Revamping the Game: Sega’s Ambition to Reignite the Online Gaming Revolution
The name Shuji Utsumi may not currently be as recognized as some other online gaming experts, yet the newly appointed president and COO of Sega Corp is an industry veteran who has been working behind the curtain since the early stages of Sony’s development of the original PlayStation.
During his tenure at Sony in Japan, Utsumi played a crucial role in establishing PlayStation in the already competitive race for console dominance—back then, mainly against prominent industry players like Nintendo and Sega. Later, he became one of the two original team members at Sony Computer Entertainment America, where he was charged with expanding PlayStation’s footprint in the US through titles like Crash Bandicoot and PaRappa The Rapper. His effectiveness in contending with Sega led Utsumi to be recruited to do the same for the Sega Saturn.
This marked the beginning of Utsumi’s enduring relationship with Sega, which is ongoing today. Rising quickly within the organization, Utsumi became responsible for Sega’s first-party games in Japan just in time for the Dreamcast’s launch, helping to manage the release of Sonic Adventure, Jet Set Radio, Rez, and Space Channel 5 alongside his future collaborator Tetsuya Mizuguchi. His career also included overseeing Disney’s gaming division in Japan and contributing to Kingdom Hearts before reuniting with Mizuguchi at Q Entertainment, working on cult hits like Lumines and Child of Eden.
Following the shutdown of Q Entertainment, Utsumi found his way back to Sega in 2019, crafting a new strategic vision for the company with a global perspective, initially becoming its chief creative officer, then CEO of Sega of America, and finally chairperson of Sega Europe. By 2022, Utsumi was overseeing Sega’s international endeavors and was ultimately appointed as the overall president in April of this year. He was part of the executive team that made the pivotal decision to sell Relic Entertainment, cancel Creative Assembly’s unreleased shooter Hyenas, and cut around 240 jobs as the company concentrated its efforts on Total War, Football Manager, and Two Point.
This strategy has been echoed in Japan with an increased emphasis on Sonic, Yakuza/Like a Dragon, and Persona—until last December’s The Game Awards 2023, during which Sega unexpectedly unveiled five announcements in a span of 90 seconds, pledging the return of Jet Set Radio, Shinobi, Golden Axe, Streets of Rage, and Crazy Taxi. With tonight’s news of new releases for Virtua Fighter and Sonic Racing (in addition to more Like a Dragon content), it’s clear that Sega is eager to rejuvenate many of its classic franchises after years of disregard.
This vision, it seems, originates from Utsumi and is a calculated effort to recapture the spirit that once made Sega an exciting alternative to Nintendo’s beloved yet cautious approach to game development. Revitalizing Sega’s vitality by emphasizing the value of its rich, underused legacy and leveraging it moving forward is all part of his strategic plan.
In anticipation of Sega’s recently revealed games at The Game Awards 2024 (a new Virtua Fighter, a new Sonic Racing title, and what appears to be a fresh Yakuza prequel), James Mielke—founder of the Japanese game development festival BitSummit and another Q Entertainment alumnus—sat down with Shuji Utsumi at Sega’s headquarters in Shinagawa, Tokyo, to hear firsthand about the president’s plans and discover if the Sega that many fondly remember is indeed coming back.
You’ve been back at Sega for around five years—what led the company to bring you back? Your extensive experience?
“Sega was more in a defensive posture.”
Utsumi: When I joined, Sega was more in a defensive posture. It was focused on cost reduction, managing its budget, and adhering to a very traditional approach. Despite the market indicating that it was a thrilling time for growth opportunities, the company was quite conservative. Google was entering the cloud gaming sector, and Microsoft was beginning to push Game Pass. Everyone was trying to dive into the gaming market, and Sega had so many fantastic IPs, but they weren’t really leveraging them at that time. They were more focused on controlling costs.
I assessed the corporate environment, and management at that time didn’t truly recognize Sega’s potential for production, or the capabilities of our [Japanese] studio. I had been involved with smaller developers at various game companies creating romance games for female audiences. Compared to these types of smaller studios, Sega actually possesses excellent production capabilities, yet the way the company had usually developed games was becoming too conservative, focusing too much on reducing costs rather than investing the necessary funds to create exceptional products. In baseball terms, they were trying for a single, but when you aim for a single, you miss the home run, and worse, you get struck out.
Or hit directly into a double play.
Utsumi: Or hit directly into a double play! Many players love indies, which are generating a lot of passion, while larger companies are producing mediocre games that compete against all these indie titles. There are too many competitors around you. But Sega has such incredible IPs and distribution strength, so I wondered why we were taking this kind of [conservative] approach. Why were we assigning our top developers to the arcade sector—a market that is declining?
Arcades, even now, technology-wise, don’t seem to be using the best technology available anymore. Consumer hardware has evolved, targeting the global market with larger budgets. You can invest more money and genuinely appeal to a global audience, but by focusing on Japanese arcades, [Sega] wasn’t making sense because that market is shrinking as well. It’s simply the law of diminishing returns. It’s tough for developers to operate under that approach, so I ultimately closed the dedicated arcade product development team and integrated them with the consumer development team.
It’s quite fitting that Sega still maintains a dedicated arcade division, since Japan is one of the few countries that truly has an arcade industry left, albeit one that is largely dominated by UFO catchers.
“I wanted Sonic to be the leading figure once more, so Sega could make a comeback.”
Utsumi: I don’t mind having some titles in [arcades], but from a financial standpoint, the return on investment is not very substantial. My role was to redirect Sega and alter its course, aiming for growth and improvement, particularly because Sega didn’t leverage its broad IPs effectively despite having many.
At the time [I returned], Yakuza was playing a pivotal role both from a studio perspective and an IP standpoint. With their Japan-focused mentality, Sega as a whole was in a similar situation. Thus, I decided to establish Sonic, Persona, and Yakuza as the three foundational pillars for global expansion.
To me, Sonic represents Sega’s identity. So when you create Sonic… Sonic should be able to, how can I put it, we didn’t have prominent figures at that time, which is why I wanted Sonic to reclaim the spotlight, enabling Sega to rediscover its success. It’s emblematic.
Sonic has made a notable resurgence in both games and now films, which signifies Sega’s revival. You are also reinvesting in several classic Sega IPs like Jet Set Radio, Crazy Taxi…
Utsumi: We announced that during the Game Awards [2023]… Initially, I was primarily focused on reviving Sonic, Yakuza, and Persona. Three IPs that can become even more powerful. And to make Sega feel more like Sega… Sega possesses a wealth of incredible IPs that have largely been underutilized, and they can resonate with the market again.
Some have been dormant for quite a while.
Utsumi: Sega, in a sense, pioneered – if you compare the gaming industry to the music industry – Sega’s position was to define rock & roll, in contrast to Nintendo. Nintendo is more aligned with pop, classical, jazz…
“We’re aiming to revive it with a hint of hip-hop flavor now.”
So, did Sega come along like Led Zeppelin?
Utsumi: Exactly. Pink Floyd, Abba, and Queen!
Sega always had a playful edge.
Utsumi: Sega had that unique attitude [back then]. Sega’s identity was that if you have a bit of attitude, then Sega is the company for you, unlike Nintendo, thanks to the games, the style, the coolness, and the overall vibe. Now we possess such rich content at Sega, along with some other IPs, so we are trying to revitalize it with a bit of hip-hop influence.
A number of Japanese companies – Capcom, Konami, Sony – have seen some success through European or Western divisions, handing over operations in Japan for a time before eventually reverting things back to Japan. That’s somewhat akin to what happened with Sega as well.
Utsumi: In a way, it’s a balancing act, though. I’ve played various roles in management in Japan related to the west or east, and management in the US related to both regions. We need to comprehend global mega trends and the local environment. Creatively, Sega has studios in Japan and Europe. Each studio has its own characteristics and customary culture. My task is to ensure each studio thrives in business while honoring its culture. I’m not merely attempting to champion Japanese management versus Western management. I spent time in the US too, as part of a Western company and also at Japanese firms. The content industry, as you know – some individuals are fond of rock & roll, others prefer hip-hop, while some like pop music – [but] when you become too intellectual… You don’t want to seek advice from hip-hop experts about classical music. That’s conventional.
That [management style] could be the legacy of the older Sega. For Japanese studios, my primary directive was “go global”. Unfortunately, the Japanese market is becoming too small to finance a significant budget to create a quality game. Fortunately, Sega possesses extensive global appeal and the infrastructure that is essential in the worldwide market, and a weaker yen offers us cost advantages. Ultimately, you need to maintain the right balance in your portfolio, in terms of any particular product; I’m very cautious that our games do not feel overly Japanese. Certainly, a game like Yakuza is highly Japanese, but they [also] need to engage with the Western market.
Yakuza has a distinctly Japanese narrative and experience, yet it’s…