Sega

Sega is a developer and publisher.

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Sega Holdings Co., Ltd. (stylized as SEGA) is a leading Japanese company known for producing and publishing video games for arcades, computers, consoles, and mobile platforms. Between 1983 and 2001, Sega stood among the world’s top console makers, creating classics like: Sega Genesis, Sega Saturn, and Dreamcast. In 2004, after merging with Sammy Corporation, the company became part of Sega-Sammy Holdings. Sega is headquartered in Tokyo’s Ota district and also operates regional offices in London (Sega Europe) and San Francisco (Sega of America). Haruki Satomi, grandson of Sammy Corporation founder Hajime Satomi, has served as the company’s president since 2015.

• Sega as a game producer
• Sega as a game publisher
• The history of Sega
• Consoles

Sega as a game producer

Sega started its game development in 1983 and still carries it forward today through internal teams known as Sega Studios and external studios acquired in the 21st century. Thanks to its long history and diverse studios, Sega has produced games for a wide range of genres and platforms. The games developed under Sega’s banner cover almost every genre imaginable, including strategy, sports, arcade, racing, fighting, RPG, action, adventure, and family titles, available on all major platforms of their time. Some of Sega’s best-known franchises include The House of the Dead, Sega Rally, Sonic, Virtua Fighter, Phantasy Star and Yakuza.

Over the years, Sega has frequently restructured its studios - creating new teams and transferring existing employees to different divisions. One of Sega’s unique traits is that its studios usually had only code names and weren’t widely recognized by their actual names. One exception was the Sonic Team - active under that name from 1991 to 2004 - best known for developing one of Sega’s most famous franchises.

After several unsuccessful console launches in the early 2000s, Sega shifted its focus from hardware to software, acquiring several major external studios over the next decade. These studios retained some independence but remain part of the Sega Group. These teams are now behind several of Sega’s biggest franchises, including Company of Heroes, Football Manager, Sonic, Total War and Warhammer 40,000: Dawn of War.

Sega as a game publisher

Almost from the beginning, Sega expanded its catalog by publishing games from external developers alongside its own creations. The company’s publishing portfolio includes both high-budget titles from major development studios and games from small independent developers, as well as localizations of Western titles for the Japanese market. The company’s publishing strategy covers a wide range of genres and platforms, including arcade machines, PC, home and portable consoles, and mobile devices. Over the years, numerous development studios from Japan and the West have worked with Sega as a publisher. The most prominent among them are:

The history of Sega

Origins and first years of activity

The origins of Sega can be traced back to 1940, during World War II, when three American businessmen - Martin Bromley, Irving Bromberg, and James Humpert - established Standard Games in Honolulu, Hawaii. Its goal was to entertain American soldiers stationed nearby with coin-operated games and amusement machines. Following the war, they sold the thriving business and created a new distribution company known as Service Games. In 1951, after the U.S. government prohibited the use of coin-operated machines in its territories, Martin Bromley dispatched his associates to Japan. There, in 1952, they founded Service Games of Japan to supply such machines to U.S. military bases.

Around 1954, while stationed in Japan, U.S. Air Force officer David Rosen launched Rosen Enterprises Inc. in Tokyo, a company initially focused on importing art into Japan. However, the company’s success came from an entirely different sector - the import of instant photo booths to Japan. In May 1960, Service Games of Japan was shut down and replaced by two new firms, Nihon Goraku Bussan and Nihon Kikai Seizo, which carried on its operations. In 1965, Rosen Enterprises and Nihon Goraku Bussan merged to form Sega Enterprises - a name derived from Service Games. A year after the merger, the company launched Periscope, a submarine simulation game that became an international success. In 1969, Rosen sold Sega Enterprises to the American conglomerate Gulf & Western Industries but retained his position as president. Under his leadership, the company continued to expand rapidly. Five years later, Gulf & Western founded an American subsidiary, Sega Enterprises, Ltd., which was subsequently listed on the stock exchange.

From 1978 to 1983 - the golden era of arcade games - Sega solidified its position in the gaming market, with revenues reaching about $100 million in 1979 and $214 million in 1982. Notable Sega releases from this period include Frogger (1981), developed by Konami, and a number of titles produced internally in 1982: Zaxxon - the first video game to use isometric graphics, SubRoc-3D - the first commercial game with stereoscopic 3D, and Astron Belt - the first video game distributed on laserdiscs. During this period, Sega released several arcade hits, including Head On (1979), Monaco GP (1979), Carnival (1980), Turbo (1981), Space Fury (1981), Astro Blaster (1981) and Pengo (1982).

Expansion into the home console market

From 1982 to 1984, Sega adapted a number of its arcade games for home consoles produced by other companies, such as the Atari 2600, ColecoVision, and Atari’s 8-bit computers. After the 1983 video game crash, Sega’s revenue dropped to around $136 million, and executives began exploring alternative ways to generate income. This marked the debut of Sega’s first home console, the SG-1000. It sold well initially, but was quickly overtaken by the Nintendo NES, which dominated the market for years. The company’s situation was further complicated when it sold a portion of its shares to the prominent pinball manufacturer Bally Manufacturing. The company faced its first serious crisis under Rosen’s leadership, and he subsequently stepped down as president.

Shortly afterward, Rosen, Robert Deith, and Hayao Nakayama purchased Sega’s Japanese division for $38 million. Nakayama owned Esco Boueki (Esco Trading), which had been acquired by Sega in 1979. Nakayama was appointed president of Sega, with Rosen taking over leadership of the company’s American branch. CSK acquired the company in 1984, renaming it Sega Enterprises and establishing its base in Japan. By 1986, the company was publicly listed on the Japanese stock exchange. Leadership passed to Isao Okawa, a close friend of David Rosen. At the same time, Sega released another console, the Sega Master System (also known as the Sega Mark III). This console marked the debut of Alex Kidd, who became Sega’s official mascot until 1991. Despite being technically superior to the NES, the Sega Master System failed to gain a significant market share due to Nintendo’s aggressive marketing strategies.

In the mid-1980s Sega launched arcade titles like Hang-On and After Burner, featuring a hydraulic controller that served as a precursor to the Force Feedback system. Sega expanded its arcade offerings with the R-360, capable of full rotation, and the ever-popular "claw crane" machines, allowing players to fish toys out of a bin using a mechanical arm. In 1988, Sega launched the Sega Genesis console, known internationally as the Sega Mega Drive. At the same time, Sega of America CEO Michael Katz ran a marketing campaign aimed at Nintendo, featuring the slogan "Genesis does what Nintendon't". With the release of the SNES in 1991, the slogan was changed to "Welcome to the next level". That year, Tom Kalinske took over as head of Sega of America, becoming deeply involved in the "console war" with Nintendo.

In 1991, the inaugural Sonic game was released, establishing the blue hedgehog as Sega’s official mascot for years to come. Thanks to its new image, the company regained its position, holding up to 65 percent of the U.S. market. The Sega CD, which extended the console’s functionality, was a major success, allowing for much larger games. Released in 1992, Sonic the Hedgehog 2 became Sega’s biggest commercial success, selling over 6 million copies. Afterward, Sega of America set up several new divisions: Sega Technical Institute (1990), Sega Midwest Studio (1992), Sega Multimedia Studio (1993), and also acquired the Interactive Designs development studio (1992). Sega also ventured into the portable console market with the Game Gear (1990) and Sega Nomad (1995), but neither could rival Nintendo’s popular Game Boy.

In 1992, Sega released a new series of arcade games, including Virtua Fighter and Virtua Racing, marking the start of fully 3D arcade gaming. In 1994, Sega introduced the 32X, an add-on for the Mega Drive that enhanced the console to 32-bit capabilities. While the device debuted successfully, its limited game selection caused it to lose ground to the Sony PlayStation and Sega Saturn. Released in November 1994, the second console sold well in Japan but struggled in Western markets, resulting in its discontinuation in 1998. Despite the console’s struggles, the Sega Saturn saw the release of several iconic titles, including Sakura Wars, Panzer Dragoon, and ports of games such as The House of the Dead, Virtua Fighter 2, and Sega Rally Championship. In 1995, Sega established SegaSoft, a division dedicated to creating new brands for the Saturn console and PC.

In the mid-1990s, Sega departed from its family-friendly reputation, publishing titles with violent and sexual content. However, none of the games succeeded in the market. In December 1994, the popular American cable network Time Warner Cable introduced the Sega Channel, allowing subscribers to play Sega games on their TVs via a special adapter. Although it reached 250,000 subscribers, the channel was forced to shut down less than four years later because of technical problems. Sega released the Dreamcast in November 1998, its final console, featuring a built-in modem for online play and outperforming direct competitors like the PlayStation and Nintendo 64. The console released notable games such as ChuChu Rocket, Quake III Arena, Phantasy Star Online (the first MMORPG on a console), and Alien Front Online (the first console title with voice chat). The Japanese release of the Dreamcast was unsuccessful, largely because of a limited selection of launch titles and the upcoming release of the PlayStation 2.

Focus on producing and publishing games

After closing its development studios, including SegaSoft, the company invested in the American studio Visual Concepts and the French studio No Cliché, which was shut down in 2001. Thanks to aggressive marketing, the Dreamcast became a commercial hit in the U.S., holding the top spot until the PlayStation 2 launched. Titles including Jet Set Radio, Seaman, Samba de Amigo, and Shenmue - each notable for innovations such as cel-shading, voice interaction, rhythm-based gameplay, or open-world design - helped make the console successful. Despite its successes, the Dreamcast was discontinued in March 2001. According to Sega president Isao Okawa, the company would continue supporting the Dreamcast but focus primarily on games rather than hardware. To mark this change, Sega renamed itself from Sega Enterprises to Sega Corporation in November 2000.

In the early 2000s, Sega focused on third-party game publishing, releasing titles for the PlayStation 2 and Game Boy Advance. However, by May 2002, it was evident that Sega’s new strategy was not producing the desired outcomes, as the company reported its fifth straight year of losses. Facing rising debt, Isao Okawa donated $692 million of his own money to save the company before passing away in 2001. Sega held talks about a possible sale with companies including Microsoft Studios, Bandai Namco Entertainment, and Electronic Arts, though none of the discussions led to a deal. In April 2003, 22 percent of Sega’s shares were acquired by Sammy, one of the leading manufacturers of pachinko and pachislot machines, and the company’s former CEO, Hajime Satomi, assumed the role of Sega’s president. Sega shifted back to the arcade market, which was enjoying a comeback, to make up for losses in the home console and PC markets. One of Sega’s biggest achievements was the revised edition of Virtua Fighter 4, featuring online competition. In mid-2004, Sammy purchased a controlling stake in Sega, establishing Sega Sammy Holdings, where both firms continued to operate independently.

After regaining financial stability, Sega bought the GameWorks arcade chain in 2004 and sold it seven years later. In 2005, Sega sold Visual Concepts, one of its leading development studios, to Take 2 Interactive, and soon acquired the British studio Creative Assembly, famed for the Total War games. In the same year, Sega Racing Studios was launched by people who previously worked at Codemasters Software. One year later, Sega’s European division acquired the British studio Sports Interactive, famous for the Football Manager series, while the U.S. branch integrated Secret Level (later Sega Studio San Francisco) into its structures. In 2007, Sega partnered with Nintendo after obtaining an Olympic Committee license, producing numerous sports games, including Mario & Sonic at the Olympic Games, which sold upwards of 20 million copies on Nintendo consoles. Subsequent titles from the Yakuza and Project DIVA series were also highly successful.

In Japan, Sega concentrated on publishing games from small indie developers, localizing Western releases, and running its arcade business, which was more profitable than its console and PC divisions until 2014. In 2008, Sega brought back its Australian office and development studio, effectively making them subordinate to Sega of Europe. Sega also launched the PlaySEGA online service, where users could enjoy Flash versions of classic Sega Genesis games alongside original titles. The website didn’t last long, as it had only a small number of subscribers. That year also saw Sega entering the mobile gaming market, where Super Monkey Ball’s success on iOS led to the release of many mobile versions of its flagship games.

In 2009, Sega Republic, a theme park in Dubai, was opened by the company. In the restructuring process, both Sega Racing Studio (returned to Codemasters Software in 2008) and Sega Studio San Francisco (2010) were closed. As a consequence of several failed business initiatives, including restrictions on selling game bundles, Sega reduced its overseas branches in 2010–2012, leading to the shutdown of five offices in Europe and the Antipodes, among them Sega Studio Australia. As a result, Sega reduced its supported arcade machines from 450 (in 2005) to roughly 200 (in 2015), with a new strategy focusing on electronic distribution for PC and mobile games. In 2012, Sega set up Sega Networks to manage its mobile game operations and began absorbing studios active in the mobile segment. Among the newly acquired studios are Hardlight, Three Rings Design, and Demiurge Studios.

From 2012 to 2015, Sega ran its operations through two separate divisions: Sega Entertainment, overseeing entertainment, and Sega Interactive, focused on the arcade business. Both divisions joined Sega Holdings and operated as part of the Sega Sammy Group. After THQ went bankrupt in 2013, Relic Entertainment, famous for the Company of Heroes series, was acquired by the company. Around that period, after Index Corporation’s bankruptcy, Sega acquired its IP and made Atlus, the studio behind the Shin Megami Tensei and Persona JRPGs, a fully owned member of the group. The company also built strong working relationships with external teams like Bizarre Creations, Backbone Entertainment, Monolith Productions, Sumo Digital, Kuju Entertainment, Obsidian Entertainment, and Gearbox Software. Also in 2013, Sega and BBC Earth opened the first fully interactive natural history museum in Yokohama, Japan.

Haruki Satomi, grandson of Hajime Satomi, was elected president of Sega Games Co. Ltd. in April 2015. That same year, Sega of America moved its headquarters from San Francisco to the former Atlus USA offices in Irvine, California. In September 2016, it was announced that the company had acquired the intellectual property of Technosoft, a celebrated Japanese studio that closed in 2001 and was temporarily active from 2006 to 2008. In April 2017, Sega Sammy Holdings revealed that its main divisions, including the management board and companies like Sammy Corporation, Sega Holdings, Sega Games, Atlus, Sammy Networks, and Dartslive, would move from central Tokyo to Shinagawa. Since 2017, under the guidance of Hajime Satomi, Sega has worked to strengthen its core brands on PC, consoles, and mobile platforms.

Looking for new opportunities, the company produced Sonic the Hedgehog, a film that was both a critical and commercial success. In May 2019, Sega acquired Two Point Studios, the developer behind the highly praised strategy game Two Point Hospital. Demiurge Studio left the company in April 2020, with one of its founders - Albert Reed - taking ownership.

The COVID-19 pandemic in 2020 forced the company to spend a large part of its previously generated profits trying to sustain Sega Entertainment’s arcade division. By January 2022, Genda acquired all shares previously held by Sega Sammy. Luckily for Sega, numerous titles bearing its logo were well received by players and reviewers alike, giving the company reason to be optimistic about the future and continue developing. Sega revealed in 2023 that it would purchase Finnish Rovio Entertainment for $776 million.

Restructuring

Returning to Sega’s search for new avenues of development, the Japanese publisher decided to enter the multiplayer FPS market and tasked Creative Assembly with creating a representative title in this genre. The game Hyenas was revealed in June 2022, with plans for PC and console releases. Things didn’t go according to plan for Sega’s management; the game’s announcement let down players who were expecting the next Alien: Isolation from Creative Assembly.

Given that all signs pointed to the project’s failure, and achieving the $900 million revenue target was practically impossible, the project was officially canceled in October 2023. Interestingly, soon after, unofficial reports indicated that Hyenas would become Sega’s most expensive game ever.

As it turned out, this was part of a large-scale restructuring. Back in May 2023, Relic Entertainment laid off 120 employees. The publisher revealed in December 2023 that it planned a grand return for a number of its brands that players had largely forgotten.

In January 2024, Jurgen Post became COO of Sega’s Western studios and Managing Director at Sega Europe. In addition, Shuji Utsumi took on the positions of President, Chief Operating Officer, and General Manager for Sega’s European and American operations. Also in that month, 61 employees from the Irvine, California office had to leave their positions.

The studio Relic Entertainment separated from Sega in March, achieving independence with the backing of an outside investor. The company also underwent a round of layoffs, with 240 people losing their jobs - most from Creative Assembly and the rest from Sega Europe and Sega Hardlight.

Fans of Sega had to wait until September and October 2024 for some brighter news. The months brought news of the games Two Point Museum, Like a Dragon: Pirate Yakuza in Hawaii, and the long-awaited Alien: Isolation sequel. On October 11, the JRPG Metaphor: ReFantazio hit the market, achieving impressive critical success with an average Metacritic rating of 92–93/100. It was also announced simultaneously that Sega had joined forces with Universal Pictures to produce a Shinobi film, directed by Sam Hargrave.

Consoles

While Sega is best known for publishing video games and running arcade networks, at its height it was also a top global producer of home game consoles. Between 1983 and 2005, the company launched a total of 11 console models and their peripherals, many of which have since become legendary, even though they are no longer sold. Across its history, Sega has introduced gamers to the following devices:

SG-1000

1. also known as Sega Computer Videogame SG-100,
2. third-generation gaming console, launched in 1983–1984,
3. Used game cartridges (the SC-3000 edition included a built-in keyboard and Sega Card slot).

SG-1000 II

1. The enhanced third-generation SG-1000 console with removable controllers, released in 1984–1985,
2. Used cartridges or Sega Cards (the SC-3000H version came with a built-in keyboard and only a Sega Card).

Master System

1. also known as Sega Mark III,
2. A third-gen console from 1985–1986, basically a significantly upgraded SG-1000,
3. The original version could use both cartridges and Sega Cards, whereas the smaller, cheaper 1990 version supported only cartridges,
4. lost the market competition with the Nintendo NES console.

Sega Genesis

1. also known as Sega Mega Drive,
2. fourth-gen console released in 1988–1997,
3. supported cartridges and, from 1990, also offered the Sega Meganet internet service,
4. the Sega Nomad, a portable version, operates using the same data carriers,
5. Failed to match the success of the Nintendo SNES and NEC PC Engine.

Game Gear

1. a fourth-generation portable console produced during 1990–1997,
2. in terms of capabilities and architecture similar to the Master System,
3. used special cartridges,
4. lost the market competition with the Nintendo Game Boy handheld.

Sega CD

1. the Sega Genesis CD-ROM drive, manufactured from 1991 to 1996, addressed the console’s earlier limitations on game size.
2. also known as Kids Computer Pico,
3. a fourth-generation console produced between 1993 and 2005, aimed at the youngest players,
4. displayed a lively, toy-like design,
5. used unique book-shaped cartridges,
6. it was operated using a special stylus and graphics tablet.

Sega Pico

32X

1. A peripheral device produced between 1994 and 1996 for the Sega Genesis console, featuring its own game library.
2. the gadget enhanced the power and capabilities of the 16-bit base device, adapting it to the era of 32-bit consoles,
3. Used the same type of data cartridges as the Genesis itself.

Sega Saturn

1. a 32-bit fifth-generation console produced between 1994 and 1998,
2. Could run CD-ROM games and, with added hardware, connect to SegaNet.
3. lost the market competition with Sony PlayStation and Nintendo 64 consoles.

Dreamcast

1. sixth-generation console produced between 1998 and 2001,
2. compatible with GD-ROM games and the SegaNet / Dreamarena online platforms,
3. includes a unique accessory known as the VMU (Visual Memory Unit) - a hybrid of a memory card, mini display, and handheld console,
4. the absence of DVD compatibility was one of the reasons it couldn’t compete with the Sony PlayStation 2.

Advanced Pico Beena

1. a 2005 Japan-only sixth-generation console, designed as an enhanced Sega Pico for kids,
2. operates with book-shaped game cartridges,
3. a more affordable and slightly downgraded version, Beena Lite, was released in 2008.