Sega

Sega (セガ) is an international video game software and hardware developing company, and a former home computer and console manufacturer. The company has had success in both arcades and the home console market, but in early 2001, they left the consumer console business and began concentrating on software development for multiple platforms.

Sega's main offices, as well as the main offices of its domestic division, Sega of Japan, are located in Ota, Tokyo, Japan. Sega's North American division, Sega of America, is headquartered in San Antonio, Texas, United States. It had moved from Redwood City, California in 1999, and San Francisco in 2003. Sega's European division, Sega of Europe, is headquartered in the Chiswick area of London, England, United Kingdom. The North American division is partially owned by Viacom.

History

1940-1988

Sega was originally founded in 1940 as Standard Games (later Service Games) in Honolulu, Hawaii, by Martin Bromely, Irving Bromberg, and James Humpert to provide coin-operated amusements for American servicemen on military bases. Bromely suggested that the company move to Tokyo, Japan in 1951 and in May 1952 "SErvice GAmes of Japan" was registered.

In 1954, another American businessman David Rosen fell in love with Tokyo and established his own company, Rosen Enterprises, Inc., in Japan to export art. When the company imported coin-operated instant photo booths, it stumbled on a surprise hit: The booths were very popular in Japan. Business was booming, and Rosen Enterprises expanded by importing coin-operated electro-mechanical games.

Rosen Enterprises and Service Games merged in 1965 to become Sega Enterprises. Within a year, the new company released a submarine-simulator game called "Periscope" that became a smash-hit worldwide.

In 1969, Gulf and Western Industries purchased Sega, and Rosen was allowed to remain CEO of the Sega division. Under Rosen's leadership, Sega continued to grow and prosper. In the videogame arcades, Sega was known for producing Frogger and creating Zaxxon. Sega's revenues would hit $214 million by 1982 and in 1983, Sega would release their first video game console; the SG-1000 and also the first laserdisc game.

In the same year, Sega was hit hard by the video game crash. Hemorrhaging money, Gulf & Western sold the U.S. assets of Sega to Bally Manufacturing Corporation. The Japanese assets of Sega were purchased for $38 million by a group of investors led by Rosen and Hayao Nakayama, a Japanese businessman who owned a distribution company that had been acquired by Rosen in 1979. Nakayama became the new CEO of Sega, and Rosen became head of its subsidiary in the United States.

In 1984, the multi-billion dollar Japanese conglomerate CSK bought Sega, and renamed it to Sega Enterprises Ltd., headquarted 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. In 1986, Sega of America was established to take advantage of the expanding video game market in the United States. Sega would also release the first Alex Kidd game, who until 1991 would be their mascot.

1989-2001

With the introduction of the Sega Mega Drive/Genesis in 1989, Sega launched itself internationally as the second largest vendor of consumer video game products, behind their main rival, Nintendo. 1990 marked a change in Sega's market focus, changing to an older audience than that of Nintendo and marketing their products as such with slogans such as "Genesis does what Nintendon't". Sega also rebranded themselves with a new mascot, Sonic the Hedgehog. This shift led to a wider success for the Sega Mega Drive/Genesis and would eventually propel Sega to 65% of the market in North America. However, Sega's share of the market would plummet in 1994 to 35% after Nintendo released key franchise titles for the Super Nintendo Entertainment System such as Donkey Kong Country and Super Metroid, as well as bad public reaction in Sega's eventual business decisions.

In 1994, Sega in association with TimeWarner launched The Sega Channel, a subscription-based cable network that provided video games to owners of the Sega Mega Drive/Genesis. Sega also released the Sega Saturn in Japan in 1994 and later in North America in 1995. Although the Saturn performed well in Japan, it failed to captivate the North American audience and thus led to a long decline in the console market for Sega. With one last effort for Sega to redeem themselves from overwhelming debt they launched the Sega Dreamcast in Japan in 1998 and in North America later on Sept. 9, 1999 (with the marketing ploy 9/9/99). The Dreamcast, at the time became the fastest selling video game console until 2000's launch of Sony's PlayStation 2.

Although the Dreamcast had a relatively successful release, it failed to gather a foothold in the market against the Sony PlayStation, the Nintendo 64, and the release of the PlayStation 2, which would dominate the market until Microsoft and Nintendo entered the sixth generation of video game consoles, although the PlayStation 2 would continue its market lead throughout the era.

In 2000, Sega Enterprises Ltd. was renamed Sega Corporation. In 2001 Sega discontinued the Dreamcast and ended its run as a video game hardware manufacturer.

2001 and beyond

2001 would see a major shift in focus for Sega as they would move out of hardware manufacturing, at least in the home console market; the arcade Sega NAOMI units are still being produced. The company has since evolved primarily into a platform-agnostic software company that creates games that will work on a variety of game consoles produced by other companies, including Nintendo's GameCube, Game Boy Advance, and Nintendo DS, Sony's PlayStation 2 and PlayStation Portable, and Microsoft's Xbox and Xbox 360.

In 2003, Sega fell on extremely hard times, and after the death of CSK founder Isao Okawa in 2001, who spent over US$40 billion to help Sega, CSK put Sega on the auction block. The first suitor was Japan's Sammy who discussed a merger, but plans fell through. Discussions also took place with Namco, Electronic Arts and Microsoft. In August 2003, Sammy bought the outstanding 22% of shares that CSK had, and Sammy chairman Hajime Satomi became CEO of Sega. With the Sammy chairman at the helm of Sega, it has been stated that Sega's activity will focus on its profit-making arcade business rather than its loss-making home software development.

During the middle of 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 games companies in the world.

Sega recently bought the rights to all output from Sports Interactive, makers of Football Manager (the old Championship Manager).

On January 25, 2005, Sega sold Visual Concepts, a second-party developer known for many Sega Sports games including the ESPN NFL Football series (formerly NFL2K) to Take Two Interactive for $24 million. The sale also came with Visual Concept's wholly-owned subsidiary Kush Games. Take Two subsequently announced the start of the publishing label 2K Games because of this purchase.

On March 9, 2005 Sega acquired developer Creative Assembly best known for their strategy games Medieval: Total War and Rome: Total War.

On September 12, 2005, It was announced that Sega would be working with Petroglyph to create a Modern Military/Sci-fi Real-time strategy game for PC[1].

Consoles

Early consoles

Main articles: SG-1000, SG-1000 Mark II, and SC-3000

Sega entered the video game console market in 1983 with the introduction of the SG-1000 in Japan after having test marketed it there since 1981. The SG-1000 was never released in North America, however, it was released in Australia, New Zealand, and many European nations such as Italy and Spain.

In 1984, Sega released an updated version of the SG-1000 called the SG-1000 Mark II and a computer version called the SC-3000. Games for the SG-1000 Mark II were compatible with the SC-3000 and vice versa - provided the player also had the keyboard accessory that came with the SC-3000. The SG-1000 and the SG-1000 Mark II, while having some minor success were both overshadowed by Nintendo's Famicom, which was released in Japan in 1983.

Master System

Main articles: Sega Master System and SG-1000 Mark III

In 1985 in an attempt to compete with Nintendo's popular Famicom, Sega updated and released the SG-1000 Mark III in Japan. The system would be redesigned and introduced in North America as the Sega Master System. Although technically superior to the Nintendo Entertainment System (Famicom), the Master System never achieved the same popularity due in part to the overwhelming third-party support Nintendo had. The Master System was also released two years after Nintendo's NES and had a hard uphill battle. The Master System was discontinued in 1992 in Japan and North America, having never achieving any real foothold on the console market in these regions, however, in Europe, the Master System did exceptionally well, even having a larger market share than Nintendo's NES because it was marketed in countries that the NES wasn't. Due to its success in Europe, Sega supported the Master System there until 1996.

Additionally, Sega also released the Master System II and Master System III, which were less-expensive and less popular retooled successors to the Master System. The Master System III was only available in Brazil.

Mega Drive/Genesis

In 1989, Sega released its most successful console worldwide, the Sega Mega Drive also known as Sega Genesis in North America. The Genesis was a 16-bit console created to rival the TurboGrafx 16. In 1990, Nintendo released the Super Famicom (or Super Nintendo Entertainment System—SNES), which was Genesis' major rival throughout the 16-bit era. Even though the Genesis was released earlier than the SNES, Sega had a hard time overcoming Nintendo's dominating foothold on the video game console market, which in the late-1980s was 95% in North America and 92% in Japan. By 1992, Sega slashed Nintendo's market by garnering 55% (going as high as 65% in 1993) of the market in North America. The Genesis also did well in Brazil, Europe, and Australia, however, it failed to put a dent on Nintendo's market share in Japan.

In 1993, the Genesis was redesigned and released as the "Sega Genesis 2". By 1994, Nintendo had regained a lot of its lost market share by slashing Sega's share from 65% to 35%. In 1996, Sega discontinued support for the Genesis. But in 1998, Majesco released a budget version of the Genesis, called "Sega Genesis 3".

Throughout the lifetime of the Genesis, Sega had developed and launched two unsuccesful well-known add-ons, the Sega 32X and the Sega CD. It also released the peripheral, Sega Meganet, which was a modem for the Mega drive. It was only released in Japan and Brazil.

Saturn

In 1994, Sega released the CD-based Sega Saturn in Japan and later in North America in 1995. Its main rivals were the Sony PlayStation released in 1995 and the Super Nintendo Entertainment System until 1996 when Nintendo released the Nintendo 64.

In North America the Saturn was a failure partly due to its initial high $400 price tag, (compared to $300 for the PSX and $200 for the N64), its programming difficulties, and perhaps because of the poor support for previous Sega Genesis add-ons, the Sega 32X and the Sega CD. Though Sonic Team did happen to create Burning Rangers, it was never really a success. The system's highest points are its numerous arcade ports from their Model 2 hardware, NiGHTS Into Dreams, Dragon Force, and the Panzer Dragoon series. The Saturn never received a proper game from their mascot, Sonic, since Sonic Xtreme was canceled after a long and troubled development process. Also, many strong titles were not brought overseas from Japan. This is partly why the Saturn did relatively well in Japan, and more or less failed commercially in other markets.

Another popular explanation for the Saturn's poor performance in markets outside of Japan may have to do with the system's hardware architecture. Many programmers found the complex hardware (including dual Hitachi SH-2 central processors) difficult to master and instead opted to develop games on the Playstation. Unlike Sega, Sony made programming libraries readily available to third party developers. Thus, developers found the Playstation a more attractive machine to develop for. In some cases, popular games like Tomb Raider looked better on the Playstation and the Saturn gained a reputation as a graphically inferior machine. Though this is not true, we can conclude that both systems were capable of doing some things better than the other. Either machine, in the right hands, was capable of impressive graphical feats for the time.

Enthusiasts remember the Saturn as a console that failed because of poor business decisions and a changing market.

Dreamcast

Sega's final video game system, the Sega Dreamcast was released in Japan in 1998 and in the United States on September 9, 1999. Considered to be "ahead of its time", the 128-bit Dreamcast rivaled the 32-bit Sony PlayStation and the 64-bit Nintendo 64. The Dreamcast, however, failed to recapture Sega's lost market share that it once held during the lifespan of the Genesis prior to the major release of Sony's PlayStation , and other "next-gen" systems inc Nintendo's N64. This was in part due to a lack of faith in the system after the 32X and Saturn systems.

The release of the Sega Dreamcast expanded on the PlayStation's popularisation of video games by offering the first out-of-the-box Internet service. For many people who only had game systems it was their first taste of the Internet, and Sega attempted to capitalize on the fact that it was the only Internet-capable console at the time by releasing games playable online such as ChuChu Rocket and Phantasy Star Online (which is still a popular online series on multiple consoles) and offering online features for other games. As of mid-2005, the PlayStation 2 and Xbox both feature online gameplay for numerous games, however, the GameCube's only online games are Phantasy Star Online Episode I & II, III, and Plus.

The Visual Memory Unit memory module used for saving game data also functioned as a portable gaming device playable away from the console. Some console games allowed the player to load a mini-game onto the VMU - Skies of Arcadia's Pinta's Quest for example had the player collect items which they would receive when they went back to the full game. The screen is viewable from the controller and some games would use it in gameplay - Virtua Tennis showed an 8-bit representation of the current play, and Skies of Arcadia would show a character and have the VMU beep to help the player find invisible items. The functionality also created the opportunity for making secret strategy in multiplayer games - for example changing strategy via the VMU screen in a football game. The complexity of the 1Mbit VMU meant that it was considered overpriced, and third-party modules without the screen but often offering larger capacity became common.

The Dreamcast was subsequently discontinued in North America in January 2001. Software support in Japan, however, continues into 2006, with the upcoming release of Radilgy and Under Defeat. SEGA shocked the game world by announcing the release of refurbished Dreamcasts in Japan to accompany this game.

Handhelds

Game Gear

In response to Nintendo's Game Boy released in 1989, Sega developed and released their first handheld to the market called Game Gear. Initially released in 1990 in Japan, it was later released to the North American market in 1991 and subsequently to Europe and Australia in 1992. It was the first mainstream handheld system to be released with a color screen, something their main competitor, Nintendo, wouldn't do for its Game Boy line until the Game Boy Color debuted in 1998. It also generated its own light without the need for attachments, which Nintendo did not do until the Game Boy Advance SP came out. Essentially the Game Gear was a portable Master System, although the color palette was larger and thus allowed for better looking graphics. Since the Master System and the Game Gear were both based on a similar Z-80 architecture, a third party released a peripheral called the Gear Master Converter, which allowed the Game Gear to play Master System cartridges. Sega, impressed with the technology, purchased the rights to the adapter and marketed it as the Master Gear Converter.

Although technically superior and having better features than Nintendo's Game Boy, the Game Gear was plagued by a short battery life of approximately 3 hours. The required 6 AA batteries made the Game Gear enthusiast a rare one. Overall, the Game Gear was an impressive piece of technology for the time. It was on the market for a good 4 years and had a respectable software library, which included versions of the popular Sonic the Hedgehog series.

Nomad and Mega Jet

Main articles: Sega Nomad and Sega Mega Jet

Similar to the Game Gear the Sega Mega Jet was released exclusively in Japan in 1992 for promotional use only. The handheld system could be rented on Japan Airlines with a choice between four games to play, one being Sonic the Hedgehog. The system had no screen as it connected to an LCD screen that was folded in the armrest.

In 1995, Sega attempted to get back into the handheld market and released the Sega Nomad, which was essentially a portable Sega Genesis. It was released in North America only. Out of the box, the Nomad had the ability to play almost every Genesis game. It came equipped with a 3-inch Active Matrix LCD screen that was backlit and allowed for higher resolutions. Other features included six face buttons, an extra controller port and a video adapter, so the system could be played on a TV.

Like the Game Gear before it, the Nomad had a very short playtime of about 3 hours before the batteries died. It was an expensive system compared to the Game Boy and it was not heavily marketed by Sega. In a time of many hardware launches, the Nomad was lost in the shuffle and was soon found in the discount bin. Recently it has garnered a reputation as a collector's item.

Other systems

• Sega CDX - a semi-portable Sega Genesis/Sega Mega-CD/Audio CD player console. Also known as the Sega Multi-Mega in Japan and Europe.
• Sega Neptune - A Sega Mega Drive/32X hybrid. It never passed the prototype stage. Only two empty cases are known to exist.
• Sega Pico - an educational computer.

Arcade system boards

In addition to home consoles and portable handhelds, Sega has been a major proponent of games and hardware in the arcades.

Franchises

Sega developed several well-known game franchises over the last fifteen years:

• Panzer Dragoon - 3D linear shooting series (rail shooter) similar to Star Fox in gameplay.
• Phantasy Star series - Role playing games, in single player and MMORPG versions.
• Sega Sports - Football, basketball, hockey, and tennis games (formerly published under the ESPN label)
• Sonic the Hedgehog - 2D and 3D platform games starring Sega's well-known mascot, Sonic.
• Shinobi - Ninja action 2D and 3D platform games.
• Virtua Fighter - One-on-one fighting games, released in arcades and at home. (brand name)
• Shining Force - A Tactical RPG in the Steampunk style. Also has games in the same universe, all with the "Shining" prefix.
• House of the Dead - A 3D light gun shooter with zombies.
• Crazy Taxi - A mission-based driving game.

Internal structure

Internally, the company is made up of various research and development teams created throughout the 1980s, called the "AM" teams. In 2000 Sega decided to turn their AM teams into second-party developers that would focus on software development for the Sega Dreamcast video game console. Due to AM2's popularity they chose to keep their original name. Additionally, after the first Sonic the Hedgehog game was released, Sega AM8 changed its name to Sonic Team and have since maintained this name.

Although the teams were separate there was a healthy sense of competition between the various teams which had resulted in some of the most remarkable and innovative gaming events. In 2003 United Game Artists was merged with Sonic Team.

2004 restructure

On July 1, 2004 Sammy merged the AM teams into three groups. The merge did not affect Sega-AM2 or Sonic Team.

Global Entertainment Software R&D, which is led by Yuji Naka. "GE" currently focuses on developing video games for home consoles.

• Dept. #1, headed by Akinori Nishiyama
• Dept. #2, headed by Akira Nishino
• Dept. #3, headed by Yuji Naka
• Mobile Content R&D Dept, headed by Kazunari Tsukamoto
• Sega Studio U.S.A. R&D, headed by Takashi Iizuka
• Sega Studio China R&D, headed by Makoto Uchida

New Entertainment R&D, which is led by each department head. "NE" currently focus' on the development of new content for the arcade and home console markets.

• Dept. #1, headed by Toshihiro Nagoshi
• Dept. #2, headed by Yu Suzuki

Amusement Software R&D, which is led by Hiroshi Kataoka. "AM" currently focus' on the development of games for amusement machines.

• Dept. #1, headed by Atsushi Seimiya
• Dept. #2, headed by Hiroshi Kataoka
• Dept. #3, headed by Mie Kumagai
• Racing Games R&D Dept., headed by Kenji Arai
• Sports Design R&D Dept., headed by Takayuki Kawagoe
• Family Entertainment, headed by Hiroshi Uemura

People

Yu Suzuki - Previously the head of AM2, and is attributed with being behind numerous arcade classics including Hang-On, Out Run, Space Harrier, After Burner II, and Virtua Fighter, just to name a few. In 1999, his first ever console-specific title, Shenmue, launched in Japan, and was the most expensive game ever produced. In 2003's internal restructure, he formed a new internal studio named Digitalrex, which was reintegrated into Sega before finishing any games.

Yuji Naka - Heads up Sonic Team and is responsible for internal QA procedures. Naka made a name for himself in 1991 as lead programmer of Sonic the Hedgehog, though his previous work includes Phantasy Star and Space Harrier. His titles since include NiGHTS Into Dreams, Phantasy Star Online and Samba de Amigo. In 2004 his team was merged with United Game Artists, giving the team control over Rez and Space Channel 5.

Toshihiro Nagoshi - Headed up Amusement Vision and is head of the Sega Creative Control centre. Mainly famed for arcade titles, his credits include Daytona USA, Spikeout and Super Monkey Ball. In 2003, he served as the producer for the Nintendo and Sega collaborative GameCube effort F-Zero GX alongside Shigeru Miyamoto. He has been a regular columnist for Edge Magazine in the UK.

Tetsuya Mizuguchi - Headed United Game Artists and created critically acclaimed games such as Sega Rally Championship, Space Channel 5, and Rez. He first worked with AM3 and during his time there, they released Sega Rally and Manx TT. In 1996, he left AM3 to create AM Annex (which would later be called AM9 and finally United Game Artists). AM9 created Sega Touring Car Championship, Sega Rally 2, Space Channel 5 pt. 1 and 2, and Rez. After the Sega-Sammy merge, he left Sega to head Q Entertainment, which has now released Meteos and Lumines for the Nintendo DS and the PlayStation Portable, respectively.

Historic legal case

Sega lost the Sega v. Accolade case, which involved independently produced software for the Sega Genesis console that copied a small amount of Sega's code. The verdict set a precedent that copyrights do not extend to non-expressive content in software that is required by another system to be present in order for that system to run the software. The case in question stems from the nature of the console video game market. Hardware companies often sell their systems at or below cost, and rely on other revenue streams such as in this case, game licensing. Sega was attempting to "lock out" game companies from making Genesis games unless they paid Sega a fee (ostensibly to maintain a consistent level of quality of games for their system.) Their strategy was to make the hardware reject any cartridge that did not include a Sega trademark. If an unlicensed company included this trademark in their game, Sega could sue the company for trademark infringement. Though Sega lost this lawsuit, all later Sega systems seemed to incorporate a similar hardware requirement.

Miscellaneous

• Sega also owns the entertainment fun center, GameWorks, which was started in 1997.

Advertisement campaigns

Sega has had a long history of different slogans and ad campaigns.

• Now, there are no limits.
• Welcome To The Next Level.
• Sega does what Nintendon't.
• The "Sega Scream".
• Do me a favour, plug me into a Sega (talking TV).
• To be this good takes AGES, To be this good takes SEGA.
• Segata Sanshiro
• Hot hits today! Hot hits on the way!

References

• segasammy.co.jp - Sega financial report
• Yahoo! Finance details for Sega Corporation
• Yahoo! Finance details for Sega of America
• Sega's entry into and growth in the American market is documented in Terry Sanders' film The Japan Project: Made in Japan.