History of Sega in the United States of America

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United States of America 
History of Sega in the United States of America
Official Sega distributor(s): Gulf+Western (1969-1982), Sega Electronics (1982-1983), Bally Midway (1983-1985) , Sega of America (1985-1987), Tonka (1987-1990), Sega of America (1990-present)

Sega Enterprises, Inc.

Sega of America traces its roots to two companies - Service Games and Rosen Enterprises - both founded in Japan by Americans during the 1950s. In 1951, Raymond Lemaire and Richard Stewart started Service Games to develop and market amusement-type games and machines, and within a few years the company was importing jukeboxes and slot machines to supply American military bases in Japan. In 1954, David Rosen, who had been stationed in Japan with the Air Force, returned to Tokyo and launched a two-minute photo booth business which quickly grew into a nationwide chain in Japan, where residents needed numerous identification pictures.[1]

Electro-mechanical games

While developing his instant photo booth business, Rosen made invaluable contacts in theaters and departments stores where his booths were located. In 1957, Rosen started tapping those contacts again after he began importing mechanical coin-operated arcade games which were popular on U.S. military bases in Japan but largely unfamiliar to the Japanese public. Within a few years, Rosen Enterprises had a nationwide chain of 200 arcades and only one principal competitor, Service Games.

Rosen, not satisfied with the mechanical games he was importing from Chicago's leading manufacturers in 1965, orchestrated a merger with Service Games, which by that time had its own factory. Rosen became chief executive of the new firm, Sega Enterprises, which derived its name from the first two letters of the words "Service" and "Games." Sega began its transformation from an importer to a manufacturer the following year, after Rosen designed a game called Periscope.[1]

Gremlin Industries was an arcade game manufacturer active from the 1971 to 1983 based in San Diego.In 1978, Gremlin was acquired by Sega Enterprises Inc. and their games acquired the label of Gremlin/Sega or Sega/Gremlin.

In 1969 Rosen, by then the sole owner of Sega, sold his company to the U.S.-based Gulf & Western Industries (G&W), becoming a millionaire in the deal while remaining with Sega as chief executive.For a time, both Paramount and Sega were owned by the same parent company; Gulf+Western, giving Sega exclusive access to many of Paramount's properties. Sega were later sold to Paramount for a brief period, before regaining independence in 1983.[1]

December 1981 saw Sega's US arm moved from Gulf+Western's manufacturing division into the hands of subsiduary Paramount Pictures, and in to, Sega/Gremlin changed their name to Sega Electronics in 1982.Thanks in part to the North American video game crash, Sega Electronics was shut down in early 1983 and its manufacturing assets transferred to Paramount Studios.

Personal computer games

Home console games

Gremlin Industries

In 1982 the name of Gremlin was changed to Sega Electronics. In mid-1983 the arcade assets of the company were sold to Bally Manufacturing and Sega Electronics was shuttered down.

Video game crash of 1983

In 1983, a video game crash appeared in America which caused serious problems in the gaming industry.After spinning off part of its arcade game subsidiary, G&W bought back the part of Sega it did not own in 1983 and then sold Sega's U.S. manufacturing operations to Bally Manufacturing Company, an electronic game, casino, and amusement park company.

Bally Midway

Sega of America

In 1986, Sega Enterprises went public in Japan and established Sega of America, Inc. as a wholly owned subsidiary to adapt Sega's video game products to the American marketplace. Nakayama was named chairman and Rosen president and chief executive of Sega of America, which entered the home video game business that same year with the introduction of its first home video system, the 8-bit color Master System.[1]


Tonka introduced the company's famous graph paper motif, a design still used to this day.

Sega's Master System immediately faced stiff competition from another Japanese-based company, Nintendo, which had single-handedly revitalized and gained control of the U.S. home video-game industry in 1985 after introducing its 8-bit Entertainment System.[1]

In 1987, Sega of America signed a distribution agreement with Tonka that boosted the presence of Sega's Master System, which came to be supported by more than 100 software video game titles (which were sold on cartridges that plugged into a game player, with that system in turn plugged into a television on which the game was viewed and played). For Sega's 1988 autumn battle with Nintendo, Tonka helped roll out 22 new titles for Master System, including adventure games based on the popular arcade titles "Double Dragon, Shinobi" and "Thunderblade" as well as a sports games promoted by baseball great Reggie Jackson and Chicago Bears running back Walter Payton, whose pictures were featured in store displays.[1]

Monopoly was the first Master System game to be developed in the US in an attempt to capture the mood of the American public, who at this point were greatly favouring Nintendo's rival console, the NES, over Sega and their Master System. All previous games, despite sometimes being localised, were developed by Sega and other companies within Japan.


Master System

By 1990 the Sega Genesis was beginning to pick up steam in North America, and so Sega bought back the Master System rights and produced a redesigned and more cost-effective version of the Master System - the Sega Master System II.

Sega Genesis

Genesis Does

Genesis Does was one of the first marketing campaigns to directly attack Nintendo's monopoly on the home console market.
Main article: Genesis Does.

Sega's strategy took a major shift in 1989 after the company developed the industry's first 16-bit color video-game home entertainment system, named Sega Genesis in the United States. Aimed at breaking Nintendo's hold on 80 percent of the then-$3 billion American video game market, Genesis offered better sound and graphics, faster action, and more difficult challenges than 8-bit game players. With games more three-dimensional and characters appearing more human and less robotic, the Genesis 16-bit system quickly changed the landscape of the video game industry while establishing Sega as a technological leader and the second largest vendor of consumer game products. Targeting the market niche of older teenagers, young adults, and Nintendo players looking for a tougher game challenge, Sega utilized popular arcade titles such as "Altered Beast" and sports games featuring the names of Arnold Palmer and Tommy Lasorda to sell Genesis. Genesis was launched with a $10 million advertising and promotional blitz that included commercials on MTV and shopping mall tours.In August 1991--anticipating a new Nintendo product to compete with Sega's 16-bit machine--Sega launched an aggressive comparative advertising campaign, describing itself as the developer of the "fastest game in the world" while branding Nintendo as a children's toy maker.[1]

By the end of 1991, Sega had sold 1.6 million copies of Genesis and emerged from the Christmas season as the leader in the 16-bit market, outselling Super NES in most stores. Sega had doubled its 1990 share of total video game market sales to 20 percent, primarily as a result of an expanding library of software titles and the growing popularity of Sonic the Hedgehog.Sega helped launch a new era of video games in the fall of 1992 when it released Sega CD, a $299 compact disk multimedia peripheral for Genesis that could play standard music CDs or live-action video-game software. With 100 times more memory than 16-bit cartridges, Sega CD carried the ability to play to both Genesis cartridges and new Sega CD games, which were displayed in movie-like images rather than simple cartoon-like graphics.In the fall of 1993, Sega opened Sega VirtuaLand, an experimental arcade and forerunner of Sega's VR parks in the new Luxor, a Las Vegas entertainment complex/hotel. By the time VirtuaLand had opened Sega had also lined up a team of major players to help develop its next home video-game player, a 32-bit machine code-named Saturn. Included in Sega's group of Saturn allies were Hitachi Ltd., a micro chip maker; Victor Company, a manufacturer of video image circuitry; and Yamaha Corporation, a sound chip builder.Sega entered the 1993 Christmas season with an edge in the crucial 16-bit market of the $6 billion American home video-game industry, holding 43 percent of total cartridge-based video-game sales, compared to Nintendo's 55 percent share. Sega's greatest yuletide sales came from "Sonic the Hedgehog" games and its best-selling "Mortal Kombat," an explicitly violent game that Nintendo also sold in a censored version.[1]



Sega CD and 32X

Sega of America wanted to keep the Genesis alive longer so they made the Sega 32X add-on.In 1994, Sega 32X was also released but it was a commercial failure.

Sega Saturn

Originally the Saturn was scheduled for release on September 2 1995, dubbed "Saturnday", but Sega of Japan decided to release it 4 months before schedule to give it an early lead over the PlayStation. The console cost $399. Sony announced that Playstation will cost $299. Seeing the price of Saturn and the failure of the last console seller did not want to sell the console Sega.Sega Saturn was defeated very quickly and the addition of a quick console defeat caused a worsening relationship with Sega of Japan. Sega Dreamcast was released in September 1999. It is difficult to determine whether the Dreamcast struggled significantly in the marketplace. Sega of America claimed to have difficulty attracting consumers outside of the "core" demographic but more Dreamcasts were sold in the US in two years than the Saturn had in three. The console was discontinued in 2001.

Sega Dreamcast



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