INTERVIEW

David Rosen of SEGA

 

David Rosen, founder and board chairman of SEGA Enterprises, Inc., is coming to the MOA Expo with a new solid-state target game called "Bullet Mark" - significant because Bullet Mark will be the first SEGA machine ever manufactured in the United States. SEGA, founded in postwar Japan by Rosen and four partners (of which he alone remains active in the company today), has risen to world prominence in the music/amusement field, boasting (among other credits) 6,500 jukeboxes and over 15,000 games on location in Japan ... possibly the largest single route in the world.

While route operations account for the bulk of the company's income and activities, SEGA is also a prominent equipment distributor in the Far East, as well as a games manufacturer whose inventions are legend in the in­dustry and whose technical break­throughs helped pave the way for many of the marvelous sight-and­sound features on games operating throughout the world today. The firm was also significantly responsible for introducing the quarter chute on amusement games with its Periscope machine and other followup pieces.

In the late 60's, Rosen and his part­ners sold the bulk of their interests in SEGA to Gulf + Western. In 1974, Rosen took the company public on the American OTC Exchange (with G + W remaining the principle shareholder) under the new corporate name SEGA Enterprises, Inc.. Less than a year later, he opened a large manufacturing/sales facility in Redondo Beach, Cal. where the new Bullet Mark was partially designed and will be manufactured for American consumption.)

REPLAY: Before we get into discus­sion on SEGA's rather adventurous plans for the American market, we'd like to go back to that five-year heyday

 

between 1965 and 1970 when it seemed everything SEGA exported into the USA from Tokyo put gold into the cash box. Can you explain the phenomenal success of those games and why America fell in love with them at a time when foreign-made machines were almost anathema to this market?

ROSEN: To understand that period, you have to understand SEGA's manufacturing philosophy first. Peri­scope, the first big hit here, was an ex­pensive machine. But once we succeeded in coaxing operators to put one or two out on the arcade, they found it out-earned practically every other machine on the floor ... and sustained those high earnings for a long period of time. This proved the point that the cost going-in is a moot point if the coin box keeps filling up. Periscope, and the machines which followed like Grand Prix, Missile, etc., did more than break the myth that American operators wouldn't buy foreign goods. Their chief success was to introduce incredibly fascinating sight and sound effects to the games in­dustry, which cost money, of course, but it was love at first sight for the location player.

We started a technical revolution in an industry which at that time was content to make and market the same staple games, with only a theme change from model to model to give distributors a selling point and players something a little different to chew on. Our games were also chiefly responsi­ble for breaking resistance to the quarter chute.

We spent a fortune in research and development inventing and perfecting those sensory illusions you saw on Missile and the others. Unfortunately, once some of the American factories saw the success of these games, they went straight away and did the same thing. We felt like we were the research and development department for the entire industry, only we were footing the bill. SEGA did succeed, however, in convincing 'Chicago' that they could successfully market a game with higher than a $695 list ... if the game makes money for the operator.

REPLAY: Are you bitter about all that copying?

ROSEN: Not really. Actually, I take great pride in the fact that SEGA was the principle influence in bringing games design into the modern era. Of course, the Jet Rocket fiasco ... and I don't mind calling it a fiasco ... hurt deeply. This game was the culmination of all our efforts. It's still one of the

 

most unique machines around today ... many of them are still on location here. But, owing to the fact that our American distributors had to purchase these games at higher costs due to shipping, duty, etc., we got hurt when a couple of the American factories copied it and shipped it at a lower price.

REPLAY: Was that the reason you pulled out of the American market so abruptly?

ROSEN: We didn't pull out abruptly at all. Certainly, we had to reappraise our position, and the position of our distributors in the face of domestic competition. But the principle reason we stopped shipping new releases to the States after Jet Rocket was because of an industry phenomenon that occurred at that time back in Japan. All our operations there began to expand at a fantastic rate. The ar­cade end, in particular, expanded at an incredible rate, almost like when fruit ripens on the tree on the same day and everyone has to stop everything and go out and pick it.

Then the amusement casinos began to open. These are arcades decorated to resemble Las Vegas casinos but only have pure amusement machines. Some of these games took tokens or slugs much the same as a slot. But the tokens can't be redeemed so there's no gambling. These places mushroomed during that period and SEGA, naturally, sought its share.

REPLAY: Would you say that the American market accounted for a sub­stantial amount of your machine sales during those golden years?

ROSEN: No, not that substantial, when divided into the total volume we did and do world wide. American was a good market but only one of many good markets.

REPLAY: Will this new thrust into the States bring SEGA a substantial in­crease in its manufacturing earnings?

ROSEN: You can't answer that question without understanding exact­ly what it is we want to do here. Make and sell machines, naturally, but just a little bit more than that. SEGA, you must understand, is arcade-oriented. The bulk of our operations in Japan are arcade situations. We have very few games in street locations. SEGA operates thousands of jukeboxes in street stops but these places have never been receptive to games. It's strange but that's the Japanese culture. Arcades are our life. We operate them, build machines for them and, to get back to your question, are very interested in helping American

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operators upgrade their own activities in arcades. We've got a fantastic plan on the drawing boards toward that end. I'll bet that the arcade you'll see two years from now will have very little resemblance to the ones you see to­day. There's a new state of the art coming. There are radical new designs and game concepts we've developed along these lines which will truly revolutionize the industry. And I don't use the word "revolutionize' lightly. I'm in deadly earnest.

But, we're also talking about major installations ... major capital input ... and that's one area where we are con­sidering joint ventures with interested operators who want to forge ahead but may need the assistance and developmental talent of a large com­pany like SEGA. Understand that SEGA will never compete with arcade operators, because these people have been and will be our customers. We're going in new directions that you might call 'virgin territory.

REPLAY: Will the new Bullet Mark be followed in regular intervals by other games?

ROSEN: Absolutely. We're here to stay. We've got complete R&D facilities here in California. We've got a full assembly operation and by the time of MOA, we'll be announcing our new sales staff.

REPLAY: What about distribution?

ROSEN: We have many loyal dis­tributors here. And we'll be appointing additional distributors at the MOA in Chicago. We'll discuss such matters with interested parties at our Conti­nental Plaza Suite, as well as at the Bullet Mark exhibit at the Hilton

REPLAY: Will you be producing Bullet Mark in Japan as well?

ROSEN: Yes. The R&D on the piece was a combined effort of Tokyo and California. Our emphasis here is on solid state technology. Japan's is on electromechanical. The Bullet Mark, though, is solid state period.

REPLAY: Where did you recruit the engineers we see here at Redondo Beach?

ROSEN: From the computer­electronics field. None of these people have been recruited from other games factories.

REPLAY: How long has this move onto American shores been under consideration?

ROSEN: About two years now. It took that long to do our homework on exactly what we wanted here, how to do it, where to get the personnel, the facilities, and the rest. SEGA's a very conservative company. We never make a move unless we're absolutely sure it'll succeed and then we move with vigor. This represents a full and lasting commitment on our part.

REPLAY October 1975 P. 14