Under the direction of Gulf + Western, with Rosen still on as CEO, Sega’s profits reached $214 Million in 1982. 1983 was a year of many firsts for Sega and the rest of the video game industry. Sega was one of the key innovators.

1983 firsts for Sega:

First 3d game Sub Roc-3D
First game on disc (laser disc) Sega Astron Belt
Sega's first game system SG-1000 (Japan Only)

But later in 1983… BUST! The American video game industry was in ruins and Sega’s American assets were no exception. Gulf + Western had spun off Sega’s US assets to Bally Manufacturing Corp and had kept 20% of Sega’s Japanese assets.

In the early half of 1984 things were not looking good for Sega, half of its assets were spun off to Bally Manufacturing Corp, and the other half were floating around… Was this the end for Sega? Well in Japan a company by the name of CSK, headed by Hayao Nakayama along with David Rosen bought back the assets of Sega for $38 Million, and with Nakayama at the head of Sega of Japan and Rosen the head of Sega of America, they started to turn things around.

By the end of 1984 they were known as Sega Enterprises Ltd, a Japanese based company. Sega had just released its 8-Bit console The Mark III in Japan, and things started to look good again. The sales were not up to Nintendo’s Famicom released in 1983, but at least they were still making games!

Let’s take a minute to look at the Great Video Game Crash of 1983, and on its significance to Sega:

 Atari, Coleco and Mattel had to sell of old inventory, which included Sega games.
Both Coleco and Mattel exited the gaming business.
Sega was spun off, then reorganized.
Three 3rd party developers made it out of the crash, Konami, Sega and Activision.
Nintendo releases console before Sega basically locking the home market.


With Nintendo controlling 90% of the Japanese market by 1985 , Sega had got a large part of its revenue from arcades.

Finally by 1986, following Nintendo’s lead Sega decided to release its 8-Bit console in the U.S., renamed to Sega Master System and distributed by toy maker Tonka. It did not make much of a dent in Nintendo’s already locked market. That’s when Sega realized that there was still one more major market left untapped by Nintendo, that market was The European Market, soon taken over by Sega; proved to be one of its most valuable later. Master System also brought to Brazil by Tech Toy in 1987, it was an instant hit, being the only licensed console in Brazil, selling in Brazil until around 1999. An important event in Sega history happened in 1987, the release of its first RPG, Phantasy Star. Phantasy Star set the RPG world on fire.

With their failures in the United States and Japan, and with the aging NES, Sega decided to take gaming to another level. With the 1989 release of the Sega Mega Drive, in Japan and Europe and the Sega Genesis in the United States. Capable of 16-Bit graphics the Genesis blew anything Nintendo had out of the water. Whether it was graphics or sound or gameplay Genesis made NES look sad.  Released at $200 with 2 controllers and a pack-in game of Sega’s Arcade Hit, Altered Beast. Genesis soon out sold the $190 8-Bit NES. Also in 1989 Sega released an update to their 1988 RPG Phantasy Star. Known as Phantasy Star 2, it was an instant success for Sega and was a huge Console Seller. With better graphics, sound, gameplay and storyline it beat the original in every way.  With Capcom arcade translations and developing 3rd party support you couldn’t go wrong with a Genesis… That’s until Nintendo came to town.

1982              Sega’s revenues hit $214 Million

 Sega makes industries first game on disc (laser disc): Sega Astron Belt.

Sega makes industries first 3D Game: SubRoc-3D.

Sega makes first video game console: SG-1000 (Marketed in Japan Only).

American video game industry crashes.

Gulf + Western spins of Sega’s American assets to Bally Manufacturing Corp.

 Rosen, Nakayama and other Japanese investors buy back Sega for $38 Million.

Nakayama CEO of Sega’s Japanese arm, Rosen CEO of Sega’s American arm.


            Sega bought by a partnership between Sega Enterprises Japanese management and CSK. 
            8 bit Sega Mark III released in Japan.


Hang-on a popular arcade racing game was released.

            Space Harrier a popular arcade shooter was released.

Sega of Japan founded.

Sega of America founded.

Sega’s stock listed on Tokyo Stock market.

Sega Master System released in America (Sega Mark III).

            Outrun, a very popular arcade racer was released.
1987             Sega Master System released worldwide.
1988             Phantasy Star, the first major console RPG is released.

16 bit Sega Mega Drive released in Japan and Europe.

Sega Genesis released in America (Mega Drive).

Sega becomes worlds 2nd largest video game maker (behind only Nintendo).

            Phantasy Star 2 released

(c) 2003 Danny L. Chapman II

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