GameWorks/History

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Background

Dating back to the late 1960s, one of Sega's core businesses was amusement operations, managing their own amusement centers/arcades. Though early locations such as Golden Center Game Corner lacked sophistication and long-term investment, the 1970s saw the company broaden its horizons and begin to open venues that attempted to move past poorer perceptions of arcades; this was foremostly seen in its 1970 partnership with Toho for "family fun centers" and eventually its first amusement arcades outside of Japan, the USA's Sega Centers. Poor market conditions in the amusement trade led to many of its US venues being disposed of at the start of the following decade, as well as the cancellation of an early venture into hospitality with P.J. Pizzazz; however, in the face of the fueiho law and tougher legislation, Japanese amusement operations were primed to improve under Hayao Nakayama and CSK.

VirtuaLand, 1993 precursor to the GameWorks venture in the Luxor Hotel, Las Vegas

Aided by the success of its own amusement machines, progressively bigger Sega amusement centres opened domestically. Branded chains such as Hi-Tech Land Sega and Sega World were established throughout the late 1980s and early 1990s, adding to a trend of cleaner, brighter location-based entertainment in the country. Amusement operations presence in the US was also eventually bought back in December 1986 with the Time-Out centers, however by July 1990, these had again been sold off. This did not end Sega's interest in overseas operation; as part of a push for improved returns on its amusement business outside of Japan, test arcades ran by new Sega subsidiaries appeared in several European countries as well as the USA, with the Game City arcade in Dallas, Texas also marking Sega Enterprises USA's return to operations.

Soon after this modest international amusement expansion began, Nakayama led Sega in its attempts to become a multimedia giant the size of Disney. High-tech indoor theme parks were stated to be an integral area of these, building off of the considerable advancements already made in its Japanese amusement operations and accelerating plans for the rest of the world. Securing infrastructure, Sega World Hakkeijima Carnival House opened in Yokohama's Hakkeijima Sea Paradise aquarium park in May 1993, containing AS-1 and Virtua Formula installations. Five months later, Sega VirtuaLand opened in the Luxor Hotel, Las Vegas, now mirroring previous Japanese expansion with the same two attractions and similar size to considerable success. Calls for a chain of 100 VirtuaLand facilities, however, never came to fruition.

By the following year, Sega's Amusement Theme Park concept had been finally launched in Japan with Osaka ATC Galbo and Yokohama Joypolis. 1994 did not see any new openings of standalone venues in the States, however with a keen eye on rapid overseas expansion, Nakayama was initiating high-level negotiations for a business alliance with global entertainment giant Disney; by now, the enterprise had decades of experience in developing and operating amusement parks and themed entertainment on a larger scale beginning with Disneyland. The talks built off of previous collaboration on Festival Disney, one of the first test locations for Sega's western amusement facilities in 1992, and eventually led to an exhibition space at Innoventions in July of that year. Though partly devoting its space to console stations, much of the area was taken up by coin-operated arcade machines and large simulators like Virtua Formula.

Development

DreamWorks' Steven Spielberg and Jeffrey Katzenberg, MCA's Edgar Bronfman Jr., Sega's Hayao Nakayama, DreamWorks' David Geffen, and MCA's Ronald Meyer in September 1995 Game Machine publicity photo for GameWorks venture announcement.

Though potentially fruitful for both companies, Sega and Disney did not progress further on their plans after Innoventions. Nakayama had previously spoken to The New York Times of his business strategy's intent to rival the latter, with Sega's indoor theme park plans as an key part to this, and according to Joe DiNuzio, former vice president of Walt Disney Imagineering, both companies saw a market opportunity that they wanted to independently capitalise on. Disney would go on to borrow ideas previously made by Sega for their similar DisneyQuest scheme. In the weeks after Innoventions' opening, Sega publicly attached itself to earlier leaked plans made alongside MCA/Universal for a $20 million indoor theme park covering up to 50,000 square feet of the Orlando CityWalk complex; however, this would also never materialise.

During 1995, gains were finally made with the launch of Sega City, negotiations with Seattle authorities for a location in the then-unopened Meridian complex, and continued talks with MCA to look at alternative avenues; DreamWorks SKG, recently founded in 1994 by Steven Spielberg, David Geffen, and former Disney chairman Jeffrey Katzenberg, had also became involved. An agreement between the three companies to create location-based entertainment centers was first announced on September 28, 1995. DreamWorks was to participate in the venture through DreamWorks Interactive, itself a joint partnership with Microsoft, with then-MCA CEO Skip Paul named as chairman. Paul and Spielberg had spoken over video games before, the former a self-proclaimed "game addict" and the latter a former Atari vice president.

Assorted notable GameWorks and Sega personnel including Hayao Nakayama, Steven Spielberg, Jeffrey Katzenberg, Skip Paul, Jon Snoddy, Yu Suzuki, Mark Cerny, and Tetsuya Mizuguchi in group photo taken during a January 1996 tour of the company's research and development offices.

As negotiations continued, Katzenberg, Spielberg, Paul and recruited Disney attraction engineer Jon Snoddy visited Sega's R&D offices in Japan during January 1996, meeting with numerous developers and Hayao Nakayama. While there, Spielberg left marks on the development of several games, and agreements evolved into creating a unique concept for the scheme - instead of the Amusement Theme Park model, which had proved problematic to get off the ground, a new chain of urban entertainment centers was envisaged by the three companies, combining manageable aspects of the indoor theme park concept with new attractions and amenities specifically designed for a wider American demographic and upmarket image. Additionally, a larger emphasis would be placed on food and drink outlets, offered by the rising Dave & Busters chain.

Eventually, the venture was formally named and announced as GameWorks by Sega, DreamWorks, and MCA on March 13, 1996. With the announcement, Sega indicated its original plans for indoor theme parks in the States were now unlikely to occur; GameWorks would be used as the name for the 100 entertainment centers it planned to open alongside the new jointly funded private company itself, which additionally took distribution of arcade machines in North America and operation of the Sega City chain over from Sega Enterprises USA as its side businesses. Under the new Sega GameWorks company, Spielberg led a team of esteemed western attraction developers including Snoddy at Soundstage 35 on Universal's Hollywood studio grounds, creating new concepts and rides for the first locations to open.

Launch

GameWorks Seattle location exterior, circa March 1997 launch

Originally stated to be during 1996 and then February 1997, the first full-scale GameWorks location, GameWorks Seattle, opened on March 15, 1997. Aided by the appointment of former MTV marketing executive John Shea in the weeks prior to its postponed launch party, the launch of the chain came with considerable PR fanfare centered around MTV GameWorks Premiere Party, an hour long television special filmed live from the opening day of the new Seattle venue and broadcast on the channel. Numerous major celebrities and public figures including Will Smith, Gillian Anderson, and Bill Gates attended, as well as popular artists Beck and Coolio performing live. Tetsuya Mizuguchi also appeared. Due to scheduling issues with Amistad, Spielberg could not join his colleagues on the day, but did feature heavily in marketing material, décor, and the TV special through a pre-recorded segment.

With the Seattle launch a success despite local controversy over MTV's treatment of invitees, GameWorks stated it to be a mere prototype - the second location, GameWorks Las Vegas, became the largest of the chain on May 10, 1997 to another celebrity-endorsed launch party. Taking up 45,000 square feet of Showcase Mall's basement on The Strip, the venue featured larger food and drink outlets alongside a 75 foot rock climb structure. Las Vegas was then closely followed by GameWorks Ontario, California, in July. The third location launched with a skateboarding event featuring Tony Hawk and Top Skater tournaments in the Ontario Mills mall, which saw the chain in direct competition with a Dave & Busters location situated on its other side. Full-scale venues cost up to $10 million, with plans initially calling for up to 100 locations in the US alongside a smaller number of licenced international examples by 2002.

Active period

The Stage 35 test venue precipitated the later small-scale GameWorks Studio chain.

Despite early success and country-wide exposure from its original launch, GameWorks' progress soon stalled on its 100-strong facility target, which could only be completed if a centre was opened every six weeks by 2002. Though talks for it and other provisional sites had been initiated earlier in the year, a three month gap occurred between the opening of the Ontario location and GameWorks Grapevine. Attributed to a lack of prime real estate and negotiations processes, the company downscaled its ambitions, instead deciding to also place focus on new smaller venues, more identifiably arcades instead of the broader GameWorks offering.

Smaller operations were trialled with November 1997's Stage 35, a location heavily inspired by the company's titular corporate offices, then solidified with the creation of GameWorks Studios, a new chain lacking most of the pretences of previous locations and used as a rebranding tool for the previous Sega City operations. Sites opened under this chain included GameWorks Studio City of Industry and GameWorks Studio San Antonio, both designed around themed arcade rooms. By this time, GameWorks' distribution unit was given back to Sega Enterprises USA in an attempt to focus the company on its original endeavours.

GameWorks Rio de Janeiro, opened November 1999 and sold to its overseas partners to become Hot Zone in 2003

With the last full-scale opening November 1997's GameWorks Tempe, it would take another year for the sixth, GameWorks Auburn Hills, to appear in 1998. A handful of other US locations followed in Miami, Chicago, and Columbus; further emphasis was placed on larger restaurants at new openings during this period, as well as franchise stores such as GameStop, smarter dress codes for staff, and eventually government-complying age restriction measures on violent games. Many of these changes were stated as attempts to move away from the predominantly young male and tourist clientele some locations attracted.

Though fewer new GameWorks Studio openings occurred, GameWorks' first full-scale international locations launched in 1999 alongside overseas partners, beginning with GameWorks Guam in March and GameWorks Rio de Janeiro in November. Taking up 40,000 square feet of the New York City shopping center, the latter venue was notably the second largest behind Las Vegas, containing a number of rare attractions more typically found in Joypolis theme parks instead of the GameWorks chain. Another venue in Brazil's Sao Paulo was planned, but never materialised.

Decline

Although Sega's pre-existent financial difficulties had worsened during its active period, GameWorks benefitted from considerable funds throughout this time between its three founding entities, including former president Michael Montgomery's $76 million investment. Aside from previous difficulties with real estate and clientele, the venture was an initial success; thusly, the company and its chain, affected by only a handful of closures and cancelled plans, would remain associated with Sega at a time where its poorer performing amusement operations were liquidated in other parts of the world. Despite this, a mere two new full-size locations, GameWorks Tampa and GameWorks Vienna, opened during the 2000-2001 period, the latter closing within months after its local partner's bankruptcy. Following a period where same-store sales tapered, revenue improved by $10 million according to GameWorks - nonetheless, DreamWorks chose to drop its involvement in February 2001, citing prolonged difficulties and a belief that its personnel had now fulfilled their creative input.

GameWorks Long Beach, the final and second-largest GameWorks venue to open in North America under Sega

Still attempting expansion in spite of dwindling funds, the chain received a handful more locations after 2001 and a shift to more traditional family amusement; GameWorks Minneapolis, opened November 2002, and GameWorks Long Beach, December 2003, were the first to feature bowling alleys. Although closures of the earlier Rio de Janeiro and Guam branches occurred in 2003 and 2006, further international venues opened through overseas partners in 2003 and 2004 with GameWorks Kuwait and GameWorks Santo Domingo. These, however, did not improve fortunes - publicly blaming a lack of income unable to cover the high rent for all of its facilities, GameWorks filed for Chapter 11 bankruptcy on March 11, 2004.

Whilst operations continued under cost cutting measures, plans to salvage the business in a last-ditch attempt by Sega to maintain its US operations presence saw Universal's remaining stake in the business wholly sold to Sega Sammy Holdings. By November 3, 2005, the conglomerate had secured the venture through the newly-formed Sega Entertainment USA, officially making it the sole owner. Remaining executives who had contributed with Universal left the company, though most original lower-level staff and venues remained. After the reorganization was completed, provisional plans on new facilities began; what would later become the final GameWorks to be launched under Sega was 2006's GameWorks Mexico.

New president Ben Kitay alongside former Tokyo Joypolis general managers Akitoshi Ogawa and Takashi Uchijima helmed the company, focusing on renewing its food and drink outlets at older locations as well as establishing new store concepts like World Sports Grille. In addition, increased testing of new arcade franchises already proven to be highly successful in Japan such as Sangokushi Taisen and Mushiking was made possible at GameWorks locations due to Sega's association. In spite of these renewed efforts, expansion of the World Sports Grille concept was halted after mixed reviews, and few games trialled at the venues would ultimately see a widespread release or subsequent popularity - Psy-Phi in particular was canned altogether, in addition to US expansion of ALL.Net after its trials. Amidst ineffective business strategies and a continually worsening economic crisis in the late 2000s that caused new openings to be scrapped, Sega Entertainment USA entered liquidation, choosing to close or sell seven of its 16 GameWorks sites effective March 29, 2010.

Sale

In May 2011, Sega sold GameWorks, which now consisted of only seven locations. Now under the relocated GameWorks Entertainment, the remaining venues were acquired by an investor group headed by amusement industry veteran Steve Dooner; Dooner, GameWorks' new chief executive, originally tried to buy Gameworks in 2001 and discussed the possibilities of making the acquisition a second time in 2004 before the chain was declared bankrupt, with his third and successful round of negotiations with Sega beginning January 2010. Dooner planned to revitalize GameWorks by making broad changes to technology, menus and marketing, increasing the company's emphasis on social media, and eventually opening new locations. Some theming and redemption prizes at original venues retained the link to its original creators, though further closures of the Las Vegas, Ontario, and Tempe branches occurred.

Today, only three of the sixteen original GameWorks locations Sega opened in the US are still in business with the same name, with others under the GameTime, Kitchen Den Bar, and Tilt chains. Numerous other buyouts and a small number of new venues opened under their new ownership during the 2010s.