Former Sega Exec Criticizes Company's "20 Years of Wrong Decisions"

In the wake of a major corporate shakeup at Sonic publisher Sega, which comprises job losses and the closure of the company's San Francisco office, former Sega of America chief executive Tom Kalinske has weighed in with his own thoughts about what went wrong.

Kalinske, who was CEO at Sega of America during the company's heyday in the 1990s, says in a new interview with GamesIndustry International that he was shocked to learn the company was closing up shop in San Francisco. He went on to say that Sega could have competed against Sony and Microsoft--now heavyweights in the video game industry--had it not been for two decades of poor decision-making.

"It was not inevitable," Kalinske, now a vice chairman of edutainment company LeapFrog, said of Sega's struggles. "It could have been avoided if they had made the right decisions going back literally 20 years ago. But they seem to have made the wrong decisions for 20 years."

Kalinske went on to say that one of the main reasons he quit Sega in 1996 was because the board rejected his idea for a Sega-Sony collaborative game console. As part of this arrangement, which was first revealed in 2006, Sega and Sony would have shared the development costs (and initial losses) of the system, but benefit from software sales.

"You have to really make a lot of mistakes to kill a strong brand" -- Tom Kalinske

"We went to Sony and they agreed, 'Great idea,'" Kalinske said. "Whether we called it Sega-Sony or Sony-Sega, who cared? We go to Sega and the board turned it down, which I thought was the stupidest decision ever made in the history of business. And from that moment on, I didn't feel they were capable of making the correct decisions in Japan any longer."

Still, Kalinske said he doesn't see the Sega brand going the way of Atari anytime soon. It could be revived, he said, and Kalinke knows a thing or two about comeback stories. As GamesIndustry International points out, Kalinske--a former Mattel executive--helped revitalize the Hot Wheels and Barbie brands, and he also popularized Flintstones vitamins.

"You have to really make a lot of mistakes to kill a strong brand," he said. "I do think some great brands obviously have been destroyed, Atari being one of them. Why didn't that survive? I think there's a lot of bad decision making involved in killing brands like that. I hope Sega isn't the same thing."

Sega is in a position of transition. Just last week, the company announced it had acquired BioShock and Mass Effect co-developer Demiurge Studios and also made strategic investments in two other Western game developers.

In 2013, Sega paid $26.6 million to acquire developer Relic Entertainment and the Company of Heroes franchise. Going forward, Sega will focus on PC and mobile games, while its future for console game development remains unclear.