Sega

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SEGA Games Co., Ltd. (株式会社セガゲームス Kabushiki-gaisha Sega Gēmusu), also known as Sega (セガ Sega), is a software developer and publisher, arcade hardware developer, and former console hardware developer owned by SEGA SAMMY HOLDINGS INC. (セガサミーホールディングス株式会社 Sega Samī Hōrudingusu Kabushiki-gaisha) as of October 1, 2004.

Sega currently owns the Puyo Puyo series, and their games are developed by Sonic Team. Sega does not own the Madou Monogatari series, however; these rights appear to belong to D4 Enterprise. Sega is still credited in every re-release of the early Madou Monogatari games, as the games contain Puyo Puyo characters.

Early History

Service Games

In 1940, American businessmen Martin Bromley (born August 6, 1919 in New York, USA, died September 7, 2008 in Culver City, CA), Irving Bromberg (born June 10, 1899 in New York, USA, died January 20, 1973 in Los Angeles, CA, USA), and James Humpert formed a company called Standard Games in Honolulu, Hawaii, to provide coin-operated amusement machines to military bases. They saw that the onset of World War II, and the consequent increase in the number of military personnel, would mean there would be demand for something for those stationed at military bases to do in their leisure time. After the war, the founders sold that company and established a new distributor called Service Games, named for the military focus. In 1951, the government of the United States outlawed slot machines in US territories, so Bromley sent two of his employees, Richard Stewart and Ray LeMaire, to Tokyo, Japan, in 1952 to establish a new distributor. The company provided coin-operated slot machines to U.S. bases in Japan and changed its name to Service Games Japan (サービスゲームズジャパン Sābisu Gēmuzu Japan) by 1953. Service Games' first use of the name Sega occurred in 1954 on slot machines, in particular on one model called the Diamond Star Machine. During 1954, Humpert sold his interest in Service Games back to Bromley and Bromberg at a price of US$50,000 each. Stewart and LeMaire later purchased shares from Bromley and Bromberg, resulting in an equal split among the four men for ownership of the company.

As Service Games grew larger, it began to attract attention from the US and Japanese governments. While the company had managed to get out of charges of bribery and tax evasion, between 1959 and 1960, Service Games was banned from US air bases in Japan and the Philippines. On May 31, 1960, Service Games Japan was formally dissolved. A few days later, on June 3, two new companies were established to take over its business activities: Nihon Goraku Bussan Inc. (日本娯楽物産株式会社 Nihon Goraku Bussan Kabushiki-gaisha, lit. "Japanese Amusement Products Company, Inc.") and Nihon Kikai Seizo (日本機械製造 Nihon Kikai Seizō, lit. "Japanese Machine Manufacturers"). Kikai Seizo focused on manufacturing Sega slot machines, while Goraku Bussan served as a distributor and operator of coin-operated machines, particularly jukeboxes. As part of the operations move, Kikai Seizo and Stewart's company Utamatic, Inc. purchased Service Games Japan's assets. Bromberg and Bromley sold Service Games Hawaii in 1961 for a price of US$1.4 million, while retaining the name. Kikai Seizo and Goraku Bussan were merged in 1964.

The founding of Sega Enterprises

David Rosen (born January 22, 1930 in Brooklyn, New York City, NY, USA) an American officer in the United States Air Force stationed in Japan, launched a two-minute photo booth business in Tokyo in 1954. This company eventually became Rosen Enterprises (ローゼン・エンタープライゼス Rōzen Entāpuraizesu), and in 1957, began importing coin-operated games to Japan. In 1965, Nihon Goraku Bussan acquired Rosen's company to form Sega Enterprises, Ltd. (株式会社セガ・エンタープライゼス Kabushiki-gaisha Sega Entāpuraizesu) Rosen was installed as the CEO and managing director of the new company. Shortly afterward, Sega stopped its focus on slot machines and stopped leasing to military bases in order to focus on becoming a publicly-traded company of coin-operated amusement machines. Products imported included Rock-Ola jukeboxes and pinball games by Williams, as well as pinball and gun games by Midway Games. Because Sega imported second-hand machines that frequently required maintenance, Sega began the transition from importer to manufacturer by constructing replacement guns and flippers for its imported games. According to former Sega director Akira Nagai, this led to Sega developing their own games as well. Sega's first release of their own manufactured electromechanical game was the 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 and was placed in malls and department stores, becoming the first arcade game in the US to cost 25 cents per play. Sega was surprised by Periscope's success, and for the next two years, Sega produced between eight and ten games per year, exporting all of them.

After dealing with financial struggles and rampant piracy, Sega was sold to American conglomerate Gulf and Western Industries in 1969. Bromley and Stewart sold their shares, 80% of the company, for a total of US$10 million, while LeMaire retained his 20%. As a condition of the sale, Rosen was to remain CEO of the company until at least 1972. Six months later, with the deal done, Bromley joined with Stewart to form a company called Sega S.A. SONIC in Spain, which imported coin-operated machines to Europe. The company was active until around 1986.

Rosen continued to develop his relationship with Gulf and Western chairman Charles Bluhdorn (born September 20, 1926 in Vienna, Austria, died February 20, 1983), and in 1974, Gulf and Western made Sega a subsidiary of an American company renamed Sega Enterprises, Inc. During 1973, Sega would release Pong-Tron, its first video-based game. In 1978, Sega acquired Gremlin Industries, a manufacturer of microprocessor-based arcade games. Sega also acquired Esco Trading (エスコ貿易 Esuko Bōeki), a coin-op distributor led by Hayao Nakayama (中山 隼雄 Nakayama Hayao) (born May 21, 1932 in Tokyo, Japan). Rosen would later admit that he mainly purchased Esco Trading for Nakayama's leadership. 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. In 1982, Sega introduced the first game with isometric graphics, Zaxxon.

While Sega had enjoyed success in the early 1980s, the success didn't last. A downturn in the North American arcade business in 1982 lead Gulf and Western to sell Sega's North American arcade manufacturing division and the licensing rights for its arcade games to Bally Manufacturing. The company retained Sega's North American R&D operation, as well as its Japanese subsidiary, Sega Enterprises, Ltd.

Working with Compile

The SG-1000's Launch, Compile's first games, shifting owners

The SG-1000's Launch

With it's arcade business in decline, Gulf and Western executives turned to Sega Enterprises, Ltd. president Nakayama for advice on how to proceed. Nakayama advocated that the company leverage its hardware expertise gained through years working in the arcade industry to move into the home console market in Japan, which was in its infancy. Nakayama received permission to proceed, leading to the release of Sega's first home video game system, the SG-1000. The first model to be developed was the SC-3000, a computer version with a built-in keyboard, but when Sega learned of Nintendo's plans to release a games-only console, they began developing the SG-1000 alongside the SC-3000. The SG-1000 and SC-3000 were released in Japan on July 15, 1983, on the same day as Nintendo launched the Family Computer (Famicom) in Japan. Though Sega only released the SG-1000 in Japan, rebranded versions were released in several other markets worldwide.

SG-1000 Sales

Due in part to the SG-1000's steadier stream of releases, and in part to a recall on Famicom units necessitated by a faulty circuit, the SG-1000 chalked up 160,000 units in sales in 1983, far exceeding Sega's projection of 50,000 units.

Compile Enters the Picture

It was around this time that Compile began to work with Sega. Compile developed three arcade ports serving as launch titles for the SG-1000 - Borderline, N-Sub, and Safari Hunting (originally Tranquilizer Gun). Despite Sega discontinuing the system in July 1984 due to it's lack of success, Compile developed five additional titles for the SG-1000. The last title they developed was Champion Billiards, and it was released in 1986.

Sega's New Owners

Shortly after the launch of the SG-1000, Gulf and Western began to divest itself of its non-core businesses, so Nakayama and Rosen arranged a management buyout of the Japanese subsidiary in April 1984 with financial backing from Computer Service, Inc. (コンピューターサービス株式会社 Konpyūtā Sābisu Kabushiki-gaisha)(later known as CSK), a prominent Japanese software company. The Japanese assets of Sega were purchased for $38 million by a group of investors led by Rosen and Nakayama. Isao Okawa (大川 功 Ōkawa Isao) (born May 19, 1926 in Osaka, Japan, died March 16, 2001 in Tokyo, Japan), chairman of CSK, became the chairman of Sega, while Nakayama was installed as CEO of Sega Enterprises, Ltd. Sega also opened a European division around this time.

The Mark III's Launch

Development

As a result of the lack of success of the SG-1000, Sega began working on the Mark III in Japan in 1985. Engineered by the same internal Sega team that had created the SG-1000, the Mark III was a redesigned iteration of the previous console. For the console's North America release, Sega restyled and rebranded the Mark III under the name "Master System". The futuristic final design for the Master System was intended to appeal to Western tastes.

System launch and Compile's games

The Sega Mark III was released in Japan in October 1985 at a price of ¥15,000. Despite featuring technically more powerful hardware than its chief competition, the Famicom, the Mark III did not prove to be successful at its launch. Difficulties arose from Nintendo's licensing practices with third-party developers at the time, whereby Nintendo required that titles for the Famicom not be published on other consoles. To overcome this, Sega developed its own titles and obtained the rights to port games from other developers, but they did not sell well.

Compile

Compile developed a total of seven titles for the system - two of them, a 1987 Ghostbusters title and Casino Games (1989), were only released in North America and Europe. The third title, Power Strike II, was exclusively in Europe in September 1993.

Success in Europe

Contrary to its performance in Japan and North America, the Master System eventually outsold the NES by a considerable margin in Europe. 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, where new variations have continued to be released, long after the console was discontinued elsewhere, distributed by Sega's partner in the region, Tectoy.

Regaining Success

Arcade Success and Puyo Puyo

Sega re-entered the North American arcade market in 1985 with the establishment of a new division at the end of a deal with Bally. The release of Hang-On in 1985 would prove successful in the region, becoming so popular that Sega struggled to keep up with demand for the game. In 1986, Sega would start distributing their arcade games to North America themselves. At the end of the 1980s, Sega would become one of the most recognized brands in arcade gaming. Following the launch of Puyo Puyo for the MSX and Famicom Disk System, Compile approached Sega with the idea of turning Puyo Puyo into a competitive arcade game. Compile developed the game using Sega's System C2 hardware, and Sega published the arcade version as well as it's Mega Drive and Game Gear ports. A sequel, Puyo Puyo Tsu, was created for the same hardware and distributed by Sega, but Compile was the sole publisher. Even the ports to Sega systems were published by Compile. Puyo Puyo Sun used the Sega Titan Video hardware, while Puyo Puyo DA! used Sega's Naomi hardware. Both games were published by Compile, even though Sega owned Puyo Puyo at the time DA was released.

Mega Drive

Initial release

Sega released the Mega Drive in Japan on October 29, 1988, though the launch was overshadowed by Nintendo's release of Super Mario Bros. 3 a week earlier. Positive coverage from magazines Famitsu and Beep! helped to establish a following, but Sega only managed to ship 400,000 units in the first year. The Mega Drive was unable to overtake the venerable Famicom and remained a distant third in Japan behind Nintendo's Super Famicom and NEC's PC Engine, though the PC Engine was discontinued in 1994. Sega announced a North American release date for the system on January 9, 1989. The console was renamed "Sega Genesis". Former Atari executive and new Sega of America CEO Michael Katz instituted a two-part approach to build sales in the region. The first part involved a marketing campaign to challenge Nintendo head-on and emphasize the more arcade-like experience available on the Genesis, summarized by 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 instantly recognizable games which used the names and likenesses of celebrities and athletes. Nonetheless, it had a hard time overcoming Nintendo's ubiquitous presence in consumers' homes. Tasked by Nakayama to sell one million units within the first year, Katz and Sega of America managed to sell only 500,000 units.

Seeking a Mascot

While Sega was seeking a flagship series to compete with Nintendo's Mario series along with a character to serve as a company mascot, Naoto Ohshima designed "a teal hedgehog with red shoes that he called "Mr. Needlemouse." The character was renamed Sonic the Hedgehog. The gameplay of Sonic the Hedgehog originated with a tech demo created by Yuji Naka, who had developed an algorithm that allowed a sprite to move smoothly on a curve by determining its position with a dot matrix. Naka's original prototype was a platform game that involved a fast-moving character rolling in a ball through a long winding tube, and this concept was subsequently fleshed out with Ohshima's character design and levels conceived by designer Hirokazu Yasuhara. Sonic's blue pigmentation was chosen to match Sega's cobalt blue logo, and his shoes were a concept evolved from a design inspired by Michael Jackson's boots with the addition of the color red, which was inspired by both Santa Claus and the contrast of those colors on Jackson's 1987 album Bad; his personality was based on Bill Clinton's "can do" attitude.

Success

In mid-1990, Nakayama hired Tom Kalinske to replace Katz as CEO of Sega of America. Although Kalinske initially knew little about the video game market, he 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 console, create a U.S.-based team to develop games targeted at the American market, continue and expand the aggressive advertising campaigns, and replace the bundled game Altered Beast with a new game, Sonic the Hedgehog. The Japanese board of directors initially disapproved of the plan, but all four points were approved by Nakayama, who told Kalinske, "I hired you to make the decisions for Europe and the Americas, so go ahead and do it." Magazines praised Sonic as one of the greatest games yet made, and Sega's console finally became successful. In large part due to the popularity of Sonic the Hedgehog, the Sega Genesis outsold its main competitor, Nintendo's SNES, in the United States nearly two to one during the 1991 holiday season. This success led to Sega having control of 65% of the 16-bit console market in January 1992, making it the first time Nintendo was not the console leader since December 1985.

In the end, Sega was able to outsell Nintendo four Christmas seasons in a row due to the Genesis' head start, a lower price point, and a larger library of games when compared to the Super Nintendo at its release. Sega's advertising positioned the Genesis as the cooler console, and as its advertising evolved, the company coined the term "blast processing" to suggest that its processing capabilities were far greater than those of the SNES. However, according to a 2014 Wedbush Securities report based on revised NPD sales data, the SNES still outsold the Genesis in the U.S. market.

Compile's titles

Throughout it's lifespan, Compile developed five titles for the Mega Drive. Two were published by Sega, one was published by Toaplan, and three were self-published. One of their titles, Madou Monogatari I, was the last official title to be released for the Japanese Mega Drive. The Puyo Puyo ports were reworked by Sega Technical Institute into Dr. Robotnik's Mean Bean Machine.

Game Gear

In 1990, Sega launched the Game Gear to compete against Nintendo's Game Boy. The console had been designed as a portable version of the Mark III, and featured more powerful systems than the Game Boy, including a full-color screen, in contrast to the monochromatic screen of its rival. Due to issues with its short battery life, lack of original games, and weak support from Sega, the Game Gear was unable to surpass the Game Boy, selling approximately 11 million units. Compile developed eleven titles for the Game Gear - eight were published by Sega, while Compile themselves published the remaining titles.

Mega CD

By 1991, compact discs had gained in popularity as a data storage device for music and software. PCs and video game companies had started to make use of this technology. NEC had been the first to include CD technology in a game console with the release of the PC Engine CD-ROM add-on, and Nintendo was making plans to develop its own CD peripheral as well. Seeing the opportunity to gain an advantage over its rivals, Sega partnered with JVC to develop a CD-ROM add-on for the Mega Drive. Sega launched the Mega-CD in Japan on December 1, 1991, initially retailing at JP¥49,800. The CD add-on was launched in North America on October 15, 1992, as the Sega CD, with a retail price of US$299; it was released in Europe as the Mega-CD in 1993. In addition to greatly expanding the potential size of its games, this add-on unit upgraded the graphics and sound capabilities by adding a second, more powerful processor, more system memory, and hardware-based scaling and rotation similar to that found in Sega's arcade games. The Mega-CD sold only 100,000 units during its first year in Japan, falling well below expectations. Although many consumers blamed the add-on's high launch price, it also suffered from a small software library; only two games were available at launch. This was due in part to the long delay before Sega made its software development kit available to third-party developers. Sales were more successful in North America and Europe, although the novelty of full motion video (FMV) and CD-enhanced games quickly wore off as many of the Mega-CD's later games were met with lukewarm or negative reviews. Compile developed and published three games for the system. One was published by Sega, and another was published outside of Japan by Tengen.

Sega Saturn and sales difficulties

Development on Sega's next video game console, the Sega Saturn, started over two years before the system was showcased at the Tokyo Toy Show in June 1994. The name "Saturn" was the system's codename during development in Japan, but was chosen as the official product name. According to Kalinske, Sega of America "fought against the architecture of Saturn for quite some time". Seeking an alternative graphics chip for the Saturn, Kalinske attempted to broker a deal with Silicon Graphics, but Sega of Japan rejected the proposal. Kalinske, Sony Electronic Publishing's Olaf Olafsson, and Sony America's Micky Schulhof had discussed development of a joint "Sega/Sony hardware system", which never came to fruition due to Sega's desire to create hardware that could accommodate both 2D and 3D visuals and Sony's competing notion of focusing on 3D technology. Publicly, Kalinske defended the Saturn's design: "Our people feel that they need the multiprocessing to be able to bring to the home what we're doing next year in the arcades." To ensure high-quality 3D games would be available early in the Saturn's life, developers from Sega's arcade division were asked to create Saturn games.

Sega released the Saturn in Japan on November 22, 1994, at a price of ¥44,800. Virtua Fighter, a faithful port of the popular arcade game, sold at a nearly one-to-one ratio with the Saturn console at launch and was crucial to the system's early success in Japan. Fueled by the popularity of Virtua Fighter, Sega's initial shipment of 200,000 Saturn units sold out on the first day, and was more popular than the PlayStation 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. However, Sega of Japan mandated an early launch to give the Saturn an advantage over the PlayStation. The events that followed led to fractured relationships between Sega and retailers, multiple price reductions of the Saturn, and financial loss.

Losses, Acquisition of Puyo Puyo

Following five years of generally declining profits, in the fiscal year ending March 31, 1998 Sega suffered its first parent and consolidated financial losses since its 1988 listing on the Tokyo Stock Exchange. Due to a 54.8% decline in consumer product sales (including a 75.4% decline overseas), the company reported a net loss of ¥43.3 billion (US$327.8 million) and a consolidated net loss of ¥35.6 billion (US$269.8 million). Sega suffered an additional ¥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. With lifetime sales of 9.26 million units, the Saturn is considered a commercial failure, although its install base in Japan surpassed the Nintendo 64's 5.54 million.

Around this time, Compile had gone into debt. Sega ended up buying the rights to Puyo Puyo as a result of this, but they gave Compile the rights to use Puyo Puyo until August 2002. Compile had self-published five titles for the Saturn.

Dreamcast

Dreamcast Launch, Puyo Puyo goes international

The Dreamcast attracted significant interest and drew many pre-orders. Sega announced that Sonic Adventure, the next game starring company mascot Sonic the Hedgehog, would arrive in time for the Dreamcast's launch and promoted the game with a large-scale public demonstration at the Tokyo Kokusai Forum Hall. However, Sega could not achieve its shipping goals for the Dreamcast's Japanese launch due to a shortage of PowerVR chipsets caused by a high failure rate in the manufacturing process. As more than half of its limited stock had been pre-ordered, Sega stopped pre-orders in Japan. On November 27, 1998, the Dreamcast launched in Japan at a price of JP¥29,000, and the entire stock sold out by the end of the day. However, of the four games available at launch, only one—a port of Virtua Fighter 3, the most successful arcade game Sega ever released in Japan—sold well. Irimajiri hoped to sell over 1 million Dreamcast units in Japan by February 1999, but less than 900,000 were sold, undermining Sega's attempts to build up a sufficient installed base to ensure the Dreamcast's survival after the arrival of competition from other manufacturers. Prior to the Western launch, Sega reduced the price of the Dreamcast to JP¥19,900, effectively making the hardware unprofitable but increasing sales.

Around this time, Sega published Puyo Puyo ~n and Compile self-published the Dreamcast version of Puyo Puyo DA!. ~n was the last Compile-developed game published by Sega, while DA! was Compile's last game on a Sega system. Bandai and SNK had published Sega-licensed WonderSwan and Neo Geo Pocket Color ports of Puyo Puyo Tsu around this time as well. SNK published their port internationally under the name Puyo Pop, and Sega registered the Trademark.

Financial Losses

Poor Japanese sales contributed to Sega's ¥42.88 billion ($404 million) consolidated net loss in the fiscal year ending March 2000, which followed a similar loss of ¥42.881 billion the previous year and marked Sega's third consecutive annual loss. Although Sega's overall sales for the term increased 27.4%, and international Dreamcast sales greatly exceeded the company's expectations, this increase in sales coincided with a decrease in profitability due to the investments required to launch the Dreamcast in Western markets and poor software sales in Japan. Sega's attempts to spur increased Dreamcast sales through lower prices and cash rebates caused escalating financial losses.

Shift to third-party software development

In 2000, Sega and CSK Corporation chairman Isao Okawa replaced Irimajiri as president of Sega. Irimajiri had been replaced as a result of Sega's financial losses. Okawa had long advocated that Sega abandon the console business. His sentiments were not unique; 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 previously suggested that Sega should have sold their company to Microsoft. In September 2000, in a meeting with Sega's Japanese executives and the heads of the company's major Japanese game development studios, Moore and Bellfield recommended that Sega abandon its console business and focus on software—prompting the studio heads to walk out. On November 1, 2000, Sega changed its company name from Sega Enterprises to Sega Corporation.

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. After initial denial, Sega of Japan 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". 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 $99 to eliminate its unsold inventory, which was estimated at 930,000 units as of April 2001. After a further reduction to $79, the Dreamcast was cleared out of stores at $49.95. The final Dreamcast unit manufactured was autographed by the heads of all nine of Sega's internal game development studios as well as the heads of Visual Concepts and Wave Master and given away with 55 first-party Dreamcast games through a competition organized by GamePro magazine. Okawa, who had previously loaned Sega $500 million in the summer of 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 also talked to Microsoft about a sale or merger with their Xbox division, but those talks failed. As part of this restructuring, nearly one-third of Sega's Tokyo workforce was laid off in 2001. By March 31, 2002, Sega had five consecutive fiscal years of net losses.

After Okawa's death, Hideki Sato became president of Sega. Sato, a 30-year veteran of Sega, had previously developed Sega's video game consoles.

Sega also had Sonic Team develop future Puyo Puyo titles.

Post-Compile

Merger Talks

Sega began to look at opportunities for a merger to fix its financial situation. Sega had previously considered a merger with Bandai in 1997, though that deal fell through. In 2003, Sega began talks with Sammy Corporation and Namco. Sato stated that he would select the partner that fit the business best. Sega made an announcement on February 13, 2003, of its decision to merge with Sammy. However, as late as April 17 of the same year, Sega was still in talks with Namco, which was attempting to overturn the merger and went public with its offer to be acquired. Sega's consideration of Namco's offer upset executives of Sammy. However, the day after Sega announced it was no longer planning to merge with Sammy, Namco withdrew its offer. Though Namco expressed that it would be willing to work with Sega on a future deal, Sega expressed it was not interested.

Due to the failure to complete a merger, Sato was forced to step down. In 2003, he and COO Tetsu Kamaya announced they were stepping down from their roles, with Sato being replaced by Hisao Oguchi, the head of Hitmaker. As part of Oguchi's restructuring plan, he announced his intention to consolidate Sega's studios into "four or five core operations." Sega's studios, including Sonic Team, were consolidated and reintegrated into Sega as its R&D division.

Merger with Sammy

Although talks of a merger had soured earlier, Sega and Sammy were able to resume discussions. In August 2003, Sammy bought the outstanding 22% of shares that CSK had, becoming Sega's largest shareholder in the process. In the same year, Hajime Satomi, primary owner and president and CEO of Sammy, stated that Sega's activity will focus on their profitable arcade business as opposed to their loss-incurring home software development sector. Satomi was determined to push this strategy, stating, "if [Sammy's] vision does not agree with that of Sega then we might have to consider taking more shares."

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, an entertainment conglomerate. Since then, Sega and Sammy became subsidiaries of the aforementioned holding company, with both companies operating independently, while the executive departments merged. According to Satomi, Sega had been operating at a loss for nearly 10 years and lacked a clear financial base. Sammy feared stagnation and overreliance of its highly profitable pachislot and pachinko machine business, and wanted to divesify its business in new fields using Sega's broader range of involvement in different entertainment fields. Sega Sammy Holdings was structured into four parts, three of which were Sega: 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). Satomi did state that not all Sega executives were in favor of the takeover. While it is unclear for his reasons, head of Wow Entertainment (previously Sega AM1) Rikiya Nakagawa resigned a week after the merger. Sega would also restructure the development studios again, consolidating the divisions further into the Global Entertainment, Amusement Software, and New Entertainment R&D divisions.

Restructuring

Due to the decline of packaged game sales both domestically and outside Japan in the 2010s, Sega began layoffs and reduction of their Western businesses, such as Sega shutting down five offices based in Europe and Australia on July 1, 2012. This was done in order to focus on the digital game market, such as PC and mobile devices. Because of the shrinking arcade business in Japan, development personnel would also be relocated to the digital game area. Sega gradually reduced its arcade centers from 450 facilities in 2005, to around 200 in 2015. In the mobile market, Sega released its first app on the iTunes Store with a version of Super Monkey Ball in 2008. Since then, the strategies for Asian and Western markets have become independent. The Western line-up consisted of emulations of games and pay-to-play apps, which were eventually overshadowed by more social and free-to-play games, eventually leading to 19 of the older mobile games being pulled due to quality concerns in May 2015. In 2012, Sega established Sega Networks for its mobile games; and although separate at first, it merged with Sega Corporation in 2015. Sega Games was structured as a "Consumer Online Company", while Sega Networks focused on developing games for mobile devices. Over the course of the existence of Sega Sammy Holdings to 2015, Sega's operating income generally saw improvements compared to Sega's past financial difficulties, but was not profitable every year of operation.

Sega Group

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 organization. Haruki Satomi, son of Hajime Satomi, took office as president and CEO of the company in April 2015. In April 2017, Sega Sammy Holdings announced a relocation of head office functions of the Sega Sammy Group and its major domestic subsidiaries located in the Tokyo metropolitan area to Shinagawa-ku by January 2018. Their stated reasoning was to promote cooperation among companies and creation of more active interaction of personnel, while pursuing efficient group management by consolidating scattered head office functions of the group, including Sega Sammy Holdings, Sammy Corporation, Sega Holdings, Sega Games, Atlus, Sammy Network, and Dartslive. In October 2017, Sega of America announced its own online store, known as the Sega Shop. Ian Curran, a former executive at THQ and Acclaim Entertainment, replaced John Cheng as president and COO of Sega of America in August 2018.

Lists of Games

First-Party-Published Games

This section consists of games that were developed by Compile and published by Sega.[1][2][3][4][5][6]

Title Platform(s) Release date Notes
Borderline SG-1000 July 15, 1983 The game was originally developed by Sega for arcades in 1981.
N-Sub SG-1000 July 15, 1983 The game was originally developed by Sega for arcades in 1980.
Safari Hunting SG-1000 July 15, 1983 The game is a port of Tranquilizer Gun, an arcade game by Sega released in June 1980.
Hustle! Chumy SG-1000 1984 Originally published for the MSX by General.
Championship Lode Runner SG-1000 1985 This game was originally published by Brøderbund for the Apple II in 1983.
C-So! SG-1000 1985 Originally published for the MSX by Pony Canyon.
Gulkave SG-1000 1986 Originally published for the MSX by Pony Canyon.
Champion Billiards SG-1000 1986
Family Games Sega Mark III December 27, 1987 Released in North America and Europe for the Master System in 1988 as Parlour Games.
Ghostbusters Master System 1987 This game is based on the GhostBusters movies.
Aleste Sega Mark III February 29, 1988 Released in North America and Europe for the Master System as Power Strike.
Mao Golvellius Sega Mark III August 14, 1988 Originally published for the MSX by Compile. Released in North America and Europe for the Master System as Golvellius: Valley of Doom.
R-Type Sega Mark III October 1, 1988 This game was originally created by Irem for Arcades in July 1987.
Casino Games Master System 1989
Ghostbusters Mega Drive June 29, 1990 This game is based on the GhostBusters movies. It was released in North America on June 29, in Japan on June 30, and in Europe sometime in 1990.
Puyo Puyo Arcade October 1992
Mega Drive December 18, 1992 This version was remade and re-released in some other countries as Dr. Robotnik's Mean Bean Machine by Sega on November 26, 1993.
Game Gear March 19, 1993 This version was remade and re-released in some other countries as Dr. Robotnik's Mean Bean Machine by Sega in December 1993.
Nazo Puyo Game Gear July 23, 1993
The Laughing Salesman Mega CD September 17, 1993 This game is based on Fujiko Fujio A's The Laughing Salesman.
Power Strike II Master System September 1993
GG Aleste II Game Gear October 1, 1993 Released in Europe as Power Strike II.
Madou Monogatari I: The Three Magic Spheres Game Gear December 3, 1993 This game is a remake of the first part of Madou Monogatari 1-2-3.
Nazo Puyo 2 Game Gear December 10, 1993
Madou Monogatari II: 16-year-old Arle Game Gear May 20, 1994 This game is a remake of the second part of Madou Monogatari 1-2-3.
Nazo Puyo: Arle no Roux Game Gear July 29, 1994
Madou Monogatari III: The Ultimate Queen Game Gear December 30, 1994 This game is a remake of the third part of Madou Monogatari 1-2-3.
Puyo Puyo~n Dreamcast March 4, 1999

Third-Party Games

This section consists of third-party games for Sega systems. All titles are developed and published by Compile unless otherwise stated.

Title Platform(s) Release date Notes
Musha Aleste Mega Drive December 21, 1990 This game was first published in Japan by Toaplan, and later published in North America by Seismic in 1991 under the name M.U.S.H.A.
GG Aleste Game Gear December 29, 1991
Dennin Aleste Mega CD November 27, 1992 The game was published and released in North America by Tengen in 1993 as Robo Aleste.
Puyo Puyo Tsu Arcade September 1994
Mega Drive December 2, 1994
Game Gear December 16, 1994
Sega Saturn October 27, 1995 This version was co-developed by Bits Laboratory.
Madou Monogatari A: Dokidoki Vacation Game Gear November 24, 1995 This game is a remake of the first part of Madou Monogatari A-R-S.
Shadowrun Mega CD February 23, 1996
Madou Monogatari I Mega Drive March 22, 1996 This game is a remake of the first part of Madou Monogatari 1-2-3.
Puyo Puyo Sun Arcade December 1996
Sega Saturn February 14, 1997
DiscStation Bessatsu i miss you. Sega Saturn October 30, 1997
Waku Waku Puyo Puyo Dungeon Sega Saturn April 2, 1998
Madou Monogatari Sega Saturn July 23, 1998 This is the first console game to acknowledge Sega's ownership of the Puyo Puyo characters.
Puyo Puyo DA! Dreamcast December 16, 1999
Arcade December 26, 1999

Non-Sega System Titles

This section consists of titles that acknowledge Sega's ownership of Puyo Puyo despite not being on a Sega system. All titles are developed and published by Compile unless otherwise stated.

Ports
Title Platform(s) Release date Notes
Puyo Puyo Sun Game Boy Color November 27, 1998
Puyo Puyo Tsu WonderSwan March 11, 1999 This port was published by Bandai.
Neo Geo Pocket Color July 22, 1999 This port was published by SNK. It was also released in North America and Europe as Puyo Pop.
Waku Waku Puyo Puyo Dungeon Ketteiban PlayStation March 8, 1999 An upgraded version of Waku Waku Puyo Puyo Dungeon.
Puyo Puyo~n Nintendo 64 December 3, 1999
PlayStation December 16, 1999
Game Boy Color September 22, 2000
New Titles
Title Platform(s) Release date
Puyo Puyo Gaiden: Puyo Wars Game Boy Color August 27, 1999
Arle no Bouken: Mahou no Jewel Game Boy Color March 31, 2000
Puyo Puyo Box PlayStation December 21, 2000
Disc Station volumes

All of the Disc Station volumes were released by Compile for Windows PCs. Vol. 19 is the first volume to mention Sega owning Puyo Puyo.

Title Release date Content
Disc Station Vol. 19 July 6, 1998 Madou RUN
Disc Station Vol. 20 September 6, 1998 Comet Summoner Nazo Puyo Nazo Puyo Editor v.1.00
Disc Station Vol. 21 December 6, 1998 Nazo Puyo Nazo Puyo Editor v.1.01
Disc Station Vol. 22 March 6, 1999 Comet Summoner: Time Trial Version Nazo Puyo Editor v.1.02
Disc Station Vol. 23 June 6, 1999 Puyo Card Nazo Puyo Editor v.1.03
Disc Station Vol. 24 September 6, 1999 Nazo Puyo Editor v.1.04
Disc Station Vol. 25 December 6, 1999 Nazo Puyo Editor v.1.05
Disc Station Vol. 26 March 6, 2000 Nazo Puyo Editor v.1.06
Disc Station Vol. 27 June 6, 2000 Restaurant King Nazo Puyo Editor v.1.07

References

  1. Sega's SG-1000 Games (Japanese)
  2. Sega's Mark III Games (Japanese)
  3. Sega's Master System Games (Japanese)
  4. Sega's Mega Drive Games (Japanese)
  5. Sega's Game Gear Games (Japanese)
  6. Sega's Dreamcast Games (Japanese)

External Links