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Know your History: The Rosen Report

SEGA is a dynamic organization. Talent is constantly being nurtured and brought in the organization. These days the company seems to be more prolific with bringing talent in to the company as evident by the 2013 acquisition of Atlus and Relic games which is essentially new talent entering the company.

Most fans are aware of the talent, in the eighties Yu Suzuki was known for his ground breaking Arcade games; Yuju Naka gained recognition in the nineties for Sonic the Hedgehog, this past decade Toshihiro Nagoshi has attained some notoriety for his dating sim brawler Yakuza.

The house of Sonic is unarguably best known for their home consoles which have all been designed by Hideki Sato starting with SG-1000 to Dreamcast. Lastly the word SE-GA is an acronym for Service Games. Most aficionados are aware of the history from the designers perspective but not the executives perspective. So with our good friend David Munoz co-author of Service Games: Rise and Fall of Sega we will be attempting to encourage our audience to get to know a little more about the executive side of the legendary company.

SEGA’s roots can be traced back as early as the 1940s. However “SEGA” was only a brand name for Nihon Goraku Bussan. SEGA Enterprises formally came into existence in 1965 with the merger of Rosen Enterprises and Goraku Bussan. Hence the reason David Rosen is regarded as the founder of the company.

An American Air Force officer stationed in Japan during the Korean War. After completing his tour, he decided to restart his life there. In 1954, he married Masako Fujisaki and created Rosen Enterprises, an export company that sold Japanese art to America. Up until the merger with Goraku Bussan, Rosen Enterprises business focus changed quite vividly. In 1957 the company was importing Photorama Photo Studios to Japan with notable clients being the American Military. Simultaneously Rosen was leveraging profits into importing Coin-Op Arcade Machines, though his vision of original games was not realized until 1966.

periscope
Fun – Suspence – Excitement
Periscop
Doesn’t look so exciting in this day and age.

Rosen’s designed his first game a submarine simulator called Periscope, though it was not really an arcade game by today’s standards. It is important for all stake holders to know that Rosen designed the first game, however it is even more crucial to understand that the man’s legacy and the company’s legacy hinges on executive decisions and Rosen was a fine Chief Executive Officer . Many fans are bewildered when their favorite corporation buys a studio instead of developing games with inhouse talents. I am not making light of the Sammy merger of SEGA, it gave rise to an uncanny exodos of talent from the comapny with many aficionados regarding SEGA as nothing more than a logo, drained of all talent. Though said, fans maybe oblivious to the fact that Rosen sold his company to Gulf+Western (now known as Viacom) after meeting with American Industrialist Charles Bluhdorn, who would eventually found Viacom.

This deal made Rosen a millionaire and he remained as the CEO of SEGA, a wholly owned subsidiary of Paramount Pictures, which was itself a wholly owned subsidiary of Gulf+Western. With the influx of capital SEGA started importing Atari games such as Pong. In 1978, Rosen designed the blue SEGA logo that we all love so much. Can you believe that? During the time the logo was created, the company wasn’t even independent!

If you think this is an eye opener get this; With the capital from Gulf+Western, Rosen was able to buyout a Japanese distribution called Essco Trading. Essco was owned by Hayoa Nakayama. The focus of this report is on Rosen, and while it may appear that Rosen bought out Essco Trading but in reality it was Nakayama buying into SEGA and it was Nakayama’s vision to make the company a home console manufacturer, Hence Nakayama is regarded as just as much of a founding father as Rosen himself.

Through all this corporate trading, SEGA’s annual income was rising sky rocketing from 32 Million US$ to 100 million US$ (1979)! The company was worth this much in the 70s, do you know how much a dollar was worth in the 1970s! Information on Rosen’s business methodology is sparse. He is a private man who does not appear to be very public and also the era that I am covering was very different. We didn’t really have the internet 4 decades ago. But somehow Rosen was ready to buy his company. In fact, he had already bought most of the company’s Japanese assets in 1979 via an investment group that he formed with Nakayama.

That said, Rosen and SEGA remained with Paramount until Bluhdorn passed away in 1983, roughly around the same time the video game market crashed due to over saturation. I am sure you are aware of what happened next. Paramount decided to sell its stock in Sega. Rosen and Nakayama had accumulated enough wealth over the years however their investment group was not in the position to own SEGA and the companies history and success are entrenched in partnership hence they presented Sega to friend Isao Okawa, head of Japanese conglomerate CSK to buy the controlling shares in the company. Isao Okawa like Bludhorn was not just an investor waiting to cash out dividends he remained committed to the company until he passed away in 2001. Ironically history repeated it self and CSK decided to sell their stock in Sega but I digress.

Rosen
Left Stefano Arnhold (Tec Toy President), Center David Rosen, Right Mr Sakurai (Executive Director of Sega) in 1985

Once Sega was purchased by Japanese conglomerate CSK, Rosen decided to formally expand the company on western shores. Rosen along with his family moved back to Los Angeles, becoming the first president of SEGA West/SEGA of America. Although SEGA West would continue to partner with other companies like Tonka and TecToy to market their home consoles in Western territories, it wasn’t until 1989 when Rosen recruited friend Michael Katz to succeed him as president of SEGA of America that the company started marketing its own consoles.

While Katz handled day-to-day operations, Rosen remained on the board of the company until he retired in late 1996. Rosen appears to be a very private man and ever since he has retired he has maintained radio silence aside from a brief interview discussing the future of SEGA after the fall of the Dreamcast.

Rise and Fall of SEGA book giveaway

As with many of my articles, it is impossible to cover the entire subject in a blog post. However, if you want to experience the enduring legacy of David Rosen, you can order Service Games: The Rise and Fall of SEGA or take part in our contest and win a free copy.

Join us next week when we discuss the career of Rosen’s successor, Michael Katz.

Editor Note:

  • Service Games served as our primary reference for this article.
  • We know that the brand name SEGA was conceived as Standard Games by Martin Bromley (who was actually at Pearl Harbour when the Japanese attacked on December 7, 1941), Irving Bromberg, and James Humpert and they were key players at Goraku Bossan however the focus of this article was primarily on David Rosen, hence the Rosen Report.
  • Most of the pictures were found via Google Images. The one with Stefan Arnhold (Tectoy), David Rosen, and Sakurai San was taken by a blog called Hardcore Gaming 101.

cube_b3

Born an entrepreneur, studied to be a psychologist, and now an aspiring journalist. In addition to team Nerds, I am the Editor in Chief for Age-Media and Dreamcast-Scene

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