Editing Sega AM2 (section)

== History ==

{{See also|Sega development studios}}

=== Precursors to AM2: Yu Suzuki and Studio 128 ===
[[File:Yu Suzuki - Game Developers Conference 2011 - Day 3.jpg|alt=A picture of Yu Suzuki|left|thumb|upright=0.8|[[Yu Suzuki]], the first head of AM2]]
[[Yu Suzuki]] joined [[Sega]] in 1983 as a [[Game programmer|programmer]].<ref name="Retro163">{{cite magazine|last=Marley|first=Scott|date=December 2016|title=Q&A with Yu Suzuki|magazine=[[Retro Gamer]]|publisher=[[Future Publishing]]|issue=163|page=61}}</ref> At the time Suzuki joined Sega, there was only one development division at the company.<ref name=":1">{{cite magazine|date=June 1994|title=Yu Suzuki: Sega's driving force|magazine=[[Edge (magazine)|Edge]]|issue=9|pages=45–50}}</ref> In his first year, he created a 2D boxing game called ''[[Champion Boxing]]'' for Sega's first home game console, the [[SG-1000]]. According to Suzuki, the executive staff at Sega found the game so impressive that they released it in arcades as-is by simply installing an SG-1000 into an arcade cabinet. He was promoted to project leader while still in his first year at the company.<ref name="Retro163" /> Suzuki's next project was the motorcycle racing game ''[[Hang-On]].'' To accomplish his desire to make a 3D game despite technological limitations at the time,<ref name="Robinson">{{cite web|url=http://www.eurogamer.net/articles/2015-03-22-out-ran-meeting-yu-suzuki|title=Out Ran: Meeting Yu Suzuki, Sega's original outsider|last=Robinson|first=Martin|date=March 22, 2015|website=[[Eurogamer]]|publisher=Gamer Network|url-status=live|archive-url=https://web.archive.org/web/20151220185846/http://www.eurogamer.net/articles/2015-03-22-out-ran-meeting-yu-suzuki|archive-date=December 20, 2015|access-date=December 24, 2015|df=mdy-all}}</ref> he specified the design of Sega's new [[List of Sega arcade system boards|Super Scaler]] [[arcade system board]],<ref name=":03">{{cite book|last=Horowitz|first=Ken|title=The Sega Arcade Revolution: A History in 62 Games|publisher=[[McFarland & Company]] |year=2018|isbn=9781476631967|pages=92–97}}</ref> which utilized [[16-bit computing|16-bit]] graphics and sprite-scaling.<ref name=":22">{{cite web|url=http://uk.retro.ign.com/articles/974/974695p3.html|title=IGN Presents the History of SEGA|last=Fahs|first=Travis|date=April 21, 2009|work=[[IGN]]|url-status=live|archive-url=https://web.archive.org/web/20120314223825/http://uk.retro.ign.com/articles/974/974695p3.html|archive-date=March 14, 2012|access-date=February 6, 2020}}</ref><ref name=":52">{{cite web|url=http://www.hardcoregaming101.net/outrun/|title=OutRun|last=Grazza|first=Brian|date=October 5, 2017|website=Hardcore Gaming 101|publisher=Kurt Kalata|url-status=live|archive-url=https://web.archive.org/web/20171014095055/http://www.hardcoregaming101.net/outrun/|archive-date=October 14, 2017|df=mdy-all}}</ref> ''Hang-On'' was very popular at launch and sold well for Sega.<ref name=":03"/> Suzuki's success followed with additional titles ''[[Space Harrier]]'', ''[[Out Run]]'', and ''[[Enduro Racer]]''.<ref name=":03"/>{{Sfn|Horowitz|2018|pp=100-102, 112-114}} He and his team relocated to "Studio 128", a more private location where ''[[After Burner]]'' and ''[[Power Drift]]'' were developed.{{Sfn|Horowitz|2018|pp=153-157}} He also worked on development of ''[[G-LOC: Air Battle]]'' and the [[R360]] arcade cabinet.<ref name=":1" /> Developer [[Toshihiro Nagoshi]] joined Sega in 1989 as a designer with Suzuki's team.{{Sfn|Horowitz|2018|pp=187-190}}

=== Establishment of AM2 and years as a department ===
[[File:Toshihiro Nagoshi 20140125.jpg|alt=An image of Toshihiro Nagoshi|thumb|upright=0.8|[[Toshihiro Nagoshi]] joined Sega as a member of Yu Suzuki's team, and was a designer with AM2.]]
Some time after the release of ''Power Drift'', Sega began to separate the amusement division into the Amusement Machine Research and Development teams, or AM teams. Suzuki was made general manager of Research and Development No. 2, or Sega AM2.{{Sfn|Horowitz|2018|pp=153-157}}<ref name=":1" /> According to Suzuki, Sega employed approximately 600 people in research and development, and that AM2 began as a group of around 100 people. He has also stated the reason for this separation was the advent of advanced computer graphics technology.<ref name=":1" /> Around the time of AM2's formation, Suzuki's team moved back into the main office, then to an annex a short walk from the office. Even so, Suzuki worked with a desire of secrecy, so much so that Sega president [[Hayao Nakayama]] was denied entry on one occasion.{{Sfn|Horowitz|2018|pp=153-157}}

The first project developed by AM2 was ''[[Virtua Racing]]''. While development began with 10 people on ''Virtua Racing'', it finished with 25 workers on the project for a year, and the [[List of Sega arcade system boards|Model 1]] [[arcade system board]] on which it runs took approximately three years. AM2 also ported the game for the [[Sega Genesis]].<ref name=":1" /> [[Next Generation (magazine)|''Next Generation'']] stated that AM2 "single-handedly chang[ed] the perception of polygons in a gaming environment" with ''Virtua Racing''.<ref name=":13">{{cite magazine|date=April 1995|title=AM2|magazine=[[Next Generation (magazine)|Next Generation]]|issue=4|pages=68–69}}</ref>

After the release of ''Virtua Racing'', AM2 split into two teams; one began work on ''[[Virtua Fighter (video game)|Virtua Fighter]]'', while another started on ''[[Daytona USA (video game)|Daytona USA]]''.<ref name=":1" /> According to Suzuki, he wanted to develop a game with multiple joint movements, such as a [[Association football|soccer]] or [[Rugby union|rugby]] game. Finding that the Model 1 was not powerful enough to handle this many motions, Suzuki resorted to a game with only two moving characters at a time. With the massive success of [[Street Fighter II: The World Warrior|''Street Fighter II'']] in the industry at the time, he made the decision to make a 3D fighting game to compete.<ref>{{cite web |url=http://vf20th.sega.jp/interview131211.html|title=VF20th Anniversary Interview with Yu Suzuki |date=December 11, 2013|website=Virtua Fighter 20th Anniversary|publisher=[[Sega]]|language=ja |archive-url=https://web.archive.org/web/20181025234316/http://vf20th.sega.jp/interview131211.html|archive-date=October 25, 2018|url-status=live}}</ref> In developing the game, Suzuki identified the need for the game to be realistic, yet fun to play.<ref>{{cite magazine|date=November 1995|title=Nothing Compares to Yu|magazine=[[Next Generation (magazine)|Next Generation]]|publisher=[[Imagine Media]]|issue=11|pages=6–9}}</ref> ''Virtua Fighter'' became a huge success in Japan,<ref>{{cite magazine|date=January 1995|title=Street's Fighting for Squares... Virtua Fighter is Big in Japan|magazine=Ultimate Future Games|publisher=[[Future Publishing]]|issue=2|pages=28–29}}</ref> and its [[Sega Saturn]] port sold at a nearly one-to-one ratio with the console itself.<ref name="Kent4">{{cite book|last=Kent|first=Steven L.|title=[[The Ultimate History of Video Games: The Story Behind the Craze that Touched our Lives and Changed the World]]|publisher=Prima Publishing|year=2001|isbn=0-7615-3643-4|location=Roseville, California|pages=501–502|author-link=Steven L. Kent}}</ref>
[[File:VR Virtua Racing.jpg|thumb|Virtua Racing Twin Cabinet]]
For ''Daytona USA'', Nagoshi was director and chief designer, while Suzuki served as producer. The concept for the game was suggested by Tom Petit, head of Sega Enterprises USA, as a way to debut Sega's new Model 2 arcade system board. Sega mandated that ''Daytona USA'' had to be better than [[Ridge Racer (1993 video game)|''Ridge Racer'']], a game made by [[Namco]]. To accurately depict Daytona International Speedway, the developers used [[satellite imagery]] and sent staff to photograph the track; Nagoshi walked a full lap to get a feel for the banking in the corners.{{Sfn|Horowitz|2018|pp=199-204}} ''Daytona USA'' was released in Japan in August 1993, and worldwide in March 1994.{{Sfn|Horowitz|2018|pp=199-204}}<ref>{{cite magazine|date=October 1993|title=Daytona USA|magazine=[[Electronic Gaming Monthly]]|issue=51|page=222}}</ref> AM2 ported the game to Saturn in April 1995.<ref name="EGM70">{{cite magazine|last=Ogasawara|first=Nob|date=May 1995|title=The Creation of Daytona, and the Future Projects of AM2|magazine=[[Electronic Gaming Monthly]]|publisher=Sendai Publishing|issue=70|pages=70–71}}</ref><ref>{{cite magazine|date=December 1995|title=Virtua Fighter 2 Development Diary|magazine=[[Sega Saturn Magazine]]|publisher=[[Emap International Limited]]|issue=2|page=46}}</ref> The Saturn port was a launch title in the West.<ref>{{cite magazine|date=January 1996|title=1995: The Calm Before the Storm?|magazine=[[Next Generation (magazine)|Next Generation]]|publisher=[[Imagine Media]]|issue=13|page=47}}</ref><ref>{{cite magazine|date=July 1995|title=Sega Hopes to Run Rings Around the Competition with Early Release of the Saturn|magazine=[[Electronic Gaming Monthly]]|publisher=Sendai Publishing|issue=72|page=30}}</ref> ''Daytona USA'' was highly popular in arcades, and the twin cabinet was one of three 1995 recipients of the [[American Amusement Machine Association]]'s Diamond Awards, which are based strictly on sales achievements.<ref>{{cite magazine|date=May 1996|title=And the Winner Is...|magazine=[[Next Generation (magazine)|Next Generation]]|publisher=[[Imagine Media]]|issue=17|page=21}}</ref> In a 2002 report, Sega reported it to be one of the most successful arcade games of all time.<ref>{{cite web|url=https://www.segasammy.co.jp/japanese/ir/library/pdf/printing_archive/2002/sega/sega_annual_tuuki_2002.pdf|title=Sega Annual Report, 2002|date=2002|publisher=[[Sega Sammy Holdings]]|url-status=live|archive-url=https://web.archive.org/web/20160303231553/https://www.segasammy.co.jp/japanese/ir/library/pdf/printing_archive/2002/sega/sega_annual_tuuki_2002.pdf|archive-date=3 March 2016|access-date=4 September 2019}}</ref>

Over the course of the remainder of the 1990s, Suzuki's primary concern in arcades were the [[Virtua Fighter|''Virtua Fighter'' series]] and working as a producer for other titles.<ref name=":12">{{cite magazine|date=January 2016|title=The Arcade Pioneer: The Story of Yu Suzuki|magazine=[[Retro Gamer]]|publisher=[[Future plc]]|issue=150|pages=96–99}}</ref> Subsequently, AM2 released ''[[Virtua Cop]]'' and ''[[Virtua Fighter 2]]'' for the Model 2.{{Sfn|Horowitz|2018|pp=204-210}} Produced in twelve months, ''Virtua Fighter 2'' was an even greater success in Japan than its predecessor.<ref name=":13" /> In a 1996 interview, Suzuki stated in an interview his philosophy to be not an imitator, but a pioneer in the arcade industry. He also described the palm tree logo of AM2 as representing reliance and peace of mind.<ref>{{cite magazine|date=June 1996|title=AM Tidbits|magazine=Sega Saturn Magazine|language=ja|pages=138–143}}</ref> Further titles developed in the end of 1990s included ''[[Virtua Cop 2]]'', ''[[Fighting Vipers]]'', [[Daytona USA 2|''Daytona USA 2: Battle on the Edge'']], and ''[[SpikeOut]]''. ''Daytona USA 2'' and ''SpikeOut'' made use of the Model 3 system board.{{Sfn|Horowitz|2018|pp=215-220, 233-240}}

=== AM2 of CRI and SEGA-AM2 Co., Ltd. ===
In April 2000, [[CSK Research Institute Corp.|CSK Research Institute]] (CRI) took management over AM2. CRI was a subsidiary of [[SCSK|CSK Corporation]], which was Sega's parent company at the time, and had previously published ''[[Aero Dancing]]''. The new division became known as "AM2 of CRI", and Suzuki remained in charge.<ref>{{cite web|url=https://www.gamespot.com/articles/new-management-for-segas-am2/1100-2447075/|title=New Management for Sega's AM2|last=Sato|first=Yukiyoshi Ite|date=April 27, 2000|website=[[GameSpot]]|access-date=March 31, 2020}}</ref>  Also in 2000, Sega restructured its arcade and console development teams into nine semi-autonomous studios headed by the company's top designers.<ref name=":22" /><ref name="Dreamcast memorial">{{cite web|url=http://www.1up.com/features/9999-dreamcast-memorial |title=9.9.99, A Dreamcast Memorial|last=Parish|first=Jeremy|date=September 3, 2009 |website=1UP.com |url-status=dead|archive-url=https://archive.today/20140201012313/http://www.1up.com/features/9999-dreamcast-memorial|archive-date=February 1, 2014|access-date=December 10, 2016|df=mdy}}</ref> Sega's design houses were encouraged to experiment and benefited from a relatively lax approval process.<ref name="Avant-Garde">{{cite journal|last1=Montfort|first1=Nick|last2=Consalvo|first2=Mia|title=The Dreamcast, Console of the Avant-Garde |journal=Loading... The Journal of the Canadian Game Studies Association|volume=6|pages=82–99|number=9}}</ref>  During the development of ''[[Shenmue (video game)|Shenmue]]'', Nagoshi requested and was granted [[Ryu Ga Gotoku Studio|his own studio]], leaving AM2.<ref>{{cite web|url=https://www.gamesradar.com/from-shenmue-to-yakuza-toshihiro-nagoshi-looks-back-on-an-illustrious-career-of-japanese-game-development/|title=From Shenmue to Yakuza, Toshihiro Nagoshi looks back on an illustrious career of Japanese game development|last=Brown|first=Nathan|date=December 28, 2018|website=[[GamesRadar+]]|access-date=March 31, 2020|url-status=live|archive-date=January 7, 2019|archive-url=https://web.archive.org/web/20190107015844/https://www.gamesradar.com/from-shenmue-to-yakuza-toshihiro-nagoshi-looks-back-on-an-illustrious-career-of-japanese-game-development/}}</ref>

AM2 developed what Sega hoped would be the [[Dreamcast]]'s [[Killer application|killer app]] in ''Shenmue'', a "revenge epic in the tradition of [[Cinema of China|Chinese cinema]]."<ref name=":22" /><ref name="History">{{cite web|url=https://ign.com/articles/1999/07/14/shenmue-the-history|title=''Shenmue'', the History|date=July 13, 1999|website=[[IGN]]|url-status=live|archive-url=https://web.archive.org/web/20141030003504/http://www.ign.com/articles/1999/07/14/shenmue-the-history|archive-date=October 30, 2014|access-date=October 26, 2014}}</ref> The [[action-adventure game]] involved the quest of protagonist Ryo Hazuki to avenge his father's murder,<ref name="Ages">{{cite web|url=https://ign.com/articles/2007/08/08/shenmue-through-the-ages|title=''Shenmue'': Through the Ages|last=Kolan|first=Patrick|date=August 7, 2007|website=[[IGN]]|url-status=live|archive-url=https://web.archive.org/web/20141104113911/http://www.ign.com/articles/2007/08/08/shenmue-through-the-ages|archive-date=November 4, 2014|access-date=October 26, 2014}}</ref> but its main selling point was its rendition of the Japanese city of [[Yokosuka, Kanagawa|Yokosuka]], which included a level of detail considered unprecedented for a video game.<ref name="Mott1">{{cite book|last=Mott|first=Tony|title=1001 Video Games You Must Play Before You Die|title-link=1001 Video Games You Must Play Before You Die|publisher=Universe Publishing|year=2013|isbn=978-0-7893-2090-2|location=New York City|pages=406}}</ref> Incorporating a [[Simulation video game|simulated]] day/night cycle with variable weather, [[non-player character]]s with regular schedules, and the ability to pick up and examine detailed objects (also introducing the [[Quick-time event]] in its modern form<ref name="Mott1" /><ref>{{cite web|url=http://www.escapistmagazine.com/articles/view/video-games/columns/waypoints/1310-On-Screen-Help-In-Game-Hindrance|title=On-Screen Help, In-Game Hindrance|last=Lamosca|first=Adam|date=June 24, 2007|work=[[The Escapist (magazine)|The Escapist]]|url-status=live|archive-url=https://web.archive.org/web/20140502182342/http://www.escapistmagazine.com/articles/view/video-games/columns/waypoints/1310-On-Screen-Help-In-Game-Hindrance|archive-date=May 2, 2014|access-date=October 26, 2014}}</ref>), ''Shenmue'' went over budget and was rumored to have cost Sega over $50 million.<ref name="Ages" /><ref name="Mott1" />{{sfn|Kent|2001|page=578}} Originally planned as the first installment in an 11-part saga, ''Shenmue'' was eventually downsized to a trilogy.<ref name=":22" /><ref>{{cite web|url=http://www.polygon.com/2014/3/19/5527120/yu-suzuki-shenmue-gdc-2014-classic-game-postmortem|title=Creator Yu Suzuki shares the story of ''Shenmue''<nowiki>'</nowiki>s development|last=Corriea|first=Alexa Ray|date=March 19, 2014|work=[[Polygon (website)|Polygon]]|url-status=live|archive-url=https://web.archive.org/web/20150628071042/http://www.polygon.com/2014/3/19/5527120/yu-suzuki-shenmue-gdc-2014-classic-game-postmortem|archive-date=June 28, 2015|access-date=December 17, 2014}}</ref> According to Sega of America president [[Peter Moore (businessman)|Peter Moore]], ''Shenmue'' sold "extremely well", but the game had no chance of making a profit due to the Dreamcast's limited installed base.{{sfn|Kent|2001|pages=587, 578}} The high amount ''Shenmue'' went over budget was also a factor in the game's lack of profitability.<ref name=":12" /> Its sequel, ''[[Shenmue II]]'', "was completed for a much more reasonable sum".<ref name="IGN History of Dreamcast2">{{cite web|url=https://ign.com/articles/2010/09/10/ign-presents-the-history-of-dreamcast|title=IGN Presents the History of Dreamcast|last=Fahs|first=Travis|date=September 9, 2010|website=[[IGN]]|url-status=live|archive-url=https://web.archive.org/web/20140928201508/http://www.ign.com/articles/2010/09/10/ign-presents-the-history-of-dreamcast|archive-date=September 28, 2014|access-date=October 31, 2014}}</ref>{{sfn|Kent|2001|page=578}}[[File:Sega F355 Challenge.jpg|alt=An arcade cabinet with a steering wheel|thumb|''[[F355 Challenge]]'', developed by AM2]]In addition to the mixed reception for ''Shenmue'', IGN's Travis Fahs stated that "the [Dreamcast] era wasn't as kind to [AM2] as earlier years"—citing (among others) ''[[F355 Challenge]]'' as an "acclaimed" arcade game that "didn't do much at home", and [[Genki (company)|Genki]]'s port of ''[[Virtua Fighter 3]]'' as inferior to the arcade version, "which was already a couple years old and never as popular as its predecessors."<ref name="IGN History of Dreamcast2" /><ref name=":0">{{cite magazine|author=Matt|date=December 2000|title=F355 Challenge: Passione Rossa|magazine=[[Game Informer]]|volume=10|issue=92|page=124}}</ref><ref>{{cite magazine|url=https://www.gameinformer.com/reviews/review_detail.cfm?ITEM_ID=3251|title=''Virtua Fighter 3tb''|date=October 25, 1999|magazine=Game Informer|url-status=dead|archive-url=https://web.archive.org/web/20000603210245/http://www.gameinformer.com/reviews/review_detail.cfm?ITEM_ID=3251|archive-date=June 3, 2000|access-date=October 26, 2014}}</ref> The ''[[Virtua Fighter]]'' series would experience a "tremendous comeback" with the universally acclaimed ''[[Virtua Fighter 4]]''—which saw a console release exclusively on [[PlayStation 2]].<ref name="IGN History of Dreamcast2" /><ref>{{cite web|url=https://www.metacritic.com/game/virtua-fighter-4/critic-reviews/?platform=playstation-2|title=''Virtua Fighter 4''|website=Metacritic|url-status=live|archive-url=https://web.archive.org/web/20150117132701/http://www.metacritic.com/game/playstation-2/virtua-fighter-4/critic-reviews|archive-date=January 17, 2015|access-date=October 26, 2014}}</ref> In Japanese arcades, ''Virtua Fighter 4'' proved to be highly influential with its VF.NET system, paving the way for arcade games with network features.<ref>{{cite web|url=http://www.1up.com/do/feature?cId=3149135|title=The Last Arcade Crusaders|last=James|first=Mielke|date=March 31, 2006|website=1up.com|url-status=live|archive-url=https://web.archive.org/web/20070914101054/http://www.1up.com/do/feature?cId=3149135|archive-date=September 14, 2007}}</ref> The quest mode of ''[[Virtua Fighter 4: Evolution]]'' on PlayStation 2, used AI mined from players in Japan playing through VF.NET.<ref>{{cite web|title=Virtua Fighter 4 – Hardcore Gaming 101|url=http://www.hardcoregaming101.net/virtua-fighter-4/|access-date=2021-06-24|language=en-US}}</ref>

In 2001, AM2 of CRI was renamed to SEGA-AM2 Co., Ltd.<ref>{{cite web|url=https://www.gamasutra.com/view/news/91644/CSK_Research_Institute_Becomes_SegaAM2_Co_Ltd.php|archive-url=https://web.archive.org/web/20210825052558/https://gamasutra.com/view/news/91644/CSK_Research_Institute_Becomes_SegaAM2_Co_Ltd.php|url-status=dead|archive-date=August 25, 2021|title=CSK Research Institute Becomes Sega-AM2 Co. Ltd.|date=August 1, 2001|website=[[Gamasutra]]|access-date=March 31, 2020}}</ref> After serving as a producer on ''[[Virtua Cop 3]]'' and ''[[OutRun 2]]'',<ref name=":12" /> Suzuki left AM2 on October 1, 2003, in order to start a new studio with Sega, called Digitalrex.<ref name=":4">{{cite web|url=http://archive.videogamesdaily.com/news/200307/037.asp|title=Sega Studio Mergers: Full Details|last=Doree|first=Adam|date=July 25, 2013|website=Kikizo|publisher=Superglobal |archive-url=https://web.archive.org/web/20150608223108/http://archive.videogamesdaily.com/news/200307/037.asp |archive-date=June 8, 2015|access-date=March 31, 2020|url-status=live}}</ref><ref>{{cite web |url=https://blog.screenweek.it/2018/01/magic-2018-da-tite-kubo-a-yu-suzuki-a-bill-sienkiewicz-ospiti-e-programma-595315.php/|title=Magic 2018 – Da tite kubo a Yu Suzuki a Bill Sienkiewicz ospiti e programma|last=Vazzoler |first=Marlen|date=January 27, 2018|website=ScreenWeek|language=it|access-date=March 31, 2020}}</ref>  He was promoted to non-executive board director.<ref name=":4" />  Hiroshi Kataoka was placed in charge of AM2.<ref name=":4" /><ref>{{cite web|title=Sega-AM2 gets new president|url=https://www.gamespot.com/articles/sega-am2-gets-new-president/1100-6071115/|date=July 8, 2003|website=[[GameSpot]]|access-date=May 7, 2020}}</ref>  Kataoka, who had led research and development at AM2 for a year, had worked on numerous projects for Sega and Yu Suzuki's division as old as ''Space Harrier'' to ''[[Virtua Fighter 4 Evolution]]''.<ref>{{cite web|url=https://www.gamesindustry.biz/articles/sega-reshuffles-development-studios|title=Sega reshuffles development studios|last=Fahey|first=Rob|date=July 9, 2003|website=Gamesindustry.biz|access-date=March 31, 2020}}</ref> Makoto Osaki became AM2's head of development, reporting to Kataoka.<ref>{{cite web |url=http://archive.videogamesdaily.com/features/sega_am2_interview_june04.asp|title=Sega-AM2: The Kikizo Interview 2004|last=Doree|first=Adam|date=June 18, 2004|website=Kikizo|publisher=Superglobal |archive-url=https://web.archive.org/web/20190515155830/http://archive.videogamesdaily.com/features/sega_am2_interview_june04.asp|archive-date=May 15, 2019|access-date=March 31, 2020|url-status=live}}</ref>  At the same time as the changes, a number of Sega's studios were merged.  However, AM2 did not merge with any other studio.<ref name=":4" /><ref>{{cite web|title=Sega reveals new development studio structure|url=https://www.gamespot.com/articles/sega-reveals-new-development-studio-structure/1100-6072725/|last=Niizumi|first=Hirohiko|date=July 30, 2003|website=[[GameSpot]]|access-date=May 7, 2020}}</ref>

=== Merge into Sega and years since ===
[[File:R-Tuned.jpg|alt=Four arcade cabinets with seats and steering wheels in a row, colored green|thumb|AM2's ''[[R-Tuned : Ultimate Street Racing]]'' cabinet]]
During mid-2004, [[Sammy Corporation]] bought a controlling share in Sega and created the new company [[Sega Sammy Holdings]], an entertainment conglomerate. Since then, Sega and Sammy became subsidiaries of the aforementioned holding company, with both companies operating independently, while the executive departments merged.<ref>{{cite web|url=http://www.gamespot.com/articles/sammy-reveals-new-logo-changes-at-sega/1100-6099624/|title=Sammy reveals new logo, changes at Sega|author=Hirohiko Niizumi|date=June 1, 2004|website=GameSpot|url-status=live|archive-url=https://web.archive.org/web/20180828001811/https://www.gamespot.com/articles/sammy-reveals-new-logo-changes-at-sega/1100-6099624/|archive-date=August 28, 2018|access-date=November 16, 2016}}</ref> Prior to the acquisition by Sammy, Sega began the process of re-integrating its subsidiaries into the main company,<ref>{{cite news|last=Fahey|first=Rob|url=https://www.gamesindustry.biz/articles/sega-development-studios-return-to-the-fold|title=Sega development studios return to the fold|date=June 29, 2004|work=GamesIndustry.biz|access-date=July 11, 2018|url-status=live|archive-url=https://web.archive.org/web/20180711093418/https://www.gamesindustry.biz/articles/sega-development-studios-return-to-the-fold|archive-date=July 11, 2018|publisher=Gamer Network|language=en}}</ref> which was completed by October 2004.<ref>{{cite web|url=https://www.gamesindustry.biz/articles/sega-and-sammy-complete-merger-new-holding-company-launched|title=Sega and Sammy complete merger, new holding company launched|last=Fahey|first=Rob|date=October 4, 2004|website=Gamesindustry.biz|url-status=live|archive-url=https://web.archive.org/web/20180612165251/https://www.gamesindustry.biz/articles/sega-and-sammy-complete-merger-new-holding-company-launched|archive-date=June 12, 2018|access-date=March 31, 2020}}</ref>  Sega would also restructure the development studios again, consolidating the divisions further into the Global Entertainment, Amusement Software, and New Entertainment R&D divisions.{{Sfn|Horowitz|2018|pp=253-257}}
[[File:BorderBreak Controller.jpg|left|thumb|The controllers for Border Break]]
AM2 continued to develop games after the merger. ''[[Virtua Fighter 5]]'' was released in 2007.<ref name=":6">{{cite web|url=http://archive.videogamesdaily.com/features/sega_am2_interview_mar07_p1.asp |title=Sega AM2: The Complete VF5 Interview|date=March 21, 2007|website=Kikizo|publisher=Superglobal|access-date=March 31, 2020|url-status=live|archive-date=September 9, 2018|archive-url=https://web.archive.org/web/20180909040036/http://archive.videogamesdaily.com/features/sega_am2_interview_mar07_p1.asp}}</ref> An upgrade, ''Virtua Fighter 5 R'', was released the following year.<ref>{{cite web |url=http://archive.videogamesdaily.com/features/sega-am2-vf5r-interview-oct08-p1.asp |title=Virtua Fighter 5 R: The ONLY Interview|date=October 7, 2008|website=Kikizo|publisher=Superglobal|url-status=live|archive-url=https://web.archive.org/web/20190915075356/http://archive.videogamesdaily.com/features/sega-am2-vf5r-interview-oct08-p1.asp|archive-date=September 15, 2019|access-date=March 31, 2020}}</ref> The last release of the ''Virtua Fighter'' franchise was the console port of ''Virtua Fighter 5: Final Showdown'', the final iteration of the game.<ref>{{cite web|title=Virtua Fighter 5 Final Showdown release date, price announced |url=https://www.eurogamer.net/articles/2012-05-14-virtua-fighter-5-final-showdown-release-date-price-announced |last=Robinson|first=Martin|date=14 May 2012|website=Eurogamer}}</ref> [[Ghost Squad (video game)|''Ghost Squad'']], in the style of ''Virtua Cop'', received an arcade and a Wii release in 2008.<ref>{{cite web |url=http://archive.videogamesdaily.com/reviews/wii/ghost_squad.asp|title=Wii Review: Ghost Squad|last=Dransfield|first=Ian|date=June 10, 2008|website=Kikizo|publisher=Superglobal|url-status=live|archive-url=https://web.archive.org/web/20160928053854/http://archive.videogamesdaily.com/reviews/wii/ghost_squad.asp|archive-date=September 28, 2016|access-date=March 31, 2020}}</ref><ref>{{cite web|title=Ghost Squad Review |url=http://wii.ign.com/articles/836/836873p1.html|last=Bozon|date=November 20, 2007|website=[[IGN]]|url-status=dead|archive-url=https://web.archive.org/web/20111211212439/http://wii.ign.com/articles/836/836873p1.html |archive-date=December 11, 2011|access-date=June 18, 2011}}</ref> AM2 has developed games for the ''[[Hatsune Miku: Project DIVA]]'' series, as well as a number of free-to-play smartphone games in Japan,<ref name=":5">{{cite web |url=https://www.engadget.com/2019-08-23-sega-genesis-saturn-dreamcast-sequels-and-remasters.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAA2Ehzbj3wOVMqOhzBp9xImO6QgLInb6a7DRovkEYCgpCut30lhy8g9R9l6H8ynZ45VB4K-lt-13oDdLsF9EYdYn2v4uDqtU32_Nc3H6jIynkwQoS3gylXt62DLrRJbFv9AFJJ58hMyIwIv6D6F9d1zCV3pNNKuCecLUjrxHGW87|title=Sega is becoming its weird and wonderful self again|last=Souppouris|first=Aaron|date=August 23, 2019|website=[[Engadget]] |access-date=March 31, 2020}}</ref> such as ''Soul Reverse Zero''.<ref>{{cite web|title=Sega · Interactive, announces new arrival RPG "SOUL REVERSE ZERO" of AM2 lab!|last=Fukuhara|first=Hiroyuki|date=October 21, 2016|website=GAME Watch|publisher=Impress Corporation |language=ja|url=https://game.watch.impress.co.jp/docs/news/1025758.html|url-status=live|archive-url=https://web.archive.org/web/20180704153231/https://game.watch.impress.co.jp/docs/news/1025758.html |archive-date=July 4, 2018|access-date=September 29, 2018}}</ref> Some titles have been developed for consoles as well, such as ''Hatsune Miku: Project Diva Mega 39’s'' for [[Nintendo Switch]].<ref>{{cite web|url=https://www.siliconera.com/hatsune-miku-project-diva-mega-39s-to-sing-and-dance-on-nintendo-switch-in-early-2020/|title=Hatsune Miku: Project Diva Mega 39's To Sing And Dance On Nintendo Switch In Early 2020|last=Wong|first=Alistair|date=July 1, 2019|website=[[Siliconera]]|access-date=March 31, 2020}}</ref> AM2 became involved with the ''Hatsune Miku'' license with items for ''Virtua Fighter 5 R'' and the racing game [[R-Tuned : Ultimate Street Racing|''R-Tuned: Ultimate Street Racing'']]. When the PSP game ''Hatsune Miku: Project DIVA'' was in development, it was decided that AM2 would develop an arcade version as well as develop the [[Holography|holographic]] imagery for ''Hatsune Miku''<nowiki/>'''s'' live concerts. The visuals for these projects were based on the ''Virtua Fighter 5 engine''. Makoto Osaki called this period the most stressful for him since ''Shenmue''.<ref>{{cite magazine|title=『初音ミク』の10年と、『ディーヴァ』シリーズの歩みを振り返る。クリプトン佐々木氏＆セガ大崎氏インタビュー(1/2)|date=December 11, 2017|magazine=Famitsu |language=ja |url=https://www.famitsu.com/news/201712/11146884.html|url-status=live|archive-url=https://web.archive.org/web/20190617154027/https://www.famitsu.com/news/201712/11146884.html|archive-date=June 17, 2019|access-date=April 5, 2020}}</ref>
[[File:Kan-Colle Arcade.jpg|thumb|Arcade version of [[Kantai Collection]] ]]
A major success for AM2 has been the ''[[Border Break]]'' franchise. The game was partly developed because the development team felt envious of the ''Virtua Fighter 5'' team and wanted to develop a competitive game as well. The arcade release in 2009 was continuously updated, with releases ''Border Break Union'' in 2012, ''Border Break Scramble'' in 2015, and ''Border Break X'' in 2017—with a [[PlayStation 4]] version released in 2018. In 2019, ''Border Break'' celebrated its 10th Anniversary.<ref>{{cite web|url=https://www.4gamer.net/games/406/G040661/20190902096/|title=「ボーダーブレイク」の10年を開発者とゲストが振り返る，「10周年だヨ！ボダりな祭」レポート。12月のPS4版アップデートも一部が明らかに|last=徹也|first=稲元|date=September 19, 2019|website=4gamer.net|url-status=live|archive-url=https://web.archive.org/web/20191204135153/https://www.4gamer.net/games/406/G040661/20190902096/|archive-date=December 4, 2019|access-date=April 5, 2020}}</ref> Other titles from AM2 to get long-term support in arcades are ''[[Quest of D]],''<ref>{{cite web|url=https://www.ign.com/articles/2003/11/13/new-from-sega-am2-quest-of-d|title=New from Sega-AM2: Quest of D|date=November 13, 2003|website=[[IGN]]|access-date=April 5, 2020}}</ref> ''[[Sega Network Taisen Mahjong MJ]],''<ref>{{cite web|url=http://www.sega-am2.co.jp/jp/games/index.html|title=Games|website=www.sega-am2.co.jp|publisher=Sega-AM2 Co.|language=ja|url-status=dead|archive-url=https://web.archive.org/web/20040630004045/http://www.sega-am2.co.jp/jp/games/index.html|archive-date=June 30, 2004|access-date=April 5, 2020}}</ref> ''and [[Shining Force Cross]].''<ref>{{cite web|url=https://game.watch.impress.co.jp/docs/series/pickupac/167941.html|title=シャイニング・フォース クロス|last=Kiharu|first=Taku|date=May 1, 2009|website=GAME Watch|language=ja|access-date=April 5, 2020}}</ref> Hiroshi Kataoka likened the basic enjoyability of these network-based arcade games to those of an MMO, but collectible cards and a community differentiated these from the usually solitary MMO experience on PC.<ref>{{cite web|url=http://www.1up.com/do/feature?cId=3149135|title=The Last Arcade Crusaders|last=James|first=Mielke|date=March 31, 2006|website=[[1Up.com]]|url-status=live|archive-url=https://web.archive.org/web/20070914101054/http://www.1up.com/do/feature?cId=3149135|archive-date=September 14, 2007|access-date=April 5, 2020}}</ref> According to Sega Amusement International CEO Paul Williams, these type of core games are only possible in Japan due to Sega owning their own chains and being able to kickstart an online infrastructure.<ref>{{cite web|url=https://www.t3.com/features/t3-interview-ceo-of-sega-amusements-international-paul-williams|title=T3 Interview: CEO of Sega Amusements International Paul Williams|last=Zangirolami|first=Marco|date=December 16, 2016|website=T3|url-status=live|archive-url=https://web.archive.org/web/20190428045122/https://www.t3.com/features/t3-interview-ceo-of-sega-amusements-international-paul-williams|archive-date=April 28, 2019}}</ref> The latest effort, ''Soul Reverse,'' was born out of the desire to create a fantasy version of ''Border Break.''<ref>{{cite web |last=Muratani |first=Kenta |date=April 14, 2008 |title=アップデートで巻き返しを図る「SOUL REVERSE」クリエイターインタビュー。バランス調整が施されたVer.1.2の狙い……のその前に，苦戦の理由を聞いてみた |url=https://www.4gamer.net/games/361/G036113/20180412074/ |url-status=live |archive-url=https://web.archive.org/web/20200321085604/https://www.4gamer.net/games/361/G036113/20180412074/ |archive-date=March 21, 2020 |access-date=April 5, 2020 |website=4gamer.net |language=ja}}</ref> It lasted a year, launching in 2018 with its network features shutting down in 2019.<ref>{{cite web |date=October 12, 2018 |title=アーケード用対戦アクション「SOUL REVERSE」が2019年2月下旬でサービス終了 |url=https://www.4gamer.net/games/361/G036113/20181012111/ |url-status=live |archive-url=https://web.archive.org/web/20190803112836/https://www.4gamer.net/games/361/G036113/20181012111/ |archive-date=August 3, 2019 |access-date=April 5, 2020 |website=4gamer.net |language=ja}}</ref> The game was not well received by the Japanese arcade player base. It took four years to produce.<ref>{{Cite web |title=アップデートで巻き返しを図る「SOUL REVERSE」クリエイターインタビュー。バランス調整が施されたVer.1.2の狙い……のその前に，苦戦の理由を聞いてみた |url=https://www.4gamer.net/games/361/G036113/20180412074/ |access-date=2023-11-21 |website=4Gamer.net |language=ja}}</ref> Currently running arcade games with AM2 staff working on them are ''KanColle Arcade'',<ref name=":16" /> ''Fate/Grand Order Arcade''<ref name=":7">{{Cite web |title=『Fate/Grand Order Arcade』 「Amusement Journal」の「2020 Best Income Award 大型ビデオゲーム部門」にて2年連続大賞受賞 {{!}} 最新情報 {{!}} ディライトワークス株式会社 |url=https://www.delightworks.co.jp/news/20210120-6907 |access-date=2022-09-02 |website=www.delightworks.co.jp |language=ja}}</ref><ref>{{Cite web |date=2023-05-29 |title=大人気アプリゲーム・FGOの世界観を徹底再現！Fate/GrandOrder Arcadeのマスターになろう！ - マガポケベース |url=https://pocket.shonenmagazine.com/article/entry/fgo/arcade |access-date=2024-01-25 |archive-url=https://web.archive.org/web/20230529110842/https://pocket.shonenmagazine.com/article/entry/fgo/arcade |archive-date=May 29, 2023 }}</ref> as well as an updated version of ''Virtua Fighter 5'', ''Virtua Fighter 5: Ultimate Showdown'', co-developed with [[Ryu Ga Gotoku Studio]].<ref name=":8" />

As of 2014, Hiroshi Kataoka was still in charge of AM2.<ref>{{Cite web |date=2014-10-27 |title=バーチャファイター20周年記念特設サイト -株式会社セガ- |url=http://vf20th.sega.jp:80/interview140410A.html |access-date=2024-01-16 |archive-url=https://web.archive.org/web/20141027201030/http://vf20th.sega.jp:80/interview140410A.html |archive-date=October 27, 2014 }}</ref> Currently he is an executive for Sega supervising arcade engineers and the technology backend of games developed at the engineering division.<ref>{{Cite web |date=2024-01-10 |title=『Beep21』片岡洋特別インタビュー 〜クリエイター・リユニオン・ファイルVol.7〜｜Beep21 |url=https://note.com/beep21/n/n48876f452c62 |access-date=2024-01-16 |website=note（ノート） |language=ja}}</ref><ref>{{Cite web |title=技術本部インタビュー |url=https://www.sega.co.jp/recruit/episode/episode11/ |access-date=2024-02-28 |website=採用サイト｜株式会社セガ -【SEGA CORPORATION】 |language=ja}}</ref>