Who killed Sega? Why Nintendo, of course, except that’s not the whole story of the video-game company that in the early 1990s could briefly brag that it owned more than 60 percent of the lucrative, U.S. video-game market. For a while, Sega was winning what we know today at the console wars. Thanks to the most popular video-game character around, Sonic the Hedgehog, Sega’s Genesis console was the most popular video-game platform on the planet, trouncing the Super Nintendo or SNES. But to put it in the parlance of video games, while Sega managed to beat the level, it never managed to beat the final boss.

Though it’s thought of as a Japanese company, and has been since the mid-1980s, Sega was actually founded in Honolulu, Hawaii, as Service Games, from which it gets its name. After World War II, Service Games produced coin-op, arcade-style amusements for U.S. troops stationed in Japan. A merger here and an alliance there, and pretty soon Sega was a dominant player in the video-arcade business, until that market crashed in 1983. In the aftermath, Sega’s U.S. assets were unloaded to pinball manufacturer Bally, while the company’s Japanese assets would be reorganized to form the basis of the company that almost took down Nintendo.

Sega’s missteps are almost too numerous to count, but some of its more impressive gaffes include passing in the mid-90s on the Silicon Graphics chipset that would eventually power the Nintendo 64, and missing the opportunity to partner with Sony on what would become the PlayStation.

But the self-inflicted wound that really bled the company dry was the Dreamcast console, which debuted in 1998. At first, U.S. retailers could not keep Dreamcasts in stock—a quarter million units were sold the first day, and a total of 500,000 were snapped up within the first two weeks. But sales quickly softened. Some blamed the fall-off on aggressive marketing on behalf of the Sony PlayStation, others for the fact that many of the titles Sega had hoped to have ready at launch failed to materialize. But gamers will tell you that the Dreamcast may simply have been too far ahead of its time. For example, its companion online service, SegaNet, was introduced when few U.S. households had the bandwidth required to support it.

Popular Sega game consoles include the Sega Genesis (1989) and the handheld Game Gear (1990), Beyond its roster of Sonic games, popular Sega titles include Skies of Arcadia, Jet Set Radio, ToeJam & Earl, Shenmue, Crazy Taxi, Space Channel 5, Rez, and Chu Chu Rocket.


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