Sega#History

{{Main|History of Sega}}

File:Slot machines at Wookey Hole Caves.JPG

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.{{Cite book|last=Smith|first=Alexander|title=They Create Worlds: The Story of the People and Companies That Shaped the Video Game Industry, Vol. I: 1971–1982|publisher=CRC Press|year=2019|isbn=978-0-429-75261-2|pages=105}} 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.{{cite web|url=https://ign.com/articles/2009/04/21/ign-presents-the-history-of-sega|title=IGN Presents the History of SEGA|last1=Fahs|first1=Travis|date=April 21, 2009|website=IGN|archive-url=https://web.archive.org/web/20120824130011/http://www.ign.com/articles/2009/04/21/ign-presents-the-history-of-sega|archive-date=August 24, 2012|url-status=dead|access-date=July 29, 2015}}{{cite web|url= http://kotaku.com/5788468/meet-the-four-americans-who-built-sega|title= Meet the four Americans who built Sega|first= Luke|last= Plunkett|work= Kotaku|date= April 4, 2011|access-date= August 1, 2015|archive-url= https://web.archive.org/web/20150726090220/http://kotaku.com/5788468/meet-the-four-americans-who-built-sega|archive-date= July 26, 2015|url-status= live|df= mdy-all}}{{cite book|url=https://books.google.com/books?id=IfDouSUqOUIC&pg=PA3|title=Core Techniques and Algorithms in Game Programming|last=Sánchez-Crespo Dalmau|first=Daniel|publisher=New Riders|year=2004|isbn=978-0-13-102009-2|page=3|access-date=August 2, 2015|archive-url=https://web.archive.org/web/20151123110659/https://books.google.com/books?id=IfDouSUqOUIC&pg=PA3&hl=en&sa=X&ved=0CCgQ6AEwAmoVChMIgsnbx7mKxwIVhQOOCh2YkAql#v=onepage&f=false|archive-date=November 23, 2015|url-status=live}} 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. The name Sega, an abbreviation of Service Games,{{cite book|title=The Ultimate History of Video Games: The Story Behind the Craze that Touched our Lives and Changed the World|url=https://archive.org/details/ultimatehistoryv00kent|url-access=limited|last=Kent|first=Steven L.|publisher=Prima Publishing|year=2001|isbn=978-0-7615-3643-7|page=[https://archive.org/details/ultimatehistoryv00kent/page/n346 331]|author-link=Steven L. Kent}} was first used in 1954 on a slot machine, the Diamond Star.{{Cite book|title=The Sega Arcade Revolution, A History in 62 Games|last=Horowitz|first=Ken|publisher=McFarland & Company|year=2018|isbn=978-1-4766-3196-7|ref=refHorowitz2018|pages=3–6}}

Due to notoriety arising from investigations by the US government into criminal business practices, Service Games of Japan was dissolved on May 31, 1960. On June 3,{{cite web|title=Sammy Corporation and SEGA Corporation Announce Business Combination: SEGA SAMMY HOLDINGS INC.|url=http://www.businesswire.com/news/home/20040519005320/en/Sammy-Corporation-SEGA-Corporation-Announce-Business-Combination|date=May 19, 2004|work=Business Wire|url-status=live|archive-url=https://web.archive.org/web/20160426060149/http://www.businesswire.com/news/home/20040519005320/en/Sammy-Corporation-SEGA-Corporation-Announce-Business-Combination|archive-date=April 26, 2016|access-date=April 12, 2016}} Bromley established two companies to take over its business activities, Nihon Goraku Bussan and {{nihongo foot|Nihon Kikai Seizō.|日本機械製造株式会社|lead=yes|group=lower-alpha|Nihon kikai seizō kabushiki gaisha|extra=Japanese Machine Manufacturers Co., Ltd.}} 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.{{Cite magazine|date=September 5, 1960|title=Sega and Utamatic Purchase Assets of Service Games|magazine=Billboard|volume=72|issue=34|page=71}}{{Cite magazine|date=September 3, 1960|title=Service Games Inc. Bought By Sega and Uta Matic|magazine=Cashbox|volume=21|issue=51|page=52}} The companies merged in 1964, retaining the Nihon Goraku Bussan name.

Around the same time, David Rosen, an American officer in the United States Air Force stationed in Japan, launched a photo booth business in Tokyo in 1954. This company became Rosen Enterprises, and in 1957 began importing coin-operated games into Japan. In 1965, Nihon Goraku Bussan acquired Rosen Enterprises to form {{nihongo foot|Sega Enterprises, Ltd.|株式会社セガ・エンタープライゼズ|Kabushiki gaisha Sega Entapuraizezu|group=lower-alpha|lead=yes}} Rosen was installed as the CEO and managing director, while Stewart was named president and LeMaire was the director of planning. Shortly afterward, Sega stopped leasing to military bases and moved its focus from slot machines to coin-operated amusement machines.Horowitz 2018, p. 7 Its imports included Rock-Ola jukeboxes, pinball games by Williams, and gun games by Midway Manufacturing.{{Cite book|title=Sega Arcade History|publisher=Enterbrain|year=2002|isbn=978-4-7577-0790-0|pages=20–23|language=ja}}

File:Sega 1960s logo.svg

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 first arcade electro-mechanical game (EM game) Sega manufactured was the submarine simulator Periscope, released worldwide in the late 1960s. It featured light and sound effects considered innovative and was successful in Japan. It was then exported to malls and department stores in Europe and the United States and helped standardize the 25-cent-per-play cost for arcade games in the US. Sega was surprised by the success, and for the next two years, the company produced and exported between eight and ten games per year.Horowitz 2018, pp. 10–11 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.{{cite book |last1=Smith |first1=Alexander |title=They Create Worlds: The Story of the People and Companies That Shaped the Video Game Industry, Vol. I: 1971-1982 |date=November 19, 2019 |publisher=CRC Press |isbn=978-0-429-75261-2 |pages=119–20, 188–91 |url=https://books.google.com/books?id=Cxy_DwAAQBAJ&pg=PT119}} However, rampant piracy led Sega to cease exporting its games around 1970.

In 1969, Sega was sold to the American conglomerate Gulf and Western Industries, although Rosen remained CEO. In 1974, Gulf and Western made Sega Enterprises, Ltd., a subsidiary of an American company renamed Sega Enterprises, Inc. Sega released Pong-Tron, its first video-based game, in 1973.Horowitz 2018, pp. 14–16 Despite late competition from Taito's hit arcade game Space Invaders in 1978, Sega prospered from the arcade video game boom of the late 1970s, with revenues climbing to over {{US$|100|link=yes}} million by 1979. During this period, Sega acquired Gremlin Industries, which manufactured microprocessor-based arcade games,Horowitz 2018, pp. 21–23 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. In the early 1980s, Sega was one of the top five arcade game manufacturers active in the United States, as company revenues rose to $214 million.{{Cite news|last1=Brandt|first1=Richard|last2=Gross|first2=Neil|date=February 20, 1994|title=Sega!|work=Businessweek|url=http://www.businessweek.com/stories/1994-02-20/sega|url-status=dead|access-date=October 10, 2013|archive-url=https://web.archive.org/web/20131203121725/http://www.businessweek.com/stories/1994-02-20/sega|archive-date=December 3, 2013}} 1979 saw the release of Head On, which introduced the "eat-the-dots" gameplay Namco later used in Pac-Man.Horowitz 2018, pp. 24–26 In 1981, Sega licensed Konami's Frogger, its most successful game until then.Horowitz 2018, p. 36 In 1982, Sega introduced the first game with isometric graphics, Zaxxon.Horowitz 2018, p. 48

{{Further|SG-1000|Master System}}

File:Sega-SG-1000-Console-Set.jpg|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.{{cite news|last=Pollack|first=Andrew|date=October 24, 1982|title=What's New In Video Games; Taking the Zing Out of the Arcade Boom|newspaper=The New York Times|url=https://www.nytimes.com/1982/10/24/business/what-s-new-in-video-games-taking-the-zing-out-of-the-arcade-boom.html|url-status=live|access-date=November 27, 2013|archive-url=https://web.archive.org/web/20131219200336/http://www.nytimes.com/1982/10/24/business/what-s-new-in-video-games-taking-the-zing-out-of-the-arcade-boom.html|archive-date=December 19, 2013}}{{cite news|date=August 27, 1983|title=The Bottom Line|page=5D|newspaper=Miami Herald|via=NewsBank|url-access=subscription|url=http://docs.newsbank.com/openurl?ctx_ver=z39.88-2004&rft_id=info:sid/iw.newsbank.com:AWNB:MIHB&rft_val_format=info:ofi/fmt:kev:mtx:ctx&rft_dat=0EB35D5F24528A22&svc_dat=InfoWeb:aggregated5&req_dat=0ECC86DE7A4704AD|url-status=live|access-date=October 10, 2013|archive-url=https://web.archive.org/web/20131110080330/http://docs.newsbank.com/openurl?ctx_ver=z39.88-2004|archive-date=November 10, 2013}}Horowitz 2018, p. 64 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.{{Cite magazine|last=Battelle|first=John|date=December 1993|title=The Next Level: Sega's Plans for World Domination|url=https://www.wired.com/wired/archive/1.06/sega_pr.html|url-status=live|magazine=Wired|archive-url=https://web.archive.org/web/20120502064808/http://www.wired.com/wired/archive/1.06/sega_pr.html|archive-date=May 2, 2012|access-date=October 9, 2013}} 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. Rebranded versions of the SG-1000 were released in several other markets worldwide.{{cite magazine|last=Marley|first=Scott|date=December 2016|title=SG-1000|magazine=Retro Gamer|issue=163|pages=56–61}}{{Cite news|last=Kohler|first=Chris|date=October 2, 2009|title=Playing the SG-1000, Sega's First Game Machine|magazine=Wired|url=https://www.wired.com/gamelife/2009/10/sega-sg-1000/|url-status=live|access-date=October 5, 2009|archive-url=https://web.archive.org/web/20140101073612/http://www.wired.com/gamelife/2009/10/sega-sg-1000/|archive-date=January 1, 2014}}{{cite web|url=https://kotaku.com/the-story-of-segas-first-console-which-was-not-the-mas-5888800|title=The Story of Sega's First Console, Which Was Not The Master System|last=Plunkett|first=Luke|date=January 19, 2017|website=Kotaku|archive-url=https://web.archive.org/web/20170306195938/http://kotaku.com/the-story-of-segas-first-console-which-was-not-the-mas-5888800|archive-date=March 6, 2017|url-status=live|access-date=March 3, 2017}}{{cite magazine|last=Marley|first=Scott|date=December 2016|title=The Rare Jewels from Taiwan ...|magazine=Retro Gamer|issue=163|page=61}} 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. This was in part because Nintendo expanded its game library by courting third-party developers, whereas Sega was hesitant to collaborate with companies with which it was competing in the arcades.

In November 1983, Rosen announced his intention to step down as president of Sega Enterprises, Inc. on January 1, 1984. Jeffrey Rochlis was announced as the new president and CEO of Sega.{{Cite magazine|date=November 12, 1983|title=Rosen Departs Sega|magazine=Cashbox|volume=45|issue=24|page=32}} 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.{{cite news|date=August 16, 1983|title=G&W Wins Cheers $1 Billion Spinoff Set|page=6D|newspaper=Miami Herald|agency=Associated Press|url=http://docs.newsbank.com/openurl?ctx_ver=z39.88-2004&rft_id=info:sid/iw.newsbank.com:AWNB:MIHB&rft_val_format=info:ofi/fmt:kev:mtx:ctx&rft_dat=0EB35D45A7276DB8&svc_dat=InfoWeb:aggregated5&req_dat=0ECC86DE7A4704AD|url-status=live|access-date=October 10, 2013|archive-url=https://web.archive.org/web/20131110080330/http://docs.newsbank.com/openurl?ctx_ver=z39.88-2004|archive-date=November 10, 2013|via=NewsBank|url-access=subscription}} Nakayama and Rosen arranged a management buyout of the Japanese subsidiary in 1984 with financial backing from CSK Corporation, a prominent Japanese software company.{{sfn|Kent|2001|p=343}} 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, while Nakayama was installed as CEO of Sega Enterprises, Ltd.{{sfn|Kent|2001|p=494}}

File:Sega-Master-System-Set.jpg, released in North America in 1986 and Europe in 1987|alt=A Master System console]]

In 1985, Sega began working on the Mark III,{{cite magazine|last=McFerran|first=Damien|date=December 2007|title=Retroinspection: Master System|magazine=Retro Gamer|issue=44|pages=48–53}} a redesigned SG-1000.{{cite web|url=http://kotaku.com/5888800/the-story-of-segas-first-ever-home-console|title=The Story of Sega's First Ever Home Console|last=Plunkett|first=Luke|date=February 27, 2012|website=Kotaku|archive-url=https://web.archive.org/web/20140915093659/http://kotaku.com/5888800/the-story-of-segas-first-ever-home-console|archive-date=September 15, 2014|url-status=live|access-date=September 14, 2014}} For North America, Sega rebranded the Mark III as the Master System,{{cite magazine|date=June 2002|title=Bruce Lowry: The Man That Sold the NES|magazine=Game Informer|volume=12|issue=110|pages=102–103}} with a futuristic design intended to appeal to Western tastes.{{cite magazine|url=http://www.edge-online.com/features/a-history-of-videogame-hardware-sega-master-system/|title=A history of video game hardware: Sega Master System|last=Parkin|first=Simon|date=June 2, 2014|magazine=Edge|archive-url=https://web.archive.org/web/20140605204323/http://www.edge-online.com/features/a-history-of-videogame-hardware-sega-master-system/|archive-date=June 5, 2014|url-status=dead|access-date=September 13, 2014}} The Mark III was released in Japan in October 1985.{{cite web|url=http://sega.jp/fb/segahard/mk3/|title=Mark III|publisher=Sega|language=ja|archive-url=https://web.archive.org/web/20140716112819/http://sega.jp/fb/segahard/mk3/|archive-date=July 16, 2014|url-status=live|access-date=March 31, 2014}} 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. To help market the console in North America, Sega planned to sell the Master System as a toy, similar to how Nintendo had done with the Nintendo Entertainment System. Sega partnered with Tonka, an American toy company, to make use of Tonka's expertise in the toy industry.{{Cite book|last=Horowitz|first=Ken|title=Playing at the Next Level: A History of American Sega Games|publisher=McFarland & Company|year=2016|isbn=978-1-4766-2557-7|pages=6–15}} Ineffective marketing by Tonka handicapped sales of the Master System. By early 1992, production had ceased in North America. The Master System sold between 1.5 million and 2 million units in the region.{{cite news|last=Matheny|first=Dave|date=October 15, 1991|title=16-Bit Hits – New video games offer better graphics, action|page=01E|newspaper=Minneapolis Star Tribune|url=http://docs.newsbank.com/openurl?ctx_ver=z39.88-2004&rft_id=info:sid/iw.newsbank.com:AWNB:STMB&rft_val_format=info:ofi/fmt:kev:mtx:ctx&rft_dat=0EFE44C5DC10D939&svc_dat=InfoWeb:aggregated5&req_dat=0ECC86DE7A4704AD|url-status=live|access-date=April 7, 2014|archive-url=https://web.archive.org/web/20131110080330/http://docs.newsbank.com/openurl?ctx_ver=z39.88-2004|archive-date=November 10, 2013|via=NewsBank|url-access=subscription}} This was less market share in North America than both Nintendo and Atari, which controlled 80 percent and 12 percent of the market.{{cite news|date=May 16, 1992|title=Company News; Nintendo Suit by Atari Is Dismissed|pages=1–40|agency=Associated Press|newspaper=The New York Times|url=https://www.nytimes.com/1992/05/16/business/company-news-nintendo-suit-by-atari-is-dismissed.html|url-status=live|access-date=September 19, 2014|archive-url=https://web.archive.org/web/20141023164857/http://www.nytimes.com/1992/05/16/business/company-news-nintendo-suit-by-atari-is-dismissed.html|archive-date=October 23, 2014}} The Master System was eventually a success in Europe, where its sales were comparable to the NES.{{cite magazine|date=March 1995|title=Sega Consoles: Active installed base estimates|magazine=Screen Digest|pages=60–61}} As late as 1993, the Master System's active installed user base in Europe was 6.25 million units. The Master System has had continued success in Brazil. New versions continue to be released by Sega's partner in the region, Tectoy.{{cite web|url=http://www.atlasobscura.com/articles/brazil-is-a-video-game-alternate-universe-where-sega-beat-nintendo|title=Brazil Is An Alternate Video Game Universe Where Sega Beat Nintendo|last=Smith|first=Ernie|date=July 27, 2015|work=Atlas Obscura|archive-url=https://web.archive.org/web/20170621140933/http://www.atlasobscura.com/articles/brazil-is-a-video-game-alternate-universe-where-sega-beat-nintendo|archive-date=June 21, 2017|url-status=live|access-date=December 11, 2017}} By 2016, the Master System had sold 8 million units in Brazil.{{cite web|url=http://jogos.uol.com.br/ultimas-noticias/2016/05/12/console-em-producao-ha-mais-tempo-master-system-ja-vendeu-8-mi-no-brasil.htm|title=Console em produção há mais tempo, Master System já vendeu 8 mi no Brasil|last=Azevedo|first=Théo|date=May 12, 2016|website=Universo Online|language=pt|archive-url=https://web.archive.org/web/20160514115923/http://jogos.uol.com.br/ultimas-noticias/2016/05/12/console-em-producao-ha-mais-tempo-master-system-ja-vendeu-8-mi-no-brasil.htm|archive-date=May 14, 2016|url-status=live|access-date=May 13, 2016}}

During 1984, Sega opened its European division of arcade distribution, Sega Europe.Horowitz 2018, pp. 76–77 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.Horowitz 2018, pp. 85–89 UFO Catcher was introduced in 1985 and as of 2005 was Japan's most commonly installed claw machine. In 1986, Sega of America was established to manage the company's consumer products in North America, beginning with marketing the Master System.Horowitz 2018, p. 151 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. Out Run, released in 1986, became Sega's best selling arcade cabinet of the 1980s.{{Cite magazine|last=Thorpe|first=Nick|date=June 2016|title=The History of OutRun|magazine=Retro Gamer|issue=156|pages=20–29}} 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.

{{Further|Sega Genesis}}

File:Sega-Genesis-Mod2-Set.jpg (second North American version pictured), Sega's successor to the Master System, took control of the 16-bit console market in much of the world during the fourth generation of video game consoles.|alt=A Sega Genesis Model 2]]

With the arcade game market once again growing, Sega was one of the most recognized game brands at the end of the 1980s. In the arcades, the company focused on releasing games to appeal to diverse tastes, including racing games and side-scrollers.Horowitz 2018, p. 141 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.

The Mega Drive struggled to compete against the Famicom{{cite web|url=https://www.eurogamer.net/articles/2012-02-22-the-rise-and-fall-of-sega-enterprises|title=The Rise and Fall of Sega Enterprises|last=McFerran|first=Damien|date=February 22, 2012|website=Eurogamer|archive-url=https://web.archive.org/web/20140216124431/http://www.eurogamer.net/articles/2012-02-22-the-rise-and-fall-of-sega-enterprises|archive-date=February 16, 2014|url-status=live|access-date=October 5, 2013}} and lagged behind Nintendo's Super Famicom and the TurboGrafx-16, made by NEC, in Japanese sales throughout the 16-bit era.Kent 2001, p. 447 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.Kent 2001, p. 405 The European version of the Mega Drive was released in September 1990.{{cite magazine|date=February 1994|title=Data Stream|magazine=Edge|issue=5|page=16}}

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, with slogans including "Genesis does what Nintendon't".{{cite magazine|last=Szczepaniak|first=John|date=August 2006|title=Retroinspection: Mega Drive|url=http://www.sega-16.com/2006/09/retroinspection-mega-drive/|magazine=Retro Gamer|issue=27|pages=42–47|archive-url=https://web.archive.org/web/20150924100219/http://www.sega-16.com/2006/09/retroinspection-mega-drive/|archive-date=September 24, 2015|url-status=live|via=Sega-16}} 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.Kent 2001, pp. 406–408 Nonetheless, Sega had difficulty overcoming Nintendo's ubiquity in homes.Kent 2001, pp. 424–431 Sega of America sold only 500,000 Genesis units in its first year, half of Nakayama's goal.

File:Sonic_1991.png has been Sega's mascot since 1991.{{Cite web|title=Twenty years of Sonic the Hedgehog|url=https://www.bbc.com/news/technology-13874266|last=Lee|first=Dave|date=June 23, 2011|work=BBC News|url-status=live|archive-url=https://web.archive.org/web/20140604062524/https://www.bbc.com/news/technology-13874266|archive-date=June 4, 2014|access-date=May 17, 2020}}|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.{{cite web|url=https://kotaku.com/remembering-segas-exiled-mascot-5789284|title=Remembering Sega's Exiled Mascot|last1=Plunkett|first1=Luke|date=April 6, 2011|website=Kotaku|archive-url=https://web.archive.org/web/20190225103052/https://kotaku.com/remembering-segas-exiled-mascot-5789284|archive-date=February 25, 2019|url-status=live|access-date=February 24, 2019}} Its new character, Sonic the Hedgehog, went on to feature in one of the best-selling video game franchises in history.{{Cite book|last=Harris|first=Blake|title=Console Wars: Sega, Nintendo, and the Battle that Defined a Generation|publisher=HarperCollins|year=2014|isbn=978-0-06-227669-8|pages=386}}{{cite web|title=Sonic the Hedgehog celebrates his 20th birthday|url=https://www.videogamer.com/xbox360/sonic_generations/news/sonic_the_hedgehog_celebrates_his_20th_birthday.html|last=Smith|first=Jamin|date=June 23, 2011|work=VideoGamer|url-status=live|archive-url=https://web.archive.org/web/20151117234137/http://www.videogamer.com/xbox360/sonic_generations/news/sonic_the_hedgehog_celebrates_his_20th_birthday.html|archive-date=November 17, 2015|access-date=November 17, 2015}} 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.{{cite magazine|date=August 2003|title=Sonic's Architect: GI Interviews Hirokazu Yasuhara|magazine=Game Informer|volume=13|issue=124|pages=114–116}} 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.{{cite magazine|date=2013|title=Sonic Boom: The Success Story of Sonic the Hedgehog|magazine=Retro Gamer—The Mega Drive Book|page=31}}{{cite web|url=https://www.gamasutra.com/view/feature/4208/out_of_the_blue_naoto_ohshima_.php?page=2|title=Out of the Blue: Naoto Ohshima Speaks|last=Sheffield|first=Brandon|date=December 4, 2009|work=Gamasutra|archive-url=https://web.archive.org/web/20150716002842/http://www.gamasutra.com/view/feature/4208/out_of_the_blue_naoto_ohshima_.php?page=2|archive-date=July 16, 2015|url-status=dead|access-date=February 15, 2012}}{{cite web|url=https://kotaku.com/5420201/sonics-shoes-inspired-by-michael-jackson|title=Sonic's Shoes Inspired by Michael Jackson|last=Ashcraft|first=Brian|date=December 7, 2009|website=Kotaku|archive-url=https://web.archive.org/web/20151030030210/http://kotaku.com/5420201/sonics-shoes-inspired-by-michael-jackson|archive-date=October 30, 2015|url-status=live|access-date=December 13, 2009}}

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, but it was approved by Nakayama, who told Kalinske, "I hired you to make the decisions for Europe and the Americas, so go ahead and do it."

In large part due to the popularity of Sonic the Hedgehog, the Genesis outsold its main competitor, the Super Nintendo Entertainment System (SNES), in the United States nearly two to one during the 1991 holiday season. By January 1992, Sega controlled 65 percent of the 16-bit console market.{{cite magazine|date=January 2002|title=This Month in Gaming History|magazine=Game Informer|volume=12|issue=105|page=117}} Sega outsold Nintendo for four consecutive Christmas seasonsKent 2001, pp. 496–497 due to the Genesis' head start, lower price, and a larger library compared to the SNES at release.Kent 2001, pp. 434–449 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,{{cite magazine|last=Gross|first=Neil|date=February 20, 1994|title=Nintendo's Yamauchi: No More Playing Around|url=http://www.businessweek.com/stories/1994-02-20/nintendos-yamauchi-no-more-playing-around|magazine=Businessweek|archive-url=https://web.archive.org/web/20121119005253/http://www.businessweek.com/stories/1994-02-20/nintendos-yamauchi-no-more-playing-around|archive-date=November 19, 2012|access-date=December 4, 2013|url-status=dead}} Sega claimed 55% of all 16-bit hardware sales during 1994,{{cite book|last=Dillon|first=Roberto|title=The Golden Age of Video Games: The Birth of a Multibillion Dollar Industry|year=2016|publisher=CRC Press|isbn=978-1-4398-7324-3|pages=125}} and the SNES outsold the Genesis from 1995 through 1997.{{cite magazine|date=January 14, 1996|title=Game-System Sales|url=http://www.newsweek.com/game-system-sales-177222|magazine=Newsweek|archive-url=https://web.archive.org/web/20131213023754/http://www.newsweek.com/game-system-sales-177222|archive-date=December 13, 2013|access-date=December 4, 2013|url-status=live}}{{cite web|title=Sega tops holiday, yearly sales projections; Sega Saturn installed base reaches 1.6 million in U.S., 7 million worldwide|url=https://www.thefreelibrary.com/Sega+tops+holiday,+yearly+sales+projections%3B+Sega+Saturn+installed...-a019014339|date=January 13, 1997|website=Business Wire|url-status=dead|archive-url=https://web.archive.org/web/20130411001244/http://www.thefreelibrary.com/Sega%2Btops%2Bholiday%2C%2Byearly%2Bsales%2Bprojections%3B%2BSega%2BSaturn%2Binstalled...-a019014339|archive-date=April 11, 2013|access-date=October 13, 2013}}{{cite web|title=Sega farms out Genesis|url=http://findarticles.com/p/articles/mi_m3169/is_n9_v38/ai_20456851/?tag=content;col1|date=March 2, 1998|publisher=CBS|url-status=live|archive-url=https://archive.today/20120709034422/http://findarticles.com/p/articles/mi_m3169/is_n9_v38/ai_20456851/?tag=content;col1|archive-date=July 9, 2012|access-date=May 17, 2020}}

File:Game-Gear-Handheld (cropped).jpg, 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.{{cite web|url=http://uk.retro.ign.com/articles/918/918381p1.html|title=Remember Game Gear?|last=Buchanan|first=Levi|date=October 9, 2008|website=IGN|archive-url=https://web.archive.org/web/20180623173244/http://www.ign.com/articles/2008/10/09/remember-game-gear|archive-date=June 23, 2018|url-status=live|access-date=March 29, 2009}} 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.{{Sfn|Dillon|2016|p=165}} Sega launched the Mega-CD in Japan on December 1, 1991, initially retailing at JP¥49,800.{{cite magazine|last=Birch|first=Aaron|date=September 2005|title=Next Level Gaming: Sega Mega-CD|magazine=Retro Gamer|issue=17|pages=36–42}} 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.{{cite magazine|date=December 1991|title=Behind the Screens at Sega of Japan|magazine=Electronic Gaming Monthly|volume=3|issue=29|pages=115, 122}} In North America, it was renamed the Sega CD and launched on October 15, 1992, with a retail price of US$299.Kent 2001, pp. 449–461 It was released in Europe as the Mega-CD in 1993. The Mega-CD sold only 100,000 units during its first year in Japan, falling well below expectations.

File:Virtua formula.jpg installation of Virtua Racing at the Sega VirtuaLand arcade in Luxor Las Vegas, circa late 1993]]

Throughout the early 1990s, Sega largely continued its success in arcades around the world. In 1992 and 1993, the new Sega Model 1 arcade system board showcased in-house development studio Sega AM2's Virtua Racing and Virtua Fighter (the first 3D fighting game), which, though expensive, played a crucial role in popularizing 3D polygonal graphics.{{efn|Attributed to multiple references:{{cite magazine|last=Feit|first=Daniel|date=September 5, 2012|title=How Virtua Fighter Saved PlayStation's Bacon|url=https://www.wired.com/2012/09/how-virtua-fighter-saved-playstations-bacon/|url-status=live|magazine=Wired|archive-url=https://web.archive.org/web/20141014093913/http://www.wired.com/2012/09/how-virtua-fighter-saved-playstations-bacon/|archive-date=October 14, 2014|access-date=October 9, 2014}}{{cite magazine|last=Thomason|first=Steve|date=July 2006|title=The Man Behind the Legend|magazine=Nintendo Power|volume=19|issue=205|page=72}}{{cite web|title=The Essential 50 Part 35: Virtua Fighter|url=http://www.1up.com/features/essential-50-virtua-fighter|last=Leone|first=Matt|year=2010|work=1Up.com|url-status=dead|archive-url=https://archive.today/20120719110526/http://www.1up.com/features/essential-50-virtua-fighter|archive-date=July 19, 2012|access-date=December 10, 2016}}{{cite book|title=Replay: The History of Video Games|title-link=Replay: The History of Video Games|last=Donovan|first=Tristan|publisher=Yellow Ant|year=2010|isbn=978-0-9565072-0-4|page=267}}}} In addition, complex simulator equipment like the rotational R360 kept Sega competing with machines by rival arcade companies, including Taito.{{cite web|title=Entertainment's Rotating Obsession|url=https://myemail.constantcontact.com/Stinger-Report---03-05-2021.html?soid=1103295952658&aid=YbRTe95u7yA|date=May 3, 2021|website=The Stinger Report|url-status=live|archive-url=https://web.archive.org/web/20210719231316/https://myemail.constantcontact.com/Stinger-Report---03-05-2021.html?soid=1103295952658&aid=YbRTe95u7yA|archive-date=July 19, 2021|access-date=July 20, 2021}} New official region-specific distributors and manufacturers, including the UK's Deith Leisure, allowed Sega to sell its machines outside of Japan with ease.{{cite web|title=Bob Deith of UK Deith Leisure Passes Away|url=https://www.highwaygames.com/arcade-news/bob-deith-uk-deith-leisure-passes-away-3274/|date=March 12, 2015|website=Highway Games|url-status=live|archive-url=https://web.archive.org/web/20200921165036/https://www.highwaygames.com/arcade-news/bob-deith-uk-deith-leisure-passes-away-3274/|archive-date=September 21, 2020|access-date=July 20, 2021}} Sega's domestic operations division also opened hundreds of family-oriented suburban Sega World amusement arcades in Japan during this period,{{cite web|publisher=Sega Retro|title=Sega En-Joint|author=Sega Enterprises|date=March 3, 2021|url=https://segaretro.org/File:SegaEnJoint_JP_Flyer.pdf}} as well as large over-18s "GiGO" facilities in the high-profile urban areas of Roppongi and Ikebukuro.{{cite web |url= https://blog.goo.ne.jp/lemon6868/e/c05a21f4c655a617cf9ce433e0651744|title=『むかしセガ・エンタープライゼスという会社があった』(3) |date=April 26, 2020 |access-date=June 3, 2021 |language=Japanese |trans-title="Once upon a time there was a company called Sega Enterprises." (3)}} 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.{{cite web|title=Sega USA Partners with Circus Circus to launch the first VirtuaLand at Luxor Las Vegas|url=https://www.bloomberg.com/press-releases/1993-08-16/sega-usa-partners-with-circus-circus-to-launch-the|date=August 16, 1993|website=Bloomberg|url-status=live|archive-url=https://archive.today/20210720000156/https://www.bloomberg.com/press-releases/1993-08-16/sega-usa-partners-with-circus-circus-to-launch-the|archive-date=July 20, 2021|access-date=July 20, 2021}}{{cite web|title=Sega VirtuaLand planned for Las Vegas|url=https://techmonitor.ai/techonology/sega_virtuland_planned_for_las_vegas|date=August 16, 1993|website=Tech Monitor|url-status=live|archive-url=https://web.archive.org/web/20210720001023/https://techmonitor.ai/techonology/sega_virtuland_planned_for_las_vegas|archive-date=July 20, 2021|access-date=July 20, 2021}} In 1994, Sega generated a revenue of {{JPY|354.032 billion}} or {{US$|{{To USD|354032|JPN|year=1994|round=yes}},000,000|long=no|1994|round=-6}}.

In 1993, the American media began to focus on the mature content of certain video games, such as Night Trap for the Sega CD and the Genesis version of Midway's Mortal Kombat.{{cite web|title=Television Violence|url=https://api.parliament.uk/historic-hansard/commons/1993/dec/16/television-violence#S6CV0234P0_19931216_HOC_584|date=December 16, 1993|website=Parliamentary Debates (Hansard)|url-status=live|archive-url=https://web.archive.org/web/20131203021917/http://hansard.millbanksystems.com/commons/1993/dec/16/television-violence#S6CV0234P0_19931216_HOC_584|archive-date=December 3, 2013|access-date=November 29, 2013}}Kent 2001, p. 461–480 This came at a time when Sega was capitalizing on its image as an "edgy" company with "attitude", and this reinforced that image. To handle this, Sega instituted the United States' first video game ratings system, the Videogame Rating Council (VRC), for all its systems. Ratings ranged from the family-friendly GA rating to the more mature rating of MA-13, and the adults-only rating of MA-17. Executive vice president of Nintendo of America Howard Lincoln was quick to point out in the United States congressional hearings in 1993 that Night Trap was not rated at all. Senator Joe Lieberman called for another hearing in February 1994 to check progress toward a rating system for video game violence. After the hearings, Sega proposed the universal adoption of the VRC; after objections by Nintendo and others, Sega took a role in forming the Entertainment Software Rating Board.

{{Further|Sega Saturn|32X}}

Sega began work on the Genesis' successor, the Sega Saturn, more than two years before showcasing it at the Tokyo Toy Show in June 1994.{{cite magazine|date=July 1994|title=EGM Interviews SEGA SATURN Product Manager HIDEKI OKAMURA|magazine=EGM²|volume=1|issue=1|page=114}} 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.{{cite magazine|last=McFerran|first=Damien|date=June 2010|title=Retroinspection: Sega 32X|magazine=Retro Gamer|issue=77|pages=44–49}} The 32X would not be compatible with the Saturn, but would play Genesis games.{{sfn|Kent|2001|p=494}} 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.{{cite web|url=https://ign.com/articles/2008/10/24/32x-follies|title=32X Follies|author=Buchanan, Levi|date=October 24, 2008|work=IGN|archive-url=https://web.archive.org/web/20160417080118/http://www.ign.com/articles/2008/10/24/32x-follies|archive-date=April 17, 2016|url-status=live|access-date=May 25, 2013}}{{cite web|url=https://sega.jp/fb/segahard/32x/|title=Super 32X|publisher=Sega|language=ja|archive-url=https://web.archive.org/web/20140716105656/http://sega.jp/fb/segahard/32x/|archive-date=July 16, 2014|url-status=live|access-date=February 23, 2014}} After the holiday season, interest in the 32X rapidly declined.{{cite web|title=Sega Genesis 32X – Overview|url=http://allgame.com/platform.php?id=35|author=Beuscher, David|work=AllGame|url-status=dead|archive-url=https://web.archive.org/web/20141210012639/http://allgame.com/platform.php?id=35|archive-date=December 10, 2014|access-date=December 13, 2014}}

File:Sega-Saturn-Console-Set-Mk1.jpg failed to repeat the western success of the Genesis.|alt=A Sega Saturn console]]

Sega released the Saturn in Japan on November 22, 1994.{{cite web|url=http://sega.jp/fb/segahard/ss/|title=Sega Saturn|publisher=Sega|language=ja|access-date=March 3, 2014|archive-url=https://web.archive.org/web/20140716103105/http://sega.jp/fb/segahard/ss/|archive-date=July 16, 2014|url-status=live}} 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.{{sfn|Kent|2001|pp=501–502}}{{cite magazine|url=http://www.edge-online.com/reviews/virtua-fighter-review/|title=Virtua Fighter Review|date=December 22, 1994|magazine=Edge|archive-url=https://web.archive.org/web/20141210173015/http://www.edge-online.com/reviews/virtua-fighter-review/|archive-date=December 10, 2014|url-status=dead|access-date=March 5, 2015}}{{cite magazine|date=February 1995|title=Sega and Sony Sell the Dream|magazine=Edge|volume=3|issue=17|pages=6–9}} Sega's initial shipment of 200,000 Saturn units sold out on the first day,{{sfn|Harris|2014|p=536}} and it was more popular than the PlayStation, made by Sony, in Japan.{{sfn|Kent|2001|p=502}} In March 1995, Sega of America CEO Tom Kalinske announced that the Saturn would be released in the US on Saturday, September 2, 1995, advertised as "Saturn-day".{{sfn|Kent|2001|p=516}}{{cite news|date=March 9, 1995|title=Let the games begin: Sega Saturn hits retail shelves across the nation Sept. 2; Japanese sales already put Sega on top of the charts.|url=http://www.thefreelibrary.com/Let+the+games+begin%3a+Sega+Saturn+hits+retail+shelves+across+the...-a016634009|work=Business Wire|access-date=December 24, 2014|archive-url=https://web.archive.org/web/20141025012132/http://www.thefreelibrary.com/Let+the+games+begin%3a+Sega+Saturn+hits+retail+shelves+across+the...-a016634009|archive-date=October 25, 2014|url-status=live}} Sega executives in Japan mandated an early launch to give the Saturn an advantage over the PlayStation.{{sfn|Harris|2014|p=536}} 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.{{sfn|Kent|2001|p=516}} 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.{{sfn|Kent|2001|p=516}}

The Saturn's release in Europe also came before the previously announced North American date, on July 8, 1995.{{cite magazine|last=McFerran|first=Damien|date=February 2007|title=Retroinspection: Sega Saturn|magazine=Retro Gamer|issue=34|pages=44–49}} Within two days of the PlayStation's American launch on September 9, 1995, the PlayStation sold more units than the Saturn.{{cite web|url=https://ign.com/articles/1998/08/28/history-of-the-playstation|title=History of the PlayStation|date=August 27, 1998|work=IGN|archive-url=https://web.archive.org/web/20120218120358/http://psx.ign.com/articles/060/060188p1.html|archive-date=February 18, 2012|url-status=live|access-date=November 16, 2014}}{{sfn|Kent|2001|pp=519–520}} Within its first year, the PlayStation secured over twenty percent of the US video game market.{{cite book|title=Computer Games and Digital Cultures: Conference Proceedings: Proceedings of the Computer Games and Digital Cultures Conference, June 6–8, 2002, Tampere, Finland|editor-last1=Mäyrä|editor-first1=Frans |last=Finn|first=Mark|publisher=Tampere University Press|year=2002|isbn=978-951-44-5371-7|pages=45–58|chapter=Console Games in the Age of Convergence}} The console's high price point, surprise launch, and difficulty handling polygonal graphics were factors in its lack of success.{{Cite magazine|last=Thorpe|first=Nick|date=November 2014|title=20 Years: Sega Saturn|magazine=Retro Gamer|issue=134|pages=20–29}} Sega also underestimated the continued popularity of the Genesis; 16-bit sales accounted for 64 percent of the market in 1995.{{sfn|Kent|2001|p=531}}{{cite journal|last1=Gallagher|first1=Scott|last2=Park|first2=Seung Ho|date=February 2002|title=Innovation and Competition in Standard-Based Industries: A Historical Analysis of the U.S. Home Video Game Market|journal=IEEE Transactions on Engineering Management|volume=49|pages=67–82|number=1|doi=10.1109/17.985749 | issn=0018-9391 }} 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.{{cite news|url=http://www.thefreelibrary.com/Sega+captures+dollar+share+of+videogame+market+--+again%3B+diverse...-a018001580|title=Sega captures dollar share of videogame market again; diverse product strategy yields market growth; Sega charts path for 1996.|date=January 10, 1996|work=Business Wire|access-date=December 24, 2014|archive-url=https://web.archive.org/web/20140502075742/http://www.thefreelibrary.com/Sega%2Bcaptures%2Bdollar%2Bshare%2Bof%2Bvideogame%2Bmarket%2B--%2Bagain%3B%2Bdiverse...-a018001580|archive-date=May 2, 2014|url-status=live}}

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.{{cite news|url=http://www.m2.com/m2/web/story.php/1996852568440080DDE88025683B005E7A3F|title=Sega of America appoints Shoichiro Irimajiri chairman/chief executive officer|date=July 16, 1996|journal=M2PressWIRE|access-date=December 24, 2014|archive-url=https://web.archive.org/web/20141018032603/http://www.m2.com/m2/web/story.php/1996852568440080DDE88025683B005E7A3F|archive-date=October 18, 2014|url-status=live|via=M2|url-access=subscription}}{{cite web|url=http://www.next-generation.com/news/071696a.html|title=Kalinske Out – WORLD EXCLUSIVE|date=July 16, 1996|work=Next Generation|archive-url=https://web.archive.org/web/19961220200643/http://www.next-generation.com/news/071696a.html|archive-date=December 20, 1996|url-status=dead|access-date=May 6, 2014}} A former Honda executive,{{cite news|last=Strom|first=Stephanie|date=March 14, 1998|title=Sega Enterprises Pulls Its Saturn Video Console From the U.S. Market|page=D-2|work=The New York Times|url=https://www.nytimes.com/1998/03/14/business/international-business-sega-enterprises-pulls-its-saturn-video-console-us-market.html?pagewanted=1|url-status=live|access-date=December 7, 2014|archive-url=https://web.archive.org/web/20130430012902/http://www.nytimes.com/1998/03/14/business/international-business-sega-enterprises-pulls-its-saturn-video-console-us-market.html?pagewanted=1|archive-date=April 30, 2013}}{{sfn|Kent|2001|p=559}} Irimajiri had been involved with Sega of America since joining Sega in 1993.{{cite web|url=http://www.next-generation.com/news/072596b.html|title=Irimajiri Settles In At Sega|date=July 25, 1996|work=Next Generation|archive-url=https://web.archive.org/web/19961220195722/http://www.next-generation.com/news/072596b.html|archive-date=December 20, 1996|url-status=dead|access-date=May 6, 2014}} The company also announced that Rosen and Nakayama had resigned from their positions at Sega of America, though both remained with Sega.{{sfn|Kent|2001|p=535}} Bernie Stolar, a former executive at Sony Computer Entertainment of America,{{cite web|url=http://www.next-generation.com/news/071396a.html|title=NEWSFLASH: Sega Planning Drastic Management Reshuffle – World Exclusive|date=July 13, 1996|work=Next Generation|archive-url=https://web.archive.org/web/19961220200717/http://www.next-generation.com/news/071396a.html|archive-date=December 20, 1996|url-status=dead|access-date=May 6, 2014}}{{sfn|Kent|2001|p=558}} became Sega of America's executive vice president in charge of product development and third-party relations. Stolar was not supportive of the Saturn, believing its hardware was poorly designed.

While Stolar had said "the Saturn is not our future" at E3 1997, he continued to emphasize the quality of its games, and later reflected that "we tried to wind it down as cleanly as we could for the consumer."{{sfn|Kent|2001|p=558}} At Sony, Stolar had opposed the localization of certain Japanese PlayStation games that he felt would not represent the system well in North America. He advocated a similar policy for the Saturn, generally blocking 2D arcade games and role-playing games from release, although he later sought to distance himself from this stance.{{sfn|Kent|2001|p=506}}{{cite web|url=http://www.gamespot.com/articles/stolar-talks-dreamcast/1100-2464369/|title=Stolar Talks Dreamcast|last=Johnston|first=Chris|date=September 8, 2009|work=GameSpot|archive-url=https://web.archive.org/web/20170710051328/https://www.gamespot.com/articles/stolar-talks-dreamcast/1100-2464369/|archive-date=July 10, 2017|url-status=live|access-date=December 17, 2014}} Other changes included a softer image in Sega's advertising, including removing the "Sega!" scream, and holding press events for the education industry.{{sfn|Kent|2001|p=533}}

File:Tokyo Joypolis entrance.jpg

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.Horowitz 2018, pp. 198–210 Virtua Fighter and Virtua Fighter 2 became Sega's best-selling arcade games of all time, surpassing their previous record holder Out Run.{{cite book|author=Famitsu DC|author-link=Famitsu DC|url=https://retrocdn.net/index.php?title=File:Sega_Arcade_History_JP_EnterBrain_Book.pdf&page=14|title=Interview: Akira Nagai - SEGA REPRESENTATIVE - セガ・アーケード・ヒストリー(Sega Arcade History)|series=Famitsu Books|publisher=Enterbrain|date=February 15, 2002|pages=20–23|language=ja|isbn=9784757707900|access-date=August 15, 2020|archive-date=August 20, 2020|archive-url=https://web.archive.org/web/20200820193203/https://retrocdn.net/index.php?title=File%3ASega_Arcade_History_JP_EnterBrain_Book.pdf&page=14|url-status=live }} ([http://shmuplations.com/akiranagai/ Translation] by Shmuplations. {{Webarchive|url=https://web.archive.org/web/20200807024817/http://shmuplations.com/akiranagai/ |date=August 7, 2020 }}). There was also a technological arms race between Sega and Namco during this period, driving the growth of 3D gaming.{{cite magazine |last1=Thorpe |first1=Nick |title=The 90s: The Decade of Rivalries |magazine=Retro Gamer |date=March 2014 |issue=127 |pages=32–5 |url=https://archive.org/details/retro_gamer/RetroGamer_127/page/34/mode/2up}}

Beginning in 1994, Sega launched a series of indoor theme parks in Japan under a concept dubbed "Amusement Theme Park",{{cite web|publisher=Sega Retro|title=Amusement Theme Park|author=Sega Enterprises|date=March 26, 2021|url=https://segaretro.org/File:Amusement_Theme_Park_JP_Booklet.pdf}} including Joypolis parks sited in urban Tokyo locations such as Yokohama and Odaiba.{{cite web|publisher=VR Focus|title=The Virtual Arena – Blast From The Past: The VR-1|author=Kevin Williams|url=https://www.vrfocus.com/2020/07/the-virtual-arena-blast-from-the-past-the-vr-1/|access-date=July 20, 2021|archive-date=December 8, 2021|archive-url=https://web.archive.org/web/20211208153938/https://www.vrfocus.com/2020/07/the-virtual-arena-blast-from-the-past-the-vr-1/|url-status=dead}} A rapid overseas rollout was planned, with at least 100 locations across the world proposed to be opened by 2000, however only two, Sega World London and Sega World Sydney, would ultimately materialise in September 1996 and March 1997, respectively.{{Cite magazine|date=May 1996|title=Sega creates alternate reality|magazine=Edge|issue=32|page=10}}{{Cite web|url=http://www.segaarcade.us.com/about-us.html|title=The History of Sega|publisher=Sega Amusements|archive-url=https://web.archive.org/web/20180828035543/http://www.segaarcade.us.com/about-us.html|archive-date=August 28, 2018|access-date=August 27, 2018|url-status=live}} 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.{{cite magazine|date=June 1997|title=Tokyo Game Show Report from Japan|url=https://archive.org/stream/NextGeneration30Jun1997/Next_Generation_30_Jun_1997#page/n17|magazine=Next Generation|publisher=Imagine Media|issue=30|page=17}}

In 1995, Sega partnered with Atlus to launch Print Club (purikura),{{cite web |url=https://www.segasammy.co.jp/english/pr/corp/history/history_sega.html |title=History of SEGA SAMMY Group/SEGA before Business Integration｜SEGA SAMMY Group｜SEGA SAMMY HOLDINGS |publisher=Segasammy.co.jp |access-date=December 11, 2016 |url-status=live |archive-url=https://web.archive.org/web/20161220131310/https://www.segasammy.co.jp/english/pr/corp/history/history_sega.html |archive-date=December 20, 2016}} an arcade photo sticker machine that produces selfie photos.{{cite book |last1=Pan |first1=Lu |title=Aestheticizing Public Space: Street Visual Politics in East Asian Cities |date=2015 |publisher=Intellect Books |isbn=9781783204533 |page=107 |url=https://books.google.com/books?id=rJbzCQAAQBAJ&pg=PA107}}{{cite book |last1=Miller |first1=Laura |chapter=10. Purikura: Expressive Energy in Female Self-Photography |title=Introducing Japanese Popular Culture |date=2018 |publisher=Routledge |isbn=9781317528937 |chapter-url=https://books.google.com/books?id=UBFFDwAAQBAJ&pg=PT129}} 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.{{cite book |last1=Edwards |first1=Elizabeth F. |last2=Hart |first2=Janice |title=Photographs Objects Histories: On the Materiality of Images |date=2004 |publisher=Psychology Press |isbn=9780415254410 |url=https://books.google.com/books?id=VRQ2StxiK0sC&pg=PA167}} Purikura became a popular form of entertainment among youths across East Asia, laying the foundations for modern selfie culture. By 1997, about 47,000 Purikura machines had been sold, earning Sega an estimated {{JPY|25 billion}} ({{£|173 million|long=no}}) or {{US$|{{To USD|173|GBR|year=1997|round=yes}},000,000|long=no|1997|round=-6}} from Purikura sales that year. Various other similar Purikura machines appeared from other manufacturers, with Sega controlling about half of the market in 1997.{{cite news |last1=Hunt |first1=Joshua |title=How 'playing Puri' paved the way for Snapchat |url=https://www.bbc.com/worklife/article/20181119-why-playing-puri-was-the-precursor-for-snapchat |access-date=October 11, 2021 |agency=BBC |date=November 23, 2018}}

Sega also made forays in the PC market with the 1995 establishment of SegaSoft, which was tasked with creating original Saturn and PC games.{{cite magazine|date=January 1996|title=Sega's Bold Leap to PC|magazine=Electronic Gaming Monthly|issue=78|page=22}}{{cite magazine|date=February 1996|title=Trailing Sony, Sega Restructures|magazine=GamePro|issue=79|page=16}} 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.{{cite book|title=The Complete Pinball Book: Collecting the Game and Its History|last=Rossignoli|first=Marco|publisher=Schiffer Publishing, Limited|isbn=978-0-7643-3785-7|page=110|year=2011}}

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.{{cite web|url=https://kotaku.com/5828939/when-sega-wanted-to-take-over-the-world-and-failed-miserably|title=When Sega Wanted to Take Over the World (and Failed Miserably)|last=Plunkett|first=Luke|date=August 9, 2011|website=Kotaku|archive-url=https://web.archive.org/web/20181123203543/https://kotaku.com/5828939/when-sega-wanted-to-take-over-the-world-and-failed-miserably|archive-date=November 23, 2018|url-status=live|access-date=January 16, 2019}}{{Cite news|url=https://www.nytimes.com/1997/01/24/business/sega-to-acquire-bandai-creating-toy-video-giant.html|title=Sega to Acquire Bandai, Creating Toy-Video Giant|last=Pollack|first=Andrew|date=January 24, 1997|work=The New York Times|access-date=January 16, 2019|archive-url=https://web.archive.org/web/20190117071651/https://www.nytimes.com/1997/01/24/business/sega-to-acquire-bandai-creating-toy-video-giant.html|archive-date=January 17, 2019|url-status=live}} 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.{{cite magazine|date=May 28, 1997|title=Bandai Calls Off Planned Merger with Sega|url=https://www.wired.com/1997/05/bandai-calls-off-planned-merger-with-sega/|magazine=Wired|access-date=January 16, 2019}} As a result of Sega's deteriorating financial situation, Nakayama resigned as Sega president in January 1998 in favor of Irimajiri. Nakayama's resignation may have in part been due to the failure of the merger, as well as Sega's 1997 performance.{{cite web|url=https://www.gamespot.com/articles/sega-president-leaving/1100-2462169/|title=Sega President Leaving?|date=April 28, 2000|website=GameSpot|archive-url=https://web.archive.org/web/20190117070329/https://www.gamespot.com/articles/sega-president-leaving/1100-2462169/|archive-date=January 17, 2019|url-status=live|access-date=January 16, 2019}} Stolar became CEO and president of Sega of America.{{sfn|Kent|2001|page=558}}{{cite web|url=http://www.gamespot.com/articles/katana-strategy-still-on-back-burner/1100-2463564/|title=Katana Strategy Still on Back Burner|last=Feldman|first=Curt|date=April 28, 2000|website=GameSpot|archive-url=https://web.archive.org/web/20170705034437/https://www.gamespot.com/articles/katana-strategy-still-on-back-burner/1100-2463564/|archive-date=July 5, 2017|url-status=live|access-date=December 9, 2014}}

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.{{sfn|Kent|2001|p=558}} 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. After several years of declining profits,{{cite web|title=Sega Enterprises Annual Report 1998|url=http://sega.jp/IR/en/ar/ar1998/ar98.pdf|publisher=Sega|url-status=dead|archive-url=https://web.archive.org/web/20040504003308/http://sega.jp/IR/en/ar/ar1998/ar98.pdf|archive-date=May 4, 2004|access-date=December 7, 2014}} Sega had a slight increase in the fiscal year ended March 1997, partly driven by increasing arcade revenue, while outperforming Nintendo during the mid-term period.{{cite magazine|editor-last=Akagi|editor-first=Masumi|title=Tecmo, Jaleco Return To Profit In Mid-Term|magazine={{ill|Game Machine|ja|ゲームマシン|vertical-align=sup}}|issue=533|publisher={{ill|Amusement Press, Inc.|ja|アミューズメント通信社|vertical-align=sup}}|date=January 1-15, 1997|page=34|url=https://onitama.tv/gamemachine/pdf/19970101p.pdf#page=18}} 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.{{cite web|url=http://www.gamespot.com/articles/sega-news-from-japan/1100-2462352/|title=Sega News From Japan|date=April 28, 2000|work=GameSpot|archive-url=https://web.archive.org/web/20170705034437/https://www.gamespot.com/articles/sega-news-from-japan/1100-2462352/|archive-date=July 5, 2017|url-status=live|access-date=December 7, 2014}} 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. Shortly before the announcement of the losses, Sega discontinued the Saturn in North America to prepare for the launch of its successor, the Dreamcast, releasing remaining games in low quantities.{{sfn|Kent|2001|p=558}}

The decision to discontinue the Saturn effectively left the North American home console market without Sega games for over a year, with most of its activity in the country coming from arcade divisions.{{cite web|url=https://ign.com/articles/2010/09/10/ign-presents-the-history-of-dreamcast|title=IGN Presents the History of Dreamcast|last=Fahs|first=Travis|date=September 9, 2010|work=IGN|archive-url=https://web.archive.org/web/20140928201508/http://www.ign.com/articles/2010/09/10/ign-presents-the-history-of-dreamcast|archive-date=September 28, 2014|url-status=live|access-date=December 24, 2014}} The Saturn lasted longer in some Europe territories and particularly Japan, with it notably outperforming the Nintendo 64 in the latter.{{sfn|Kent|2001|p=559}} 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.{{Cite magazine|date=January 1999|title=The 'Q'|magazine=Electronic Gaming Monthly|issue=114|page=56}} With lifetime sales of 9.26 million units,{{cite book|last1=Ernkvist|first1=Mirko|title=The Video Game Industry: Formation, Present State, and Future|publisher=Routledge|year=2012|isbn=978-1-138-80383-1|editor-last=Zackariasson|editor-first=Peter|page=158|chapter=Console Hardware: The Development of Nintendo Wii|editor-last2=Wilson|editor-first2=Timothy L.}} the Saturn is retrospectively considered a commercial failure in much of the world.{{cite magazine|last=Lefton|first=Terry|year=1998|title=Looking for a Sonic Boom|magazine=Brandweek|volume=9|issue=39|pages=26–29}} 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.Horowitz 2018, pp. 211–212 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.

{{Further|Dreamcast}}

File:Dreamcast-Console-Set.png, discontinued in 2001, was Sega's last video game console.|alt=A Dreamcast console]]

Despite a 75 percent drop in half-year profits just before the Japanese launch of the Dreamcast, Sega felt confident about its new system. The Dreamcast attracted significant interest and drew many pre-orders.{{cite magazine|last=McFerran|first=Damien|date=May 2008|title=Retroinspection: Dreamcast|url=http://www.nintendolife.com/news/2015/04/hardware_classics_sega_dreamcast|magazine=Retro Gamer|issue=50|pages=66–72|archive-url=https://web.archive.org/web/20160304110322/http://www.nintendolife.com/news/2015/04/hardware_classics_sega_dreamcast|archive-date=March 4, 2016|access-date=May 17, 2020|url-status=live|via=NintendoLife}} 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.{{cite web|title=Sonic Onboard Dreamcast|url=http://www.gamespot.com/articles/sonic-onboard-dreamcast/1100-2464382/|last=Ohbuchi|first=Yutaka|date=April 28, 2000|website=GameSpot|url-status=live|archive-url=https://web.archive.org/web/20170705034437/https://www.gamespot.com/articles/sonic-onboard-dreamcast/1100-2464382/|archive-date=July 5, 2017|access-date=December 9, 2014}}{{cite magazine|date=November 1998|title=International News: Sonic Rocks Tokyo|magazine=Electronic Gaming Monthly|volume=10|issue=112|page=50}}{{cite magazine|date=October 1998|title=News: Sonic's Back!|magazine=Sega Saturn Magazine|volume=4|issue=36|pages=6–8}} Due to a high failure rate in the manufacturing process, Sega could not ship enough consoles for the Dreamcast's Japanese launch.{{cite episode|title=Sega Dreamcast|url=http://www.g4tv.com/gamemakers/episodes/1259/Sega_Dreamcast.html|series=Game Makers|network=G4|number=302|series-link=Game Makers|airdate=August 20, 2008|url-status=live|archive-url=https://web.archive.org/web/20081121040744/http://www.g4tv.com/gamemakers/episodes/1259/Sega_Dreamcast.html|archive-date=November 21, 2008|access-date=May 14, 2020}} As more than half of its limited stock had been pre-ordered, Sega stopped pre-orders in Japan.{{sfn|Kent|2001|page=563}} 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.{{cite web|title=How Naomi Got Its Groove On|url=http://www.gamespot.com/articles/how-naomi-got-its-groove-on/1100-2464869/|last=Ohbuchi|first=Yutaka|date=April 28, 2000|website=GameSpot|url-status=live|archive-url=https://web.archive.org/web/20171224213728/https://www.gamespot.com/articles/how-naomi-got-its-groove-on/1100-2464869/|archive-date=December 24, 2017|access-date=December 9, 2014}} NAOMI shared technology with the Dreamcast, allowing nearly identical ports of arcade games.{{cite journal|last1=Hagiwara|first1=Shiro|last2=Oliver|first2=Ian|date=November–December 1999|title=Sega Dreamcast: Creating a Unified Entertainment World|journal=IEEE Micro|volume=19|pages=29–35|number=6|doi=10.1109/40.809375}}

The Dreamcast launched in Japan on November 27, 1998. The entire stock of 150,000 consoles sold out by the end of the day.{{sfn|Kent|2001|page=563}} Irimajiri estimated that another 200,000 to 300,000 Dreamcast units could have been sold with sufficient supply.{{sfn|Kent|2001|page=563}} 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.{{sfn|Kent|2001|page=564}} 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.{{cite news|last=King|first=Sharon R.|date=July 12, 1999|title=TECHNOLOGY; Sega Is Giving New Product Special Push|page=C-4|work=The New York Times|url=https://www.nytimes.com/1999/07/12/business/technology-sega-is-giving-new-product-special-push.html|url-status=live|access-date=December 24, 2014|archive-url=https://web.archive.org/web/20141225075707/http://www.nytimes.com/1999/07/12/business/technology-sega-is-giving-new-product-special-push.html|archive-date=December 25, 2014}} Before the Western launch, Sega reduced the price of the Dreamcast in Japan by JP¥9,100, effectively making it unprofitable but increasing sales.

On August 11, 1999, Sega of America confirmed that Stolar had been fired.{{cite web|title=A Post-Bernie Sega Speaks|url=http://www.gamespot.com/articles/a-post-bernie-sega-speaks/1100-2460797/|last=Kennedy|first=Sam|date=September 8, 2009|website=GameSpot|url-status=live|archive-url=https://web.archive.org/web/20170705034437/https://www.gamespot.com/articles/a-post-bernie-sega-speaks/1100-2460797/|archive-date=July 5, 2017|access-date=December 17, 2014}} Peter Moore, whom Stolar had hired as a Sega of America executive only six months before, was placed in charge of the North American launch.{{efn|Attributed to multiple references:{{sfn|Kent|2001|pages=564–565}}{{cite magazine|date=September 2000|title=Dreamcast: In the USA|magazine=Next Generation|volume=2|issue=9|pages=6–9}}{{cite magazine|date=November 1999|title=News Bytes|magazine=Next Generation|volume=1|issue=3|page=14}}}} The Dreamcast launched in North America on September 9, 1999,{{sfn|Kent|2001|page=564}}{{cite web|url=http://www.1up.com/features/9999-dreamcast-memorial|title=9.9.99, A Dreamcast Memorial|last=Parish|first=Jeremy|date=September 3, 2009|website=1Up.com|archive-url=https://web.archive.org/web/20140202182808/http://www.1up.com/features/9999-dreamcast-memorial|archive-date=February 2, 2014|url-status=dead|access-date=December 10, 2016}} with 18 games.{{cite web|url=https://ign.com/articles/2008/09/09/ign-classics-dreamcast-launch-guide|title=IGN Classics: Dreamcast Launch Guide|last=Gantayat|first=Anoop|date=September 9, 2008|website=IGN|archive-url=https://web.archive.org/web/20141030003140/http://www.ign.com/articles/2008/09/09/ign-classics-dreamcast-launch-guide|archive-date=October 30, 2014|url-status=live|access-date=October 29, 2014}}{{cite magazine|url=https://www.gameinformer.com/b/features/archive/2013/10/30/which-game-console-had-the-best-launch-lineup.aspx?PostPageIndex=4|title=Which Game Console Had The Best Launch Lineup?|last=Kato|first=Matthew|date=October 30, 2013|magazine=Game Informer|page=4|archive-url=https://web.archive.org/web/20141230142031/http://www.gameinformer.com/b/features/archive/2013/10/30/which-game-console-had-the-best-launch-lineup.aspx?PostPageIndex=4|archive-date=December 30, 2014|url-status=live|access-date=November 5, 2014}} 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".{{cite web|title=The Rise And Fall Of The Dreamcast|url=https://www.gamedeveloper.com/business/the-rise-and-fall-of-the-dreamcast|last=Perry|first=Douglass|date=September 9, 2009|website=Gamasutra|url-status=live|archive-url=https://web.archive.org/web/20141027132503/http://www.gamasutra.com/view/feature/4128/the_rise_and_fall_of_the_dreamcast.php?print=1|archive-date=October 27, 2014|access-date=October 29, 2014}} Within two weeks, US Dreamcast sales exceeded 500,000. By Christmas, Sega held 31 percent of the US video game market by revenue.{{cite web|url=https://www.bloomberg.com/news/articles/2000-12-17/sega-vs-dot-sony-pow-biff-whack|title=Sega vs. Sony: Pow! Biff! Whack!|last=Edwards|first=Cliff|date=December 18, 2000|website=BusinessWeek|via=Bloomberg News|url-access=subscription|access-date=June 21, 2019|archive-url=https://web.archive.org/web/20190621133255/https://www.bloomberg.com/news/articles/2000-12-17/sega-vs-dot-sony-pow-biff-whack|archive-date=June 21, 2019|url-status=live}} On November 4, Sega announced it had sold more than a million Dreamcast units.{{cite news|url=http://news.bbc.co.uk/2/hi/business/534957.stm|title=Dreamcast beats PlayStation record|date=November 24, 1999|work=BBC News|access-date=October 29, 2014|archive-url=https://web.archive.org/web/20131016054015/http://news.bbc.co.uk/2/hi/business/534957.stm|archive-date=October 16, 2013|url-status=live}} 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.{{cite web|url=http://www.gamespot.com/articles/defective-dreamcast-gd-roms/1100-2460952/|title=Defective Dreamcast GD-ROMs|date=April 27, 2000|website=GameSpot|archive-url=https://web.archive.org/web/20150401191004/http://www.gamespot.com/articles/defective-dreamcast-gd-roms/1100-2460952/|archive-date=April 1, 2015|url-status=live|access-date=December 9, 2014}} Sega released the Dreamcast in Europe on October 14, 1999. While Sega sold 500,000 units in Europe by Christmas 1999, sales there slowed, and by October 2000 Sega had sold only about a million units.{{cite web|url=http://www.eurogamer.net/articles/article_29487|title=Dreamcast – thanks a million|last=Bye|first=John|date=October 17, 2000|website=Eurogamer|archive-url=https://web.archive.org/web/20141022142729/http://www.eurogamer.net/articles/article_29487|archive-date=October 22, 2014|url-status=live|access-date=October 16, 2014}}

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. On March 2, 1999, in what one report called a "highly publicized, vaporware-like announcement",{{cite web|title=The Art of the Game: The Power of the PlayStation Is Challenging Designers to Match Its Capabilities-And Forcing Sony's Competitors to Rethink Their Strategies|url=https://www.questia.com/read/1G1-59651752/the-art-of-the-game-the-power-of-the-playstation|last=Croal|first=N'Gai|date=March 6, 2000|work=Newsweek|url-status=live|archive-url=https://web.archive.org/web/20141031033940/https://www.questia.com/read/1G1-59651752/the-art-of-the-game-the-power-of-the-playstation|archive-date=October 31, 2014|access-date=October 30, 2014}} Sony revealed the first details of the PlayStation 2.{{sfn|Kent|2001|pages=560–561}}{{cite magazine|title=A history of videogame hardware: Sony PlayStation 2|url=http://www.edge-online.com/features/a-history-of-videogame-hardware-playstation-2/|last=Parkin|first=Simon|date=June 25, 2014|magazine=Edge|url-status=dead|archive-url=https://web.archive.org/web/20141129031500/http://www.edge-online.com/features/a-history-of-videogame-hardware-playstation-2/|archive-date=November 29, 2014|access-date=March 5, 2015}} 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.{{sfn|Kent|2001|pages=563, 574}}{{cite book|title=High Score!: The Illustrated History of Electronic Games|last1=DeMaria|first1=Rusel|last2=Wilson|first2=Johnny L.|publisher=McGraw-Hill/Osborne|year=2004|isbn=978-0-07-223172-4|page=313}}{{cite magazine|url=http://www.edge-online.com/features/a-history-of-videogame-hardware-xbox/|title=A history of videogame hardware: Xbox|last=Parkin|first=Simon|date=June 27, 2014|magazine=Edge|archive-url=https://web.archive.org/web/20141121024245/http://www.edge-online.com/features/a-history-of-videogame-hardware-xbox/|archive-date=November 21, 2014|url-status=dead|access-date=March 5, 2015}} Sega's initial momentum proved fleeting as US Dreamcast sales—which exceeded 1.5 million by the end of 1999{{cite web|url=http://news.cnet.com/Segas-sales-fly-despite-business-woes/2100-1040_3-235509.html|title=Sega's sales fly despite business woes|last=Davis|first=Jim|date=January 2, 2002|website=CNET|archive-url=https://web.archive.org/web/20141031031716/http://news.cnet.com/Segas-sales-fly-despite-business-woes/2100-1040_3-235509.html|archive-date=October 31, 2014|url-status=live|access-date=October 30, 2014}}—began to decline as early as January 2000.{{sfn|Kent|2001|page=566}} 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.{{cite web|title=Sega Corporation Annual Report 2000|url=http://www.segasammy.co.jp/english/ir/pdf/ir/kako/sega_AR_all_2000.pdf|publisher=Sega|url-status=dead|archive-url=https://web.archive.org/web/20070925210504/http://www.segasammy.co.jp/english/ir/pdf/ir/kako/sega_AR_all_2000.pdf|archive-date=September 25, 2007|access-date=December 9, 2014}}{{cite news|url=http://news.bbc.co.uk/2/hi/business/659554.stm|title=Sega warns of losses|date=February 28, 2000|work=BBC News|access-date=November 10, 2013|archive-url=https://web.archive.org/web/20131111081448/http://news.bbc.co.uk/2/hi/business/659554.stm|archive-date=November 11, 2013|url-status=live}} 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. At the same time, worsening conditions reduced the profitability of Sega's Japanese arcade business, prompting the closure of 246 locations.{{sfn|Kent|2001|page=582}}

Moore became the president and chief operating officer of Sega of America on May 8, 2000.{{Cite web |last1=Kennedy |first1=Sam |last2=Trueman |first2=Doug |date=May 8, 2000 |title=Sega announced new president, COO Peter Moore |url=https://www.gamespot.com/articles/sega-announced-new-president-coo-peter-moore/1100-2565545/ |access-date=July 3, 2022 |website=GameSpot |language=en-US}} 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.{{sfn|Kent|2001|pages=581, 588}} Moreover, Sega's attempts to spur Dreamcast sales through lower prices and cash rebates caused escalating financial losses.{{cite news|url=http://usatoday30.usatoday.com/tech/techreviews/games/2001-01-23-dreamcast.htm|title=Dreamcast may be discontinued, Sega says|date=January 24, 2001|newspaper=USA Today|archive-url=https://web.archive.org/web/20141225010445/http://usatoday30.usatoday.com/tech/techreviews/games/2001-01-23-dreamcast.htm|archive-date=December 25, 2014|url-status=live|access-date=December 9, 2014|agency=Associated Press}} In March 2001, Sega posted a consolidated net loss of ¥51.7 billion ($417.5 million).{{cite web|url=http://www.segasammy.co.jp/english/ir/library/pdf/printing_archive/2001/e_sega_annual_tuuki_2001.pdf|title=Sega Corporation Annual Report 2001|date=August 2001|publisher=Sega|page=22|archive-url=https://web.archive.org/web/20150924100120/http://www.segasammy.co.jp/english/ir/library/pdf/printing_archive/2001/e_sega_annual_tuuki_2001.pdf|archive-date=September 24, 2015|url-status=live|access-date=December 9, 2014}} 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.{{cite web|url=http://news.cnet.com/Old-PlayStation-tops-holiday-game-console-sales/2100-1040_3-249457.html|title=Old PlayStation tops holiday game console sales|last=Becker|first=David|date=March 2, 2002|website=CNET|archive-url=https://web.archive.org/web/20141031031819/http://news.cnet.com/Old-PlayStation-tops-holiday-game-console-sales/2100-1040_3-249457.html|archive-date=October 31, 2014|url-status=live|access-date=October 30, 2014}}{{sfn|Kent|2001|pages=585–588}} Eventually, Sony and Nintendo held 50 and 35 percent of the US video game market, while Sega held only 15 percent.

File:Sega Annual Income(Loss) 1993-2004.svg

CSK chairman Isao Okawa replaced Irimajiri as president of Sega on May 22, 2000.{{sfn|Kent|2001|pages=581–582}} Okawa had long advocated that Sega abandon the console business.{{sfn|Kent|2001|pages=577, 582}} Others shared this view; Sega co-founder David Rosen had "always felt it was a bit of a folly for them to be limiting their potential to Sega hardware", and Stolar had suggested Sega should have sold the company to Microsoft.{{cite magazine|last=Kent|first=Steven L.|author-link=Steven L. Kent|date=April 2001|title=A Few Words on Sega, From the Founder|magazine=Next Generation|volume=3|issue=4|page=9|ref=none}} 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 announced an official company name change from Sega Enterprises, Ltd. to Sega Corporation effective November 1, 2000, officially dropping the Sega Enterprises name used in Japan as well as transitioning to the Sega name used globally. Sega stated in a release that this was to display its commitment to its "network entertainment business".

On January 23, 2001, Japanese newspaper Nihon Keizai Shinbun reported that Sega would cease production of the Dreamcast and develop software for other platforms. After an initial denial, Sega released a press release confirming it was considering producing software for the PlayStation{{nbsp}}2 and Game Boy Advance as part of its "new management policy". On January 31, 2001, Sega announced the discontinuation of the Dreamcast after March 31 and the restructuring of the company as a "platform-agnostic" third-party developer.{{sfn|Kent|2001|pages=588–589}}{{cite web|url=http://www.gamespot.com/articles/sega-announces-drastic-restructuring/1100-2680518/|title=Sega announces drastic restructuring|last=Ahmed|first=Shahed|date=January 31, 2001|website=GameSpot|archive-url=https://web.archive.org/web/20150510200945/http://www.gamespot.com/articles/sega-announces-drastic-restructuring/1100-2680518/|archive-date=May 10, 2015|url-status=live|access-date=December 9, 2014}} Sega also announced a Dreamcast price reduction to eliminate its unsold inventory, estimated at 930,000 units as of April 2001.{{cite web|url=https://www.segasammy.co.jp/english/ir/release/pdf/past/sega/2002/20011030.pdf|title=Revisions to Annual Results Forecasts|date=October 23, 2001|publisher=Sega|page=4|archive-url=https://web.archive.org/web/20150726015556/https://www.segasammy.co.jp/english/ir/release/pdf/past/sega/2002/20011030.pdf|archive-date=July 26, 2015|url-status=dead|access-date=November 4, 2015}}{{cite magazine|date=April 2001|title=Sega pulls plug on Dreamcast|magazine=Next Generation|volume=3|issue=4|pages=7–9}} This was followed by further reductions to clear the remaining inventory.{{cite web|url=http://www.gamespot.com/articles/sega-drops-dreamcast-price-again/1100-2826685/|title=Sega drops Dreamcast price again|last=Ahmed|first=Shahed|date=May 17, 2006|website=GameSpot|archive-url=https://web.archive.org/web/20151102005656/http://www.gamespot.com/articles/sega-drops-dreamcast-price-again/1100-2826685/|archive-date=November 2, 2015|url-status=live|access-date=December 9, 2014}}{{cite magazine|date=March 2002|title=Sega Ships the 'Dreamlast'|magazine=GamePro|volume=14|issue=162|page=30}} 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.{{cite magazine|date=April 2002|title=Dreamcast Collector's Edition Giveaway|magazine=GamePro|volume=14|issue=163|page=117}}

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.{{sfn|Kent|2001|pages=582, 589}}{{cite web|url=http://edition.cnn.com/2001/BUSINESS/asia/03/18/tokyo.okawalegacy/index.html|title=Late Sega exec leaves legacy, new leadership|last=Stout|first=Kristie Lu|date=March 19, 2001|publisher=CNN|archive-url=https://web.archive.org/web/20140330062832/http://edition.cnn.com/2001/BUSINESS/asia/03/18/tokyo.okawalegacy/index.html|archive-date=March 30, 2014|url-status=dead|access-date=October 31, 2014}} He held failed talks with Microsoft about a sale or merger with their Xbox division. According to former Microsoft executive Joachim Kempin, Microsoft founder, Bill Gates, decided against acquiring Sega because "he didn't think that Sega had enough muscle to eventually stop Sony".{{cite web |last1=Phillips |first1=Tom |title=Microsoft mulled Sega buyout before deciding company 'didn't have enough muscle to stop Sony' |url=https://www.eurogamer.net/articles/2013-02-08-microsoft-mulled-sega-buy-out-before-deciding-company-didnt-have-enough-muscle-to-stop-sony |website=Eurogamer |access-date=April 30, 2020 |date=February 8, 2013 |archive-url=https://web.archive.org/web/20200207044936/https://www.eurogamer.net/articles/2013-02-08-microsoft-mulled-sega-buy-out-before-deciding-company-didnt-have-enough-muscle-to-stop-sony |archive-date=February 7, 2020 |url-status=live }} A business alliance with Microsoft was announced whereby Sega would develop 11 games for the Xbox.{{Cite web|date=March 30, 2001|title=Sega and Microsoft Team Up for Strategic Xbox Alliance|url=https://news.microsoft.com/2001/03/30/sega-and-microsoft-team-up-for-strategic-xbox-alliance/|access-date=July 27, 2020|website=Stories|language=en-US}} As part of the restructuring, nearly one third of Sega's Tokyo workforce was laid off in 2001.{{cite magazine|url=http://www.edge-online.com/features/sega-blue-sky-company/|title=Sega: The Blue Sky Company|date=May 31, 2007|magazine=Edge|archive-url=https://web.archive.org/web/20141129025823/http://www.edge-online.com/features/sega-blue-sky-company/|archive-date=November 29, 2014|url-status=dead|access-date=March 5, 2015}} 2002 was Sega's fifth consecutive fiscal year of net losses.

After Okawa's death, Hideki Sato, a 30-year Sega veteran who had worked on Sega's consoles, became the company president. Following poor sales in 2002, Sega cut its profit forecast for 2003 by 90 percent, and explored opportunities for mergers. In 2003, Sega began talks with Sammy Corporation–a pachinko and pachislot manufacturing company–and Namco. The president of Sammy, Hajime Satomi, had been mentored by Okawa and was previously asked to be CEO of Sega.{{Cite web|title=CNBC Transcript: Haruki Satomi, President, Sega Sammy Holdings|url=https://www.cnbc.com/2018/05/03/cnbc-transcript-haruki-satomi-president-sega-sammy-holdings.html|website=CNBC|date=May 4, 2018}} 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.Horowitz 2018, pp. 253–257

In 2003, Sato and COO Tetsu Kamaya stepped down. Sato was replaced by Hisao Oguchi, the head of the Sega studio Hitmaker.{{Cite news|url=https://www.gamesindustry.biz/articles/sega-reports-a-profit-but-top-execs-step-down|title=Sega reports a profit, but top execs step down|last=Fahey|first=Rob|date=May 20, 2003|work=GamesIndustry.biz|access-date=July 11, 2018|archive-url=https://web.archive.org/web/20180711093416/https://www.gamesindustry.biz/articles/sega-reports-a-profit-but-top-execs-step-down|archive-date=July 11, 2018|url-status=live|language=en}} 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.{{Cite web|last=Sarkar|first=Samit|date=April 7, 2017|title=Peter Moore recalls the last straw that convinced him to leave Sega|url=https://www.polygon.com/2017/4/7/15222852/peter-moore-sega-yuji-naka|access-date=July 27, 2020|website=Polygon|language=en}} Hideaki Irie, who had worked at Agetec and ASCII, became the new president and COO of Sega of America in October 2003.{{Cite web|date=October 1, 2003|title=SEGA of America Announces New President and COO|url=https://www.businesswire.com/news/home/20031001005296/en/SEGA-America-Announces-New-President-COO|access-date=July 27, 2020|website=www.businesswire.com|language=en}}

File:Sega Sammy Holdings logo.svg (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.{{Cite web|title=Sammy buys huge stake in Sega; takeover on the cards|url=https://www.gamesindustry.biz/articles/sammy-buys-huge-stake-in-sega-takeover-on-the-cards|last=Fahey|first=Rob|date=December 8, 2003|website=GamesIndustry.biz|url-status=live|archive-url=https://web.archive.org/web/20180724002301/https://www.gamesindustry.biz/articles/sammy-buys-huge-stake-in-sega-takeover-on-the-cards|archive-date=July 24, 2018|access-date=May 7, 2020}} 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. Successful console games during this period include entries in the Sonic the Hedgehog, Puyo Puyo, Virtua Fighter, Super Monkey Ball, Phantasy Star Online and Sakura Wars franchises.{{cite web |url=https://www.segasammy.co.jp/cms/wp-content/uploads/pdf/en/ir/e_sega_kessan_tuuki_2004.pdf |title=Sega Corporation Consolidated Financial Results for the Year Ended March 31, 2004 |publisher=Sega Corporation |page=5 |access-date=January 20, 2025}}{{cite web |url=https://www.segasammy.co.jp/cms/wp-content/uploads/pdf/en/ir/e_sega_kessan_tuuki_2003.pdf |title=Sega Corporation Consolidated Financial Results for the Year ended March 31, 2003 |publisher=Sega Corporation |page=9 |access-date=January 20, 2025}} 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,{{cite web|url=http://www.gamespot.com/articles/sammy-reveals-new-logo-changes-at-sega/1100-6099624/|title=Sammy reveals new logo, changes at Sega|last=Niizumi|first=Hirohiko|date=June 1, 2004|website=GameSpot|archive-url=https://web.archive.org/web/20180828001811/https://www.gamespot.com/articles/sammy-reveals-new-logo-changes-at-sega/1100-6099624/|archive-date=August 28, 2018|url-status=live|access-date=November 16, 2016}} while Sammy feared stagnation and over-reliance of its highly profitable pachislot and pachinko machine business and wanted to diversify.{{cite web|title=Sega Sammy Holdings Annual Report 2005|url=http://www.segasammy.co.jp/english/ir/library/pdf/printing_annual/2005/e_2005_annual.pdf|date=September 5, 2005|publisher=Sega Sammy Holdings|url-status=live|archive-url=https://web.archive.org/web/20160304062524/http://www.segasammy.co.jp/english/ir/library/pdf/printing_annual/2005/e_2005_annual.pdf|archive-date=March 4, 2016|access-date=November 16, 2016}} Sammy acquired the remaining percentages of Sega, completing a takeover.{{Cite web|title=Sammy set to complete Sega takeover with full buy-out|url=https://www.gamesindustry.biz/articles/sammy-set-to-complete-sega-takeover-with-full-buy-out|last=Fahey|first=Rob|date=May 18, 2004|website=GamesIndustry.biz|url-status=live|archive-url=https://web.archive.org/web/20200517211209/https://www.gamesindustry.biz/articles/sammy-set-to-complete-sega-takeover-with-full-buy-out|archive-date=May 17, 2020|access-date=May 7, 2020}} The stock swap deal valued Sega between $1.45 billion and $1.8 billion.{{Cite web|title=Sammy to Buy Sega for $1.8 Billion|url=https://www.wsj.com/articles/SB108486546347614331|last=Dvorak|first=Phred|date=May 19, 2004|website=The Wall Street Journal|url-status=live|archive-url=https://web.archive.org/web/20180209073540/https://www.wsj.com/articles/SB108486546347614331|archive-date=February 9, 2018|access-date=May 7, 2020}} 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).{{cite web|url=http://www.segasammy.co.jp/english/ir/finance/profits.html|title=Earnings information|publisher=Sega Sammy Holdings|archive-url=https://web.archive.org/web/20160601035107/https://www.segasammy.co.jp/english/ir/finance/profits.html|archive-date=June 1, 2016|url-status=live|access-date=November 16, 2016}}

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.{{cite web |title=Sega Sammy Holdings – Annual Report 2007 |url=https://www.segasammy.co.jp/english/ir/library/pdf/printing_annual/2007/e_2007_annual.pdf |url-status=live |archive-url=https://web.archive.org/web/20160330014101/http://www.segasammy.co.jp/english/ir/library/pdf/printing_annual/2007/e_2007_annual.pdf |archive-date=March 30, 2016 |access-date=May 7, 2015 |publisher=Sega Sammy Holdings |page=36}} 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.Horowitz 2018, pp. 251–252 The cabinet was too expensive and the game did not entice casual users which are essential to the western arcade market.{{Cite web |title=Arcade Belgium - Shinichi Ogasawara (Senior Game Designer, Sega) interview (18/04/2021) (en) |url=https://www.arcadebelgium.be/ab.php?r=art&p=int003 |access-date=November 17, 2023 |website=www.arcadebelgium.be}} 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.{{Cite web |last=Zangirolami |first=Marco |date=December 16, 2016 |title=T3 Interview: CEO of Sega Amusements International Paul Williams |url=https://www.t3.com/us/features/t3-interview-ceo-of-sega-amusements-international-paul-williams |access-date=June 27, 2021 |website=T3}}

In 2005, the GameWorks chain of arcades came under the sole ownership of Sega, which previously was shared with Vivendi Universal,{{Cite web |last=Rose |first=Alan |date=November 4, 2005 |title=SEGA acquires struggling GameWorks |url=https://www.engadget.com/2005-11-04-sega-acquires-struggling-gameworks.html |access-date=July 4, 2020 |website=Engadget |language=en}} and remained under their ownership until 2011.{{Cite web|title=Sega Sells Gameworks To Investors Blooloop|url=https://blooloop.com/link/sega-sells-gameworks-to-investors/|access-date=July 4, 2020|website=Blooloop|archive-date=July 6, 2020|archive-url=https://web.archive.org/web/20200706124501/https://blooloop.com/link/sega-sells-gameworks-to-investors/|url-status=dead}} In 2009, Sega Republic, an indoor theme park, opened in Dubai.{{Cite web|author=Staff Writer|title=Sega Republic to open as major new attraction - eb247 - Companies And Markets - Retail - Emirates24{{!}}7|url=https://www.emirates247.com/eb247/companies-markets/retail/sega-republic-to-open-as-major-new-attraction-2009-08-21-1.30495|access-date=July 4, 2020|website=www.emirates247.com|date=August 21, 2009 |language=en}} Sega gradually reduced its arcades from 450 in 2005 to around 200 in 2015. Arcade machine sales incurred higher profits than the company's console, mobile and PC games on a year-to-year basis until the fiscal year of 2014.

In order to drive growth in western markets, Sega announced new leadership for Sega of America and Sega Europe in 2005. Simon Jeffery became president and COO of Sega of America, and Mike Hayes president and COO for Sega Europe.{{Cite web |last=Bloodworth |first=Daniel |date=January 21, 2005 |title=Sega Combines US and European Management - News |url=http://www.nintendoworldreport.com/news/10232/sega-combines-us-and-european-management |access-date=July 27, 2020 |website=Nintendo World Report}} In 2009, Hayes became president of the combined outfit of both Sega of America and Sega Europe, due to Jeffery leaving.{{Cite web|date=June 20, 2009|title=Hayes set for global Sega role {{!}} Gaming Industry {{!}} MCV|url=http://www.mcvuk.com/news/34736/Hayes-set-for-global-Sega-rolern|archive-url=https://web.archive.org/web/20090620152141/http://www.mcvuk.com/news/34736/Hayes-set-for-global-Sega-rolern|url-status=dead|archive-date=June 20, 2009|access-date=July 27, 2020}} 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.{{efn|Attributed to multiple references:{{Cite web |last=McWhertor |first=Michael |date=August 7, 2008 |title=Sega Hits It Big In Japan With Phantasy Star Portable |url=https://kotaku.com/sega-hits-it-big-in-japan-with-phantasy-star-portable-5034374 |access-date=October 26, 2022 |website=Kotaku}}{{Cite web |last=Rose |first=Mike |date=November 17, 2011 |title=Rhythm Game Hatsune Miku: Project Diva Extend Tops Japanese Cha |url=https://www.gamedeveloper.com/business/rhythm-game-i-hatsune-miku-project-diva-extend-i-tops-japanese-charts |access-date=October 26, 2022 |website=Game Developer }}{{Cite web |last=Sahdev |first=Ishaan |date=December 16, 2012 |title=Yakuza 5 Sales Remain Relatively Stable In Japan |url=https://www.siliconera.com/yakuza-5-sales-remain-relatively-stable-in-japan/ |access-date=October 26, 2022 |website=Siliconera |language=en-US}}{{cite web |url=https://www.segasammy.co.jp/cms/wp-content/uploads/pdf/en/ir/201503_4q_tanshin_e_final.pdf |title=Ｆlash Report: Consolidated Financial Statements［Japanese GAAP］|publisher=Sega Sammy Holdings Inc. |date=May 11, 2015 |page=6, Mention of Phantasy Star Online 2 |access-date=January 20, 2025}}}} Sega began providing the 3D imaging for Hatsune Miku holographic concerts in 2010. Sega also distributes games from smaller Japanese game developers and sells localizations of Western games in Japan. In 2013, Index Corporation was purchased by Sega Sammy after going bankrupt.{{cite news|url=https://www.bloomberg.com/news/2013-09-18/sega-said-to-win-auction-to-buy-bankrupt-japan-gamemaker-index.html|title=Sega Said to Win Auction to Buy Bankrupt Japan Gamemaker Index|last1=Sato|first1=Shigeru|date=September 17, 2013|publisher=Bloomberg News|access-date=September 18, 2013|last2=Hyuga|first2=Takahiko|archive-url=https://web.archive.org/web/20130922052951/http://www.bloomberg.com/news/2013-09-18/sega-said-to-win-auction-to-buy-bankrupt-japan-gamemaker-index.html|archive-date=September 22, 2013|url-status=live}} The year before, Sega signed a deal to distribute Atlus titles in Japan.{{Cite web |last=Rose |first=Mike |date=February 17, 2012 |title=Sega to distribute Atlus games in Japan from April |url=https://www.gamedeveloper.com/business/sega-to-distribute-atlus-games-in-japan-from-april |access-date=August 13, 2022 |website=Game Developer |language=en}} 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. Atlus is known for the Persona and Megami Tensei series.{{Cite web |last=Handrahan |first=Matthew |date=September 18, 2013 |title=Sega confirms Atlus acquisition |url=https://www.gamesindustry.biz/sega-confirms-atlus-acquisition |access-date=February 18, 2025 |website=GamesIndustry.biz |language=en}} The Sonic the Hedgehog games had grossed over {{US$|5 billion|long=no}} in sales by 2014.{{cite web |last=Gaudiosi |first=John |date=July 9, 2014 |title=Sonic the Hedgehog still running fast for Sega |url=http://fortune.com/2014/07/09/sonic-the-hedgehog-sega/ |url-status=live |archive-url=https://web.archive.org/web/20190528202524/http://fortune.com/2014/07/09/sonic-the-hedgehog-sega/ |archive-date=May 28, 2019 |magazine=Fortune}}

In the mobile market, Sega released its first app on the iTunes Store with a version of Super Monkey Ball for iOS in 2008.{{Cite web|last1=Cohen|first1=Peter|last2=Macworld {{!}}|date=July 11, 2008|title=Review: Super Monkey Ball for iPhone|url=https://www.macworld.com/article/1134452/supermonkeyball.html|access-date=July 4, 2020|website=Macworld|language=en}} Due in part to the decline of packaged game sales worldwide in the 2010s, Sega began layoffs and closed five offices based in Europe and Australia on July 1, 2012. This was to focus on the digital game market, such as personal computers and mobile devices. In 2012, Sega also began acquiring studios for mobile development, studios such as Hardlight, Three Rings Design, and Demiurge Studios becoming fully owned subsidiaries.{{cite web|title=Sega acquires Demiurge Studios, but not its best-known game, Marvel Puzzle Quest|url=http://www.polygon.com/2015/2/19/8069443/sega-networks-acquires-demiurge-studios-investments-west|last=Sarkar|first=Samit|date=February 19, 2015|website=Polygon|url-status=live|archive-url=https://web.archive.org/web/20180912091848/https://www.polygon.com/2015/2/19/8069443/sega-networks-acquires-demiurge-studios-investments-west|archive-date=September 12, 2018|access-date=February 19, 2015}}{{cite web|url=http://www.gamasutra.com/view/news/267291/Segas_Western_mobile_division_hit_with_layoffs.php|title=Sega's Western mobile division hit with layoffs|last=Kerr|first=Chris|date=March 4, 2016|website=Gamasutra|archive-url=https://web.archive.org/web/20170118063733/http://www.gamasutra.com/view/news/267291/Segas_Western_mobile_division_hit_with_layoffs.php|archive-date=January 18, 2017|url-status=dead|access-date=January 17, 2017}}{{cite web|title=From Sonic Jump to Speed Battle: The story of Sega Hardlight|url=https://www.pocketgamer.biz/profile/66972/sega-hardlight-studio-profile/|last=Cowley|first=Ric|date=November 20, 2017|website=PocketGamer.biz|url-status=live|archive-url=https://web.archive.org/web/20180912022136/https://www.pocketgamer.biz/profile/66972/sega-hardlight-studio-profile/|archive-date=September 12, 2018|access-date=September 11, 2018}} 19 older mobile games were pulled due to quality concerns in May 2015.{{cite web|url=http://blogs.sega.com/2015/05/08/sega_mobile_game_closures/|title=SEGA Mobile Game Closures|publisher=Sega|archive-url=https://web.archive.org/web/20150510071803/http://blogs.sega.com/2015/05/08/sega_mobile_game_closures/|archive-date=May 10, 2015|url-status=live|access-date=May 9, 2015}}{{cite web|title=SEGA Removing Games From Mobile Catalog that Fail to Meet Quality Standards|url=https://uk.ign.com/articles/2015/05/08/sega-removing-games-from-mobile-catalog-that-fail-to-meet-quality-standards|last=Rad|first=Chloi|date=May 8, 2015|website=IGN|url-status=live|archive-url=https://web.archive.org/web/20150518171338/http://www.ign.com/articles/2015/05/08/sega-removing-games-from-mobile-catalog-that-fail-to-meet-quality-standards|archive-date=May 18, 2015|access-date=May 10, 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.{{cite web|url=http://sega-games.co.jp/company/about/|script-title=ja:事業内容｜株式会社セガゲームス|trans-title=Entreprise ｜ SEGA Games Co., Ltd.|publisher=Sega|language=ja|archive-url=https://web.archive.org/web/20150518081117/http://sega-games.co.jp/company/about/|archive-date=May 18, 2015|url-status=live|access-date=May 15, 2015}} The same year, Sega Entertainment was established for Sega's amusement facility business. In January 2015, Sega of America announced its relocation from San Francisco to Atlus USA's headquarters in Irvine, California, which was completed later that year.{{cite web|url=http://www.businesswire.com/news/home/20150129006720/en/SEGA-America-Relocates-Southern-California|title=SEGA of America Relocates to Southern California|date=January 30, 2015|website=Business Wire|archive-url=https://web.archive.org/web/20170322203538/http://www.businesswire.com/news/home/20150129006720/en/SEGA-America-Relocates-Southern-California|archive-date=March 22, 2017|url-status=live|access-date=March 22, 2017}} 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.{{cite web|title=Balance sheets information｜Financial Information｜Investor Relations｜SEGA SAMMY HOLDINGS|url=http://www.segasammy.co.jp/english/ir/finance/balance.html|publisher=Sega Sammy Holdings|url-status=live|archive-url=https://web.archive.org/web/20170819183156/http://www.segasammy.co.jp/english/ir/finance/balance.html|archive-date=August 19, 2017|access-date=February 4, 2015}}

{{Infobox company

|name = Sega Interactive Co., Ltd.

|logo = SegaInteractive2015.svg

|native_name = 株式会社セガ・インタラクティブ

|native_name_lang = ja

|romanized_name = Kabushiki-gaisha Sega Intarakutibu

|type = Subsidiary

|fate = Merged with Sega Games

|founded = {{Start date and age|2015|04|01}}

|defunct = {{End date and age|2020|03|31}}

|divisions = Sega AM1
Sega AM2

|products = Arcade games
Arcade systems

|subsid = Sega Logistics Services
Sega Amusements International

|hq_location = Nishi-Shinagawa

|hq_location_city = Shinagawa, Tokyo

|hq_location_country = Japan

}}

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.{{cite magazine|url=http://www.famitsu.com/news/201507/20082607.html|title=セガゲームス始動！代表取締役社長CEO里見治紀氏に訊く新会社設立の意図と将来像|trans-title=Sega Games started! Interview with Haruki Satomi, President and CEO|date=July 20, 2015|magazine=Famitsu|language=ja|archive-url=https://web.archive.org/web/20150828064709/http://www.famitsu.com/news/201507/20082607.html|archive-date=August 28, 2015|url-status=live|access-date=September 9, 2015}}{{cite web|url=https://www.segasammy.co.jp/english/pr/corp/profile.html|title=Executive Profile | SEGA SAMMY Group | SEGA SAMMY HOLDINGS|publisher=Sega Sammy Holdings|archive-url=https://web.archive.org/web/20150919091829/http://www.segasammy.co.jp/english/pr/corp/profile.html|archive-date=September 19, 2015|url-status=live|access-date=September 9, 2015}} As a result, Sega Corporation rebranded itself to {{Nihongo foot|Sega Games Co., Ltd.|株式会社セガゲームス|Kabushiki-gaisha Sega Gēmuzu|group=lower-alpha}} and continued to manage home video games, while {{Nihongo foot|Sega Interactive Co., Ltd.|株式会社セガ・インタラクティブ|Kabushiki-gaisha Sega Intarakutibu|group=lower-alpha}} was founded to take control of the arcade division.{{cite web|url=https://www.segasammy.co.jp/english/pr/corp/history/|title=History of SEGA SAMMY group|publisher=Sega Sammy Holdings|archive-url=https://web.archive.org/web/20190331220100/https://www.segasammy.co.jp/english/pr/corp/history/|archive-date=March 31, 2019|url-status=live|access-date=March 8, 2019}} Sega Networks merged with Sega Games in 2015. At the Tokyo Game Show in September 2016, Sega announced that it had acquired the intellectual property and development rights to all games developed and published by Technosoft.{{cite web|title=［TGS 2016］「サンダーフォースIII」の立体視リメイクが「セガ3D復刻アーカイブス3」に収録。セガゲームスによるテクノソフト全タイトルの権利取得も発表|trans-title=[TGS 2016] Stereoscopic remake of "Thunder Force III" is included in "SEGA 3D Reprint Archives 3". Sega Games also announced acquisition of rights for all technosoft titles|url=http://www.4gamer.net/games/355/G035505/20160917017/|date=September 17, 2016|website=4Gamer.net|language=ja|url-status=live|archive-url=https://web.archive.org/web/20160920134641/http://www.4gamer.net/games/355/G035505/20160917017/|archive-date=September 20, 2016|access-date=October 24, 2018}} 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.{{Cite web|date=October 31, 2016|title=セガサミー、「ジョイポリス」を香港企業に売却|url=https://www.nikkei.com/article/DGXLASDZ31H5F_R31C16A0000000/|access-date=June 27, 2021|website=日本経済新聞|language=ja}}

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.{{cite web|url=http://www.segasammy.co.jp/english/pdf/release/20170403_honsha_final_e_.pdf|title=Consolidation/Relocation of Head Office Functions of SEGA SAMMY Group|publisher=Sega Sammy Holdings|date=April 3, 2017|access-date=April 4, 2017|archive-url=https://web.archive.org/web/20170404220020/http://www.segasammy.co.jp/english/pdf/release/20170403_honsha_final_e_.pdf|archive-date=April 4, 2017|url-status=live}} Sega's previous headquarters in Ōta was sold in 2019.{{cite web|url=https://www.siliconera.com/2019/02/24/players-say-goodbye-as-old-sega-headquarters-finally-sold-off-for-eventual-reconstruction/|title=Players Say Goodbye As Old Sega Headquarters Finally Sold Off For Eventual Reconstruction|last1=Wong|first1=Alistair|date=February 24, 2019|website=Siliconera|archive-url=https://web.archive.org/web/20190308223826/https://www.siliconera.com/2019/02/24/players-say-goodbye-as-old-sega-headquarters-finally-sold-off-for-eventual-reconstruction/|archive-date=March 8, 2019|url-status=live|access-date=March 8, 2019}}

In June 2017, Chris Bergstresser replaced Jurgen Post as president and COO of Sega Europe.{{Cite magazine|date=August 3, 2017|title=Chris Bergstresser becomes Sega Europe COO and President|url=https://www.mcvuk.com/business-news/publishing/chris-bergstresser-becomes-sega-europe-coo-and-president/|access-date=July 28, 2020|magazine=MCV/DEVELOP|language=en-GB}} In June 2018, Gary Dale, formerly of Rockstar Games and Take-Two Interactive, replaced Chris Bergstresser as president and COO of Sega Europe.{{Cite magazine|title=Sega Europe announces ex-Rockstar COO Gary Dale as new president|url=https://www.mcvuk.com/business-news/publishing/sega-europe-announces-ex-rockstar-coo-gary-dale-as-new-president/|last=Barton|first=Seth|date=June 28, 2018|magazine=MCV/Develop|url-status=live|archive-url=https://web.archive.org/web/20200517211609/https://www.mcvuk.com/business-news/publishing/sega-europe-announces-ex-rockstar-coo-gary-dale-as-new-president/|archive-date=May 17, 2020|access-date=May 16, 2020}} 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.{{cite web|title=Sega of America taps THQ, Acclaim vet Ian Curran as new president and COO|url=https://venturebeat.com/2018/08/01/sega-of-america-makes-thq-acclaim-vet-ian-curran-as-new-president-and-coo/|last1=Minotti|first1=Mike|date=August 1, 2018|website=VentureBeat|url-status=live|archive-url=https://web.archive.org/web/20180802013051/https://venturebeat.com/2018/08/01/sega-of-america-makes-thq-acclaim-vet-ian-curran-as-new-president-and-coo/|archive-date=August 2, 2018|access-date=August 3, 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.{{Cite web|last=McAloon|first=Alissa|url=https://www.gamedeveloper.com/production/sega-credits-strong-localizations-for-jump-in-worldwide-game-sales|title=Sega credits strong localizations for jump in worldwide game sales|website=Gamasutra|date=October 16, 2018|access-date=April 19, 2020|url-status=live|archive-url=https://web.archive.org/web/20181020055310/http://gamasutra.com/view/news/328749/Sega_credits_strong_localizations_for_jump_in_worldwide_game_sales.php|archive-date=October 20, 2018}}

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,{{cite web|url=https://www.ign.com/articles/2019/05/01/sega-refocusing-on-existing-ip-in-response-to-falling-profits|title=Sega Refocusing on Existing IP in Response to Falling Profits|last=Bankhurst|first=Adam|date=May 1, 2019|website=IGN|archive-url=https://web.archive.org/web/20190509192408/https://www.ign.com/articles/2019/05/01/sega-refocusing-on-existing-ip-in-response-to-falling-profits|archive-date=May 9, 2019|url-status=live|access-date=May 9, 2019}}{{cite web |title=FY Ended March 2019 Full Year Results Presentation |url=https://www.segasammy.co.jp/english/ir/library/pdf/settlement/2019/201903_4q_siryo_2019426_final_e.pdf |website=segasammy.co.jp |publisher=SEGA SAMMY HOLDINGS INC |date=April 26, 2019 |access-date=June 3, 2020 |archive-date=September 18, 2020 |archive-url=https://web.archive.org/web/20200918162851/https://www.segasammy.co.jp/english/ir/library/pdf/settlement/2019/201903_4q_siryo_2019426_final_e.pdf |url-status=dead }} which was released in September 2019.{{Cite web|title=Everything You Need to Know About the SEGA Genesis Mini: Where to Preorder, Full Game List, and What's In the Box|url=https://www.ign.com/articles/sega-genesis-mini-release-date-preorder-games|last=Macy|first=Seth|date=September 16, 2019|website=IGN|url-status=live|archive-url=https://web.archive.org/web/20191119142303/https://www.ign.com/articles/sega-genesis-mini-release-date-preorder-games|archive-date=November 19, 2019|access-date=May 17, 2020}} In May 2019, Sega acquired Two Point Studios, known for Two Point Hospital.{{cite web|url=https://www.gamesindustry.biz/articles/2019-05-09-sega-acquires-two-point-studios|title=Sega acquires Two Point Studios|last=Sinclair|first=Brendan|date=May 9, 2019|website=GamesIndustry.biz|archive-url=https://web.archive.org/web/20190509115733/https://www.gamesindustry.biz/articles/2019-05-09-sega-acquires-two-point-studios|archive-date=May 9, 2019|url-status=live|access-date=May 9, 2019}}{{cite web|url=https://www.eurogamer.net/articles/2019-05-09-sega-acquires-two-point-hospital-developer-two-point-studio|title=Sega acquires Two Point Hospital developer Two Point Studios|last=Wales|first=Matt|date=May 9, 2019|website=Eurogamer|archive-url=https://web.archive.org/web/20190509094041/https://www.eurogamer.net/articles/2019-05-09-sega-acquires-two-point-hospital-developer-two-point-studio|archive-date=May 9, 2019|url-status=live|access-date=May 9, 2019}}

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.{{Cite web|title=セガゲームスがセガに。セガサミーホールディングスが組織再編と一部連結子会社の商号変更を発表|trans-title=SEGA Games becomes SEGA. SEGA SAMMY HOLDINGS announces reorganization and change of trade names of some consolidated subsidiaries|url=https://www.4gamer.net/games/999/G999905/20191224082/|last=Matsumoto|first=Ryuichi|date=December 24, 2019|website=4Gamer.net|language=ja|url-status=live|archive-url=https://web.archive.org/web/20200125130535/https://www.4gamer.net/games/999/G999905/20191224082/|archive-date=January 25, 2020|access-date=December 24, 2019}} According to a company statement, the move was made to allow greater research and development flexibility.{{Cite web|url=https://www.segasammy.co.jp/english/pdf/release/20191224_reorganization_e_final.pdf|title=Notice of mergers between consolidated subsidiaries and changes in trade names of certain consolidated subsidiaries due to organizational restructuring in Entertainment Contents Business|date=December 24, 2019|publisher=Sega Sammy Holdings|url-status=live|archive-url=https://web.archive.org/web/20191224091004/https://www.segasammy.co.jp/english/pdf/release/20191224_reorganization_e_final.pdf|archive-date=December 24, 2019|access-date=April 3, 2020}} 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.{{cite web | url = https://www.gamesindustry.biz/articles/2020-04-02-demiurge-co-founder-buys-the-studio-back-from-sega | title = Demiurge co-founder buys the studio back from Sega | first = Brendan | last = Sinclair | date = April 2, 2020 | access-date = April 2, 2020 | work = GamesIndustry.biz | archive-url = https://web.archive.org/web/20200404111433/https://www.gamesindustry.biz/articles/2020-04-02-demiurge-co-founder-buys-the-studio-back-from-sega | archive-date = April 4, 2020 | url-status = live }}

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.{{Cite web |title=【アーカイブ】60周記念GOSEGAグッズ・イベント {{!}} 60周記念GOSEGAグッズ {{!}} セガ設立60周年特設サイト |url=https://www.sega.jp/special/60th/contents/ |access-date=February 19, 2025 |website=セガ設立60周年特設サイト |language=ja}} 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.{{cite web |last=Robinson |first=Martin |date=June 3, 2020 |title=Sega celebrates its 60th anniversary with a Game Gear Micro |url=https://www.eurogamer.net/articles/2020-06-03-sega-celebrates-its-60th-anniversary-with-a-game-gear-micro |access-date=June 3, 2020 |work=Eurogamer}}

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.{{cite news|url =https://www.gamesindustry.biz/articles/2020-08-05-segas-q1-games-performance-erased-by-impact-of-covid-19|title = Sega's strong Q1 games performance erased by impact of COVID-19|first=Matthew |last=Handrahar|date = August 5, 2020|access-date = November 4, 2020|newspaper= GamesIndustry.biz}} 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.{{cite web | url = https://www.gamesindustry.biz/articles/2020-11-04-sega-sammy-sells-arcade-business-sega-entertainment-to-genda-inc | title = Sega Sammy sells arcade business Sega Entertainment to Genda Inc | first= Rebekah | last= Valentine | date = November 4, 2020 | access-date = November 4, 2020 | work = GamesIndustry.biz }} By January 2022, Sega sold the remaining portion of this division to Genda.{{cite web | url =https://www.eurogamer.net/articles/2022-01-28-sega-quits-japanese-arcade-business-after-50-years | title = Sega quits Japanese arcade business after 50 years | first = Tom | last = Phillips | date = January 28, 2022 | access-date = January 28, 2022 | work = Eurogamer }} 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.{{Cite web |last=arcadehero |date=March 25, 2021 |title=The Future Of Sega Amusements International & The Sega Name In Arcades |url=https://arcadeheroes.com/2021/03/25/the-future-of-sega-amusements-international-the-sega-name-in-arcades/ |access-date=February 19, 2025 |website=Arcade Heroes |language=en-US}} Sega Group Corporation was formally dissolved by its parent company in 2021.

Contrasting its losses brought forth by amusement operations in 2020, sales and critical reception of Sega's home console games improved; Metacritic named Sega the best publisher of the year in 2020.{{cite web |title=11th Annual Game Publisher Rankings Summary Table |url=https://www.metacritic.com/feature/2021-game-publisher-rankings-summary-table |website=Metacritic |access-date=March 29, 2021 |date=March 25, 2021 |archive-date=January 25, 2022 |archive-url=https://web.archive.org/web/20220125030044/https://www.metacritic.com/feature/2021-game-publisher-rankings-summary-table |url-status=dead }} 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.{{cite web |last1=Dietz |first1=Jason |title=2021 Game Publisher Rankings – #1: Sega |url=https://www.metacritic.com/pictures/2021-game-publisher-rankings/31 |website=Metacritic |date=March 25, 2021 |access-date=March 30, 2021 |archive-date=January 25, 2022 |archive-url=https://web.archive.org/web/20220125030044/https://www.metacritic.com/pictures/2021-game-publisher-rankings/31 |url-status=dead }}{{cite news |last1=Blake |first1=Vikki |title=Sega is Metacritic's game publisher of the year |url=https://www.eurogamer.net/articles/2021-03-28-sega-is-metacritics-game-publisher-of-the-year |access-date=March 29, 2021 |work=Eurogamer |date=March 28, 2021}} Phantasy Star Online 2 was reported in 2021 to have made over 900 million dollars since its release in 2012.{{Cite web |date=August 6, 2021 |title=Phantasy Star Online 2 has made over $900 million in sales since 2012 |url=https://www.nintendo.destructoid.com/phantasy-star-online-2-has-made-over-900-million-in-sales-since-2012/ |url-status=dead |archive-url=https://web.archive.org/web/20221016091125/https://www.nintendo.destructoid.com/phantasy-star-online-2-has-made-over-900-million-in-sales-since-2012/ |archive-date=October 16, 2022 |access-date=October 16, 2022 |website=Destructoid - Nintendo |language=en-US}} 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.{{Cite web |title=Sega thinks its proposed "Super Game" could deliver over $600 million in lifetime sales |url=https://www.gamedeveloper.com/business/sega-thinks-its-proposed-super-game-could-deliver-over-600-million-in-lifetime-sales |access-date=February 18, 2025 |website=www.gamedeveloper.com |language=en}}{{Cite web |last=Vladisavljev |first=Vuk |date=February 18, 2025 |title=Echocalypse Codes (February 2025) |url=https://www.siliconera.com/echocalypse-codes/ |access-date=February 18, 2025 |website=Siliconera |language=en-US}}{{Cite web |date=November 29, 2024 |title=SEGA allocates $200 million to spend on Super Game initiative across next 3 years |url=https://www.tweaktown.com/news/101934/sega-allocates-200-million-to-spend-on-super-game-initiative-across-next-3-years/index.html |access-date=February 19, 2025 |website=TweakTown |language=en-US}} In 2023, Sega acquired the Finnish video game developer Rovio Entertainment, best known for the Angry Birds series, for US$776 million.{{cite web |last1=Bonk |first1=Lawrence |title=Sega completes purchase of Rovio for $776 million |url=https://www.engadget.com/sega-completes-purchase-of-rovio-for-776-million-191525883.html |website=Engadget |access-date=September 6, 2023 |date=August 18, 2023}} Rovio will help Sega to continue to build their mobile presence worldwide.{{Cite web |last=arcadehero |date=March 31, 2023 |title=Sega Amusements International Celebrates 40 Years In Business |url=https://arcadeheroes.com/2023/03/31/sega-amusements-international-celebrates-40-years-in-business/ |access-date=February 19, 2025 |website=Arcade Heroes |language=en-US}}

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.{{cite news|last=Carpenter|first=Nicole|title=Sega of America workers win union vote|url=https://www.polygon.com/23789856/sega-of-america-workers-win-union-vote-nlrb|work=Polygon|publisher=Vox Media|date=July 10, 2023}}{{cite news|last=Roscoe|first=Jules|title=SEGA of America Workers Vote to Unionize|work=Vice|url=https://www.vice.com/en/article/sega-of-america-workers-vote-to-unionize/|date=July 10, 2023}}

In May 2023, Sega announced that 121 employees at Relic Entertainment had been made redundant to focus on cored franchises.{{Cite web |last=Dring |first=Christopher |date=May 23, 2023 |title=Sega announces 121 redundancies at Relic Entertainment |url=https://www.gamesindustry.biz/sega-announces-121-redundancies-at-relic-entertainment |access-date=March 3, 2024 |website=GamesIndustry.biz |language=en}} That same year, Sega cancelled their upcoming shooter Hyenas and began restructuring its British and European operations.{{cite web|url=https://www.segasammy.co.jp/en/release/41070/|title=Notice regarding Implementation of Structural Reform in European Region and Recording of Losses|work=Sega Sammy|date=September 28, 2023|access-date=March 28, 2023}} 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.{{cite web |last1=Wood |first1=Austin |date=December 7, 2023 |title=Sega gives retro fans a heart attack with 5 game reveals at once: Jet Set Radio, Shinobi, Golden Axe, Streets of Rage, Crazy Taxi, "and more" |url=https://www.gamesradar.com/sega-gives-retro-fans-a-heart-attack-with-5-game-reveals-at-once-jet-set-radio-shinobi-golden-axe-streets-of-rage-crazy-taxi-and-more/ |access-date=December 8, 2023 |website=GamesRadar+}} The Washington Post characterized the announcement as a return to Sega's 1990s "bohemian" and "countercultural" spirit.{{Cite news |last=Park |first=Gene |date=December 8, 2023 |title=In reviving classic games, Sega channels its old bohemian spirit |url=https://www.washingtonpost.com/entertainment/video-games/2023/12/08/sega-reboots-crazy-taxi-jet-set-radio/ |access-date=January 10, 2024 |newspaper=The Washington Post}} 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 November 2023, AEGIS filed an unfair labor practice after Sega proposed a plan to phase out temporary employees by February 2024, which would affect around 80 employees.{{Cite web |last=McEvoy |first=Sophie |date=November 16, 2023 |title=Sega of America accused of threatening workers with mass layoffs over unionisation |url=https://www.gamesindustry.biz/sega-of-america-accused-of-threatening-workers-with-mass-layoffs-over-unionisation |access-date=March 3, 2024 |website=GamesIndustry.biz |language=en}}

In January 2024, Jurgen Post rejoined Sega Europe to become COO of its western studios and also serve as managing director.{{cite web|url=https://videogames.si.com/news/sega-europe-jurgen-post-return|title=Sega Europe brings back Jurgen Post in shake-up|date=January 2, 2024|access-date=March 28, 2024|work=Video Games by Sports Illustrated|first=Marco|last=Wutz}} 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.{{Cite web |last=Middler |first=Jordan |date=January 10, 2024 |title=Sega appoints Dreamcast and PSOne veteran Shuji Utsumi as new Western boss |url=https://www.videogameschronicle.com/news/sega-appoints-dreamcast-and-psone-veteran-shuji-utsumi-as-new-western-boss/ |access-date=January 10, 2024 |website=Video Games Chronicle |language=en-GB}} 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.{{Cite web |title=Notice regarding the Organizational Restructure in the Entertainment Contents Business (Absorption-type Demerger between consolidated subsidiaries and change of trade name of subsidiary)｜News Release｜SEGA SAMMY HOLDINGS |url=https://www.segasammy.co.jp/en/release/44213/ |access-date=January 9, 2024 |website=Notice regarding the Organizational Restructure in the Entertainment Contents Business (Absorption-type Demerger between consolidated subsidiaries and change of trade name of subsidiary)｜News Release｜SEGA SAMMY HOLDINGS |language=en}} On February 29, Sega appointed Justin Scarpone as an executive vice president of a group to expand Sega's presence in film and television.{{cite web |date=February 29, 2024 |title=SEGA Appoints New Executive to Lead Global Transmedia Strategy |url=https://www.sega.co.jp/en/release/240229_1.html?year=2024&category=1&page=1 |access-date=March 2, 2024 |work=Sega Corporation}}

In January 2024, Sega 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.{{Cite web |last=Dealessandri |first=Marie |date=January 31, 2024 |title=Sega of America to lay off 61 employees |url=https://www.gamesindustry.biz/sega-of-america-to-lay-off-61-employees |access-date=March 3, 2024 |website=GamesIndustry.biz |language=en}} On March 27, 2024, AEGIS announced that its workers had ratified a contract with Sega of America, focusing on key issues.{{cite web|url=https://www.polygon.com/24113444/sega-america-workers-union-contract-aegis|title=Sega of America workers ratify union contract, protecting 150 employees|work=Polygon|date=March 27, 2024|access-date=March 28, 2024}} 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.{{Cite web|url=https://www.segasammy.co.jp/en/release/47402/|title=Notice regarding Implementation of Structural Reform in European Region and Recording of Losses|date= March 28, 2024|work=Sega Sammy}}{{Cite web|title=Sega to Sell Relic Entertainment, Will Cut 240 Employees Across UK, Europe |url=https://variety.com/2024/gaming/news/sega-relic-entertainment-sale-layoffs-240-employees-1235954787/|first=Jennifer|last=Maas|date=March 28, 2024|work=Variety}} On November 8, Sega sold Amplitude Studios to its staff via a management buyout.{{cite web|url=https://www.gematsu.com/2024/11/sega-sells-amplitude-studios-to-members-of-internal-team|title=SEGA sells Amplitude Studios to members of internal team|date=November 8, 2024|first=Sal|last=Romano|work=Gematsu}} 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.{{Cite web |date=November 23, 2024 |title=Sonic X Shadow Generations Surpasses One Million Sales In Opening Weekend |url=https://www.nintendolife.com/news/2024/11/sonic-x-shadow-generations-surpasses-one-million-sales-in-opening-weekend#:~:text=It%20seems%20the%20game%20has,your%20continued%20and%20endless%20support.%22 |access-date=January 19, 2025 |website=Nintendo Life |language=en-GB}}{{Cite web |last=Dinsdale |first=Ryan |date=February 8, 2024 |title=Persona 3 Reload Becomes Fastest-Selling Game in Atlus History With 1 Million Sales |url=https://www.ign.com/articles/persona-3-reload-becomes-fastest-selling-game-in-atlus-history-with-1-million-sales |access-date=January 19, 2025 |website=IGN |language=en}}{{Cite web |last=Dinsdale |first=Ryan |date=February 2, 2024 |title=Like a Dragon: Infinite Wealth Sells 1 Million Copies |url=https://www.ign.com/articles/like-a-dragon-infinite-wealth-sells-1-million-copies |access-date=January 19, 2025 |website=IGN |language=en}} The Sonic the Hedgehog movie franchise made over 1 billion dollars.{{Cite web |last=Writer |first=Sophie McEvoy Staff |date=January 6, 2025 |title=Sonic movie franchise grosses over $1bn at global box office |url=https://www.gamesindustry.biz/sonic-movie-franchise-grosses-over-1bn-at-global-box-office#:~:text=Paramount%20Pictures'%20Sonic%20film%20franchise,its%20first%20week%20in%20cinemas. |access-date=February 18, 2025 |website=GamesIndustry.biz |language=en}}

In December 2024, the musician Johnny Gioeli sued Sega, seeking $1 million in damages and restitution for unauthorized use of "Live and Learn", the theme song of Sonic Adventure 2. Gioeli claims that he owns the composition and master recording and is owed payment for the song's usage in later games. As of 2024, "Live and Learn" had appeared in more than two dozen games and in the anime Sonic X. Gioeli said he hoped to settle the lawsuit amicably and maintain his "long-standing beautiful relationship with Sega".{{cite news |last1=Carpenter |first1=Nicole |title='Live and Learn' musician suing Sega over ownership of iconic Sonic the Hedgehog song |url=https://www.polygon.com/news/498953/sonic-music-live-and-learn-copyright-lawsuit-crush-40-sega |access-date=December 18, 2024 |work=Polygon |date=December 18, 2024}} The lawsuit is unrelated to the film Sonic the Hedgehog 3, which was released the same week and uses "Live and Learn" with Gioeli's permission.{{cite news |last1=Cripe |first1=Michael |title=Sonic 3 Will Feature Sonic Adventure 2's Beloved Song 'Live and Learn,' Band Confirms |url=https://www.ign.com/articles/sonic-3-will-feature-sonic-adventure-2s-beloved-song-live-and-learn-band-confirms |access-date=December 18, 2024 |work=IGN |date=February 7, 2024 |language=en}}

Since 2004, Sega has been a subsidiary of Sega Sammy Holdings. Sega's global headquarters are in Shinagawa, Tokyo, Japan.{{cite web|url=https://www.segasammy.co.jp/english/pdf/release/20180520%20segasammy_release_e.pdf|title=- Initiative towards Further Growth of Sega Sammy Group - Consolidation of Group Headquarters Functions (Detailed Information) and Introduction of Sideline Job System (JOB+)|publisher=Sega Sammy Holdings|date=May 2018|access-date=September 14, 2022|archive-date=September 15, 2022|archive-url=https://web.archive.org/web/20220915022714/https://www.segasammy.co.jp/english/pdf/release/20180520%20segasammy_release_e.pdf|url-status=dead}} Sega also has offices in Irvine, California (as Sega of America), in London (as Sega Europe),{{cite web|url=http://www.sega.co.uk/corporate|title=SEGA UK – Corporate|date=March 26, 2015|publisher=Sega|archive-url=https://web.archive.org/web/20180918123626/http://www.sega.co.uk/corporate|archive-date=September 18, 2018|url-status=live|access-date=September 17, 2018}} in Seoul, South Korea (as Sega Publishing Korea),{{cite web|title=Location to Sega Publishing Korea|url=http://eng.sega-spk.co.kr/CorpInfo/CorpMap.asp|publisher=Sega|url-status=live|archive-url=https://web.archive.org/web/20190512034631/http://eng.sega-spk.co.kr/CorpInfo/CorpMap.asp|archive-date=May 12, 2019|access-date=May 11, 2019}} and in Singapore, Hong Kong, Shanghai, and Taipei.{{cite web|title=Group Companies List (Overseas)|url=https://www.segasammy.co.jp/english/pr/corp/group/list_kaigai/|publisher=Sega Sammy Holdings|url-status=live|archive-url=https://web.archive.org/web/20190512034638/https://www.segasammy.co.jp/english/pr/corp/group/list_kaigai/|archive-date=May 12, 2019|access-date=May 11, 2019}} In other regions, Sega has contracted distributors for its games and consoles, such as Tectoy in Brazil. Sega has had offices in France, Germany, Spain, and Australia; those markets have since contracted distributors.{{cite web|url=https://www.gamedeveloper.com/business/sega-closing-multiple-offices-to-focus-on-digital-stronger-ips|title=Sega closing multiple offices to focus on digital, stronger IPs|last=Rose|first=Mike|date=June 28, 2012|website=Gamasutra|archive-url=https://web.archive.org/web/20190512034628/https://gamasutra.com/view/news/173177/Sega_closing_multiple_offices_to_focus_on_digital_stronger_IPs.php|archive-date=May 12, 2019|url-status=live|access-date=May 11, 2019}}

Relations between the regional offices have not always been smooth.{{cite web|url=https://www.gamesradar.com/the-greatest-sonic-game-we-never-got-to-play/|title=The greatest Sonic game we never got ...|last=Houghton|first=David|date=April 24, 2008|website=GamesRadar+|archive-url=https://web.archive.org/web/20131026090625/http://www.gamesradar.com/the-greatest-sonic-game-we-never-got-to-play/|archive-date=October 26, 2013|url-status=live|access-date=July 23, 2012}} Some conflict in the 1990s may have been caused by Sega president Nakayama and his admiration for Sega of America; according to Kalinske, "There were some guys in the executive suites who really didn't like that Nakayama in particular appeared to favor the US executives. A lot of the Japanese executives were maybe a little jealous, and I think some of that played into the decisions that were made." By contrast, author Steven L. Kent said Nakayama bullied American executives and that Nakayama believed the Japanese executives made the best decisions. Kent also said Sega of America CEOs Kalinske, Stolar, and Moore dreaded meeting with Sega of Japan executives.{{cite web|url=http://www.sega-16.com/2006/05/interview-steven-kent/|title=Interview: Steven Kent (Author)|last=Horowitz|first=Ken|date=May 9, 2006|website=Sega-16|archive-url=https://web.archive.org/web/20160504071309/http://www.sega-16.com/2006/05/interview-steven-kent/|archive-date=May 4, 2016|url-status=live|access-date=February 22, 2018}}

File:CLUB SEGA Akihabara Annex 20111122.jpg, Tokyo, shown before the Sega brand was removed from it in 2022|alt=A Club Sega building in 2011]]

After the formation of Sega Group in 2015 and the founding of Sega Holdings, the former Sega Corporation was renamed Sega Games Co., Ltd. Under this structure, Sega Games was responsible for the home video game market and consumer development, while Sega Interactive Co., Ltd., comprised Sega's arcade game business.{{cite web|url=https://www.sega.co.jp/english/about/summary/#am|title=Business Summary |publisher=Sega|language=en|archive-url=https://web.archive.org/web/20180906195658/https://www.sega.co.jp/english/about/summary/#am|archive-date=September 6, 2018|url-status=dead|access-date=September 6, 2018}} The two were consolidated in 2020, renamed as Sega Corporation, and Sega Group Corporation was formally absorbed into Sega Corporation in 2021.{{cite news |last1=Romano |first1=Sal |date=January 29, 2021 |title=Toshihiro Nagoshi to step down as Sega CCO and become creative director; Sega Sammy announces organizational restructure |work=Gematsu |url=https://www.gematsu.com/2021/01/toshihiro-nagoshi-to-step-down-as-sega-cco-and-become-creative-director-sega-sammy-announces-organizational-restructure |access-date=October 2, 2022}} The company includes Sega Networks, which handles game development for smartphones. Sega Corporation develops and publishes games for major video game consoles and has not expressed interest in developing consoles again. According to former Sega Europe CEO Mike Brogan, "There is no future in selling hardware. In any market, through competition, the hardware eventually becomes a commodity{{nbsp}}... If a company has to sell hardware then it should only be to leverage software, even if that means taking a hit on the hardware."

Sega Fave Corporation, originally known as Yonezawa Toys and acquired by Sega in 1991, has created toys for children's franchises such as Oshare Majo: Love and Berry, Mushiking: King of the Beetles, Lilpri, Bakugan, Jewelpet, Rilu Rilu Fairilu, Dinosaur King, and Hero Bank. Products released in the West include the home planetarium Homestar and the robot dog iDog. The Homestar was released in 2005 and has been improved several times. Its newest model, Flux, was released in 2019. The series is developed by the Japanese inventor and entrepreneur Takayuki Ohira. As a recognized specialist for professional planetariums, he has received numerous innovation prizes and supplies large planetariums internationally with his company Megastar. Sega Toys also inherited the Sega Pico handheld system and produced Pico software.{{cite web|url=https://www.segatoys.co.jp/company/english/pdf/2014history-en.pdf|title=History of Sega Toys|date=2014|publisher=Sega Toys Co., Ltd.|archive-url=https://web.archive.org/web/20150415180237/http://segatoys.co.jp/company/english/pdf/2014history-en.pdf|archive-date=April 15, 2015|url-status=live|access-date=October 24, 2018}} The company also develops and sells arcade games that were previously held under Sega until 2024.

Since the late 1960s, Sega has been affiliated with operations of bowling alleys and arcades through its former Sega Entertainment Co., Ltd. subsidiary in Japan, as well as a number of other smaller regional subsidiaries in other countries. Initiatives to expand operations in other territories, such as the US, UK, France, Spain, and Taiwan, have been more short-lived, and following the 85.1% majority acquisition of Sega Entertainment's shares in November 2020 to mitigate losses caused by the COVID-19 pandemic,{{cite web|title=Sega Sammy sells arcade business Sega Entertainment to Genda Inc|date=November 4, 2020 |url=https://www.gamesindustry.biz/articles/2020-11-04-sega-sammy-sells-arcade-business-sega-entertainment-to-genda-inc|publisher=gamesindustry.biz|access-date=March 17, 2021}} Sega's arcades in Japan since have been run under Genda Incorporated's Genda GiGO Entertainment division.{{Cite web|url=https://www.animenewsnetwork.com/news/2020-11-05/genda-acquires-sega-entertainment-arcade-business-as-its-subsidiary/.165969|title=GENDA Acquires Sega Entertainment's Arcade Business as Its Subsidiary|website=Anime News Network}} Its DartsLive subsidiary creates electronic darts games, while Sega Logistics Service distributes and repairs arcade games.

In 2015, Sega and Japanese advertising agency Hakuhodo formed a joint venture, Stories LLC, to create entertainment for film and TV. Stories LLC has exclusive licensing rights to adapt Sega properties into film and television,{{cite web|url=http://www.stories-llc.com/about|title=Stories LLC., Stories International Inc.|publisher=Stories International LLC.|url-status=live|archive-url=https://web.archive.org/web/20160430025500/http://www.stories-llc.com/about|archive-date=April 30, 2016|access-date=May 15, 2015}}{{cite web|title=Our Back Story|url=https://www.hakuhodo-global.com/network/stories-international-inc.html|publisher=Hakuhodo|url-status=live|archive-url=https://web.archive.org/web/20171222052212/https://www.hakuhodo-global.com/network/stories-international-inc.html|archive-date=December 22, 2017|access-date=December 25, 2017}} and has partnered with producers to develop series based on properties including Shinobi, Golden Axe, Virtua Fighter, The House of the Dead, and Crazy Taxi.{{cite web|title=Stories International partners with 'The Walking Dead' producers Circle of Confusion on film and TV adaptations of hit Sega franchises 'Altered Beast' and 'Streets of Rage'|url=http://www.stories-llc.com/news/stories-international-partners-with-the-walking-dead-producers-circle-of-confusion-on-film-tv-adaptations-of-hit-sega-franchises-altered-beast-and-street|publisher=Stories International LLC|url-status=live|archive-url=https://web.archive.org/web/20180303212701/http://www.stories-llc.com/news/stories-international-partners-with-the-walking-dead-producers-circle-of-confusion-on-film-tv-adaptations-of-hit-sega-franchises-altered-beast-and-street|archive-date=March 3, 2018|access-date=December 25, 2017}}

{{See also|Sega development studios}}

Sega releases games developed by its research and development teams. The Sonic the Hedgehog franchise, maintained through Sega's Sonic Team division, is one of the best-selling franchises in video games. Sega has also acquired third-party studios including Atlus, Play Heart, Creative Assembly, Hardlight, Sports Interactive, Two Point Studios, and Rovio Entertainment.

Sega's software research and development teams began with one development division operating under Sega's longtime head of R&D, Hisashi Suzuki. As the market increased for home video game consoles, Sega expanded with three Consumer Development (CS) divisions. After October 1983, arcade development expanded to three teams: Sega DD No. 1, 2, and 3. Some time after the release of Power Drift, Sega restructured its teams again as the Sega Amusement Machine Research and Development Teams, or AM teams. Each arcade division was segregated, and a rivalry existed between the arcade and consumer development divisions.Horowitz 2018, p. 153

In what has been called "a brief moment of remarkable creativity", in 2000, Sega restructured its arcade and console development teams into nine semi-autonomous studios headed by the company's top designers.{{sfn|Kent|2001|pages=577–578, 581}} The studios were United Game Artists, Smilebit, Hitmaker, Sega Rosso, WOW Entertainment, Overworks, Amusement Vision, Sega-AM2, and Sonic Team.{{Cite magazine|date=October 2000|title=Sega's new beginning|magazine=Edge|issue=89|pages=68–78}} Sega's design houses were encouraged to experiment and benefited from a relatively lax approval process.{{cite journal|last1=Montfort|first1=Nick|last2=Consalvo|first2=Mia|date=February 1, 2012|title=The Dreamcast, Console of the Avant-Garde|url=https://journals.sfu.ca/loading/index.php/loading/article/view/104/124|format=PDF|journal=Loading... The Journal of the Canadian Game Studies Association|volume=6|pages=82–99|archive-url=https://web.archive.org/web/20120220200904/https://journals.sfu.ca/loading/index.php/loading/article/view/104/124|archive-date=February 20, 2012|access-date=May 20, 2020|number=9}} After taking over as company president in 2003, Hisao Oguchi announced his intention to consolidate Sega's studios. Prior to the acquisition by Sammy, Sega began the process of re-integrating its subsidiaries into the main company.{{Cite news|url=https://www.gamesindustry.biz/articles/sega-development-studios-return-to-the-fold|title=Sega development studios return to the fold|last=Fahey|first=Rob|date=June 29, 2004|work=GamesIndustry.biz|access-date=July 11, 2018|archive-url=https://web.archive.org/web/20180711093418/https://www.gamesindustry.biz/articles/sega-development-studios-return-to-the-fold|archive-date=July 11, 2018|url-status=live}} Toshihiro Nagoshi, formerly the head of Amusement Vision, recalls this period as "in many ways a labour of love" from Sega, teaching the creatives the experience of managing a business.{{Cite web|last=Takeuchi|first=Takuya|date=June 2, 2020|title=SEGA 60th Anniversary Special Presentation: Interview with Toshihiro Nagoshi|url=https://www.otaquest.com/sega-60th-anniversary-interview-with-toshihiro-nagoshi/|access-date=July 28, 2020|website=OTAQUEST|language=en-US|archive-date=June 24, 2021|archive-url=https://web.archive.org/web/20210624205021/https://www.otaquest.com/sega-60th-anniversary-interview-with-toshihiro-nagoshi/|url-status=dead}}

Sega still operates first-party studios as departments of its research and development division. Sonic Team exists as Sega's CS2 research and development department,{{cite web|title=Producer Takashi Iizuka speaks, "Sonic Generations White Space-Time Space / Blue Adventure" Production Secret Story and Sonic Series 20 Years of Progress|url=http://www.4gamer.net/games/131/G013139/20111227008/|last=Inemoto|first=Tetsuya|date=December 28, 2011|website=4Gamer.net|language=ja|url-status=live|archive-url=https://web.archive.org/web/20170821045318/http://www.4gamer.net/games/131/G013139/20111227008/|archive-date=August 21, 2017|access-date=July 11, 2018}} while Sega's CS3 or Online department has developed games such as Phantasy Star Online 2,{{cite web|url=https://game.watch.impress.co.jp/docs/interview/572264.html|title='Phantasy Star Online 2' producer Mr. Satoshi Sakai interview|date=November 11, 2012|website=GAME Watch|language=ja|archive-url=https://web.archive.org/web/20180929194733/https://game.watch.impress.co.jp/docs/interview/572264.html|archive-date=September 29, 2018|url-status=live|access-date=September 29, 2018}}{{Cite web |title=【インタビュー】セガのオンラインゲームを影で支えるエクストリームの力 ― 両社の対談で見えた技術者の新しい働き方とは {{!}} gamebiz |url=https://gamebiz.jp/news/207021 |access-date=October 2, 2022 |website=gamebiz【ゲームビズ】 |language=ja}} and Sega's AM2 department has more recently worked on projects such as smartphone game Soul Reverse Zero.{{cite web|url=https://game.watch.impress.co.jp/docs/news/1025758.html|title=Sega · Interactive, announces new arrival RPG 'SOUL REVERSE ZERO' of AM2 lab!|last=Fukuhara|first=Hiroyuki|date=October 21, 2016|website=GAME Watch|language=ja|archive-url=https://web.archive.org/web/20180704153231/https://game.watch.impress.co.jp/docs/news/1025758.html|archive-date=July 4, 2018|url-status=live|access-date=September 29, 2018}} Toshihiro Nagoshi remained involved with research and development as Sega's chief creative officer or creative director while working on the Yakuza series until 2021.{{Cite magazine|last=Brown|first=Nathan|date=October 2018|title=Collected Works: Toshihiro Nagoshi|magazine=Edge|issue=323|pages=82–93}}{{Cite web |last=Wen |first=Alan |date=October 8, 2021 |title='Yakuza' creator Toshihiro Nagoshi has left Sega |url=https://www.nme.com/news/gaming-news/yakuza-creator-toshihiro-nagoshi-has-left-sega-3065967 |access-date=October 2, 2022 |website=NME |language=en-GB}}{{Cite magazine |last=Hester |first=Blake |date=January 29, 2021 |title=Yakuza Creator Toshihiro Nagoshi To Become Sega's Creative Director |url=https://www.gameinformer.com/2021/01/29/yakuza-creator-toshihiro-nagoshi-to-become-segas-creative-director |archive-url=https://web.archive.org/web/20210129230256/https://www.gameinformer.com/2021/01/29/yakuza-creator-toshihiro-nagoshi-to-become-segas-creative-director |url-status=live |archive-date=January 29, 2021 |magazine=Game Informer |language=en |access-date=October 2, 2022}} Other studios include Ignited Artists{{cite web |url=https://www.ign.com/articles/2015/02/19/sega-acquires-new-studio-invests-in-two-more |title= SEGA Acquires New Studio, Invests in Two More |date= February 19, 2015 |publisher= IGN |access-date= October 26, 2021}} and Play Heart.{{cite web |url= https://playheart.com/history/ |title= 沿革 – Play Heart|access-date= October 26, 2021}}

File:Sega Dreamcast arcade machine.jpg kiosk at the Finnish Museum of Games in Tampere, Finland, in 2017]]

Sega is one of the world's most prolific arcade game producers, having developed more than 500 games, 70 franchises, and 20 arcade system boards since 1981. It has been recognized by Guinness World Records for this achievement. Of Sega's arcade division, Eurogamer's Martin Robinson said, "It's boisterous, broad and with a neat sense of showmanship running through its range. On top of that, it has something that's often evaded its console-dwelling cousin: success."{{cite web|url=https://www.eurogamer.net/articles/2014-02-16-segas-arcade-redemption|title=Sega's arcade redemption|last=Robinson|first=Martin|date=February 16, 2014|website=Eurogamer|archive-url=https://web.archive.org/web/20140302070346/https://www.eurogamer.net/articles/2014-02-16-segas-arcade-redemption|archive-date=March 2, 2014|url-status=live|access-date=February 25, 2019}}

The Sega Genesis is often ranked among the best consoles in history.{{cite web|url=https://ign.com/top-25-consoles/5.html|title=Top 25 Videogame Consoles of All Time|date=September 4, 2009|website=IGN|archive-url=https://web.archive.org/web/20180623043900/http://www.ign.com/top-25-consoles/5.html|archive-date=June 23, 2018|url-status=live|access-date=October 24, 2010}}{{cite web|url=http://www.gamingexcellence.com/features/15.shtml?page=2|title=The Top Ten Consoles of All Time|last=Sztein|first=Andrew|date=March 28, 2008|website=GamingExcellence|archive-url=https://web.archive.org/web/20120505224057/http://www.gamingexcellence.com/features/15.shtml?page=2|archive-date=May 5, 2012|url-status=live|access-date=September 21, 2011}}{{cite web|url=http://www.gamedaily.com/articles/galleries/top-10-greatest-consoles/?page=2|title=Top 10 Greatest Consoles|last=Buffa|first=Chris|date=March 5, 2008|website=GameDaily|archive-url=https://web.archive.org/web/20080309153306/http://www.gamedaily.com/articles/galleries/top-10-greatest-consoles/?page=2|archive-date=March 9, 2008|url-status=dead|access-date=October 24, 2010}} In 2014, USgamer's Jeremy Parish credited it for galvanizing the market by breaking Nintendo's near-monopoly, helping create modern sports game franchises, and popularizing television games in the UK.{{cite web|url=http://www.usgamer.net/articles/the-true-16-bit-experience-segas-genesis-turns-25|title=Sega Genesis 25th Anniversary: The Rise and Fall of an All-Time Great|last=Parish|first=Jeremy|date=August 14, 2014|work=USgamer|archive-url=https://web.archive.org/web/20150527115400/http://www.usgamer.net/articles/the-true-16-bit-experience-segas-genesis-turns-25|archive-date=May 27, 2015|url-status=live|access-date=November 16, 2015}} Kalinske felt Sega had innovated by developing games for an older demographic and pioneering the "street date" concept with the simultaneous North American and European release of Sonic the Hedgehog 2.{{cite web|url=https://venturebeat.com/2014/08/14/sega-genesis-genius-tom-kalinske-on-its-25-year-legacy-battling-nintendo-launching-sonic-and-birthing-the-street-date/|title=Sega Genesis genius Tom Kalinske on its 25 year legacy: Battling Nintendo, launching Sonic, and birthing the 'street date'|last=Grubb|first=Jeff|date=August 14, 2014|work=VentureBeat|archive-url=https://web.archive.org/web/20151117054029/http://venturebeat.com/2014/08/14/sega-genesis-genius-tom-kalinske-on-its-25-year-legacy-battling-nintendo-launching-sonic-and-birthing-the-street-date/|archive-date=November 17, 2015|url-status=live|access-date=November 16, 2015}} Sega of America's marketing campaign for the Genesis influenced marketing for later consoles.{{cite magazine|date=February 1996|title=Pssstt! Wanna Buy a Game System?|magazine=Next Generation|issue=14|pages=68–79}}

Despite its commercial failure, the Saturn is well regarded for its library,{{cite web|url=http://www.1up.com/features/pleasure-pain?pager.offset=0|title=Sega Saturn: The Pleasure And The Pain|last=Sewart|first=Greg|date=August 5, 2005|work=1Up.com|archive-url=https://archive.today/20140317211403/http://www.1up.com/features/pleasure-pain?pager.offset=0|archive-date=March 17, 2014|url-status=dead|access-date=December 10, 2016}}{{cite web|url=http://www.usgamer.net/articles/the-lost-child-of-a-house-divided-a-sega-saturn-retrospective|title=The Lost Child of a House Divided: A Sega Saturn Retrospective|last=Parish|first=Jeremy|date=November 18, 2014|work=USgamer|archive-url=https://web.archive.org/web/20141215095100/http://www.usgamer.net/articles/the-lost-child-of-a-house-divided-a-sega-saturn-retrospective|archive-date=December 15, 2014|url-status=live|access-date=December 17, 2014}} though it has been criticized for a lack of high-profile franchise releases. Edge wrote that "hardened loyalists continue to reminisce about the console that brought forth games like Burning Rangers, Guardian Heroes, Dragon Force, and Panzer Dragoon Saga."{{cite magazine|url=http://www.edge-online.com/features/how-consoles-die/3/|title=How Consoles Die|date=September 17, 2008|magazine=Edge|page=3|archive-url=https://web.archive.org/web/20141129171554/http://www.edge-online.com/features/how-consoles-die/3/|archive-date=November 29, 2014|url-status=dead|access-date=March 5, 2015}} Sega's management was criticized for its handling of the Saturn. According to Greg Sewart of 1Up.com, "the Saturn will go down in history as one of the most troubled, and greatest, systems of all time".

The Dreamcast is remembered for being ahead of its time,{{cite web|url=https://ign.com/top-25-consoles/8.html|title=Dreamcast is number 8|website=IGN|archive-url=https://web.archive.org/web/20110830184437/http://www.ign.com/top-25-consoles/8.html|archive-date=August 30, 2011|url-status=live|access-date=September 7, 2011}}{{cite web|url=http://www.eurogamer.net/articles/dreamcast-a-forensic-retrospective-article|title=Dreamcast: A Forensic Retrospective|last=Whitehead|first=Dan|date=January 2, 2009|website=Eurogamer|archive-url=https://web.archive.org/web/20141015103108/http://www.eurogamer.net/articles/dreamcast-a-forensic-retrospective-article|archive-date=October 15, 2014|url-status=live|access-date=October 30, 2014}}{{cite magazine|url=http://www.edge-online.com/features/the-ten-best-consoles-the-greatest-gameboxes-from-the-past-20-years/|title=The ten best consoles: our countdown of the greatest gameboxes of the last 20 years|date=September 20, 2013|magazine=Edge|archive-url=https://web.archive.org/web/20141128181657/http://www.edge-online.com/features/the-ten-best-consoles-the-greatest-gameboxes-from-the-past-20-years/|archive-date=November 28, 2014|url-status=dead|access-date=March 5, 2015}} with several concepts that became standard in consoles, such as motion controls and online functionality.{{cite web|url=https://www.ign.com/articles/2012/05/20/sega-a-soothsayer-of-the-games-industry|title=SEGA: A Soothsayer of the Games Industry|last=Redsell|first=Adam|date=May 20, 2012|website=IGN|archive-url=https://web.archive.org/web/20131012022048/https://www.ign.com/articles/2012/05/20/sega-a-soothsayer-of-the-games-industry|archive-date=October 12, 2013|url-status=live|access-date=November 30, 2018}} Its demise has been connected with transitions in the video game industry. In 1001 Video Games You Must Play Before You Die, Duncan Harris wrote that the Dreamcast's end "signaled the demise of arcade gaming culture... Sega's console gave hope that things were not about to change for the worse and that the tenets of fast fun and bright, attractive graphics were not about to sink into a brown and green bog of realistic war games."{{cite book|last=Mott|first=Tony|title=1001 Video Games You Must Play Before You Die|year=2013|publisher=Universe Publishing|isbn=978-0-7893-2090-2|page=434|title-link=1001 Video Games You Must Play Before You Die}} Parish contrasted the Dreamcast's diverse library with the "suffocating sense of conservatism" that pervaded the industry in the following decade.{{cite web|url=http://www.usgamer.net/articles/what-if-dreamcast-had-won|title=What if Dreamcast Had Won?|last=Parish|first=Jeremy|date=September 13, 2014|website=USgamer|archive-url=https://web.archive.org/web/20141215170706/http://www.usgamer.net/articles/what-if-dreamcast-had-won|archive-date=December 15, 2014|url-status=live|access-date=January 20, 2015}}

In Eurogamer, Damien McFerran wrote that Sega's decisions in the late 1990s were "a tragic spectacle of overconfidence and woefully misguided business practice". Travis Fahs of IGN noted that since the Sammy takeover Sega had developed fewer games and outsourced to more western studios, and that its arcade operations had been significantly reduced. Nonetheless, he wrote: "Sega was one of the most active, creative, and productive developers the industry has ever known, and nothing that can happen to their name since will change that." In 2015, Sega president Haruki Satomi told Famitsu that, in the previous ten years, Sega had "betrayed" the trust of older fans and that he hoped to re-establish the Sega brand.{{cite magazine|title=セガゲームス始動！ 代表取締役社長CEO・里見治紀氏に訊く、新会社設立の意図と将来像|trans-title=Sega Games started! Interview with President and CEO Haruki Satomi, the intention and future image of establishing a new company|url=https://www.famitsu.com/news/201507/20082607.html|last=Hayashi|first=Katsuhiko|date=July 20, 2015|magazine=Famitsu|language=ja|url-status=live|archive-url=https://web.archive.org/web/20200304041135/https://www.famitsu.com/news/201507/20082607.html|archive-date=March 4, 2020|access-date=June 30, 2018}} During the promotion of the Sega Genesis Mini, Sega executive manager Hiroyuki Miyazaki reflected on Sega's history, saying, "I feel like Sega has never been the champion, at the top of all the video game companies, but I feel like a lot of people love Sega because of the underdog image."{{Cite web|title=Sega on Bringing the Old Team Back Together to Create the Genesis Mini|url=https://www.usgamer.net/articles/sega-on-bringing-the-old-team-back-together-to-create-the-genesis-mini|last=Williams|first=Mike|date=June 21, 2019|website=USGamer|url-status=live|archive-url=https://web.archive.org/web/20190621102813/https://www.usgamer.net/articles/sega-on-bringing-the-old-team-back-together-to-create-the-genesis-mini|archive-date=June 21, 2019|access-date=May 14, 2020}} Former Sega management cited the absence of Dragon Quest and Final Fantasy games on their home consoles as a reason for the console division's struggles, especially in Japan.{{Cite web |last= |first= |title=ビデオゲームの語り部たち 第11部：鈴木久司氏が魂を注いだセガのアーケードゲーム黄金時代 |url=https://www.4gamer.net/games/999/G999905/20190302005/ |access-date=September 25, 2022 |website=4Gamer.net |language=ja}}{{Cite web |title=『Beep21』創刊3号・特別企画 小口久雄氏インタビュー｜Beep21｜note |url=https://note.com/beep21/n/n529331d3af71 |access-date=September 25, 2022 |website=note（ノート） |date=August 10, 2022 |language=ja}} In his 2018 book The Sega Arcade Revolution, Horowitz connected Sega's decline in the arcades after 1995 with broader industry changes. He argued that its most serious problems came from the loss of its creative talent, particularly Yuji Naka and Yu Suzuki, after the Sammy takeover, but concluded that "as of this writing, Sega is in its best financial shape of the past two decades. The company has endured."Horowitz 2018, p. 282

{{portal|Video games}}

• List of Sega video game franchises
• Lists of Sega games
• Sega, S.A. SONIC
• Sega Technical Institute

{{notelist}}

{{reflist|refs=

{{cite web | url=http://www.segasammy.co.jp/english/ir/library/pdf/printing_annual/2014/all_ar2014_e.pdf | title=Sega Sammy Holdings – Annual Report 2014 | publisher=Sega Sammy Holdings | access-date=May 6, 2015 | pages=34, 58, 62, 65 | archive-url=https://web.archive.org/web/20141225224941/http://www.segasammy.co.jp/english/ir/library/pdf/printing_annual/2014/all_ar2014_e.pdf | archive-date=December 25, 2014 | url-status=live | df=mdy-all }}

{{cite web | url=http://www.guinnessworldrecords.com/world-records/most-prolific-producer-of-arcade-machines | title=Most prolific producer of arcade machines | work=Guinness World Records | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20141225224058/http://www.guinnessworldrecords.com/world-records/most-prolific-producer-of-arcade-machines | archive-date=December 25, 2014 | url-status=live | df=mdy-all }}

{{cite web | url=http://www.gamespot.com/articles/sega-to-close-five-european-australian-offices/1100-6384808/ | title=Sega to close five European, Australian offices | work=GameSpot | first=Jake | last=Harris | date=June 28, 2012 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150510072940/http://www.gamespot.com/articles/sega-to-close-five-european-australian-offices/1100-6384808/ | archive-date=May 10, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=http://www.usgamer.net/articles/next-gen-graphics-part-1-nes-master-system-genesis-and-super-nes | title=Next Gen Graphics, Part 1: NES, Master System, Genesis, and Super NES | work=USgamer | first=Mike | last=Williams | date=November 21, 2013 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150522144510/http://www.usgamer.net/articles/next-gen-graphics-part-1-nes-master-system-genesis-and-super-nes | archive-date=May 22, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=http://sega.jp/corp/release/2000/1101_1/ | title=Sega Enterprises, Ltd. Changes Company Name | publisher=Sega | date=November 1, 2001 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150419235822/http://sega.jp/corp/release/2000/1101_1/ | archive-date=April 19, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=https://www.segasammy.co.jp/japanese/media/file/ir/library/archive/sega/sega_annual_tuuki_2002.pdf | title=Sega Corporation Annual Report 2002 | publisher=Sega | access-date=November 29, 2018 | archive-url=https://web.archive.org/web/20181130030425/https://www.segasammy.co.jp/japanese/media/file/ir/library/archive/sega/sega_annual_tuuki_2002.pdf | archive-date=November 30, 2018 | url-status=live | df=mdy-all }}

{{cite web |url=http://www.segasammy.co.jp/english/ir/pdf/ir/kako/sega_AR_all_2004.pdf | title=Sega Corporation Annual Report 2004 | publisher=Sega | access-date=March 12, 2010 | pages=2, 16 | archive-url=https://www.webcitation.org/5mHPmG7gs?url=http://www.segasammy.co.jp/english/ir/pdf/ir/kako/sega_AR_all_2004.pdf |url-status=dead | archive-date=December 25, 2009 }}

{{cite web | url=https://uk.ign.com/articles/2001/01/24/sega-sinks-console-efforts | title=Sega Sinks Console Efforts? | work=IGN | first=Brandon | last=Justice | date=January 23, 2001 | access-date=May 7, 2015|archive-date=November 19, 2015|archive-url=https://web.archive.org/web/20151119111738/http://www.ign.com/articles/2001/01/24/sega-sinks-console-efforts}}

{{cite web | url=https://uk.ign.com/articles/2001/01/24/sega-confirms-ps2-and-game-boy-advance-negotiations | title=Sega Confirms PS2 and Game Boy Advance Negotiations | work=IGN | first=Anoop | last=Gantayat | date=January 23, 2001 | access-date=May 7, 2007|archive-url=https://web.archive.org/web/20160131135602/http://www.ign.com/articles/2001/01/24/sega-confirms-ps2-and-game-boy-advance-negotiations|archive-date=January 31, 2016}}

{{cite web | url=http://www.taipeitimes.com/News/worldbiz/archives/2003/03/13/197881 | title=Analysts say Sega taking its toll on CSK's bottom line | work=Taipei Times |agency=Bloomberg News | date=March 13, 2003 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150716054419/http://www.taipeitimes.com/News/worldbiz/archives/2003/03/13/197881 | archive-date=July 16, 2015 | url-status=live | df=mdy-all }}

{{cite news | url=https://www.nytimes.com/2001/03/17/business/isao-okawa-74-chief-of-sega-and-pioneer-investor-in-japan.html | title=Isao Okawa, 74, Chief of Sega And Pioneer Investor in Japan |page=C-17 | work=The New York Times | first=Miki | last=Tanikawa | date=March 17, 2001 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150518230442/http://www.nytimes.com/2001/03/17/business/isao-okawa-74-chief-of-sega-and-pioneer-investor-in-japan.html | archive-date=May 18, 2015 | url-status=live | df=mdy-all }}

{{cite news | url=https://www.nytimes.com/2001/11/04/business/microsoft-explores-a-new-territory-fun.html?pagewanted=2 | title=Microsoft Explores A New Territory: Fun | work=The New York Times | first=Chris | last=Gaither | pages=3–1 | date=November 1, 2001 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150527152530/http://www.nytimes.com/2001/11/04/business/microsoft-explores-a-new-territory-fun.html?pagewanted=2 | archive-date=May 27, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=http://www.gamespot.com/articles/sammy-merging-with-sega/1100-6098677/ | title=Sammy merging with Sega | work=GameSpot | first1=Hirohiko | last1=Niizumi | first2=Tor | last2=Thorsen | date=May 26, 2004 | access-date=February 18, 2011 | archive-url=https://web.archive.org/web/20081006132850/http://www.gamespot.com/news/2004/05/18/news_6098677.html | archive-date=October 6, 2008 | url-status=live}}

{{cite web | url=http://www.eurogamer.net/articles/news111203sammysega | title=Sammy tells Sega to focus on arcade | work=Eurogamer | first=Tom | last=Bramwell | date=December 11, 2003 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20141225223426/http://www.eurogamer.net/articles/news111203sammysega | archive-date=December 25, 2014 | url-status=live | df=mdy-all }}

{{cite web | url=http://www.eurogamer.net/articles/news090305sega | title=SEGA acquires Creative Assembly | work=Eurogamer | first=Tom | last=Bramwell | date=March 9, 2005 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150518073240/http://www.eurogamer.net/articles/news090305sega | archive-date=May 18, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=http://www.eurogamer.net/articles/news040406sigames | title=SEGA acquires Sports Interactive | work=Eurogamer | date=April 4, 2006 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150518073051/http://www.eurogamer.net/articles/news040406sigames | archive-date=May 18, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=http://sega.jp/cgi-bin/csALL.cgi | title=セガ 製品情報 | publisher=Sega | language=ja | trans-title=Sega product information | access-date=May 7, 2015 | url-status=dead | archive-url=https://web.archive.org/web/20150511235740/http://sega.jp/cgi-bin/csALL.cgi | archive-date=May 11, 2015 | df=mdy-all }}

{{cite web | url=http://sega.jp/pc/baldurs/ | title=Sega PC Localized Game Official Site | publisher=Sega | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150512102713/http://sega.jp/pc/baldurs/ | archive-date=May 12, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=http://www.polygon.com/2014/2/18/5421642/sega-to-rebrand-index-as-atlus-in-april-creates-new-division | title=Sega to rebrand Index as Atlus in April, creates new division | website=Polygon | first=Jenna | last=Pitcher | date=February 18, 2014 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150429041957/http://www.polygon.com/2014/2/18/5421642/sega-to-rebrand-index-as-atlus-in-april-creates-new-division | archive-date=April 29, 2015 | url-status=live | df=mdy-all }}

{{cite web | url = http://www.segasammy.co.jp/english/ir/finance/sales.html | title = Sales by segment – Financial Information – Investor Relations | publisher = Sega Sammy Holdings | access-date = April 5, 2015 | archive-url = https://web.archive.org/web/20150521082806/http://www.segasammy.co.jp/english/ir/finance/sales.html | archive-date = May 21, 2015 | url-status = live | df = mdy-all }}

{{cite magazine | url=https://www.wired.com/2012/10/mf-japan-pop-star-hatsune-miku/ | title=How Virtual Pop Star Hatsune Mikue Blew Up in Japan | magazine=Wired | first=James | last=Verini | date=October 19, 2012 | volume=20 | issue=11 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150516062025/http://www.wired.com/2012/10/mf-japan-pop-star-hatsune-miku | archive-date=May 16, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=http://www.segasammy.co.jp/english/pdf/release/20150212_organizational%20restructuring_e_final.pdf | title=Notice of Organizational Restructuring within the Group and Change of Names of Some Subsidiaries due to the Restructuring | publisher=Sega Sammy Holdings | date=February 12, 2015 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150624051027/http://www.segasammy.co.jp/english/pdf/release/20150212_organizational%20restructuring_e_final.pdf | archive-date=June 24, 2015 | url-status=live | df=mdy-all }}

{{cite magazine | url=https://www.wired.com/2009/02/sega-layoffs/ | title=Sega to Close Arcades, Cancel Games, Lay Off Hundreds | magazine=Wired | first=Chris | last=Kohler | date=October 2, 2009 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150415115234/http://www.wired.com/2009/02/sega-layoffs/ | archive-date=April 15, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=http://www.segasammy.co.jp/english/pdf/release/2015_3q_presentation_e_final.pdf | title=FY Ending March 2015 – 3rd Quarter Results Presentation | publisher=Sega Sammy Holdings | access-date=April 14, 2015 | archive-url=https://web.archive.org/web/20150924100308/http://www.segasammy.co.jp/english/pdf/release/2015_3q_presentation_e_final.pdf | archive-date=September 24, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=https://www.gamedeveloper.com/business/sega-focusing-on-digital-shift-following-decreased-2011-financials | title=Sega focusing on digital shift following decreased 2011 financials | work=Gamasutra | first=Mike | last=Rose | date=May 11, 2012 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150518104206/http://www.gamasutra.com/view/news/170179/Sega_focusing_on_digital_shift_following_decreased_2011_financials.php | archive-date=May 18, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=https://www.pcmag.com/article2/0,2817,2402442,00.asp | title=Sega Cancelling Games, Planning Layoffs | work=PC Magazine | first=Angela | last=Moscritolo | date=March 30, 2012 | access-date=April 8, 2015 | archive-url=https://web.archive.org/web/20150501133306/http://www.pcmag.com/article2/0,2817,2402442,00.asp | archive-date=May 1, 2015 | url-status=live | df=mdy-all }}

{{cite web | url=https://games.yahoo.com/news/sega-axe-300-jobs-focus-112900482.html | title=Sega to Axe 300 Jobs as Focus Turns to PC and Mobile | work=Yahoo! Games| first=Rob | last=Crossley | date=January 30, 2015 | access-date=April 14, 2015 | url-status=dead | archive-url=https://web.archive.org/web/20151017162120/https://games.yahoo.com/news/sega-axe-300-jobs-focus-112900482.html | archive-date=October 17, 2015 | df=mdy-all }}

{{cite news | url=https://www.nytimes.com/1993/07/04/business/sega-takes-aim-at-disney-s-world.html?pagewanted=3 | title=Sega Takes Aim at Disney's World | work=The New York Times | first=Andrew | last=Pollack | date=July 4, 1993 | access-date=May 7, 2015 | archive-url=https://web.archive.org/web/20150526082802/http://www.nytimes.com/1993/07/04/business/sega-takes-aim-at-disney-s-world.html?pagewanted=3 | archive-date=May 26, 2015 | url-status=live | df=mdy-all |pages=3–1}}

}}

{{Commons category|Sega}}

• {{Official website|https://www.sega.jp/}} {{in lang|ja}}
• {{url|https://www.sega.co.jp/en/|Official corporate website}}
• {{url|https://www.sega.co.jp/|Official corporate website}} {{in lang|ja}}

{{Spoken Wikipedia|date=March 28, 2021|En-Sega-article.ogg}}

{{Sega|state=expanded}}

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{{Japanese Electronics Industry}}

{{Portal bar|Video games|Companies|Tokyo|Japan}}

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Category:1960 establishments in Japan

Category:2004 mergers and acquisitions

Category:Companies formerly listed on the Tokyo Stock Exchange

Category:Entertainment companies of Japan

Category:Golden Joystick Award winners

Category:Gulf and Western Industries

Category:Japanese brands

Category:Manufacturing companies based in Tokyo

Category:Multinational companies headquartered in Japan

Category:Publishing companies established in 1960

Category:Software companies based in Tokyo

Category:Video game companies based in California

Category:Video game companies established in 1960

Category:Video game companies of Japan

Category:Video game development companies

Category:Video game publishers

Category:1980s initial public offerings

Category:Shinagawa