1940–1982: Origins and arcade success In May 1940, American businessmen Martin Bromley, Irving Bromberg and James Humpert formed Standard Games in
Honolulu, Hawaii. Their aim was to provide
coin-operated amusement machines, including
slot machines, to military bases as the increase in personnel with the onset of
World War II would create demand for entertainment. After the war, the founders sold Standard Games in 1945, and established Service Games the next year, named for the military focus. After the US government outlawed slot machines in
its territories in 1952, Bromley sent employees Richard Stewart and Ray LeMaire to Tokyo to establish Service Games of Japan to provide coin-operated slot machines to US bases in Japan. A year later, all five men established Service Games Panama to control the entities of Service Games worldwide. The company expanded over the next seven years to include distribution in South Korea, the Philippines, and South Vietnam. was first used in 1954 on a slot machine, the Diamond Star. Due to notoriety arising from investigations by the US government into criminal business practices, Service Games of Japan was dissolved on May 31, 1960. Bromley established two companies to take over its business activities, Nihon Goraku Bussan and The two new companies purchased all of Service Games of Japan's assets. Kikai Seizō, doing business as Sega, Inc., focused on manufacturing slot machines. Goraku Bussan, doing business under Stewart as
Utamatic, Inc., served as a distributor and operator of coin-operated machines, particularly
jukeboxes. The companies merged in 1964, retaining the Nihon Goraku Bussan name. Its imports included
Rock-Ola jukeboxes,
pinball games by
Williams, and
gun games by
Midway Manufacturing. Because Sega imported second-hand machines, which required frequent maintenance, it began constructing replacement guns and flippers for its imported games. According to former Sega director Akira Nagai, this led to the company developing its own games. The worldwide success of
Periscope led to a "technological renaissance" in the arcade industry, which was reinvigorated by a wave of "audio-visual" EM novelty games that followed in the wake of
Periscope during the late 1960s to early 1970s. However, rampant piracy led Sega to cease exporting its games around 1970. Despite late competition from
Taito's hit arcade game
Space Invaders in 1978, and Esco Boueki, a coin-op distributor founded and owned by
Hayao Nakayama. Nakayama was placed in a management role of Sega's Japanese operations. 1979 saw the release of
Head On, which introduced the "eat-the-dots" gameplay
Namco later used in
Pac-Man. In 1981, Sega licensed
Konami's
Frogger, its most successful game until then. In 1982, Sega introduced the first game with
isometric graphics,
Zaxxon.
1982–1989: Entry into the game console market, management buyout and arcade resurgence |alt=A Sega SG-1000 console Following a downturn in the arcade business starting in 1982, Gulf and Western sold its North American arcade game manufacturing organization and the licensing rights for its arcade games to
Bally Manufacturing in September 1983. Gulf and Western retained Sega's North American
R&D operation and its Japanese subsidiary, Sega Enterprises, Ltd. With its arcade business in decline, Sega Enterprises, Ltd. president Nakayama advocated for the company to use its hardware expertise to move into the home consumer market in Japan. This led to Sega's development of a computer, the SC-3000. Learning that
Nintendo was developing a
games-only console, the
Famicom, Sega developed its first home video game system, the
SG-1000, alongside the SC-3000. The SG-1000 sold 160,000 units in 1983, which far exceeded Sega's projection of 50,000 in the first year but was outpaced by the Famicom. Shortly after the launch of the SG-1000, and the death of company founder
Charles Bluhdorn, Gulf and Western began to sell off its secondary businesses. Nakayama and Rosen arranged a
management buyout of the Japanese subsidiary in 1984 with financial backing from
Computer Service, a prominent Japanese software company. Sega's Japanese assets were purchased for $38 million by a group of investors led by Rosen and Nakayama.
Isao Okawa, head of CSK, became chairman, a redesigned SG-1000. For North America, Sega rebranded the Mark III as the
Master System, with a futuristic design intended to appeal to Western tastes. The Mark III was released in Japan in October 1985. Despite featuring more powerful hardware than the Famicom in some ways, it was unsuccessful at launch. As Nintendo required third-party developers not to publish their Famicom games on other consoles, Sega developed its own games and obtained the rights to
port games from other developers. Ineffective marketing by Tonka handicapped sales of the Master System. This was less market share in North America than both Nintendo and
Atari, which controlled 80 percent and 12 percent of the market. The Master System was eventually a success in Europe, where its sales were comparable to the NES. As late as 1993, the Master System's active
installed user base in Europe was 6.25 million units. By 2016, the Master System had sold 8 million units in Brazil. During 1984, Sega opened its European division of arcade distribution, Sega Europe. It re-entered the North American arcade market in 1985 with the establishment of Sega Enterprises USA at the end of a deal with Bally. The release of
Hang-On in 1985 would prove successful in the region, becoming so popular that Sega struggled to keep up with demand for the game. UFO Catcher was introduced in 1985 and as of 2005 was Japan's most commonly installed
claw machine. During Sega's partnership with Tonka, Sega of America relinquished marketing and distribution of the console and focused on customer support and some localization of games. Former Sega director Akira Nagai said
Hang-On and
Out Run helped to pull the arcade game market out of the 1982 downturn and created new genres of video games. Sega released the Master System's successor, the
Mega Drive, in Japan on October 29, 1988. The launch was overshadowed by Nintendo's release of
Super Mario Bros. 3 a week earlier. Positive coverage from magazines
Famitsu and
Beep! helped establish a following, with the latter launching a new publication dedicated to the console, but Sega shipped only 400,000 units in the first year. and lagged behind Nintendo's
Super Famicom and the
TurboGrafx-16, made by
NEC, in Japanese sales throughout the
16-bit era. For the North American launch, where the console was renamed Genesis, Sega had no sales and marketing organization. After Atari declined an offer to market the console in the region, Sega launched it through its own Sega of America subsidiary. The Genesis was launched in New York City and Los Angeles on August 14, 1989, and in the rest of North America later that year. The European version of the Mega Drive was released in September 1990. Former Atari executive and new Sega of America president Michael Katz developed a two-part strategy to build sales in North America. The first part involved a marketing campaign to challenge Nintendo and emphasize the more arcade-like experience available on the Genesis, Since Nintendo owned the console rights to most arcade games of the time, the second part involved creating a library of games which used the names and likenesses of celebrities, such as ''
Michael Jackson's Moonwalker and Joe Montana Football''. Nonetheless, Sega had difficulty overcoming Nintendo's ubiquity in homes. Sega of America sold only 500,000 Genesis units in its first year, half of Nakayama's goal.|alt=A blue anthropomorphic hedgehog wearing red shoes|246x246px After the launch of the Genesis, Sega sought a new flagship line of releases to compete with Nintendo's
Mario series. Its new character,
Sonic the Hedgehog, went on to feature in one of the
best-selling video game franchises in history.
Sonic the Hedgehog began with a
tech demo created by
Yuji Naka involving a fast-moving character rolling in a ball through a winding tube; this was fleshed out with
Naoto Ohshima's character design and levels conceived by designer
Hirokazu Yasuhara. Sonic's color was chosen to match Sega's
cobalt blue logo; his shoes were inspired by
Michael Jackson's boots, and his personality by
Bill Clinton's "can-do" attitude. Nakayama hired
Tom Kalinske as CEO of Sega of America in mid-1990, and Katz departed soon after. Kalinske knew little about the video game market, but surrounded himself with industry-savvy advisors. A believer in the
razor-and-blades business model, he developed a four-point plan: cut the price of the Genesis, create a US team to develop games targeted at the American market, expand the aggressive advertising campaigns, and replace the bundled game
Altered Beast with
Sonic the Hedgehog. The Japanese board of directors disapproved, Sega outsold Nintendo for four consecutive Christmas seasons due to the Genesis' head start, lower price, and a larger library compared to the SNES at release. Nintendo's dollar share of the US 16-bit market dropped from 60% at the end of 1992 to 37% at the end of 1993, Sega claimed 55% of all 16-bit hardware sales during 1994, and the SNES outsold the Genesis from 1995 through 1997. , released in 1990 In 1990, Sega launched the
Game Gear, a
handheld console, to compete against Nintendo's
Game Boy. The Game Gear was designed as a portable version of the Master System and featured a full-color screen, in contrast to the
monochrome Game Boy screen. Due to its short battery life, lack of original games, and weak support from Sega, the Game Gear did not surpass the Game Boy, having sold approximately 11 million units. Sega launched the
Mega-CD in Japan on December 1, 1991, initially retailing at
JP¥49,800. The add-on uses
CD-ROM technology. Further features include a second, faster processor, vastly expanded system memory, a graphics chip that performed
scaling and
rotation similar to the company's arcade games, and another sound chip. In North America, it was renamed the Sega CD and launched on October 15, 1992, with a retail price of US$299. It was released in Europe as the Mega-CD in 1993. New official region-specific distributors and manufacturers, including the UK's Deith Leisure, allowed Sega to sell its machines outside of Japan with ease. Sega's domestic operations division also opened hundreds of family-oriented suburban
Sega World amusement arcades in Japan during this period, as well as large over-18s "GiGO" facilities in the high-profile urban areas of
Roppongi and
Ikebukuro. In 1993, this success was mirrored in overseas territories with the openings of several large branded entertainment centers, such as Sega VirtuaLand in
Luxor Las Vegas. In 1994, Sega generated a revenue of or . This came at a time when Sega was capitalizing on its image as an "edgy" company with "attitude", and this reinforced that image. According to former Sega of America producer Scot Bayless, Nakayama became concerned about the 1994 release of the
Atari Jaguar, and that the Saturn would not be available until the next year. As a result, Nakayama decided to have a second console release to market by the end of 1994. Sega began to develop the
32X, a Genesis add-on which would serve as a less expensive entry into the
32-bit era. The 32X would not be compatible with the Saturn, but would play Genesis games. Sega released the 32X on November 21, 1994, in North America, December 3, 1994, in Japan, and January 1995 in PAL territories, and was sold at less than half of the Saturn's launch price. After the holiday season, interest in the 32X rapidly declined. failed to repeat the western success of the Genesis.|alt=A Sega Saturn console Sega released the Saturn in Japan on November 22, 1994.
Virtua Fighter, a port of the popular arcade game, sold at a nearly one-to-one ratio with the Saturn at launch and was crucial to the system's early success in Japan. Sega's initial shipment of 200,000 Saturn units sold out on the first day, Sega executives in Japan mandated an early launch to give the Saturn an advantage over the PlayStation. At the first
Electronic Entertainment Expo (E3) in Los Angeles on May 11, 1995, Kalinske revealed the release price and that Sega had shipped 30,000 Saturns to
Toys "R" Us,
Babbage's,
Electronics Boutique, and
Software Etc. for immediate release. A by-product of the surprise launch was the provocation of retailers not included in Sega's rollout;
KB Toys in particular decided to no longer stock its products in response. The Saturn's release in Europe also came before the previously announced North American date, on July 8, 1995. Within two days of the PlayStation's American launch on September 9, 1995, the PlayStation sold more units than the Saturn. Within its first year, the PlayStation secured over twenty percent of the US video game market. The console's high price point, surprise launch, and difficulty handling polygonal graphics were factors in its lack of success. Sega also underestimated the continued popularity of the Genesis; 16-bit sales accounted for 64 percent of the market in 1995. Despite capturing 43 percent of the US market dollar share and selling more than 2 million Genesis units in 1995, Kalinske estimated that, if prepared for demand, another 300,000 could have been sold. Sega announced that
Shoichiro Irimajiri had been appointed chairman and CEO of Sega of America in July 1996, while Kalinske left Sega after September 30 of that year. A former
Honda executive, Irimajiri had been involved with Sega of America since joining Sega in 1993. The company also announced that Rosen and Nakayama had resigned from their positions at Sega of America, though both remained with Sega. became Sega of America's executive vice president in charge of product development and third-party relations. Other changes included a softer image in Sega's advertising, including removing the "Sega!" scream, and holding press events for the education industry. Sega partnered with
GE to develop the
Sega Model 2 arcade system board, building on 3D technology in the arcade industry at the time. This led to several successful arcade games, including
Daytona USA, launched in a limited capacity in late 1993 and worldwide in 1994. Other popular games included
Virtua Cop,
Sega Rally Championship, and
Virtua Fighter 2.
Virtua Fighter and
Virtua Fighter 2 became Sega's best-selling arcade games of all time, surpassing its previous record holder
Out Run. There was also a technological
arms race between Sega and
Namco during this period, driving the growth of 3D gaming. Beginning in 1994, Sega launched a series of indoor theme parks in Japan under a concept dubbed "Amusement Theme Park", including
Joypolis parks sited in urban Tokyo locations such as
Yokohama and
Odaiba. A rapid overseas rollout was planned, with at least 100 locations across the world proposed to be opened by 2000, Following on from difficulties faced in setting up theme parks in the United States, Sega established the
GameWorks chain of urban entertainment centers in a joint venture with
DreamWorks SKG and
Universal Studios during March 1997. In 1995, Sega partnered with
Atlus to launch
Print Club (purikura), an arcade photo sticker machine that produces
selfie photos. 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.
Purikura became a popular form of entertainment among youths across
East Asia, laying the foundations for modern selfie culture. Sega also made forays in the
PC market with the 1995 establishment of
SegaSoft, which was tasked with creating original Saturn and PC games. From 1994 to 1999, Sega also participated in the arcade
pinball market when it took over
Data East's pinball division, renaming it Sega Pinball. In January 1997, Sega announced its intentions to merge with the Japanese toy maker
Bandai. The merger, planned as a $1 billion
stock swap whereby Sega would wholly acquire Bandai, was set to form a company known as Sega Bandai, Ltd. Though it was to be finalized in October of that year, it was called off in May after growing opposition from Bandai's mid-level executives. Bandai instead agreed to a business alliance with Sega. As a result of Sega's deteriorating financial situation, Nakayama resigned as Sega president in January 1998 in favor of Irimajiri. Stolar became CEO and president of Sega of America. After the launch of the
Nintendo 64 in the US during 1996, sales of the Saturn and its games fell sharply in much of the west. The PlayStation outsold the Saturn three-to-one in the US in 1997, and the latter failed to gain a foothold in Europe and Australia, where the Nintendo 64 would not release until March 1997. Sega had a slight increase in the fiscal year ended March 1997, partly driven by increasing arcade revenue, However, in the fiscal year ending March 1998, Sega suffered its first financial loss since its 1988 listing on the
Tokyo Stock Exchange as both a
parent company and a corporation as a whole. In the company's 1998 year end report, Irimajiri placed the blame for these losses on the failure to transition from the Genesis to the Saturn in North America and Sega Enterprises covering the debts of Sega of America. The Saturn lasted longer in some Europe territories and particularly Japan, with it notably outperforming the Nintendo 64 in the latter. Nonetheless, Irimajiri confirmed in an interview with Japanese newspaper
Daily Yomiuri that Saturn development would stop at the end of 1998 and games would continue to be produced until mid-1999. With lifetime sales of 9.26 million units, the Saturn is retrospectively considered a
commercial failure in much of the world. While Sega had success with the
Model 3 arcade board and titles like
Virtua Fighter 3, Sega's arcade divisions struggled in the West during the late 1990s. On the other hand, Sega's arcade divisions were more successful in Asia, with Sega's overall arcade revenues increasing year-on-year throughout the late 1990s, but it was not enough to offset the significant declining revenues of Sega's home consumer divisions. Sega announced that
Sonic Adventure, the first major 3D
Sonic the Hedgehog game, would be a Dreamcast
launch game. It was promoted with a large-scale public demonstration at the
Tokyo Kokusai Forum Hall. Due to a high failure rate in the manufacturing process, Sega could not ship enough consoles for the Dreamcast's Japanese launch. As more than half of its limited stock had been pre-ordered, Sega stopped pre-orders in Japan. Before the launch, Sega announced the release of its
New Arcade Operation Machine Idea (NAOMI)
arcade system board, which served as a cheaper alternative to the
Sega Model 3. NAOMI shared technology with the Dreamcast, allowing nearly identical ports of arcade games. The Dreamcast launched in Japan on November 27, 1998. The entire stock of 150,000 consoles sold out by the end of the day. Irimajiri estimated that another 200,000 to 300,000 Dreamcast units could have been sold with sufficient supply. He hoped to sell more than a million Dreamcast units in Japan by February 1999, but less than 900,000 were sold. The low sales undermined Sega's attempts to build up a sufficient
installed base to ensure the Dreamcast's survival after the arrival of competition from other manufacturers. Sega suffered a further ¥42.881 billion consolidated net loss in the fiscal year ending March 1999, and announced plans to eliminate 1,000 jobs, nearly a quarter of its workforce. Before the Western launch, Sega reduced the price of the Dreamcast in Japan by JP¥9,100, effectively making it unprofitable but increasing sales.
Peter Moore, whom Stolar had hired as a Sega of America executive only six months before, with 18 games. Sega set a record by selling more than 225,132 Dreamcast units in 24 hours, earning $98.4 million in what Moore called "the biggest 24 hours in entertainment retail history". Within two weeks, US Dreamcast sales exceeded 500,000. On November 4, Sega announced it had sold more than a million Dreamcast units. Nevertheless, the launch was marred by a glitch at one of Sega's manufacturing plants, which produced defective
GD-ROMs where
data was not properly
recorded onto the disc. Sega released the Dreamcast in Europe on October 14, 1999.
Shenmue became the
most expensive game ever developed at the time, reported to have cost Sega . In 2011, Suzuki said the figure was closer to $47 million including marketing. Development also covered some of
Shenmue II (2001), which was completed for a smaller amount, and groundwork for future
Shenmue games. Though the Dreamcast was successful, Sony's PlayStation still held 60 percent of the overall market share in North America at the end of 1999. Sony revealed the first details of the
PlayStation 2. The same year, Nintendo announced that its next console would meet or exceed anything on the market, and
Microsoft began development of its own console, the
Xbox. Sega's initial momentum proved fleeting as US Dreamcast sales—which exceeded 1.5 million by the end of 1999—began to decline as early as January 2000. Poor Japanese sales contributed to Sega's ¥42.88 billion ($404 million) consolidated net loss in the fiscal year ending March 2000. This followed a similar loss of ¥42.881 billion the previous year and marked Sega's third consecutive annual loss. Sega's overall sales for the term increased 27.4 percent, and Dreamcast sales in North America and Europe greatly exceeded its expectations. However, this coincided with a decrease in profitability due to the investments required to launch the Dreamcast in Western markets and poor software sales in Japan. He said the Dreamcast would need to sell 5 million units in the US by the end of 2000 to remain viable, but Sega fell short of this goal with some 3 million units sold. In March 2001, Sega posted a consolidated net loss of ¥51.7 billion ($417.5 million). While the PlayStation 2's October 26 US launch was marred by shortages, this did not benefit the Dreamcast as much as expected, as many disappointed consumers continued to wait or purchased a
PSone. Eventually, Sony and Nintendo held 50 and 35 percent of the US video game market, while Sega held only 15 percent. In a September 2000 meeting with Sega's Japanese executives and heads of its first-party game studios, Moore and Sega of America executive Charles Bellfield recommended that Sega abandon its console business. In response, the studio heads walked out. Sega also announced a Dreamcast price reduction to eliminate its unsold inventory, estimated at 930,000 units as of April 2001. This was followed by further reductions to clear the remaining inventory. The final manufactured Dreamcast was autographed by the heads of all nine of Sega's first-party game studios, plus the heads of sports game developer
Visual Concepts and audio studio Wave Master, and given away with all 55 first-party Dreamcast games through a competition organized by
GamePro. Okawa, who had loaned Sega $500 million in 1999, died on March 16, 2001. Shortly before his death, he forgave Sega's debts to him and returned his $695 million worth of Sega and CSK stock, helping the company survive the third-party transition. He held failed talks with Microsoft about a sale or
merger with its Xbox division. A business alliance with Microsoft was announced whereby Sega would develop 11 games for the Xbox. As part of the restructuring, nearly one third of Sega's Tokyo workforce was laid off in 2001. 2002 was Sega's fifth consecutive fiscal year of net losses. On February 13, Sega announced that it would merge with Sammy; however, as late as April 17, Sega was still in talks with Namco, which was attempting to overturn the merger. Sega's consideration of Namco's offer upset Sammy executives. The day after Sega announced it no longer planned to merge with Sammy, Namco withdrew its offer. In 2003, Sato and
COO Tetsu Kamaya stepped down. Sato was replaced by Hisao Oguchi, the head of the Sega studio
Hitmaker. Moore left Sega in January 2003, feeling that the Japanese executives were refusing to adapt to industry changes, such as the demand for mature games such as
Grand Theft Auto III. Hideaki Irie, who had worked at
Agetec and
ASCII, became the new president and COO of Sega of America in October 2003.
2003–2015: Sammy takeover and business expansion (current logo pictured) was founded in 2004 with pachinko and pachislot manufacturer
Sammy Corporation's purchase of Sega.|alt=Sega Sammy Holdings logo In August 2003, Sammy bought 22.4 percent of Sega's shares from CSK, making Sammy Sega's largest shareholder. In the same year, Hajime Satomi said Sega's activity would focus on its profitable arcade business as opposed to loss-incurring home software development. In 2004,
Sega Sammy Holdings, an entertainment conglomerate, was created; Sega and Sammy became subsidiaries of the new holding company, both companies operating independently while the executive departments merged. According to the first Sega Sammy
Annual Report, the merger went ahead as both companies were facing difficulties. Satomi said Sega had been operating at a loss for nearly ten years, while Sammy feared stagnation and over-reliance of its highly profitable pachislot and pachinko machine business and wanted to diversify. Sammy acquired the remaining percentages of Sega, completing a
takeover. The stock swap deal valued Sega between $1.45 billion and $1.8 billion. Sega Sammy Holdings was structured into four parts: Consumer Business (video games), Amusement Machine Business (arcade games), Amusement Center Business (Sega's theme parks and arcades) and Pachislot and Pachinko Business (Sammy's pachinko and pachislot business). According to an industry survey, as of 2005, sales of arcade machines were up for the previous four years in Japan, while down for nine straight years overseas. In response to the decline of the global arcade industry in the late 1990s, Sega created several novel concepts tailored to the Japanese market.
Derby Owners Club was an arcade machine with memory cards for data storage. Testing of
Derby Owners Club in a Chicago arcade showed that it had become the most popular machine at the location, with a 92% replay rate. The cabinet was too expensive and the game did not entice casual users which are essential to the western arcade market. While the Japanese market retained core players, western arcades had become more focused on casual players, and Sega Amusements Europe, the entity created to officially distribute and manufacture Sega's machines on the continent after the consolidation of its regional divisions, subsequently decided to develop more games locally that were better suited to western tastes. In 2005, the
GameWorks chain of arcades came under the sole ownership of Sega, which previously was shared with
Vivendi Universal, and remained under its ownership until 2011. In 2009,
Sega Republic, an indoor theme park, opened in
Dubai. Sega gradually reduced its arcades from 450 in 2005 to around 200 in 2015. In 2009, Hayes became president of the combined outfit of both Sega of America and Sega Europe, due to Jeffery leaving. Sega sold Visual Concepts to
Take-Two Interactive, and purchased UK-based developer
Creative Assembly, known for its
Total War series. In the same year,
Sega Racing Studio was also formed by former
Codemasters employees. In 2006, Sega Europe purchased
Sports Interactive, known for its
Football Manager series. Sega found success in the Japanese market with the
Yakuza, Phantasy Star and
Hatsune Miku: Project DIVA series. Sega began providing the 3D imaging for
Hatsune Miku holographic concerts in 2010. The year before, Sega signed a deal to distribute Atlus titles in Japan. After the buyout, Sega implemented a
corporate spin-off with Index. The latter's game assets were rebranded as
Atlus, a wholly owned subsidiary of Sega. The
Sonic the Hedgehog games had grossed over in sales by 2014. In the mobile market, Sega released its first app on the
iTunes Store with a version of
Super Monkey Ball for
iOS in 2008. Due in part to the decline of packaged game sales worldwide in the 2010s, 19 older mobile games were pulled due to quality concerns in May 2015. To streamline operations, Sega established operational firms for each of its businesses in the 2010s. In 2012, Sega established Sega Networks as a subsidiary company for its mobile games. The same year, Sega Entertainment was established for Sega's amusement facility business. From 2005 to 2015, Sega's
operating income generally saw improvements compared to Sega's past financial problems, but was not profitable every year, reporting overall losses in 2008, 2009 and 2012.
2015–2020: Sega Games and Sega Interactive In April 2015, Sega Corporation was reorganized into Sega Group, one of the three groups of Sega Sammy Holdings. Sega Holdings Co., Ltd. was established, with four business sectors under its control. Haruki Satomi, son of Hajime Satomi, took office as president and CEO of the company in April 2015. As a result, Sega Corporation rebranded itself to and continued to manage home video games, while was founded to take control of the arcade division. Sega Networks merged with Sega Games in 2015. Effective from January 2017, 85.1% of the shares in Sega's theme park business became owned by China Animations Character Co., renaming the former Sega Live Creation to
CA Sega Joypolis. Sega Sammy Holdings announced in April 2017 that it would relocate its head office functions and domestic subsidiaries located in the
Tokyo metropolitan area to
Shinagawa by January 2018. This was to consolidate scattered head office functions including Sega Sammy Holdings, Sammy Corporation, Sega Holdings, Sega Games, Atlus, Sammy Networks, and Dartslive. Sega's previous headquarters in
Ōta was sold in 2019. In June 2017, Chris Bergstresser replaced Jurgen Post as president and COO of Sega Europe. In June 2018, Gary Dale, formerly of
Rockstar Games and
Take-Two Interactive, replaced Chris Bergstresser as president and COO of Sega Europe. A few months later, Ian Curran, a former executive at
THQ and
Acclaim Entertainment, replaced John Cheng as president and COO of Sega of America in August 2018. In October 2018, Sega reported favorable western sales results from games such as
Yakuza 6 and
Persona 5, due to the localization work of Atlus USA. Despite a 35-percent increase in the sale of console games and success in its PC game business, profits fell 70 percent for the 2018
fiscal year in comparison to the previous year, mainly due to the digital games market which includes mobile games as well as
Phantasy Star Online 2. In response, Sega announced that for its digital games it would focus on releases for its existing
intellectual property and also focus on growth areas such as packaged games in the overseas market. Sega blamed the loss on market miscalculations and having too many games under development. Projects in development at Sega included a new game in the
Yakuza series, the
Sonic the Hedgehog film, and the
Sega Genesis Mini, which was released in September 2019. In May 2019, Sega acquired
Two Point Studios, known for
Two Point Hospital. On April 1, 2020, Sega Interactive merged with Sega Games. The company was again renamed to Sega Corporation, while Sega Holdings Co., Ltd. was renamed Sega Group Corporation. According to a company statement, the move was made to allow greater
research and development flexibility. Also in April 2020, Sega sold Demiurge Studios to Demiurge co-founder Albert Reed. Demiurge said it would continue to support the mobile games it developed under Sega.
2020–present: Recent history As part of its 60th anniversary, Sega announced the
Game Gear Micro microconsole for release on October 6, 2020, in Japan. Other anniversary projects include the Astro City Mini and several other merchandise. Sega also announced its Fog Gaming platform, which uses the unused processing power of arcade machines in Japanese arcades overnight to help power
cloud gaming applications. Sega made a number of restructuring moves in the early 2020s. During the latter half of 2020, many of the financial gains Sega made in the earlier part of the year dissolved due to the impact of the
COVID-19 pandemic on its Sega Entertainment division, which ran its arcades. That November, Sega Sammy sold 85.1% of its shares in the division to Genda Inc., though the Sega branding and coin-operated machines continued to be used in arcades. Arcade game development was unaffected by the sale. By January 2022, Sega sold the remaining portion of this division to Genda. Sega Amusement International was sold via a management buyout to Kaizen Entertainment, however the Sega brand will still be used for all games and the company name remains through a royalty agreement. Sega Group Corporation was formally dissolved by its parent company in 2021. Of its 28 releases that year, 95% had "good" Metacritic scores (above 75/100), including two with "great" scores (above 90/100 for
Persona 5 Royal and
Yakuza 0), with an average Metacritic score of 81.6 for all 2020 Sega releases.
Phantasy Star Online 2 was reported in 2021 to have made over 900 million dollars since its release in 2012. In 2022, Sega announced "Super Game", several high budget games that are expected to have 672 million dollars in lifetime sales, allocating about 200 million into its budget across three years. In 2023, Sega acquired the Finnish video game developer
Rovio Entertainment, best known for the
Angry Birds series, for US$776 million. Rovio will help Sega to continue to build its mobile presence worldwide. On April 24, 2023, 144 Sega of America employees announced plans to file a new union election under the new labor union, Allied Employees Guild Improving Sega (AEGIS), which is allied with the
Communication Workers of America via CWA Local 9510. AEGIS represents workers from departments including marketing, quality assurance, development and localization, making it the first of its kind in the game industry in the United States. On July 10, 2023, it was announced that workers had voted 91–26 to form the union. AEGIS is undergoing certification with the
National Labor Relations Board before going into bargaining. In May 2023, Sega announced that 121 employees at
Relic Entertainment had been made redundant to focus on cored franchises. That same year, Sega cancelled its upcoming shooter
Hyenas and began restructuring its British and European operations. At
the Game Awards 2023, Sega announced an initiative to revive many of its dormant franchises, beginning with new
Crazy Taxi,
Golden Axe,
Jet Set Radio,
Shinobi and
Streets of Rage games. The
Washington Post characterized the announcement as a return to Sega's 1990s "bohemian" and "countercultural" spirit. The co-CEO, Shuji Utsumi, said Sega wanted to "show edginess and a rebellious mindset", and that the industry was now large enough to sustain its less conventional games. In January 2024, Jurgen Post rejoined Sega Europe to become COO of its western studios and also serve as managing director. That month, Shuji Utsumi became the president, COO and CEO of Sega of America and Europe. Utsumi had previously helped found
Sony Computer Entertainment, where he helped launch the original PlayStation, before moving to Sega and assisting with the North American Dreamcast launch. After a period with
Disney Interactive, he co-founded
Q Entertainment before returning to Sega in 2020. On January 9, Sega Sammy Holdings announced that Sega's amusement machine business would be demerged and transferred to Sega Toys, which will be renamed
Sega Fave Corporation. The changes will take effect by April. On February 29, Sega appointed Justin Scarpone as an executive vice president of a group to expand Sega's transmedia strategy. In January 2024, Sega of America announced that it would lay off 61 workers at its Irvine, California location. AEGIS had been negotiating with Sega of America since November to reduce the total redundancies. On March 27, 2024, AEGIS announced that its workers had ratified a contract with Sega of America, focusing on key issues. The following day, Sega laid off 240 workers from its British and European operations, including Sega Europe,
Creative Assembly, and
Hardlight, and sold Relic Entertainment to an external investor. On November 8, Sega sold
Amplitude Studios to its staff via a management buyout.
Sonic X Shadow Generations,
Like a Dragon: Infinite Wealth and
Persona 3 Reload reached a million sales within a week, a record for each of the respective franchises. The
Sonic the Hedgehog movie franchise made over 1 billion dollars. ==Corporate structure==