A Brief History of Sega Enterprises
Sega does what Nintendon't
Irving Bromberg, the son of Russian immigrants, was born on the 10th of June in 1899 in New York. In his early adult life, he was a salesman of glassware. He married Jeannette Blumenthal on the 15th of June in 1918. On the 6th of August in 1919, the young couple welcomed Martin Jerome Bromberg into the world. In 1923, Irving Bromberg became the president of the Greenpoint Motor Car Corporation. In 1924, the couple were blessed with a daughter, Ethelda. Irving Bromberg Company was started in 1930. This company operated vending machines and coin-operated games in Brooklyn, Boston, and the District of Columbia. The company’s largest success was as a distributor of Bingo which they sold for $12.50 per unit (about $267 in 2025 dollars). Bingo was an early pinball game in the likeness of Whiffle. The game was manufactured and advertised by Gottlieb and Company. The creators of Bingo broke their deal with Gottlieb, Gottlieb then created Baffle-Ball, and Bingo sales plunged as Baffle-Ball became a hit. Luckily, Bromberg didn’t put all of his eggs in one basket. He was working as a chewing gum salesman while operating his company so he maintained income through this. He sold the vending and games company in 1933 and it became the Supreme Vending Company of Brooklyn.
After the sale of the company, the Bromberg family moved to Los Angeles. Bromberg opened two companies rather quickly. First, he restarted the Irving Bromberg Company, and then in 1934, he started Standard Games. The standout hit this time was Contact. Bromberg’s son Martin went to work for his father after graduating from high school, and he was also drafted into the US Navy for World War 2. His enlistment was inactive as he worked at the Pearl Harbor shipyard in Hawaii while also receiving income from his father’s business. In 1940, Standard Games of Hawaii was opened in Honolulu.
In 1945, Standard Games of Hawaii was sold. Irving Bromberg, his son Martin, and a friend of theirs, James Humpert, then formed Service Games on the 1st of September in 1946. This was a partnership with each of the three providing $50,000 to get things started. The company’s mission was to supply coin-operated games and slot machines to the US military’s facilities across the Pacific. Around this time, Martin Bromberg changed his last name to Bromley.
In 1951, the Transportation of Gambling Devices Act banned slot machines in US territories. The response from Service Games was, on the 15th of February in 1952, to open a distribution office in Tokyo, Japan. The exact arrangement of this venture is murky. There are three distinct names used: Lemaire & Stewart, Japan Service Games, and Service Games of Japan. This business unit, however it was arranged, did quite well. The next year, this unit became Service Games, Japan, Inc and gained its own factories and sales organization.
The first use of the name “Sega” was in 1954 on the Diamond Star slot machine. The company was growing with offices in Panama, and they reincorporated in Nevada. Yet, not all was well. In 1959, the company attracted the interest of both the US Air Force and the Japanese government. Service Games was accused of bribery and tax evasion. While they managed to avoid official charges, the company was banned from US air bases, and the Japanese division was dissolved. The legal battle was resolved in December of 1964 when the US courts ruled that there had been no criminal activity by Bromley or Service Games (testimonies in court are a key source for the early history presented in this article). On the 3rd of June in 1960, Nihon Kikai Seizō, operating as Sega Inc, took over the manufacturing of slot machines, and Nihon Goraku Bussan took over distribution. In 1961, the remaining assets of Service Games were sold for $1.4 million.
David Rosen was born on the 22nd of January in 1930 in Brooklyn. Rosen joined the US Air Force in 1948, and he was stationed in the far East. He was in Shanghai around 1949, but US presence there ended on the 25th of April in 1950. At that point he went to Japan only to be redeployed to Korea shortly after the 25th of June in 1950 with the outbreak of the Korean War. The war ended on the 27th of July in 1953, and Rosen returned to Japan. His service ended in 1954. He started Rosen Enterprises after receiving an honorable discharge, and he was originally focused on exporting Japanese artwork.
Then, he realized that Japan had a serious need for ID photos. A photo ID was needed for school applications, ration cards, railway cards, employment, and almost anything else involving interaction with the government. In the USA, there were automated photo booths, so he began importing those to Japan. Doing this, at that time, involved learning quite a bit in the way of licensing through the Ministry of Industrial Trade and Industry who divided licenses into the importation of necessities, non-necessity desirable goods, and luxuries. Luxury licenses were hard to obtain, but an automated Photo Booth would fall into that second category. It wasn’t really essential but it provided a service for something that was.
With that business moving, Rosen began looking for something to compete for Japanese folks’ disposable income. The most popular entertainments at the time were pachinko, bars, cabarets, and dance halls. Taking inspiration from automated photo booths that he was already selling, Rosen began to look at importing coin-operated games from the USA. There were pinball and air-gun game manufacturers in Chicago, and the market in the USA wasn’t growing much. It was easy to get the machines, but the license from MITI was harder. While it took him a year, he did eventually get the license he needed. He could import $100,000 worth of pinball machines, and due to this limit and import duties of around 200%, Rosen began seeking used machines that he could refurbish. He got the machines, opened a few small arcades, and his establishments were busy from morning to night.
By the 1960s, Rosen Enterprises and Nihon Goraku Bussan had almost the entire market within Japan. In June of 1964, Nihon Goraku Bussan acquired Kikai Seizo, and on the 1st of July in 1965, Nihon Goraku Bussan acquired Rosen Enterprises. The combined company became Sega Enterprises, Ltd. Rosen became chairman and CEO of the new company. I imagine that for NGB, the import licenses that Rosen held were a key factor. He also already had the US relationships. For Rosen, the engineers, factory, and other assets of NGB must have been a major part of his decision.
Sega’s initial focus remained on jukeboxes, gun games, and pinball. Just as had been the case with Rosen Enterprises, these machines were largely second-hand units from the USA that required significant service before being leased or sold. This servicing meant the company needed flippers, bumpers, guns, and really, everything else used in a coin-op. Sega began manufacturing these components and quickly realized that they could simply make their own games.
The first game made by Sega was Periscope. The game had been sketched out by Rosen and was then handed off to Shikanosuke Ochi to assemble a team and develop the game. It was originally a three-player, electromechanical, shooting game. It simulated a submarine attacking warships. The ships were cardboard and hung from chains moving across a backdrop of an ocean. The players would then look through a periscope and fire torpedoes represented by lines of colored lights and accompanied by sound effects. Each player had five torpedoes. At the game’s first demonstration at the 23rd London Amusement Trades Exhibition, Periscope did well and earned $100 which would be about $1000 in 2025 dollars. After some initial sales, customers complained that while the game was extremely popular, it had a poor profit as the machine was expensive at $1295 (a significant portion of that price being a Japanese export tax). The response from Sega was twofold. First, they recommended increasing the price-per-play to 25¢, and second, Sega made a cheaper, smaller, single-player version of the game. Periscope was a massive success, and it largely set the standard of 25¢ per play for arcades in North America while raising the expectations of arcade goers. For Sega, Periscope proved a market and the company made a series of electro-mechanical games of various kinds until 1977.
In 1969, Sega was sold to Gulf and Western. Rosen remained CEO, but many other former owners and executives chose to retire following the sale. In 1970, Rosen became the head of a subdivision of Gulf and Western called Gulf and Western Far East Pacific based in Hong Kong of which Sega was a subsidiary.
Perhaps the most impressive electro-mechanical arcade cabinet that Sega created was Jet Rocket which saw world-wide release in August of 1970. This game didn’t do as well in the USA as it had in Japan due to it having been copied by competitors before it could ship. Jet Rocket was a flight simulator that had neither a proper screen nor any processor. The landscape was on a vertically oriented conveyor belt that scrolled during gameplay. The game surface was then reflected to the player by mirror. Turning the yoke would turn the mirror. When firing, lights in the cabinet reflected orange lights inside the cabinet onto the plexiglass that the player looked through. The reflection on the plexiglass reflected onto the mirror. This provided the illusion of the rockets flying through the air. These rockets were accompanied by sound effects. Hits on the map were illuminated via timing of the map scrolling and fire button presses, but of course, there were no circuits on the map. The illumination of targets and hits were provided by lights behind the canvas, and the timing is what allowed the closure of the circuits controlling the lights. Jet Rocket won several awards, but due to clones there was an oversupply. The game wasn’t the commercial success that Sega had hoped for outside of Japan.
By 1970, Sega’s games were successful enough that the company had committed to opening arcades itself. When the arcades proved to be successful as well, the company entered into a joint venture with Toho Film Studios (maker of Godzilla). The first Sega/Toho location was in Sapporo City, Hokkaido, Japan taking the entire second floor of the Toho Leisure Building. The arcade was divided into two rooms and featured 125 games.
In 1973, Sega released Hockey TV and Pong Tron. Hockey TV was a variation on Pong where the player controlled a vertical line blocker, and the puck had to hit a smaller location on the screen. Pong Tron, on the other hand, was a more traditional Pong implementation. All of Sega’s video game cabinets used discrete logic until 1979.
In 1974, Sega Enterprises Ltd went public in 1974 by becoming a subsidiary of Gulf and Western owned Polly Bergen. Rosen then became the CEO of Polly Bergen which was renamed Sega Enterprises Inc, and Sega Enterprises Ltd in Japan became a subsidiary.
Sega’s first light-gun game was made in 1974, Balloon Gun. Sega described it:
Balloon Gun is a one or two player game and perfect score is 60. With each balloon that is burst by an accurate pistol shot as it appears in the target area, a score of one point is recorded. Each player is given 60 shots and the game ends when that number has been fired. In a two player game, the first one to use all 60 shots terminates the game for both players and the one with the highest score is the winner. As the game starts, the balloons appear in a slow pattern allowing ample time for careful aim but as the game proceeds, the balloons are released at a faster rate adding excitement and making scoring more difficult.
Sound: A cracking sound when the pistol is fired and a “popping” sound when a balloon is hit.
Dimensions: 69 inches by 26 inches by 33 inches
Wattage: 70 watts
In 1975, Sega wanted to replicate their success in Japan in the USA. Kingdom of Oz was an arcade operator in California’s shopping malls, and they’d been reasonably successful but not so much that they’d be too expensive. Sega purchased fifty percent of the company in 1975, and then fully acquired the company in 1976. After acquisition, Kingdom of Oz locations became Sega Centers. After rebranding and redesigning the existing locations, Sega began opening new Sega Centers in 1977.
Gremlin Industries Inc had been founded in 1973, and the company produced the VIC Dual system for video game cabinets, and they also made the Noval 760 microcomputer. The Noval 760 was a commercial failure (despite being pretty cool), but the VIC Dual was good. Sega purchased Gremlin in 1978. Gremlin would eventually become Sega Electronics.
The VIC Dual was comprised of two Zilog Z80 CPUs at 1.9MHz with each capable of 280,000 IPS, 8K RAM, 8 colors from a palette of 64, with a resolution of 256 by 224 at 60Hz. Sound logic was discrete and custom for each game. This board was used between 1977 and 1981 in Safari, Depthcharge, Heiankyo Alien, Car Hunt, Space Attack, Head On, Head On 2, Invinco, Samurai, Deep Scan, Digger, Space Trek, Tranquilizer Gun, Carnival, N-Sub, Pulsar, Star Raker, Borderline, Alpha Fighter, and Special Dual (I, II, III).
The arcade industry was seeing a bit of a lull in the early 1980s, and Sega needed to reduce costs and install times. The answer to these issues was the G80 arcade system. The bulk of the hardware boards could be used by any game, and the specific game board could be swapped. This allowed an operator to change the signage, controls (if necessary), and a single board to change a game. The rest of the cabinet needn’t be modified beyond signage and possibly controls.
The G80 consisted of a card cage and a six slot backplane with around ten different cards available depending upon the game: vector vs raster, a few sound boards, a speech board, two different RAM boards, and the game logic board. As the name implies, this is a Z80 based system. For raster-based systems, this was a Z80 at 8MHz, and for vector-based systems this was a Z80 at 3.86MHz. For sound, the G80 used the Sega SN76496 at either 4MHz or 2MHz, a Sega Melody Generator, and an optional GI SP0250 speech synthesizer. The soundboard also made use of an Intel i8035 MCU at 3.12MHz. Depending upon the raster or vector option a different Sega display controller would be used and these offered 64 to 128 colors on screen from a palette of 256, 28 to 32 sprites with 4 colors per sprite, and a 6bit color depth. Raster systems had 14K RAM, and vector system had 10K RAM.
Distributors didn’t really seem to find the upgradability to be too convincing, and this feature of the G80 didn’t push sales. This was made particularly obvious when the success of Zaxxon, which was completely bespoke, outclassed any of the G80 systems. While Sega had been directionally correct with the idea of an upgradable arcade platform, it was only the JAMMA standards of the middle 1980s that would bring swappable PCBs to arcade systems in a major way.
Sega slightly changed their logo in 1982.
Sega released the System 1 arcade board in early 1983. This board standardized CPU, sound, and graphics. The CPU was a Z80 at 4MHz. The sound system was comprised of Sega SN76496 and Intel 8751. RAM was 20K and ROM was 136K. Graphics for this system well surpassed anything Sega had previously delivered with the Sega 315-5911 sprite line comparator, 315-5012 sprite generator, and 315-5049 tile map generator. The chips working together with the CPU could provide an active resolution of 256 by 224 at 60Hz with a total area of 640 by 260 overscan and 260 scanlines (224 active). System 1 allowed 2048 colors on screen from a palette of 4096 with 16 colors per sprite and up to 32 sprites. This board was used in 4-D Warriors, Block Gal, Brain, Bullfight, Choplifter, Flicky, Garcia, I’m Sorry, Mister Viking, Ninja Princess, Noboranka, Pitfall II, Rafflesia, Regulus, Spatter, Star Jacker, SWAT, Teddy Boy Blues, Up’n Down, Water Match, and Wonder Boy.
In March of 1984, Rosen led a management buyout of Sega with backing from the CSK Corporation. Following the buyout, Isao Okawa (chairman of CSK) became the chairman of Sega, and Hayao Nakayama (former VP of distribution) became the CEO. Jeffrey Rochlis became COO and president. Rosen had announced his intention to step down in November of 1983, but he would continue in a consulting role with the company (and as a shareholder) for quite some time.
Given the down turn in the arcade business that was now worse, Nakayama advocated that Sega enter the home computer and game console business. The Sega SC-3000 microcomputer was released on the 15th of July in 1983. This system was available in red, white, or black and with either rubber keys or a fully mechanical keyboard. The computer was built around the NEC D780C (Z80 clone), 2K RAM, 16K VRAM, TMS9918A video chip, and SN76489A audio chip. The system had no ROM and required a cartridge be present to boot. The computer’s video system could produce 40 columns by 25 rows or 256 by 192 pixels with 32 sprites and 16 colors.
For connectors, the SC-3000 offered RF out, analog out and composite video out via 5pin DIN, RGB out, tape (female 2.5mm), 7pin din printer, a cartridge slot, two joysticks, and power (9V, 850mA). If one opted to buy the Card Catcher, Sega Cards could be used with the SC-3000. The Card Catcher was originally distributed with Zoom 909 and Dragon Wang providing decent value, but the memory cards were limited offering just 4K to 32 KB ROM. The Card Catcher plugged into the cartridge slot.
The 2K RAM limit was a problem, but most cartridges had RAM. If you were wanting to write some BASIC, Sega had you covered with four different options. All of these featured 32K ROM, but contained different amounts of RAM. BASIC Level II A shipped with half a kilobyte of extra RAM. Level II B added 1K, III A added 16K, and III B added 32K.
What is a classic computer without a floppy drive and serial ports? For the SC-3000, these were supplied by the SF-7000 Super Control Station. This expansion unit provided a 3 inch floppy disk drive, an RS-232C port, a Centronics parallel port, 64K RAM, and 8K ROM. It connected to the computer via a short cable that ended with a cartridge port adapter. This essentially required the computer to be placed on top of the expansion unit which I can only imagine made typing a pain (unless the owner also possessed an SK-1100 external keyboard), and it additionally required the expansion to be disconnected to use any cartridge software.
Generally, the SC-3000 was similar to many other micros of the time. It shared CPU, video, and sound with the ColecoVision and Spectravideo SV-318. It shared the same CPU and video as MSX1 computers with the difference between them being the sound chip. MSX computers made use of the GI AY-3-8910 rather than the SN76489A. Yet, these two audio chips were similar enough that Coleco offered a translator in the Coleco SDK. I am unaware of anything like this existing from Sega.
After having started work on their computer, Sega discovered that Nintendo were working on the Famicom. Feeling that they’d need to compete, Sega immediately began working on a cost-reduced version of their system that would do without a keyboard and most expansions while offering a permanently attached joystick. This became the SG-1000. The computer itself was unchanged except that it had just 1K of main RAM, the processor was down clocked to 3.58MHz, and video/audio were output only through RF. It did feature an expansion port on the back of the unit, and the SK-1100 keyboard could be used.
The SG-1000 could make use of all SC-3000 cartridge software except for Music and BASIC (unless the keyboard were attached). It could also make use of the Card Catcher. As the primary joystick was permanently attached, there was only one joystick port for the second player.
On the 31st of July in 1984, just over one year after releasing the SG-1000, Sega introduced the SG-1000 Mark II. This was functionally the same system but with the attached joystick removed and two joystick slots having been added. The default was also a joypad rather than a joystick, and the expansion port was moved to the front of the system.
The Mark I and Mark II had just 68 cartridge games during their lives, 29 Sega Cards, and 26 of the cartridges required the keyboard. The Mark I and Mark II also never saw releases in most countries. They were moderately successful in Japan (even beating expectations and being profitable), and they saw some sales in New Zealand, Australia, Italy, Spain, Singapore, Taiwan, France, and Finland but weren’t the massive success of the Famicom. Partially, Sega had poor timing with both the MSX and Famicom overshadowing the SG-1000, but the company was also completely unfamiliar with the home market. Sega was an arcade company. Thankfully, they learned.
On the 20th of October in 1985, Sega released the Mark III. This system integrated the Sega Card slot, kept the expansion slot on the front, had two joypad ports, and was built around a Zilog Z80A at 3.58MHz, 8K RAM, and 16K VRAM. Audio was provided via the SN76496 PSG and Yamaha YM2413 FM synth. The PSG supported 4 channel mono sound with sample rates from 4kHz to 44.1 kHz, 1bit to 12bit audio depth, and 16 volume levels. The FM chip offered 9 mono FM synthesis channels, and 15 pre-defined instruments. The Mark III utilized the Sega 315-5124 manufactured by Yamaha. From what I’ve been able to find, this was essentially a single-chip version of the System 1 graphics chipset. This chip was 16bit and capable of supporting up to 256 by 240 on screen with an overscan resolution of 342 by 262 at 60Hz with 32 colors on screen from a palette of 64. Sprites could have up to 16 colors with another 16 colors for the background. The Mark III was compatible with the SG-1000 and thus the SC-3000, but I am unaware of any expansion that could transform the Mark III into a full home computer. The system launched at the equivalent of $200 or around $602 in 2025 dollars. Within a year, around a million Marks III had been sold in Japan.
The same year the Mark III launched in Japan, Sega launched Sega of America. With the NES having already launched in the USA, Sega wanted to lower the price of the Mark III for the US market and give it cosmetic changes to appeal to the US audience. This was the “Sega Video Game System” or just “Sega System.” To make the system a little cheaper, the FM synthesis chip was removed, and most units had a game in ROM that would launch if no cartridge was inserted (saving money on bundling a cartridge with the system). Getting ready for CES in the summer of 1986, J. Walter Thompson was hired and given a budget of $9 million for advertising, producing the console packaging, and getting launch titles readied.
When CES came, JWT had an 1800 square feet booth setup for Sega. By all accounts, Sega made a good showing and managed to win a design and engineering award. When the Sega System was released in 1986, it was offered in two different bundles, the Base System which consisted only of the game console a controller for $139, or the Master System which included a second controller and light phaser for $149. As most units sold were of the Master System variety, the name “Sega Master System” became the default term for the international version of the Mark III. This was later made official by Sega.
At this time, Nintendo controlled around 90% of the US home video game market, and Nintendo had distributors like Toys R Us and Sears. After four months on the market, Sega managed to sell around 125,000 units which placed them ahead of the Atari 7800 but well behind Nintendo. By winter of 1987, Sega had released 3D Glasses for the SMS and they’d gained distributors like Macy’s and FAO Schwartz, but Sega was still struggling with sales having reached just 250,000 for 1986 when they’d hoped for around 750,000. Nakayama then chose to invest less money in marketing in North America, and turned over distribution and marketing to Tonka in the USA and to Irwin Toy in Canada.
Most of the Master System’s games library was built of arcade ports which were aided by the SMS sharing much of the Sega System 1 and System 2 platform. This fact was heavily used in marketing. Of course, this was something that Sega was forced to do as well. Nintendo’s developer agreement brought with it exclusivity, and this prevented most Nintendo games from getting ports and prevented many developers from making games for the SMS at all.
In 1987, the international SMS was brought to Japan with a few additions. The Japanese unit brought back the FM synthesizer, had a built in port for the 3D Glasses (rather than using a Sega Card), and included a Rapid Fire unit. The BIOS was also different and with no game inserted would play the Space Harrier theme utilizing both the PSG and FM chip.
The final revision of the Master System from Sega (sort of) was the Master System II. This was a cost reduced system that lacked support for composite output allowing only RF (except in France where the reverse was true), lacked support for Sega Cards and 3D glasses, but actually had a better VDP with more supported modes, improved scaling, and bug fixes. The advantages of the newer VDP are best seen with the Brazilian release of Earth Worm Jim. The SMS II’s built in game was Alex Kidd in Miracle World at launch in 1990, but this was changed to Sonic the Hedgehog in PAL regions after 1992 (NTSC models ceased production that year).
While both the Japanese and North American markets may have disappointed Sega, other markets most certainly didn’t. In South Korea, Europe, and Australia, the SMS was the best-selling console. In New Zealand, it was a close second. In Brazil, well… not only was it the best selling console, it is still being sold today. In Japan, a bit over a million units were sold. In the USA, around 2 million; in Europe, close to 7 million; in South Korea, around 720,000; and in Australia, around 650,000. Then in Brazil, the SMS sold over 8 million.
The Sega Game Gear was released in Japan on the 6th of October in 1990, and it hit the shores of Europe and North American in April the following year. It was, essentially, a handheld SMS retailing for $149.99, and using six AA batteries to achieve around three hours of run time. Sega said five, but from personal experience, I can assure you that that figure was inaccurate. The key selling point against competitors at the time was the color screen and the ability to play actual SMS cartridges through an adapter. The Game Gear achieved just over ten million units sold.
Development of the Mark V began in mid-to-late 1986 and was led by Hideki Sato with Taku Matsubara and Masami Ishikawa contributing heavily along with another five individuals whose names I cannot find. Initially, this design was supposed to be 8bit, building on the SMS, but offloading much of the processing to coprocessors. Then, some information about the Super Famicom started to circulate, and Nakayama stated that something much more powerful was needed, citing the Sega System 16 arcade board built of both the Motorola 68000 (Hitachi FD1094) and Z80 as an example. The Mark V team then worked to replicate as much of the System 16 architecture as was possible. As they worked, they found that the VDP chip design was simply getting to be too large to be successfully fabricated at any kind of reasonable yield, and the design began to be scaled back sacrificing spinning sprites and decreasing the number of colors. As the system was nearing completion, Nakayama chose the name Mega Drive with mega conveying the system’s technological superiority over rivals, and the drive conveying the speed of the CPU. This name wasn’t available for trademark in the USA due to it having been taken by the Mega Drive Systems company who made data storage modules and removable disk drives. In the USA, the Mega Drive became the Genesis.
The Mega Drive was built around the Motorola 68000 clocked at 7.6MHz with 64K RAM, 64K VRAM, 72 bytes of color RAM, and 8K audio RAM. A game cartridge could provide 4MB to 8MB of ROM and an additional 8K to 32K RAM. Sound processing was handled by a Zilog Z80 at 3.5MHz when playing Mega Drive games, but this CPU could also be used for compatibility with SMS games. The Mega Drive featured the YM2612 for FM synthesis and the SN76496 PSG. For the VDP which should now really be called a GPU, the Mega Drive used the Sega 315-5313. This chip was 16bit, could output 60fps at NTSC progressive scan 320 by 224 or 256 by 224; PAL 320 by 224, 256 by 224, 320 by 240, or 256 by 240; NTSC interlaced 320 by 448 or 256 by 448; PAL interlaced 320 by 448, 256 by 448, 320 by 480, or 256 by 480. The GPU could provide 80 sprites on screen with 16 colors per sprite, and it offered integer sprite zooming, sprite priorities, flipping, tiling, and combining. The palette offered was 512 colors at 9bit, but with shadow and highlight this comes out to 1536 total colors. As for colors on screen, the standard was 64. Adding shadow and highlight, the Mega Drive could put 192 colors on screen. If the programmer used a mid-frame palette swap, the Mega Drive could achieve 256 colors. These latter two were only possible utilizing the rather powerful DMA unit on the Sega 315-5313. The DMA could write to VRAM during active display and during blanking, and this allowed the programmer to change colors while drawing a scanline. For a still image, the Mega Drive could output a static bitmap with up to 4096 12bit colors. For the curious, the powerful DMA of the Mega Drive was the source of the “blast processing” hype of Sega’s ads during this era.
The Sega Mega Drive was released in Japan on the 29th of October in 1988 and the entire first production run sold out within two days. Despite strong sales success, the console never rose higher than third place in Japan. The Super Famicom was the most popular, and the NEC PC Engine the second most popular.
Sega felt that they needed a competitor to Nintendo’s Mario, and a competition was held inside the company to create that rival. In November of 1989, Naoto Oshima was working on a game where the player controlled a character who ran through a world of smooth terrains, loops, and jumps. The game emphasized speed, and thus, the original thoughts were around fast animals. Eventually, they settled on a rabbit who could use his ears to grab objects and manipulate his environment. Unfortunately, this idea proved to be too difficult for the Mega Drive hardware. This led to Oshima and his team focusing on animals that could roll themselves into a ball for an attacking move. This narrowed the field of characters to armadillos and hedgehogs. Oshima’s hedgehog idea prevailed. The hedgehog became dark blue to match the Sega logo, but this also helped him standout against lighter blue backgrounds. Oshima then took inspiration from Felix the Cat’s head, Mickey Mouse’s body, and Michael Jackson’s boots from the cover for Bad. That the shoes were red and white comes from Santa Claus. The hedgehog’s names was originally Mr. Hedgehog, but the development team eventually chose Sonic as they felt this name better conveyed a sense of speed (Sonic’s walking speed matched Mario’s running speed), and the team took the nickname Sonic Team. Sonic’s antagonist was a man with a mustache and had originally been one of the possible protagonists. He came in second, and the character was then repurposed as a villain. Mr. Mustache then became Dr. Eggman in Japan and Dr. Robotnik in the rest of the world. The game was programmed by Yuji Naka who’d worked on Phantasy Star and Ghouls ‘n Ghosts. Production began in April of 1990, with Oshima and Naka working around 19 hours per day. Hirokazu Yasuhara came in as a manager and level designer. Four others later joined to help speed development. The game was ready for play testing in early 1991, and it was revealed at CES that year where it won an award for innovation. Sonic was released in the USA on the 11th of June in 1991, in Japan on the 26th of July in 1991, and I cannot find a reliable release date for other regions.
In 1990, Nakayama realized that the North American was quite different from that of Japan, and he wanted to succeed in that market. To that end, he hired an American who’d already proven his capabilities. Thomas Kalinske had successfully revived Barbie and Hot Wheels, and launched Masters of the Universe as CEO of Mattel. He became CEO of Sega of America in 1990. Not being a video games man, Kalinske brought in industry advisors to get him up to speed and adopted the razor and blades model where the console is sold at a low price to push the sales of games. He then created a team to develop games specifically for the North American market, created new advertising campaigns, and switched the bundled game from Altered Beast to Sonic the Hedgehog. All of this was looked down upon by the Japanese board, but Nakayama was insistent that Kalinske be allowed to continue.
Sonic the Hedgehog was released just after Kalinske’s turn around plan, and during the Christmas season of 1991, the Sega Genesis roughly doubled the sales of the Super Nintendo. Over the course of the year, Sega managed to take around 65% of the 16bit console market. This pattern continued for the next four years.
From the start of design, the Mega Drive/Genesis was meant to be expandable. There was the Power Base Converter that allowed SMS games to be played on the Mega Drive, the Modem that allowed users to connect to Sega Meganet (Japan/Brazil, allowed online multiplayer over dialup), the Sega Channel adapter that allowed a user to download games to the adapter’s 4MB of RAM over cable TV, the Mega-CD (or Sega CD) that allowed for games on CD-ROM as well as providing a faster CPU (12.5MHz m68k) and better graphics chip featuring sprite scaling and rotation, and the 32X which provided two 32bit SuperH-2 CPUs at 23MHz with 256K RAM and 256K VRAM. Of all of these add-ons, the Mega-CD was the most popular, but none were incredibly popular. The 32X, in particular, did fairly poorly with 800,000 units sold despite impressive graphical and gameplay capabilities, and despite being able to work alongside the Mega-CD. The full “tower of power” with a Sega Mega Drive, Mega-CD, and 32X was impressive and more fully realized the original vision for the system, but the SuperH-2 CPU suffered production difficulties. Likewise, being difficult to develop for, only six games were available at launch, and the 32X only ever received forty games.
The Mega Drive saw three official variations from its original design. The Mega Drive II is shown above with both the CD and 32X. There was a Mega Drive III that looked quite similar to the later SMS consoles, and of course, there was the Sega Nomad. The Nomad ate up AAs in about the way I drink coffee… quite quickly and in high volume. The stated figure was six AA batteries for four hours of run time. It was, however, a portable Sega Mega Drive which made it quite wonderful. It sold about a million units, and while not a real “success,” it was still a testament to Sega’s capabilities at the time. It had 3.25 inch screen, an AV connector for video out, a mono speaker, headphone jack, and a controller port for a second player. It could not, however, make use of any of the Mega Drive expansions.
The 32X had launched on the 21st of November in 1994, the 3rd of December in Japan, and in January of 1995 in PAL markets. The Sega Saturn launched in Japan on the 22nd of November in 1994. This timing, the lack of availability of the 32X, and this simultaneous release of the Saturn hurt both the Saturn and the 32X.
In 1993, the home video game console market was getting crowded. The SNES, Mega Drive, Atari Jaguar, CD-i, and 3DO were all competing for placement next to home televisions. A team of 27 was assembled and put under the management of Hideki Sato and they began working on the Saturn project. Early rumors were of either a 32bit or 64bit system utilizing CD-ROM, but the only sure thing was that it would likely be capable of arcade-like visuals. The system was decidedly 32bit.
The Saturn was built around two Hitachi SuperH-2 CPUs clocked at 28.63MHz in a master/slave configuration with each CPU capable of 37.22 MIPS and executing two instructions per cycle per CPU. There were then two DMA units, four fixed point math coprocessors, and a 32bit databus. The CD-ROM had its own dedicated Hitachi SuperH-1 CPU as a controller running at 20MHz and achieve 20 MIPS, and this utilized a 16bit databus. Audio was handled by a proprietary sound chip manufactured by Yamaha and had a 16bit databus. This chip was capable of executing four parallel instructions and ran at 22.58MHz. The chip provided the Saturn with 32 audio channels, could handle PCM, FM, MIDI, and LFO, offered both 16bit and 8bit audio depth at a 44.1kHz sample rate, and stereo output. Video was handled by the Sega/Hitachi VDP1 and Sega/Yamaha VDP2 both operating at 28.63MHz. VDP1 handled sprite, texture, and polygon drawing with a 48bit bus width and 16bit word length. VDP2 handled backgrounds, scrolling, and 3D rotation with a 32bit bus width and 32bit word length. Additionally, the Sony CXA1645M was present for RGB composite video encoding. The Saturn had 2MB of “work RAM,” 1.5MB of VRAM, 512K sound RAM, 512K of CD-ROM buffer, and 32K battery backed SRAM. ROM was 512K. The Saturn did have one expansion slot on the top that could add another 512K to 4.5MB of RAM. There were many video modes, but the lowest was 320 by 224 pixels and the highest was 704 by 512 pixels. System RAM achieved 480MB/s, VRAM achieved 286MB/s, and on a 3D rotating playfield, the Saturn achieved a polygon filtrate of roughly a million texture mapped polygons per second. The Saturn supported a color palette of more than 16 million 24bit colors, and the number of colors on screen at one time varied on modes used. Not bad at all for 1994.
Sega sold (at minimum) 170,000 Saturn consoles on launch day in Japan. Pre-orders had sold out and queues were hours long. Sega achieved 500,000 units sold by the end of Christmas in 1994. By June of 1995, Sega had achieved a million Saturns sold. In Japan, Virtua Fighter had been among the most successful arcade games of all time, and that this was the bundled title no doubt helped those sales. Virtua Fighter 2 launched in 1995, and Virtua Fighter 3 followed in 1997. The Saturn became the market leader for a brief time in Japan, and it was the company’s most successful console in Japan. Around 80% of all games produced for the system were Japanese exclusives.
In North America, Sega had felt that the Saturn was too expensive at $399, and they therefore focused on the Sega Genesis add-ons. These, however, weren’t to have a long life, and customers knew this with the launch of the Saturn. This all changed with the launch of the Playstation at $299. Sega of America then prioritized the Saturn’s launch, but they didn’t have enough stock. They chose to prioritize Babbages, EB, Software Etc, and Toys R Us while leaving out Kay-Bee and other retailers. The likes of Sears and Wal-Mart didn’t receive consoles until the summer of the following year, and demand greatly exceeded supply. Customers could, however, easily get their hands on Sony’s Playstation. With the launch of the Nintendo 64 on the 29th of September in 1996, the Saturn was truly moribund in North America. By the close of 1996, Sega had sold 1.6 million Saturns in North America while Nintendo had sold 1.7 million N64s in just three months and Sony had sold 3.2 million PlayStations. The only market to see success with Saturn outside of Japan was Brazil where the PlayStation wasn’t sold at all.
Curiously, other than the Sonic Jam anthology of previous games, Sonic R racing game, and Sonic 3D Blast ported from the Genesis, there were no Sonic titles for the Saturn. Why did the Sega icon not show up? First, Sonic Team was focused on NiGHTS into Dreams. Second, both Sonic X-Treme and Sonic Saturn were under development, but never released. Sonic Saturn was a truly 3D Sonic game not too dissimilar from the later Sonic Adventure, Yuji Naka didn’t like it, so it didn’t happen. For Sonic X-Treme, the game was stuck in development, redevelopment, and management shifts. With other 3D platformers seeing release and success, the bar for quality went up. By the time the game was getting close to ready, the company had begun work on their next console.
A successor to the Saturn was being conceptualized before the Saturn had been released, and this only picked up steam following the introduction of the Sony PlayStation and Nintendo 64. Some decisions were easy to make, and others not so much. Sega wanted to continue using the SuperH CPUs, but they also wanted to make their next console far more easy for developers. Initial GPU development was in the hands of Lockheed-Martin who’d worked on the Model 1 and Model 2 arcade systems, but Sega rejected their proposals. The next consideration was 3dfx’s Voodoo as this would be quite familiar to software developers, and Sega managed to buy around 16% of the company in 1997 as a sign of commitment. By November, that had changed. Sega chose NEC’s PowerVR. This resulted in a lawsuit from 3dfx against both Sega and NEC. This lawsuit was eventually settled in 2000 with 3dfx receiving a bit more than $10 million. To keep developers as happy as possible, the system would ship with Microsoft’s Windows CE (first released on the 16th of November in 1996 for SuperH-3, MIPS 3000, MIPS 4000). Windows CE was initially related to Windows 3.11 and Windows 95 while having some connections to WinPad. Still, there were a few major differences. CE could be shipped as a runtime library not unlike earlier Windows 1 and Windows 2, the system could be shipped to hardware builders as partially source available for easier adaptation to unique hardware platforms, and the kernel could be configured and built either as monolithic or hybrid. On top of these differences, the operating system was also dramatically scaled down in comparison to either 3.11 or 95. For gaming, a main attraction was DirectX 6 support.
After it all shook out, the Dreamcast was built around the Hitachi SuperH-4 at 200MHz. This is a 2-way, superscalar, RISC CPU with 8K instruction cache and 16K data cache capable of 360 MIPS. It had a 128bit SIMD vector unit, 64bit floating point unit, 32bit fixed point unit, a DMA controller, and interrupt controller. The system made use of NEC PowerVR CLX2 at 100MHz. System RAM was 16MB and was accompanied by 8MB of VRAM, 2MB of audio RAM, and GD-ROM buffer of 128K. The system ROM was 2MB. The console could accept media in GD-ROM, CD-ROM, CD-DA, PhotoCD, VideoCD, CD Extra, CD+G, and CD+EG. Audio was handled by the bespoke AICA manufactured by Yamaha which was an improved version of the Saturn’s sound chip. It was capable of 64 PCM channels with a resolution of 16bits or 8bits at a sample rate of 44.1kHz. The sound IC was controlled by an ARM7DI at 2.82MHz. All of the various hardware was connected via the System Bus which offered abstracted interfaces to BIOS ROM and GD-ROM, modem and sound, data transfer between controllers and CPU, the CPU itself, main memory and DMA, and the PowerVR chip. In the case of the Dreamcast, the CPU actually handled quite a bit of the graphics and the PowerVR chip mostly handled rasterizing. Video output could be done via RCA cables, RF modulator, S-Video, SCART, or VGA. Output via VGA was at 480p.
For input, the Dreamcast had several different controllers and four controller ports. The official controller was a variation on the 3D controller from the Saturn, but had two dock connectors. In addition to this controller, the Dreamcast had arcade-style joysticks, lightguns, rod-and-reel motion controller, keyboard, mouse, and flightsticks.
The Dreamcast shipped with a 56K modem, but an ethernet adapter was available (these are rare), and the system was expandable via this port. Iomega had planned and announced a Zip drive for the system, but this was never released. A karaoke expansion was made available in Japan and was quite popular. It had its own expansion slot, and thus the modem could still be used. This allowed users to download songs over the internet.
The dock connectors on the controllers could accept memory cards, visual memory units (VMUs), microphones, and rumble packs. Most users would prefer the VMU to be in the top of the two dock connectors making the VMU screen visible in the controller. For most games, this would just display an icon, but in some it could display player character health or other useful information. A rumble pack would then be in the second slot. When playing games that made use of or accepted voice, a microphone would likely take the place of the VMU. An interesting note for VMUs, is that VMUs had their own batteries, and some games would install mini games playable on the VMU itself when not attached to a controller. These would also sometimes allow data trading by connecting two VMUs together.
The Dreamcast was released in Japan on the 27th of November in 1998 and in the USA on the 9th of September in 1999. The launch in Japan wasn’t great as NEC was struggling to produce enough PowerVR chips. Sega had wanted half a million Dreamcasts available at launch, but the number ended up being just 150,000. Of these, 80,000 were allocated to fulfill pre-orders while the rest were allocated to retailers across Japan. Nearly all of these were sold in the first three days. There were four titles available for the Japanese launch: July, Pen Pen Trilcelon, Virtua Fighter 3tb (along with the arcade stick), and Godzilla Generations. As usual for Sega of Japan, Virtua Fighter was the best seller. About one in three users logged into Sega’s online service within the first few months.
In the US, the launch was far better. The advertising had played up the 9/9/99 for $199 launch date and price, and nineteen titles were available: Soul Caliber, Power Stone, Mortal Combat Gold, Sonic Adventure, Expendable, Blue Stinger, Trickstyle, Hydro Thunder, Tokyo Extreme Racer, Flag to Flag, Monaco Grand Prix, TNN Motorsports Hardcore Heat, The House of the Dead 2, AirForce Delta, AeroWings, NFL 2K, NFL Blitz 2000, and Ready 2 Rumble Boxing. The first day, revenues for Sega of America’s Dreamcast launch totaled $97,904,618.09. Around a quarter million Dreamcasts were sold in just twenty four hours, and more than half a million were sold in the following two weeks. More than 1.5 million were sold in the States by the end of the year. In Europe, the Dreamcast was released on the 14th of October. By Christmas, Sega had sold roughly half a million Dreamcasts, but sales in Europe cooled quickly.
Perhaps the most ambitious game made by Sega for the Dreamcast was Shenmue. It was, at the time, the most expensive game ever produced, and it had extreme interactivity (for example, the main character Ryo {and thus the player of Shenmue} could play a full version of Hang-On or Space Harrier in an arcade), freedom of movement, real-time day/night and weather systems, fully voiced non-playable characters, a large world, and an involved story more commonly seen in cinema. It was an RPG that crossed sub-genres by including adventure, puzzle solving, fighting, and racing, but it was driven by its story. The gameplay mechanics were simple enough to make the game approachable, but it would quickly draw the player into the game world; a world where the player could talk to every single NPC, and those NPCs had jobs, lunch breaks, and homes. They had their own names, ages, and hobbies. Toys seen in the game come from other Sega franchises like Daytona USA, NiGHTS into Dreams, Phantasy Star, and Sonic. These items could be collected. The game was released on the 29th of December in 1999, and it was well received in Japan. Having cost Sega between $47 million and $70 million to create, it sold at a loss.
Overall, the Sega Dreamcast sold 9.13 million units before being discontinued on the 31st of March in 2001. The discontinuation followed a six month loss for the period ending in September of 2000 to the tune of $163 million. That March of 2001, Sega posted a net loss of $417 million. Partially, this was due to the Sony PlayStation 2, but it was also due to a broader softening economy. More games were released for the Dreamcast (619 total), many of them quite groundbreaking and wonderful, but the platform was dead.
The arcade market had been declining, and Sega began closing arcade locations. Most of Sega’s oversees locations were closed including Sega World indoor theme parks.
Sega became a platform agnostic game studio with a small arcade side business. Overtime, Sega had come to be owned largely by itself and private shareholders. CSK still owned 22%. This share was purchased by Sammy making Sammy the largest single shareholder of Sega. Hajime Satomi (CEO of Sammy) then became the CEO of the combined company, Sega Sammy. The portion of this entity that was Sega Enterprises is today Sega Corporation (Kabushiki-gaisha Sega), and is a subsidiary of Kabushiki-gaisha Samī via Sega Sammy Holdings (Sega Samī Hōrudingusu kabushikigaisha). Its major divisions/studios are Ryu Ga Gotoku Studio, Sonic Team, Sega Sapporo Studio, Sega Fave, Sega Amusements International, Sega Studios Shanghai, Creative Assembly, Sports Interactive, Hardlight, Atlus, Play Heart, Two Point Studios, and Rovio Entertainment.
There are so many games that I couldn’t list or talk through, and there are many people who didn’t get a mention. This is always the case. I was a Sega fan in my earlier years, and I owned and played the SMS, Genesis, Saturn, Dreamcast, Game Gear, and Nomad. The SMS, Saturn, Game Gear, and Nomad were gifted from friends who’d lost interest in them. The Genesis was a gift from my father to his four children. The Dreamcast was a Christmas gift for me from my father in 1999. All of them were awesome. It rained and snowed rather often in southern Ohio, so my Segas got quite the workout. These game systems didn’t just bring joy and entertainment, they stimulated my mind to consider just how the wonders of screen and sound were made. I was quite disappointed when the Dreamcast was discontinued, but it is the one computing device with which I’ve never been able to part.
To everyone who ever worked with or for Sega, thank you; you built magic!
My dear readers, many of you worked at, ran, or even founded the companies I cover here on ARF, and some of you were present at those companies for the time periods I cover. A few of you have been mentioned by name. All corrections to the record are sincerely welcome, and I would love any additional insights, corrections, or feedback. Please feel free to leave a comment.
Thanks for another wonderful article!
I was also a Sega kid growing up, the Megadrive means so much for precious childhood memories. Maybe that “blast processing” stuff wasnt all just hype, I tried emulating SNES games many years later and boy do they feel slow to play compared to Sega stuff 😁
Such a pleasure to finally learn so many of the behind the scenes politics and details around this