the shadow of the upcoming PS2, the system would gain little ground, despite several successful games in the region.
The Dreamcast's Western launch, a year later, was accompanied by a large amount of both first-party and third-party software and an aggressive marketing campaign. In contrast to the Japanese launch, the Western launch earned the distinction of the "most successful hardware launch in history," selling a then-unprecedented 500,000 consoles in its first week in North America. Sega was able to hold onto this momentum in the US almost until the launch of Sony's PlayStation 2. The Dreamcast is home to several innovative and critically acclaimed games of the time, including one of the first cel-shaded titles, Jet Set Radio (Jet Grind Radio in North America); Seaman, a game involving communication with a fish-type creature via microphone; Samba de Amigo, a rhythm game involving the use of maracas, and Shenmue, a large-scope adventure game with freeform gameplay and a detailed in-game city.
Sega also released the NAOMI series, which were the last arcade boards built uniquely rather than being based on existing consoles and PC architecture. Derby Owners Club was the first large-scale arcade machine with IC cards, and Virtua Fighter 4 the first arcade game with internet functionality. Both of these features have become a staple in Japanese arcades.
In late 1999, Sega Enterprises Chairman Isao Okawa spoke at an Okawa Foundation meeting, saying that Sega's focus in the future would shift from hardware to software, but adding that they were still fully behind the Dreamcast.
On November 1, 2000, Sega changed its company name from Sega Enterprises, Ltd. to Sega Corporation.
Shift to third-party software development (2001–2005)
On January 23, 2001, a story ran in Nihon Keizai Shimbun claiming that Sega would cease production of the Dreamcast and develop software for other platforms in the future. After initial denial, Sega Japan then put out a press release confirming they were considering producing software for the PlayStation 2 and Game Boy Advance as part of their "New Management Policy". Subsequently on January 31, 2001, Sega of America officially announced they were becoming a third-party software publisher. The company has since developed into a third-party publisher that oversees games that launch on game consoles produced by other companies, many of their former rivals, the first of which was a port of ChuChu Rocket! to Nintendo's Game Boy Advance. On March 31, 2001, the Dreamcast was discontinued.
By March 31, 2002, Sega had five consecutive fiscal years of net losses. To help with Sega's debt, CSK founder Isao Okawa, before his death in 2001, gave the company a $695.7 million private donation, and talked to Microsoft about a sale or merger with their Xbox division, but those talks failed. Discussions also took place with Namco, Bandai, Electronic Arts and again with Microsoft. In August 2003, Sammy bought the outstanding 22% of shares that CSK had, and Sammy chairman Hajime Satomi became CEO of Sega. During mid-2004, Sammy bought a controlling share in Sega Corporation at a cost of $1.1 billion, creating the new company Sega Sammy Holdings, one of the biggest game manufacturing companies in the world.
In 2003, Hajime Satomi, the chairman of Sega Sammy Holdings stated that Sega's activity will focus on their profitable arcade business as opposed to their loss-incurring home software development sector. After the decline of the global arcade industry around the 21st century, Sega introduced several novel concepts tailored to the Japanese market such as trading card game machines, which included World Club Champion Football for general audiences and Mushiking: King of the Beetles for young children. Sega also further enhanced internet functionality in arcades with ALL.Net, introduced in 2004.
Continued expansion and acquisitions (2005–2013)
In 2005, Sega sold its major western studio Visual Concepts to Take Two Interactive. In 2006, Sega Europe purchased Sports Interactive, known for its Football Manager series, and Creative Assembly, known for its Total War series. In the same year, the Sega Racing Studio was also formed. Sega of America purchased Secret Level in 2006, which was renamed to Sega Studio San Francisco in 2008. In early 2008 Sega announced that Sega would re-establish an Australian presence, as a subsidiary of Sega of Europe, with a development studio branded as Sega Studio Australia.
Sonic the Hedgehog continues to be an internationally recognised series, having sold 150 million units of the franchise. The reception of games has ranged from negative, mixed, to generally positive. In 2007, Sega and Nintendo teamed up using Sega's acquired Olympic license, to create the Mario and Sonic at the Olympic Games series, which has sold 20 million as of the latest installment. In the console and handheld business, Sega of Japan found success with the Ryu Ga Gotoku series (Yakuza overseas) and Hatsune Miku: Project DIVA series of games, amongst other games aimed at the Japanese market. In Japan, Sega distributes titles from smaller Japanese game developers and localizations of western titles. In 2013, Index Corporation was purchased by Sega Sammy after going bankrupt. After they buyout, Sega officially split Index, making Atlus, the video game developer and publisher, a wholly owned subsidiary of Sega. Atlus is known for its Megami Tensei and Persona series of role-playing games.
In 2013, following THQ's bankruptcy, Sega bought Relic Entertainment, known for its Company of Heroes series. Sega has also collaborated with many western studios such as Bizarre Creations, Backbone Entertainment, Monolith, Sumo Digital, Kuju Entertainment, Obsidian Entertainment and Gearbox Software. After the release of Sega Rally Revo, Sega shut down their Sega Racing Studio in 2008, with the closures of Sega Studio San Francisco following in 2010 and Sega Studio Australia in 2012.
Sega continued to develop arcade games based on network and card aspects, in management, real-time strategy, and more action oriented genres. Games of this type include Sangokushi Taisen, Virtua Fighter 5 and Border Break. Sega also continued to develop children's card games (Oshare Majo: Love and Berry), prize games (UFO Catcher) and medal games (Starhorse). Sega Amusements was initially established to be an overseas distributor for Japanese titles. In recent times however, they have begun developing local games themselves in order to appease to the small local arcade culture. Sega's arcade business contributed more to Sega Sammy profits than Sega's consumer profits on a year to year basis until 2014.
In 2010, Sega began providing the 3D imaging for Hatsune Miku's holographic concerts. In 2013, in co-operation with BBC Earth, Sega opened the first interactive nature simulation museum, Orbi Yokohama in Yokohama, Japan.
Digital market focus (2013–present)
In the 2010s, Sega established several operational firms for its mobile phone, amusement facility and arcade businesses, in order to streamline operations and avoid prior losses. In 2012, Sega established Sega Networks Co., Ltd. for its mobile phone business; although separate at first, it merged with Sega in 2015, and established Sega Games Co., Ltd. In 2012, Sega Entertainment Co., Ltd. was established for Sega's amusement facility business. And beginning in 2015, Sega Interactive Co., Ltd. was established for the arcade business. These new divisions would replace the former Sega Corporation, and the new Sega Holdings Co., Ltd would contain all entertainment companies from the Sega Sammy group. The exception of this is Sega Live Creation Inc., formed in 2015, which spun off Sega Entertainment and contains the theme park development of the Joypolis and Orbi theme parks. Sega Live Creation is now at the newly formed resorts section of Sega Sammy.
Because of the shrinking arcade business in Japan, development personnel would be relocated to the consumer business, specifically the digital game area. Sega also gradually reduced it's arcade centers from 450 facilities in 2005, to around 200 in 2015.
Due to the decline of packaged game sales both domestically and overseas in the 2010s, Sega began layoffs and reduction of their western businesses in order to focus on the digital game market, such as PC and mobile devices. In the digital game market, Sega's biggest success is the MMO Phantasy Star Online 2, along with their mobile game line-up. In January 2015, Sega of America announced their relocation from San Francisco to Southern California, which would be completed by early summer.
Sega is involved in the merchandising of their own intellectual properties, such as Sonic the Hedgehog and The House of the Dead, as well as unaffiliated anime and manga franchises such as Bleach, Neon Genesis Evangelion, and Initial D. Sega currently owns two animation companies, Marza Animation Planet and TMS Entertainment.
Sega Toys was founded when Yonezawa Toys, Japan's largest post-war toy manufacturer, was merged into Sega in 1994. It was briefly known as Sega-Yonezawa until the Yonezawa name was dropped entirely in April 1998. Since the early 2000s Sega Toys has become a mostly separate entity from Sega with its own management structure and goals, with some occasional collaboration between the two; Sega and Sega Toys produce the UFO Catcher prize games jointly, where Sega manufactures the arcade equipment, while Sega Toys produces the prizes. They have created merchandise for children's franchises such as Oshare Majo: Love and Berry, Mushiking: King of the Beetles, Lilpri, Bakugan, Jewelpet, Dinosaur King and Hero Bank. Products by Sega Toys released in the West include the Homestar and the iDog. Sega Toys also inherited the Sega Pico handheld system and produced software for the console.
Sega of Japan
- Hayao Nakayama: Co-founder, president (1984–1998)
- Shoichiro Irimajiri: President (1998–2000)
- Isao Okawa: President (2000–2001)
- Hisao Oguchi: President (2001–2004)
- Okitane Usui: President and COO (2008–2012)
- Toshihiro Nagoshi: Director and CCO (2012–present)
- Naoya Tsurumi: President and COO (2012–present)
Sega of America
- David Rosen: Co-founder
- Bruce Lowry: President Sega of America (1986–1988)
- Michael Katz: President Sega of America (1989–1991)
- Tom Kalinske: President (1991–1996)
- Bernie Stolar: President (1996–1999)
- Peter Moore: President (1999–2003)
- Simon Jeffery: President (2003–2009)
- Mike Hayes: President (2009–2012)
- John Cheng: President and COO (2012–present)
- Robert Deith: Co-founder/chairman (1991–2001)
- Naoya Tsurumi: CEO of Sega of America (2005–2009)
- Mike Hayes: President (2009–2012)
- Jürgen Post: President (2012–present)
Sega Publishing Korea
- Yasutaka Sato: President (2005–2008)
- Kazunobu Takita: President (2008–2011)
- Tooru Matsuo: President (2011–2013)
- Akira Nomoto: President (2013–present)
- List of Sega video game consoles
- List of Sega video game franchises
- Lists of Sega games
- Sega Seal of Quality
- Sega Enterprises Ltd. v. Accolade, Inc.
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