SEGA History: Founding, Timeline, and Milestones - Zippia (2024)

In 1951, Raymond Lemaire and Richard Stewart started Service Games to develop and market amusem*nt-type games and machines, and within a few years the company was importing jukeboxes and slot machines to supply American military bases in Japan.

While providing games for military bases, the company was called Standard Games, but, following a move to Japan in 1952, the company was renamed Service Games of Japan.

Formed by American entrepreneur David Rosen in 1954, Rosen Enterprises dealt in everything from instant photo booths to mechanical arcade games.

The name Sega, an abbreviation of Service Games, was first used in 1954 on a slot machine, the Diamond Star.

During the same time frame, David Rosen, an American officer in the United States Air Force stationed in Japan, launched a photo booth business in Tokyo in 1954.

In 1957, Rosen started tapping those contacts again after he began importing mechanical coin-operated arcade games which were popular on United States military bases in Japan but largely unfamiliar to the Japanese public.

Due to notoriety arising from investigations by the US government into criminal business practices, Service Games of Japan was dissolved on May 31, 1960.

The company also continued to use the "Sega" brand, creating the first entirely original product to bear the name, the Sega 1000 jukebox in 1960.

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.

In 1965, Nihon Goraku Bussan acquired Rosen Enterprises to form Sega Enterprises, Ltd.

Originally an importer of coin-operated arcade games to Japan and manufacturer of slot machines and jukeboxes, Sega began developing its own arcade games in 1966 with Periscope, which became a surprise success and led to more arcade machine development.

In 1969 Rosen, by then the sole owner of Sega, sold his company to the United States-based Gulf & Western Industries (G&W), becoming a millionaire in the deal while remaining with Sega as chief executive.

However, rampant piracy led Sega to cease exporting its games around 1970.

Two years after Atari Inc. had launched a new era in video games with its 1972 release of Pong, a version of table tennis played on a video screen, G&W made Sega Enterprises a subsidiary and took the arcade game manufacturer public.

Sega released Pong-Tron, its first video-based game, in 1973.

Sega became an American company in 1974 after making its first public stock offering (Sega Enterprises, Inc. becoming the head office, with Sega Enterprises Ltd. relegated to a Japanese subsidiary), opening up a factory on the west coast the following year.

1979 saw the release of Head On, which introduced the "eat-the-dots" gameplay Namco later used in Pac-Man.

In 1981, Sega licensed Frogger, its most successful game until then.

In 1982, Sega introduced the first game with isometric graphics, Zaxxon.

Nakayama and Rosen arranged a management buyout of the Japanese subsidiary in 1984 with financial backing from CSK Corporation, a prominent Japanese software company.

During 1984, Sega opened its European division of arcade distribution, Sega Europe.

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. 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.

In the arcades, Sega's Japanese R&D teams were revolutionising the industry with Hang-On, Space Harrier, OutRun and After Burner (all of which would subsequently see Master System conversions), and by 1987, 40,000 coin-operated machines were being used in 2,000 locations across the world.

Sega released the Master System's successor, the Mega Drive, in Japan on October 29, 1988.

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.

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.

The European version of the Mega Drive was released in September 1990.

Nakayama hired Tom Kalinske as CEO of Sega of America in mid-1990, and Katz departed soon after.

Nintendo waited until the fall of 1991 to introduce its 16-bit system and SEGA took full advantage of the delay, quickly becoming one of the fastest growing companies in Japan.

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.

By 1993, competition in the video-game industry had broadened to include such newcomers as 3DO, which developed the industry's first 32-bit game player, a $700 CD-ROM based game machine displaying near 3-D images that doubled as an compact disk audio system.

The Master System was eventually a success in Europe, where its sales were comparable to the NES. As late as 1993, the Master System's active installed user base in Europe was 6.25 million units.

It was released in Europe as the Mega-CD in 1993.

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.

Sega began work on the Genesis' successor, the Sega Saturn, over two years before the system was showcased at the Tokyo Toy Show in June 1994.

The Saturn's release in Europe also came before the previously announced North American date, on July 8, 1995.

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.

After the launch of the Nintendo 64 in the United States during 1996, sales of the Saturn and its games fell sharply in much of the west.

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.

The PlayStation outsold the Saturn three-to-one in the United States in 1997, and the latter failed to gain a foothold in Europe and Australia, where the Nintendo 64 would not release until March 1997.

As a result of Sega's deteriorating financial situation, Nakayama resigned as Sega president in January 1998 in favor of Irimajiri.

The Dreamcast launched in Japan on November 27, 1998.

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.

On March 2, 1999, in what one report called a "highly publicized, vaporware-like announcement", Sony revealed the first details of the PlayStation 2.

Irimajiri stepped down as president in May 2000, replaced by Ohkawa, who was watching his 22 percent investment in Saga plummet in value.

Moore said the Dreamcast would need to sell 5 million units in the United States by the end of 2000 to remain viable, but Sega fell short of this goal with some 3 million units sold.

Even still, the fiscal reports released in March 2002 still put the company below the line of profitability for the fourth straight year.

The cost of ending Dreamcast production resulted in $689 million in extraordinary losses, contributing to another money-losing year in 2002, when the company's revenue volume was half the total generated a decade earlier.

2002 was Sega's fifth consecutive fiscal year of net losses.

In August 2003, Sammy bought 22.4 percent of Sega's shares from CSK, making Sammy into Sega's largest shareholder.

In 2003, thanks largely to growth recorded in its arcade equipment business, the company posted its first annual profit in six years, providing an encouraging sign that a turnaround was underway.

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.

In order to drive growth in western markets, Sega announced new leadership for Sega of America and Sega Europe in 2005.

Gulf & Western, which had spun off 20 percent of Sega, bought back the public shares and sold the United States assets to Bally Manufacturing Corp. © 2006 Sega

In the mobile market, Sega released its first app on the iTunes Store with a version of Super Monkey Ball in 2008.

In 2009, Sega Republic, an indoor theme park, opened in Dubai.

To streamline operations, Sega established operational firms for each of its businesses in the 2010s.

The chain was sold in 2011.

In 2012, the enviorment of the business has changed dramatically, with the arcade market declining, packaged games no longer providing the core of the companies revenue both in Japan and in the West.

In 2012, Sega established Sega Networks as a subsidiary company for its mobile games.

In 2013, Index Corporation was purchased by Sega Sammy after going bankrupt.

However 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.

Haruki Satomi, son of Hajime Satomi, took office as president and CEO of the company in April 2015.

Sega Networks merged with Sega Games Co., Ltd. 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.

By 2016, the Master System had sold 8 million units in Brazil.

In June 2017, Chris Bergstresser replaced Jurgen Post as president and COO of Sega Europe.

In June 2018, Gary Dale, formerly of Rockstar Games and Take-Two Interactive, replaced Chris Bergstresser as president and COO of Sega Europe.

In May 2019, Sega acquired Two Point Studios, known for Two Point Hospital.

During the latter half of 2020, much of the financial gains Sega made in the earlier part of the year were wiped out due to the impact of the COVID-19 pandemic on its Sega Entertainment division, which ran its arcades.

By January 2022, Sega sold the remaining portion of this division to Genda.

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David Rosen,Martin Bromley,Richard Stewart,Irving Bromberg,James Humpert,Martin Bromely