There will never be another SEGA . While their reign as a first-party has long ended, and the name hardly carries the cachet it once had, the industry owes deep debt to the former giant. An innovator and an unrivaled creative powerhouse, they were perhaps the greatest single developer in gaming history.

While rival Nintendo has shown an unmatched ability to maintain a small handful of blockbuster series, SEGA churned out brilliant original franchises one after another with such frequency they made it seem effortless. Their hit series were practically disposable, because they knew the next one would be just as good. All across the world, from Tokyo, to San Francisco, to Lyon, their studios always bet on the gamble, always took chances, and to their fans, they were always winners.Unfortunately, SEGA didn't win many battles in the hardware market. Their history is riddled with mistakes – some that you probably know well, and a few you've never heard before, but all of them heartbreaking. Their moment on top was fleeting, lasting just a few years before it all came crashing down. When SEGA retired from the hardware business, it felt like originality and creativity had lost the battle against bigger brand names. SEGA's way of doing business didn't pay off, and even as a third party they've continued to struggle.As SEGA's star has faded, some are quick to whitewash their history; to act as if their success was the fluke and their failure inevitable. It's natural – the victors always write the history books – but that isn't the way it happened. This is the story of SEGA; the good, the bad, and the possibilities of what could have been.SEGA's early history has many strands that wove themselves into the fabric we would later know so well. Its story goes hand in hand with that of Japan and its relationship with America. Following World War II, Japan was a defeated nation. The loss of industry and human life had left the country economically devastated, and although the United States was there to support her growth, Japan's recovery would take time. Sega's founding fathers came from America and, for various reasons, their paths converged on Japan. Marty Bromley had formed Standard Games in 1940 to provide coin operated amusements to military bases in Hawaii. He was in Hawaii when the Japanese bombed Pearl Harbor, where he maintained the base's slot machines, but he never harbored the negative feelings toward the Japanese that so many others at the time did. In 1952, when the United States outlawed slot machines, he saw the emerging Japanese market as an opportunity. He purchased slot machines from the government, and set up a company to import them to Japan. He called it Service Games.Around this time, a man named David Rosen set out on a business venture of his own. Rosen was a New Yorker, stationed in Japan during the Korean War. His sharp business sense and tireless determination would serve as a guiding force for his company for the next 45 years. While in the Air Force, he saw a nation working tirelessly to build itself up – a great opportunity to invest in a business and a people. His ventures followed the recovery of the nation itself: his first business exported portraits painted from photos by Japanese artists for a fraction of the cost that an American would charge. After this, he opened a series of photo booths to provide inexpensive pictures to be used for IDs needed for work and travel. As the US's military operations brought more money into Japan, he finally decided it was time for fun, and he began importing electromechanical arcade games.The amusement machine industry in the US was sagging, outside of the booming pinball business. Arcades were seen as seedy locales, and hardly the kid-friendly playgrounds they would become many decades later. Machines could be had for cheap and sold on the Japanese market with none of the baggage they faced in the US. The thriving arcade business that developed is a legacy that remains with SEGA to this day. Throughout the company's history, its arcade operations were its spine, keeping SEGA on the cutting edge even when the console business was sagging.In 1964, the two paths converged. Rosen Enterprises negotiated a merger with Service Games, resulting in the abbreviated SEGA Enterprises Ltd. The two companies seemed a logical fit; an appealing blend of American and Japanese business culture with a strong, stable foothold in the market. Had they been successful in joining with their other competitor, Taito , who knows how huge they could have become? Service Games served as the parent company in the merger, but Rosen assumed control as CEO. He would remain with the company until 1996.In 1966, they began designing and manufacturing original arcade machines. Their first was a submarine-themed shooting game called Periscope . The colossal machine was nearly ten feet deep and six feet wide and cost twice as much to play as competing machines, but audiences and arcade owners agreed that it was worth it. Periscope was so successful that SEGA began exporting their games to America, establishing them as an international company with a Japanese base. Not long after, SEGA was sold to Gulf + Western, with Rosen remaining on board to helm the ship.The 1970s saw the complete reinvention of the arcade industry. Video games didn't take long to overtake electromechanical games and pinball machines. Not long after, microprocessors replaced discrete logic games. When Taito released Space Invaders in 1978, it was so in demand it famously created a coin shortage in Japan.To keep pace with the rapidly-evolving gaming market, SEGA acquired San Diego-based Gremlin Industries to develop and manufacture new microprocessor-based arcade games. Shortly after this union, they released Head On , a game renowned for pioneering the maze chase genre further popularized by Pac-Man. It was also during this time that SEGA purchased a distribution company run by Hayao Nakayama . He was named vice president of distribution, beginning his long and important career as key part of SEGA's story.The company began expanding rapidly, producing more and more elaborate hits, and recruiting new developers that would help to define the company creatively. SEGA's games would come to distinguish themselves from their peers with their eye-popping graphics that marked some of arcade gaming's baby steps into 3D. Turbo became the first racing game to use sprite scaling with full-color graphics. Zaxxon delivered scrolling graphics with an isometric view and 3D gameplay. Buck Rogers: Planet of Zoom trumped both with its fast 3D scaling and detailed sprites. SEGA had become a leader in the arcade video game business.The game industry was booming and SEGA along with it, but a storm was brewing in the industry, and David Rosen knew it before the rest of the world was willing to face it. He urged the arcade business to reform, and start offering conversion kits to allow operators to inexpensively turn over machines. This idea would later help the arcade industry to begin its second life, but at the time, his remarks were met only with boos and jeers. Rosen's fears were well founded, and when Atari began its downward spiral in 1983, many lost confidence in the industry. SEGA's benefactors (who by then included Paramount) began looking to get rid of the company.