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Sega Corporation is a Japanese multinational video game developer and publisher headquartered in Shinagawa, Tokyo. Its international branches, Sega of America and Sega Europe, are respectively headquartered in Irvine, California, and London. Sega’s arcade division existed as Sega Interactive Co., Ltd. from 2015 to 2020 before it merged with Sega Games to create Sega Corporation with Sega Games as the surviving entity. Sega is a subsidiary of Sega Group Corporation, which is, in turn, a part of Sega Sammy Holdings. From 1983 until 2002, Sega also developed video game consoles.
Sega was founded by American businessmen Martin Bromley and Richard Stewart as Nihon Goraku Bussan on June 3, 1960; shortly after, the company acquired the assets of its predecessor, Service Games of Japan. Five years later, the company became known as Sega Enterprises, Ltd., after acquiring Rosen Enterprises, an importer of coin-operated games. Sega developed its first coin-operated game, Periscope, in the late 1960s. Sega was sold to Gulf and Western Industries in 1969. Following a downturn in the arcade business in the early 1980s, Sega began to develop video game consoles, starting with the SG-1000 and Master System but struggled against competitors such as the Nintendo Entertainment System. In 1984, Sega executives David Rosen and Hayao Nakayama led a management buyout of the company with backing from CSK Corporation.
Sega released its next console, the Sega Genesis (known as the Mega Drive outside North America), in 1988. The Genesis struggled against the competition in Japan, but found success overseas after the release of Sonic the Hedgehog in 1991 and briefly outsold its main competitor, the Super Nintendo Entertainment System, in the U.S. Later in the decade, Sega suffered several commercial failures such as the 32X, Saturn, and Dreamcast consoles. In 2002, Sega stopped manufacturing consoles to become a third-party developer and publisher and was acquired by Sammy Corporation in 2004. In the years since the acquisition, Sega has been more profitable. Sega Holdings Co. Ltd. was established in 2015, Sega Corporation, being renamed Sega Games Co., Ltd. and its arcade, entertainment, and toy divisions separated into other companies. Sega Games and Sega Interactive were merged in 2020 and renamed Sega Corporation.
Sega has produced several multi-million-selling game franchises, including Sonic the Hedgehog, Total War, and Yakuza, and is the world’s most prolific arcade game producer. It also operates amusement arcades and produces other entertainment products, including Sega Toys. Sega has been recognized for its time supporting its own video game consoles, its creativity, and its innovations. In more recent years, it has been criticized for its business decisions and the quality of its creative output.
While providing games for military bases, the company was called Standard Games, but, following a move to Japan in 1952, the company was renamed Service Games of Japan. Service Games of Japan later merged with Rosen Enterprises to create Sega Enterprises. Sega released a popular arcade game called Periscope in 1965 and also created arcade standouts Zaxxon (1982) and Out Run (1986). In the early 1980s, Sega released its first console system, the SG-1000, which generated more than $200 million in revenue. Over the next few years, Sega underwent several ownership changes. The company released more consoles—the Sega Master System (1986) and the Sega Genesis (1988)—beginning a serious competition with its main rival, the Nintendo console, for control of the video game market.
After seeing the Master System defeated by the Nintendo Entertainment System (NES), Sega launched an aggressive marketing campaign and, with the help of the Sega Genesis’s superior technology, was able to recapture a large portion of the video game market. When the Super Nintendo Entertainment System (SNES) was released in the early 1990s, Sega introduced Sonic the Hedgehog, a game based on a speedy blue rodent designed to seem more modern than Nintendo’s mascot, Mario, from the Mario Brothers game series. Sonic spawned many popular games and became the face of the company. A long battle for video supremacy with Nintendo ensued, which resulted in Sega’s defeat; nevertheless, both companies thrived throughout the so-called console wars.
Sega went on to create several more console systems, including the Saturn in 1994 and the Dreamcast in 1998, but new companies entering the competition and poor sales caused Sega to abandon console development entirely in 2001. Sega has since focused on software design and worked as a third-party game developer for its most successful franchises, such as Sonic the Hedgehog, Total War, and Virtua Fighter.