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.
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.
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