UPDATE: Some minor fixes and more details have been added to the story.
When the pandemic first began, it was anyone’s guess as to how deeply it would have affected the arcade industry – a lot of it would depend on just how long it would go on. We’ll still see fallout effects for years to come, and with this news today, that is even more clear.
Sega is a name that needs no introduction – they started off as an amusement company back in 1955, celebrating their 60th year in business last year and while the company had built a strong brand for themselves in home gaming thanks to a family of home game consoles and video games, they’ve always maintained a strong presence in arcades all over the world. In recent times, the company has operated a bevy of divisions, where it can become a little confusing to track who does what. Things began changing last year when Sega sold off their arcade operations division to GENDA, directly laying the blame at the feet of the pandemic; and now the shake-up is hitting their international arcade side.
Taking a quick step back though, here are some of the company divisions:
- Sega Sammy – the parent company. This name has and will still appear on their casino & pachinko gaming machines
- Sega Corporation (Sega Japan) – Previously responsible for both arcade & console game developments(arcade side usually focused on Japan), it appears that many are taking early retirement packages from the arcade side, or arcade people being transferred to console development. That said, they still maintain an arcade division that will develop games for the Japanese market and will occasionally create something that will work for the West.
- Sega Amusements International (SAI) – The division responsible for arcade manufacturing & sales for territories overseas, primarily Europe & the US. They have often worked with 3rd parties like Hollywood Gaming or Gamewax to develop content that Sega Japan wouldn’t do.
- Play-It Amusements – the US arm of SAI that is focused wholly on US sales, distribution & tech support.
This morning, Sega Sammy issued a Japanese press release laying out the changes at SAI. As Paul Williams explained to me on a voice call, he setup Kaizen Entertainment as a holding company and initiated a “Management Buy Out” through that. What this means is that everything that distributors, operators, and players see will remain the same – the Sega name will still show up on the games, and SAI will still be the name found on the booth at trade shows. This also means that everyone who has been working at SAI is still there. Here’s the press release to do some of the talking:
The new company will retain the name SEGA Amusements International Ltd under a royalty
agreement with SEGA CORPORATION. It will also retain manufacturing and distribution rights of SEGA
developed amusement games to effectively a worldwide basis, to most territories outside Japan. It
will continue to offer parts, service and technical support for all SEGA amusement games previously
sold into the market along with a wide range of merchandise.
The pandemic has been blamed for this (like it was when Sega spun off their operations to GENDA), causing a significant decline in revenues needed for such companies to stay afloat. In an effort to keep the parent company alive while also giving these divisions – and their people – going, Sega Sammy is going in this direction.
Also from the press release:
Paul Williams commented, “I am extremely pleased to have concluded this deal which secures the
future of my team of employees who have supported me over the years. We will continue to work
closely with our friends and colleagues at SEGA Japan to develop amusement games for the western
market, alongside game development with our in-house R&D team headed by Patrick Michael. These
products in conjunction with the games from our 3rd party suppliers will ensure that we remain at the
very pinnacle of game development, manufacture, and distribution to the amusement sector. We
have a pipeline of product in development and to be shortly released that will deliver a series of
blockbuster games. Certainly, exciting times are ahead. “
I have reached out to Paul Williams, CEO of the company, who added that most of the games that they’ve developed – including the recent Mission: Impossible Arcade and Transformers: Shadows Rising, were developed in-house and did not come from Sega Japan. Future games, including the upcoming Men In Black, will continue that trend, but when Sega Japan does develop something – say another House of the Dead or something along those lines – then SAI will handle the Western release as they have done in the past.
What does this all mean?
Will you still see the Sega name on arcade games in the future? Yes. Have jobs been saved? Also yes. As far as I am aware, anyone in the distribution side of the business will continue working with the same people, although email addresses will probably change soon. Sega could have just shuttered these divisions, leaving everyone out in the cold – it seems they have been finding ways to keep things going without it costing employment, which I find to be commendable.
How much content we will see coming from Sega Japan is anyone’s guess, since it is clear that a lot of people on that side of the pond are using these times to retire. I do not know how large the arcade development division is over in Japan at this point, but it’s certainly diminished from where it used to be. Still, the PR promises that we will still see Sega Japan content…we’ll just have to wait a while to see what that means in practice.
This should also mean that things continue as usual for SAI’s social media outlets and YouTube.
SAI has been working with other partners, such as Hollywood Gaming, to develop content, so all of their eggs aren’t in the same basket. On the buyer side of the business, things seem to be picking up – there are reports that FECs are seeing a big boost in earnings, as the “cabin fever” of lockdowns break while numbers in many areas continue to decline; At my own business, weekends have returned to a normal level of earnings, but weekdays are still a roller coaster.
What do you think about this? Here’s the full press release:
Sega Amusements International Ltd
42 Barwell Business Park
Tel: +44 (0) 208 391 8090
Tel: +1 847-364-9787
25th March 2021
Management Buy Out at SEGA Amusements International Ltd.
SEGA Amusements International Ltd which is a wholly owned subsidiary of SEGA CORPORATION headquartered in Japan and has been at the core of distribution of amusement games to EMEA and USA markets is being acquired by its management team. Industry veteran, Paul Williams who has been employed by SEGA for 22 years has led a Management Buyout (MBO) of the company.
The new company will retain the name SEGA Amusements International Ltd under a royalty agreement with SEGA CORPORATION. It will also retain manufacturing and distribution rights of SEGA developed amusement games to effectively a worldwide basis, to most territories outside Japan. It will continue to offer parts, service and technical support for all SEGA amusement games previously sold into the market along with a wide range of merchandise.
Paul Williams commented, “I am extremely pleased to have concluded this deal which secures the future of my team of employees who have supported me over the years. We will continue to work closely with our friends and colleagues at SEGA Japan to develop amusement games for the western market, alongside game development with our in-house R&D team headed by Patrick Michael. These products in conjunction with the games from our 3rd party suppliers will ensure that we remain at the very pinnacle of game development, manufacture, and distribution to the amusement sector. We have a pipeline of product in development and to be shortly released that will deliver a series of blockbuster games. Certainly, exciting times are ahead.”
A Chief Operating Officer for SEGA CORPORATION stated :
Paul and his team have done a tremendous job building up a local R&D resource in the western world that can now fully develop games suitable to the market at the right price. This along with the excellent business relationships that have been developed with 3rd party supplier and customers has led to year on year growth. It is only right and fitting that Paul now leads his team into the future as a separate company, focusing on the western market. Sega Japan will still work very closely with SAI for future developments and distribution of Sega Japan developed amusement games into the western market and look forward to watching SAI grow.
Now that lockdown is being eased around the world, SEGA Amusements International is here for you.
We are now open and can assist you with technical support, provide critical spares and ship games to help get your business up and running again. All of us here at SEGA Amusements International are proud to be part of this amazingly creative and
resilient industry. We are incredibly grateful for all the support we have received from customers, industry associations, partners, suppliers, and competitors over the past few months. Despite our industry being hit the hardest, it is clear by working together we are all growing stronger than ever before.
We hope things get back to normal around the world soon so we can see you in person again. In the meantime, we look forward to meeting you online to discuss how we can get you through this challenging time. We are here to help you.
From the entire Team at SEGA Amusements International
About SEGA Amusements International
SEGA Amusements International is dedicated to the production, development, supply, support and distribution of amusement arcade games and merchandise. Always staying ahead of the times; SEGA’S Research and Development team brings tried and tested, high performing arcade games to the market. A dedicated team provides operators with technical support and vital spares to keep games operational. The team also handles sale of essential consumable items such as redemption tickets,
plush for cranes as well as prizes for vending games and redemption counters. Constant commitment to delivering excellent customer service and industry leading after sales support makes SEGA a preferred choice by customers worldwide.
About SEGA CORPORATION
SEGA CORPORATION is headquartered in Tokyo, Japan, a worldwide leader in interactive entertainment both inside and outside the home. The company offers a variety of game contents for console, PC, wireless devices including planning, development, sales and operation, and amusement machine including planning, development and sales. Moreover, it provides game content developed by studios in countries around the world through global publishing bases.
SEGA CORPORATION’s website is located at https://www.sega.co.jp/