Thoughts on the History of SEGA, Part 01

These days, SEGA is—well, while it’s not exactly a lesser-known company, it doesn’t enjoy the popularity it once knew.  Most of the games published nowadays are either the latest in a long line of dreary Sonic titles, or a republishing of a game from their hey-day in various e-stores.  Once, they were the company, managing to topple Nintendo—a feat then considered unthinkable.  Today, we start another article series, as we explore the history of this once-mighty giant who was nearly synonymous with gaming innovation.

As counter-intuitive as it might initially seem, SEGA would never have existed had it not been for World War II.  In Nineteen Forty, three men started a company named Standard Games.  They were Martin Bromley, Irving Bromberg and James Humpert, and they founded the company in Honolulu, Hawaii.  Standard Games existed to bring coin-operated amusement—typically slot machines—to military personnel stationed in Japan.

Bromley was in Hawaii when Pearl Harbor was bombed, but by all accounts he never felt an intense hatred or the like toward the Japanese.  Though we don’t know what he or his partners did think with certainty, they never cut ties with Japan.  As the nation struggled to rebuild itself in the wake of the war, the United States was outlawing such gambling-related entertainment as slot machines.  Standard Games was presented with an opportunity, and that opportunity was leapt upon.  Slot machines were purchased from the United States government by the truck-load, and Standard Games was renamed Service Games.

Meanwhile, a man by the name of David Rosen had been stationed in Japan with the Air Force.  After the war, he returned to Tokyo where he launched a two-minute photo-booth business.  That business grew incredibly rapidly, as citizens needed such small identification photos.  These booths were located in places like department stores, movie theaters, and other such places of business where people congregated often.

As his business grew, he made good contacts amongst the owners of the businesses his booths were in, which were helpful when he decided to to import coin-operated arcade games that were rather popular in the American military bases, but relatively unknown to the Japanese public at large.  Within only a few years, Rosen Enterprises, Ltd. had only one competitor—Service Games.

By ‘Sixty-Four, Service Games had its own factory, while Rosen Enterprises was purchasing machines from Chicago.  While no record I know of exists of what David Rosen thought during that time, I think it’s safe to say he realized he could either get into a heated “war” with Service Games, or take the route that would make everyone money—merge.  Obviously, we know which route he took.

In ‘Sixty-Four, Rosen Enterprises merged with Service Games, the result renamed SEGA Enterprises.  Within the year, SEGA Enterprises had become a full-fledged manufacturer, and their machines are still considered collectible to this day.  An overview of the slot machines they produced and sold can be found here, and if one has nearly two thousand Pounds Sterling just lying around (or the equivalent of almost three thousand, one hundred and fifty U.S. dollars), they can always purchase a classic SEGA slot machine of their own, such as this one.

While arcades were losing their appeal in America, they skyrocketed in popularity in Japan.  Pinball machines still held the public interest, but it would be a good few years before they were no longer associated with the “seedy”, under-lit rooms that was the stereotypical arcade.  The Japanese couldn’t get enough.  It’s not really hyperbolic to suggest that the proliferation of gambling parlors in Japan to this day was at least helped by SEGA Enterprises, if not directly caused by; though, whether that’s good or bad, well—that’s up for debate.

Anyway, SEGA Enterprises started designing original arcade games in ‘Sixty-Six.  David Rosen, in position of C.E.O. (obtained in the merger), achieved particular success in ‘Sixty-Eight with a game called Periscope, which was a submarine simulation, more or less.  It was the most popular game SEGA Enterprises had produced, which was rather saying something.  So popular, it was exported to the United States, and it became a hit there, as well.

By ‘Sixty-Nine, Rosen was the sole owner of SEGA Enterprises, and he sold the company to Gulf&Western Industries, Inc., though remained C.E.O. of SEGA.

The ‘Seventies saw the near-reinvention of arcades, as they started to offer electronic wonders next to the tried-and-true mechanical machines.  The electronic games took off like a shot, so much that it was nearly inevitable that SEGA Enterprises was going to get involved.

In Nineteen Seventy, Pong was introduced to arcades, which was a real innovation.  It was table-tennis played on a video screen, and the novelty of such an idea made the “video game” market boom.  Two years later, Gulf&Western Industries made SEGA Enterprises a subsidiary and took the company public (which just means giving the general public the opportunity to purchase stock, something previously reserved for select people such new investors).  One year later, Gremlin Industries, Inc. was acquired.

This new type of gaming, eventually dubbed “video gaming” (though that term wasn’t coined just yet), only grew in popularity as the decade progressed.  Still, it wasn’t seen by everyone as the “next big thing”—until, that is, Taito released Space Invaders to Japanese arcades in ‘Seventy-Eight.  It was so incredibly popular, there was a nation-wide shortage of coins.  You’d better believe that SEGA Enterprises was going to get in on the action—which we’ll get into tomorrow.

Until next time, friends!


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