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Sega (セガ) is a video game software and hardware developer, and a former home computer and console manufacturer. The company has had success in both arcades and the home console market, but in late 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 Francisco, California, United States. It had moved from Redwood City, California in 1999. Sega's European division, Sega of Europe, is headquartered in the Chiswick area of London, England, United Kingdom.
Sega was originally founded in 1940 as Standard 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 be 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 & 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 laser-disc 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. 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 would be their mascot.
With the introduction of the Sega 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 "Sega 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 Genesis and would eventually propel Sega to 65% of the market in North America. Unfortunately 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 Super Mario World and The Legend of Zelda: A Link to the Past.
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 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 lead 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 in 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 unfortunately 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.
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.
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.
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.
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 vise versa providing 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.
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 later in 1985 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.
In 1989 Sega released its most successful console worldwide, the Sega Genesis known in Japan and Europe as the Sega Mega Drive. 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 and was technically more advanced 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 Australasia, 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 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.
- Main article: Sega 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 due in part to its initial price compared to other systems, it was more difficult to develop for, and perhaps because of the poor support for Sega's previous Sega Genesis add-ons, the Sega 32X and the Sega CD. It's also worth noting that Sega's mascot, Sonic never had a proper video game for the system. The system was also host to very quality-lacking titles, besides the seminal Panzer Dragoon Saga which fetches upwards of $200 in most auctions. Despite this, the Saturn did relatively well in Japan, being the system of choice for hardcore gamers up until 1998, something Sega had failed to do with both the SG-1000 Mark III and the Mega Drive.
- Main article: Sega Dreamcast
Sega's final video game system, the Sega Dreamcast was released in Japan in 1998 and in America 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 follow up system the PlayStation 2, and other "next-gen" systems Microsoft's Xbox and Nintendo's GameCube.
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. 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 so similar, Sega released an add-on called the "Master Gear" which allowed the Game Gear to play games developed for the Master System.
Although technically superior and having better features than Nintendo's Game Boy, the Game Gear is ultimately considered a "failure".
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.
- Main article: Nomad
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 Japan and North America, but was never released in Europe. 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. Sega's rival, Nintendo, wouldn't have a backlit system until the Game Boy Advance SP in 2003.
Like the Game Gear before it, the Nomad failed to put a dent into Nintendo's dominating handheld market and is considered a failure as well.
- Sega CDX - a semi-portable Sega Genesis/Sega Mega-CD/Audio CD player console.
- Sega Neptune - A Sega Megadrive/32X hybrid. It never passed the prototype stage.
- Sega Pico - an educational computer.
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 - 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.
Internally, the company is actually made up of various research and development teams that were created throughout the 80's 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.
|Original name||New name||Notable titles|
|AM1||Wow Entertainment||House of the Dead series|
|AM2||Sega AM2||Virtua Fighter series, Virtua Cop series, Daytona USA, Shenmue|
|AM3||Hitmaker||Crazy Taxi series|
|AM4||Amusement Vision, Ltd.||Super Monkey Ball series, Virtua Striker series|
|AM5||Sega Rosso||Initial D arcade racing games|
|AM6||Smilebit||Jet Set Radio series,|
|AM7||Overworks||Streets of Rage series, Shinobi series, Skies of Arcadia|
|AM8||Sonic Team||Sonic the Hedgehog, NiGHTS Into Dreams|
|AM9||United Game Artists||Space Channel 5|
|Digital Media||Wave Master||Concentration on music tools and sound design|
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 and shortly after Sammy merged the teams back together on July 1, 2004. The merge did not effect Sega-AM2 or Sonic Team.
Yu Suzuki - Previously the head of AM2, and is attributed with being behind numerous arcade classics including Hang-On, OutRun, Virtua Fighter and more. 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. 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.
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, the Sega Dreamcast seemed to incorporate a similar hardware requirement.
- Several webcomics have been produced starring the Sega characters, one of the more popular ones being "That's My Sonic!"
- Sega also owns the entertainment fun center, GameWorks , which was started in 1997.
- Sega's official website
- Sega Sammy Holdings official website
- Console Database info on Sega consoles and Sega in general
- Unofficial history of Sega
- Retrospective of Sega Consoles: part 1, part 2
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