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Welcome to the entire history of the most famous gaming company on the planet, SEGA! =D

Origins and entry into the video game market (1940–1988)

Sega was founded in 1940 as Standard Games (later Service Games) in Honolulu, Hawaii [2], 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. Periscope was Sega's first highly successful arcade game. Periscope was Sega's first highly successful arcade game.

Rosen Enterprises and Service Games merged in 1965 to make 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 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 games such as Zaxxon and Out Run.

Sega's revenues would hit $214 million by 1982 and in 1983, Sega would release its first video game console, the SG-1000, the first 3D arcade video game, SubRoc-3D, which used a special periscope viewer to deliver individual images to each eye, and the first action-based laserdisc arcade game, Astron Belt.

In the same year, Sega was hit hard by the American video game crash. Hemorrhaging money, Gulf+Western sold the U.S. assets of Sega to famous pinball manufacturer 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, renamed it to Sega Enterprises Ltd., headquartered it in Japan, and two years later, shares of its stock were being traded on the Tokyo Stock Exchange. David Rosen's friend, Isao Okawa, the chairman of CSK, became chairman of Sega.

In 1986, Sega of America was established to take advantage of the resurgent video game market in the United States.

Sega would also release the Sega Master System and the first Alex Kidd game, who would be SEGA's mascot until 1991 when Sonic the Hedgehog took over. While the Master System was technically superior to the NES , it failed to capture market share in North America due to highly aggressive strategies by Nintendo and ineffective marketing by Tonka. However, it did dominate the European and Brazilian markets until Sega discontinued the system in 1996.

[edit] Sega as a major console manufacturer (1989-2001) Sonic the Hedgehog has been Sega's mascot for over sixteen years. Sonic the Hedgehog has been Sega's mascot for over sixteen years.

Sega Mega Drive/Genesis

With the introduction of the Sega Mega Drive (known as Sega Genesis in North America), and to carry the momentum to the 2nd generation of games, Sega of America, led by Tom Kilanski, launched an anti-Nintendo campaign with slogans such as "Genesis does what Nintendon't." When Nintendo launched its Super Nintendo Entertainment System, in 1991, Sega changed its slogan to "Welcome to the next level".

In 1991, to beat Nintendo to the punch of the upcoming Super Nintendo, Sega re-branded itself with a new game and mascot, Sonic the Hedgehog. With his hip attitude and style, he was considered by some "cooler" than Mario, Nintendo's mascot. This shift led to a wider success for the Mega Drive and would eventually propel Sega to 65% of the market in North America. Simultaneously, after much previous delay, Sega released the moderately successful Sega CD as an add-on feature, allowing for extra storage in games due to their CD-ROM format, giving developers the ability to make longer, more sophisticated games, the most popular of which was Sega’s own Sonic CD.

Sega Versus Accolade

In 1992, Sega lost the Sega v. Accolade case, which involved independently produced software for the Sega Mega Drive/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 Mega Drive/Genesis games unless they paid Sega a fee (something its competition has done in the past.) 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. Also worthy of note was the release of the successful Virtua Racing in the arcades and on the Genesis, among the first 3D games on the market, as well as the release of Sonic the Hedgehog 2, the most successful game Sega ever made.[citation needed]

Arcade Successes

The 1993 release of Virtua Fighter was widely hailed as one of the greatest achievements in Sega's history.[citation needed] By utilizing their newest arcade cabinet, the Sega Model 1, they managed to create graphics and gameplay that were, at the time, revolutionary, becoming a massive critical success. The game was a smash hit with consumers, spawning four direct sequels, several successful spinoffs, as well as the 3D Fighting genre. It is one of the video games on display at the Smithsonian.

Sega followed that success in 1994 with Daytona USA, an equally impressive game that was the first to connect arcade cabinets together for multiplayer use. The success of Daytona USA would be unparalleled in the history of the arcades, becoming the most profitable game ever released in that medium. Other notable hits of the year would be Yu Suzuki's Virtua Cop, Star Wars Arcade and Sonic the Hedgehog 3 & Knuckles.

Despite their massive advances in the arcades, Sega’s share of the home market plummeted by 1994 to 35% after Nintendo released key franchise titles for the Super Nintendo Entertainment System such as Donkey Kong Country, Star Fox, and Super Metroid, along with an internal shift in focus away from the Genesis to Sega's upcoming Saturn and the release of the Sega 32X,which never achieved commercial success in light of Sega's attention on the forthcoming Saturn. Also in 1994, Sega launched the Sega Channel, a subscription gaming service delivered by local cable companies affiliated with Time-Warner Cable or TCI through which subscribers received a special cartridge adapter that connected to the cable connection. At its peak, the Sega Channel had approximately 250,000 subscribers.

Sega Saturn

In 1995, Sega released the Sega Saturn in the American market with Virtua Fighter which utilized a 32 bit processor and preceded both the PlayStation and the Nintendo 64. However, poor sales in the West (including the traditional stronghold markets in Europe) led to the console being abandoned within three years. Ironically, it was Sega's only success in its home country of Japan, where it managed to outsell the Playstation well into 1996, and soundly defeated the Nintendo 64. The Saturn library was built heavily on arcade ports, such as two of the Saturn's top selling games; Virtua Fighter 2 and Sega Rally, and platformers, such as Sonic Team's Nights into Dreams... and Burning Rangers. Other notable titles include several titles exclusive to the Japanese market, like Radiant Silvergun and Sakura Taisen, rail shooters, such as Panzer Dragoon and The House of the Dead and a few well regaurded RPGs; Panzer Dragoon Saga, Grandia, and Shining Force 3.

In 1997, Sega entered into a short-lived merger with Bandai. However it was later called off, citing "cultural differences" between the two companies. Around the same time, Sega announced that the Saturn was not Sega’s future and quickly began moving high profile titles (most notoriously Virtua Fighter 3) over to their upcoming next generation game console, the Dreamcast. Entertainment fun center GameWorks, was founded in 1997 as well as the now defunct Sega World theme parks.

Sega Dreamcast

In 1998, Sega launched the Dreamcast game console, in a novel idea to use off-the-shelf components. The Dreamcast was not only competitive price wise, but it also featured technology that was ahead of its time, such as Tiled rendering, which allowed for massive geometry with little to no performance penalty. An analog modem was also included, allowing gamers to play multi-player games on a home console for the first time, most notably with Chu Chu Rocket; the first online console game, Phantasy Star Online, the first console-based MMORPG and Alien Front Online, the first console game with online voice chat.

The Dreamcast sold out in the first week in Japan, and it was in such high demand in that region people often camped out to get one. The Western launch was just as successful and earned the distinction of "most successful hardware launch in history,"[citation needed] holding that title until the 2000 launch of the Playstation 2. The Dreamcast is home to several innovative cult hits of the time, including the first cel-shaded title; Jet Set Radio, Sonic Team's ryhthm game, Samba de Amigo, and Shenmue, which was among the first "sandbox" games, as well was being the first to employ the now common "QTE" game mechanic. However, despite receiving critical acclaim, these titles failed to garner much public attention in the face of the upcoming Playstation 2 launch.

Faced with debt and competition from Sony, Nintendo, and Microsoft, Sega officially discontinued the Dreamcast hardware in 2001.

The shift to a software manufacturer (2001-2005)

2001 would see a major shift in focus for Sega as it moved out of the home console market.

The company has since evolved primarily into a platform-agnostic software company, known as a "third-party publisher", that creates games that will launch on a variety of game consoles produced by other companies, many of them former rivals, the first of which was a port of Chu Chu Rocket to Nintendo's Gameboy Advance.

Arcade units are still being produced, first under the Sega NAOMI name, and then with subsequent releases of the Sega NAOMI 2, Sega HIKARU, Sega Chihiro, Triforce (in collaboration with Nintendo and Namco) and the Sega Lindbergh. Sega is the major force in the arcade industry today, controlling a substantial portion of the market.[citation needed].

Despite several early hits as a third party vendor, including Virtua Fighter 4, Sonic Adventure 2 Battle and the new Super Monkey Ball series, Sega fell on hard times, and after the death of CSK founder Isao Okawa in 2001, who spent over US$40 million to help Sega, CSK put Sega on the auction block. The first potential buyer was Japan's Sammy who discussed a merger, but plans fell through. Discussions also took place with Namco, Bandai, 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. In late December Sega launched the highly successful Sonic Heroes, the first Sonic game to be on both the XBOX and the Playstation 2. It is one of the most successful games in Sega's portfolio, selling slightly over 5 million units in its lifetime.[citation needed]

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 game manufacturing companies in the world. With the merger, Sega reabsorbed its second party studios and began to reorganize them. Many Sega employees, most notably Tetsuya Mizuguchi, father of Sega Rally and Space Channel 5, walked out in protest.

On January 25, 2005, Sega sold Visual Concepts, a studio Sega dubbed a "1.5" developer, to Take Two Interactive for $24 million. Sega used the parlance "1.5" as a mid-point of sorts between first-party and second-party developer status: that is, a wholly owned studio that would otherwise be known as a first-party developer, but was outside of internal development teams. Visual Concepts was known for many Sega Sports games including the ESPN NFL Football series, formerly NFL2K. 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.

Success again (2006)

By the end of 2005, Sega experienced strong earnings growth across multiple divisions. Contributing to the company's success were strong pachinko sales[3], and sales of software titles Ryu Ga Gotoku (known as Yakuza outside of Japan), Mushiking, and Sonic the Hedgehog.

In an effort to appeal to western tastes, they partnered with Obsidian Entertainment to develop a new RPG for the PS3 and Xbox 360.[4] The partnership was the latest in a series of collaborations with western video game studios, including Monolith Productions (Condemned: Criminal Origins), Bizarre Creations (The Club) and Silicon Knights (who have yet to announce their project with Sega). Sega also acquired Sports Interactive and Secret Level. The deal with Sports Interactive was said to be worth GBP 30 million ($52 million)[5]; the terms of the Secret Level buyout were not disclosed.[6]

That desire to have a more Western appeal for Sega was shortly followed up by Sega acquiring British developer Sports Interactive after a successful run of publishing Football Manager 2005 and 2006, in which they managed to sell 1.5 million copies,[7] the deal was said to be worth in the region of GBP 30 million ($52 million) by Miles Jacobson, Sports Interactive’s Managing Director.[8] This was, however, not the only developer Sega had acquired, they also purchased American developer Secret Level although the terms of the deal was not disclosed[9], Secret Level had however begun work before being bought by Sega to “recreate a classic Sega franchise" for the PS3 and Xbox 360 July 2005, which was revealed to be Golden Axe later that year.

While Sega continued its expansion in the West, on May 8, 2006, it was announced Sega of Japan begun helping famed Sega developer and Sonic Team head Yuji Naka (known for being the main programmer for the original Sonic the Hedgehog games and Nights into Dreams...) to start up his own company titled "Prope" (Latin for "beside" and "near future")[10] in which Sega helped provide 10% startup capital[11] and have the option to publish games produced from the studio if they wished to.

Due to the continued success of Sega’s software sales, the company reported on May 17, 2006 a 31% rise in net profits from that of the previous year of the period ending March 31, 2006, being posted at ¥66.2 billion ($577 million), as well as an increase in operating profit growing by 13% from the previous year, being posted at ¥553.2 billion ($4.82 billion) [12] notable titles to have helped Sega increase profits in the West being that of Shadow the Hedgehog (which sold over a million copies)[13] and Sonic Riders, whilst in Japan, games such as Yakuza, Mushi King and Brain Trainer Portable continued to sell strong.

Although Sega seemed poised to continue increasing profits, the company reported a massive drop of 93% profits for the period ending June 30, 2006 compared to the same period last of year. Net income for the company dropped from $98.3 million (a year earlier) to $7.12 million for this period ending as well of total sells dropping from $926.5 million to $809.1 million [1], Sega reported that the decrease in profits was due to no significant big releases by its slot machine division. However, a total of 2.1 million games were sold between the period, 870,000 in the US, 680,000 in Europe and 580,000 in Asia. Despite this, Sega Sammy said that the results were in line with their expectations and did not amend their fully year forecasts.

Despite this, Sega reported in November a massive 52% rise in profits for the periods between April and September 2006, compared to the same period last year. [14] Software sales for the company had also increased with 5.75 million. Of those units, 1.76 million were sold in Japan, 1.59 million in Europe, 2.36 million in the US and 30,000 in other regions. [15] a number of titles were said to have performed well, in particular Super Monkey Ball Adventure for the Nintendo DS and Football Manager 2006 for the Xbox 360 having sold well. While Sega performed better in 2006, they had slashed their forecasts for the year ending March 2007 by 20% with an anticipated profit of $536.7 million, down from the initial profits of $656.7 million.

Continuing to prepare more games for the Western market, Sega was able to bridge a partnership with New Line Cinema in September to develop a game for the movie tie-in game The Golden Compass [2] and also partnered themselves with Fox to develop two new games based off of the Alien franchise.[16] Sega had then assigned critically acclaimed developers Gearbox software to develop a first person shooter and Obsidian Entertainment to develop a movie based on the popular film franchise, while the platforms are still to be specified, Sega have both titles are in pre-production and one of them is set to release in 2009.[17]

Recognized company personnel

   * In alphabetical order

Corporate Division

American

   * Bernie Stolar: Recruited from Sony, President SOA (1996 – 1999)
   * Charles Bellfield:
   * David Rosen: Co-Founder, Board Member
   * Ken Balthaser: Former SOA head of development 1989-
   * Michael Katz: President SOA (1985 - 1990)
   * Peter Moore: Vice President (199X – 1999) President SOA (1999 – 2003)
   * Scott Steinberg: Vice president of marketing SOA 2003 - 2007.
   * Simon Jeffery: Recruited from Lucas Arts, Simon Jeffery President SOA (2003 - )
   * Tom Kalinske: President SOA (1990 – 1996), Former Board Member (199X – 199X)


Australian

   * Daniel Evans: President of SEGA's Australian operations.
   * Jonathan Clavin: Former SEGA President of Australian Intercontinental Operations (1987-2001)

European

   * Robert Deith: Past Chair of Board
   * William S. Polchinski: Former Senior Assistant Chairman of Sales and Marketing Division (1999-2004)

Japanese

   * Hayao Nakayama: Co-Founder, President SOJ (19XX-2001)
   * Isao Okawa: President SOJ 2000 - 2001 (died shortly after Dreamcast was discontinued & donated 700 million US$ to Sega Corporation.{Citation|August}
   * Shoichiro Irimajiri: President SOJ 1998 - 2000
   * Yukawa Hidekazu: Aka Mr. Dreamcast, is the man on the Dreamcast boxes in Japan, has an appearance in What's Shenmue and also an own little Dreamcast Game (I call it "Yukawa Hidekazu Treasure Hunting", don't know the exact title).

Video Game Hardware Division

   * Hideki Sato Designer of all major hardware

Video Game Software Division

   * Toshihiro Nagoshi: Head of NE R&D 1.
   * Mie Kumagai : Head of AM R&D 3, only female studio head.
   * Yuji Naka: Co-creator of company mascot, owns independent studio, 10% funded by Sega.
   * Yu Suzuki: Head of AM Plus R&D (AKA NE R&D 2, DigitalRex).
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