[3] During a re-organization, Sega's nine studios were consolidated into "four of five core operations", and the non-sports staff of Smilebit was merged into Amusement Vision.

Based on this, Sega asked Arai to develop an online game when Smilebit was founded.

[9][full citation needed] Smilebit had about 105 employees and six lines of development, with a third of the staff coming from Sega PC.

[10] It developed the successful sports simulator series Derby Tsuku, Pro Yakyuu Team o Tsukurou!

A sequel was developed for Xbox, called Jet Set Radio Future, or JSRF.

The Typing of the Dead was initially presented to AM1, and Ollie King was originally developed under the Smilebit banner before it was released under Amusement Vision.

At the same time Shun Arai left Smilebit to lead the Sega Creative Center.