When Sega Wanted To Take Over The World (and Failed Miserably)

The year was 1997. And Sega, the Dreamcast still a twinkle in Segata Sanshiro's eye, was in a bullish mood. While its rivals were focusing their efforts on winning the video game war, Sega was looking beyond.

It didn't have Nintendo or Sony in its sights. It had the Walt Disney Company.

Sega wanted to take the humble video game company and turn it into an international multimedia powerhouse. Movies, TV shows, comics, toys, the works, you name it, Sega wanted in on the action.

To achieve this, though, the company couldn't go it alone. It didn't have the money, the properties or the know-how. So it had to team up with somebody else. And that somebody, it was decided, would be Bandai.

The Japanese toy giant was a perfect fit. To complement Sega's vast video game experience, Bandai (itself a video game publisher) was also a world powerhouse in toy production, and also owned the rights to a number of big-hitting franchises, especially in the US, where it distributed series like DragonBall, Power Rangers, Gundam and Godzilla.

In January 1997, the wheels were set in motion for a merger between the two companies. For around $US1 billion, Sega would buy Bandai outright, the two operations would combine and henceforth be known as Sega Bandai Ltd. With the deal due to be formalised in October 1997, Sega president Hayao Nakamay was so optimistic about the new company's prospects he predicted it would be the world's second-biggest entertainment company, behind only the might of the Walt Disney Corporation.

In May 1997, however, things started looking a little shaky. Both sides had been due to sign off on confirmation of the merger well ahead of the October deadline, but discontent about the move, especially from Bandai's middle management, was sowing the seeds of doubt.

Tamagotchi: Turns out Bandai didn't need Sega's help taking over the world...

The Wall Street Journal reported on May 27 that "roughly 80%" of Bandai's middle managers "had expressed concern about changes in the company's culture and working conditions that would occur as a result of the merger".

While Bandai President Makoto Yamashina was still putting a positive spin on things later that day, by May 28, it was suddenly all over.

That night, Nakamay and Yamashina called separate press conferences, during which they revealed that the planned merger had collapsed. While alluding to "cultural differences" as the main sticking point, it's believed that the Bandai dissent had been instrumental in bringing the whole thing down.

The day after that, on May 29, Yamashina resigned from his position. In the years immediately following the collapsed merger, Sega was forced to exit the console business after the failure of the Dreamcast, while Bandai would go on to merge with another video game firm, Namco, in 2005.

FUN FACT: Bandai president Makoto Yamashina was the son of the company's founder, who began the company back in 1950.
Total Recall is a look back at the history of video games through their characters, franchises, developers and trends.


    It would have worked too, if it wasn't for those damn kids!

    Great article. The decline of Sega over the last decade or so has been a sad one, to say the least. I cut my teeth on Sega consoles and I still maintain that the Dreamcast was ahead of its time but things didnt work out. At least we have the memories...

      ...And all those unsold dreamcasts.

      I'm sure I've got a few propping up a bench in the den.

        If anyone remembered Sega World the year before its closure. Right at the end, you'd exit through the gift shop and it was filled with merchandise and souvenirs. What I remember distinctly were the boxes and boxes of unsold Dreamcasts lining the walls of that place and how despite going there several times, I never even saw anyone come close to buying one.

    I was always sad about sega's decline, even as a youngun. Being a massive sonic fan as a kid, it was sad to see all of that history and dominance sold off as a third party product to the likes of sony, a relative newcomer to the games industry.

      The closing of Sega World Sydney was probably the first time I realised that Sega was actually fucked. Of course there were other clues on the way: the fact that NONE of my friends had a Dreamcast while PSX and N64 were dime a dozen, how Sega just didn't have any more games kids talked about anymore, etc.

    I cannot fathom a world in which Sonic the goddamn Hedgehog is in the same league as Mickey. It scares me a little to be honest.

    Ahhhh I remember Xmas 2000...I had the choice between a newly launched PS2 or a Sega Dreamcast

    I went the Dreamcast and I stand by my choice...at the time there was more I wanted to play for the Dreamcast then there was for the PS2. I eventually did buy a PS2 when MGS2 was released...but I never regretted my choice of going Dreamcast that year for Xmas since there were some choice games to be had

    Skies of Arcadia

    Sonic Adventure (wasn't great but wasn't as bad as what people make it out to be)
    Crazy Taxi
    Quake 3 (so many hours playing Quake 3 with the keyboard and mouse)
    Shenmue (I loved it and became a Shenmue fanboy)
    Jet Grind Radio
    NBA 2k1
    NHL 2k1
    Resident Evil Code Veronica
    Soul Calibur

    At the time, the PS2 just couldn't compete with the games I wanted to play on the Dreamcast, so I've never regretted choosing the Dreamcast over the PS2 at that time.

    Great system, just a shame it didn't pan out for Sega

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