The initial team, formed in 1990, comprised staff from Sega's Consumer Development division, including programmer Yuji Naka, artist Naoto Ohshima, and level designer Hirokazu Yasuhara.

Sega's financial troubles led to several major structural changes in the early 2000s; the United Game Artists studio was absorbed by Sonic Team in 2003, and Sonic Team USA became Sega Studios USA in 2004.

[5][6][8] Sega wanted a killer app and character that could appeal to an older demographic than preteens, demonstrate the capabilities of the Genesis, and ensure commercial success in North America.

[8][9] Ohshima designed a blue hedgehog named Sonic,[5] who was inserted into a prototype game created by Naka.

Ohshima said their progress encouraged Sega to select their proposal, as theirs was the only team to have put in a high amount of time and effort.

[10] The Sonic the Hedgehog project began with just Naka and Ohshima,[11][10] but grew to involve two programmers, two sound engineers, and three designers.

[12] Hirokazu Yasuhara joined to supervise Naka and Ohshima and develop levels, and became the lead designer.

[13] Sonic the Hedgehog was released in 1991 and proved a major success, contributing to millions of sales of the Genesis.

Though Naka was not directly involved in the Sonic CD development, he exchanged design ideas with Ohshima.

[6] In the mid-1990s, Sonic Team started work on new intellectual property, leading to the creation of Nights into Dreams (1996) and Burning Rangers (1998) for the Sega Saturn.

[5][8] They had begun working on a 3D Sonic game for the Saturn, but development moved to the Dreamcast to align with Sega's plans.

In 2000, Sonic Team launched the role-playing game Phantasy Star Online to critical and commercial success.

[5] Sega began to restructure its studios in October 2000 and spun off its software divisions into subsidiary companies.

The company changes and lack of a Sega console affected Sonic Team; according to Naka, in a 2006 interview, "Our approach was always to create strategic title concepts, which included the hardware.

As part of Oguchi's restructuring plan, he announced his intention to consolidate Sega's studios into "four or five core operations".

[40] Naka announced his departure on 8 May 2006 and formed a new studio, Prope, to focus on creating original games.

2 (CS2), Sega Studios USA had been reintegrated into the Japanese team, and Iizuka had become the head of the department.

Forces was aimed at a broad audience of young and adult players, while Mania was focused on fans of the original Genesis games.

It was founded when twelve Sonic Team members, including Takashi Iizuka, relocated to San Francisco, California, in 1999,[5] and was a subsidiary of SONICTEAM, Ltd. by 2000.

They took inspiration from their location in San Francisco, as well as Yosemite National Park and other areas of the United States.

[62] Shadow the Hedgehog was critically panned for its mature themes and level design,[63][64] but was a commercial success, selling at least 1.59 million units.

[67][68] Iizuka felt it was important to retain the original game's concepts while developing new mechanics, and released it on the Wii, a more family-oriented console.

The sound and CGI were completed by Sonic Team in Japan, while Sega Studios USA handled the rest of the development for the 2007 release.

[41][42] In 2016, Iizuka relocated to Los Angeles to oversee development, with the goal of making the studios there "a centralized hub for the global brand".

[77][78] According to Sean Smith of Retro Gamer, few companies could claim to have released as many AAA games over such a long period, especially between 1991 and 2000.

[79][80] Iizuka has said Sonic Team would be open to developing a third Nights game or a sequel to Knuckles' Chaotix (1995), if Sega were to commission them.

[82] Zolani Stewart of Kotaku argued that the greater emphasis on plot and character changed Sonic into "a flat, lifeless husk of a character, who spits out slogans and generally has only one personality mode, the radical attitude dude, the sad recycled image of vague '90s cultural concept".