History of Sega

In response to a downturn in the arcade-game market in the early 1980s, Sega began to develop video game consoles—starting with the SG-1000 and Master System—but struggled against competing products such as the Nintendo Entertainment System.

Sega had commercial failures in the second half of the decade with the 32X, Saturn, and Dreamcast, as the company's market strategy changed and console newcomer Sony became dominant with the PlayStation, in addition to further competition from Nintendo.

In 1940, Bromberg, Bromley, and family friend James Humpert formed Standard Games in Honolulu, Hawaii, to provide coin-operated amusement machines to military bases.

[3] In 1951 the Transportation of Gambling Devices Act outlawed slot machines in US territories, so Bromley sent two of his employees, Richard Stewart and Ray LeMaire, to Tokyo in Japan, in 1952 to establish a new distributor.

[21] With its arcade business in decline, Sega Enterprises, Ltd. president Nakayama advocated that the company leverage its hardware expertise to move into the home console market in Japan, which was in its infancy at the time.

By 1984, the Famicom's success began to outpace the SG-1000, in part because Nintendo boosted its games library by courting third-party developers, whereas Sega was less than eager to collaborate with the same companies they were competing with in arcades.

[14] Roughly translating to "bodily sensation" or "experience", the namesake referred to their eye-catching motion-based control scheme and hydraulic simulation movement, using rideable motorbike and car models.

[21] The openings came after the creation of the fueiho law and the amusement industry's "3K Cleanup Campaign", which attempted to dispel the "kurai, kowai, and kitanai" (dark, scary and dirty) aspects of the venues.

[21] Alongside similar branded chains by competitors like Taito, the venues in both countries followed the trajectory previously set in place to make amusement arcades cleaner and more socially acceptable, installing features such as toilets for both men and women, lighting systems, and smoking areas.

[14] Sega's success in arcades kept the company afloat whilst its home consumer endeavours struggled, though the Time-Out chain in the US would later be sold during 1990 as a result of changing conditions in the amusement industry.

[82][83] 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.

[80] 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.

[80] 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.

Despite its crude visuals—with characters composed of fewer than 1,200 polygons—Virtua Fighter's fluid animation and relatively realistic depiction of distinct fighting styles gave its combatants a lifelike presence considered impossible to replicate with sprites.

[128][129][130] The Model 1 was exceedingly expensive and advanced, bringing arcade gaming technology further in front of home consoles; Sega's difficulties in porting Virtua Racing to the Genesis reflected this.

[133] After creating new regional arcade divisions through buyouts of existing distributors like Deith Leisure, Sega took this successful formula and retooled it for overseas territories, beginning in 1992 with a number of small test locations in the United Kingdom, Taiwan, France, and Spain.

[150] 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.

[156] At the first Electronic Entertainment Expo (E3) in Los Angeles on May 11, 1995, Kalinske gave a keynote presentation in which he revealed the release price of US$399 (including a copy of Virtua Fighter[157]), and described the features of the console.

[157][167][168] Virtua Fighter's relative lack of popularity in the West, combined with a release schedule of only two games between the surprise launch and September 1995, prevented Sega from capitalizing on the Saturn's early timing.

[185][186] Stolar, who had arranged a six-month PlayStation exclusivity deal for Mortal Kombat 3[193] and helped build close relations with Electronic Arts[78] while at Sony, was perceived as a major asset by Sega officials.

"[192] At Sony, Stolar opposed the localization of certain Japanese PlayStation games that he felt would not represent the system well in North America, and advocated a similar policy for the Saturn during his time at Sega, although he later sought to distance himself from this perception.

[207][208] Atlus and Sega introduced Purikura in February 1995, initially at game arcades, before expanding to other popular culture locations such as fast food shops, train stations, karaoke establishments and bowling alleys.

[159] Conversely, Nintendo's long delay in releasing a 3D console and damage caused to Sega's reputation by poorly supported add-ons for the Genesis are considered major factors allowing Sony to gain a foothold in the market.

[258] On March 2, 1999, in what one report called a "highly publicized, vaporware-like announcement"[261] Sony revealed the first details of its "next generation PlayStation", which Ken Kutaragi claimed would allow video games to convey unprecedented emotions.

"[268][278] Incorporating a simulated day/night cycle with variable weather, non-player characters with regular schedules, and the ability to pick up and examine detailed objects (also introducing the Quick-time event in its modern form[279][280]), Shenmue went over budget and was rumored[281] to have cost Sega over $50 million.

[267] Adventure garnered criticism for technical problems including erratic camera angles and glitches,[283][284] but was praised for its "luscious"[285] visuals, "vast, twisting environments" and iconic set pieces.

[321] 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".

[336] 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.

[351] Mike Hayes is credited for re-inventing Sega's software strategy, taking it from failing to $500 million in revenue, focusing on PC with franchises like Total War and Football Manager, selling Mario & Sonic at the Olympic Games and at one point being one of the top 3 customers on Steam.

In the console and handheld business, Sega found success in Japan with the Yakuza and Hatsune Miku: Project DIVA series of games, amongst others primarily aimed at the Japanese market.