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01/31/2001
New Company Strategy Gives Sega a Range of Revenue Possibilities and a Path to Profitability; Poised to Become Leading Network Entertainment Company

Sega today announced it would restructure the company to capitalize on its game content -- an area that has been Sega's biggest strength for more than 40 years. In turn, Sega will unveil a three-pronged approach -- becoming a platform-agnostic third party videogame publisher for game consoles, focusing on its advantage in the networked gaming arena, and becoming an architecture provider of the powerful Dreamcast chip-set technology to a range of devices including the Pace Micro Technology set-top-box. By embracing technologies including Java, Sega will also be taking advantage of different publishing channels and will deliver Sega games to Palm handheld computers and Motorola cellular phones. With this new strategy, Sega will be significantly broadening its accessibility to consumers and dramatically expanding its revenue possibilities, leading the company to a path of profitability.

World's Leading Publisher of Interactive Entertainment
"Sega is a company that has always dared to innovate and push this industry forward," said Peter Moore, president and COO, Sega of America. "Sega will continue to do so with its new strategy, and the result for consumers will be what you would always expect from a 'rules-breaker' like Sega - a library of pioneering, jaw-dropping content now available any way you want to play."

Sega plans to ship more than 30 games for Dreamcast in the U.S. this year and a number for other platforms. The first Sega games to be available on other game consoles this year will include Virtua Fighter 4, the Space Channel 5 series, the popular Sakura Wars series and two titles from the Let's Make a Sports Team series (which has been highly successful in Japan) for Sony PlayStation 2. Sonic the Hedgehog Advance, ChuChu Rocket! and Puyo Puyo will ship for Nintendo's Game Boy Advance. Further details on availability of these titles will be announced shortly.

Sega will continue to sell through and market the Dreamcast console and its games at retail for the next year. To help accelerate the transition of Sega from a hardware to a software company, the company has announced a new MSRP of $99.95 for Dreamcast. The new price point becomes effective on February 4, 2001 throughout the United States and Canada ($149 CND). In addition, Sega of America will be undergoing a company restructuring as they transform into a third party publisher.

Sega is already well positioned to become the world's leading publisher of interactive entertainment. The company has more than 40 years of experience in interactive entertainment, in addition to thousands of Sega developers worldwide creating quality games. The combination of a greatly expanded installed base provided by other videogame consoles and the world's best developer talent including Yu Suzuki (creator of the Shenmue and the Virtua Fighter series), Yuji Naka (creator of the Sonic the Hedgehog series, Samba de Amigo and Phantasy Star Online) and Hisao Oguchi (creator of Crazy Taxi and Virtua Tennis), Sega is well positioned to become the world's leading videogame publisher.

Alternative Platform Support
Sega will leverage its powerful Dreamcast technology and other technologies such as Java to further the objective of putting Sega games virtually everywhere. To that end, Sega today announced it will bring its legendary videogame content to Palm handheld computers, and announced a relationship with Pace, a leading set-top box company. Under the relationship with Palm, Sega will provide both on and offline games for Palm Powered handhelds sometime this year. Sega has licensed the Dreamcast technology to Pace, which is creating a set-top box that will play Dreamcast games. Additionally, Sega also announced late last year that the company would bring Java-based games to Motorola phones this year.

In further support of Dreamcast consumers, many of the 30 Dreamcast games shipping in the U.S. will be exclusive to the Dreamcast console. There will also be best-selling franchises such as Sonic Adventure 2, Crazy Taxi 2 and Shenmue 2 coming to Dreamcast this year. Dreamcast gamers can also enjoy the current library of more than 200 games including hits such as the award-winning Shenmue, which USA Today called "one of the most immersive and gratifying games around" and the top-selling Sega Sports NFL 2K1 and Crazy Taxi.

"We have an incredible line-up, key opportunities with other non-gaming devices and a huge combined installed base worldwide for next generation platforms," continued Moore. "With this in place, Sega is well positioned to become the world's dominant interactive software publisher and the leading network entertainment company given our online strengths."