Sega started out in Hawaii as a company called Standard Games that created coin-operated machines to entertain the growing military population in Hawaii. Standard Games' founders Martin Bromley, Irving Bromberg, and James Humpert had a lot of success during the 1940's, but they hit their first roadblock in 1951 when slot machines were outlawed in the United States. After the loss of the American market, Standard Games sent two employees to Tokyo to work as distributors and place slot machines at United States military bases in Japan. With the full move to Japan in 1952, Standard Games changed their name to Service Games of Japan. In 1965, Service Games of Japan, which became known as Nihon Goraku Bussan merged with Rosen Enterprises, a company ran by American entrepreneur David Rosen who had distributed various entertainment machines throughout Japan bringing a new form of entertainment to the Japanese Public. The new company shortened down the name Service Games of Japan into what it is now known today Sega.

With David Rosen as CEO, Sega decided to go after a whole new market with the 1965 release of the arcade game Periscope. Periscope proved to not only be a major turning point for Sega but also for the struggling video game market that had been lacking innovation and was becoming stagnant. Originally developed by Namco, Sega decided that after the positive reception the game received in Japan, they would distribute the game worldwide release a year later and the game received an equal amount of praise around the world. With the arcade scene on the rise after the release of Periscope, Sega decided to go all in and began exporting about 10 games a year. Sega continued to grow through the rest of the 60's and well into the 70's before David Rosen sold the company in 1974 to Gulf and Western. The arcade boom allowed Sega to surpass a quarter of a million dollars in revenue thanks to popular games like Zaxxon, Out Run, and Astro Blaster. Sega would be forced to find a new avenue to release video games after their success in the arcade market came to an end with the video game crash of 1983.

Thanks to home consoles like the Atari and ColecoVision, the introduction of the home computer, and the competition in the arcade market, Sega was experiencing a drop in their arcade sales. Sega decided to join the home console market on July 15th, 1983 with the release of the SG-1000 in hopes of tapping into a new market. Sega encountered an unexpected hurdle when Nintendo decided to release its own home console, the Famicom on the same day. The SG-1000 received multiple versions over the next few years, but it never saw a release outside of Japan and was ultimately discontinued in 1985.

Despite the fact that The SG-1000 was never able to surpass the Famicom in popularity, the console still did well enough to give Sega hope for the future. Thanks to the Famicom's success, the video game market was revitalized and Sega was able to use their knowledge to create the Sega Mark III which would later be known as the Master System worldwide. With improved specs and a new sleek design, Sega had hoped this was the boost they needed to hit the mainstream market. The system was set to compete with Nintendo's rebranded Famicom, the NES, around the world.

Despite their newly improved console that featured more powerful hardware than its competitors, Sega didn't find nearly as much success with the Master System as they had hoped. Sega lacked the ability to get some popular video games and developers to release on the Master System thanks to the contracts Nintendo had them sign. With the Master System only reaching moderate success in one territory, Sega went back to the drawing board and came out with their third system the Mega Drive, renamed the Genesis in North America. While Sega was unable to gain much traction in the Japanese market, the Genesis performed much better in North America than anybody had anticipated. As Nintendo began to see their dominance in the market slipping, they developed a successor to the NES in order to take down the Genesis.

With the impending release of Nintendo's new console, Sega decided they needed a mascot that would star in their flagship series and compete with Mario. With the help of many Sega employees including Yuji Naka and Naoto Ohshima, Sonic the Hedgehog was created and served as the star of the Sega Genesis with his games being the highest selling games on the console. Sega and Nintendo would compete throughout the 16-bit era leaving behind all of the other home consoles. Sega started matching Nintendo step for step and tried to outdo them in every way by releasing their games and console for less money, bundling Sonic the Hedgehog with the console after the SNES was bundled with the latest Mario game, and showing off their superior hardware in their "Genesis does what Nintendon't!" commercials.

With Sega doing everything it could, it marketed the Genesis as the console for adults and included things Nintendo wouldn't like a bloody version of Mortal Kombat. This attempt to outdo Nintendo led to a major controversy surrounding violence in video games. In 1993 and 1994, Sega and Nintendo took part in Congressional hearings revolving around the more realistic violence in this new era of gaming. Sega was lambasted for having a bloodier version of Mortal Kombat and for allowing games like Night Trap to be allowed on its consoles. This ultimately led to the creation of the ESRB and Sega taking a massive hit to their public image.

After finally finding some mainstream success, Sega hoped to continue its long-standing rivalry with Nintendo. Sega had experimented with cd-based video games with the Sega CD add-on to the Genesis and decided to release a brand new cd-based console called the Sega Saturn in 1994. With Nintendo still using cartridges, Sega had little to worry about from Nintendo in terms of quality and performance, but Sega faced new competition in Sony who released the PlayStation one month after the Sega Saturn. The Saturn failed due to the high manufacturing costs and lack of video games, Sega lost a significant amount of money on the console. As Sony was making waves with its PlayStation and Nintendo was doing just as well with its Nintendo 64, Sega decided to take one more shot at the home-console market with the Sega Dreamcast.

The Dreamcast released in 1999 and built a unique and diverse library of games including Crazy Taxi, Jet Set Radio, Shenmue, and Sonic Adventure. With a strong launch, the Dreamcast looked to be doing well, but with a lack of third-party games and Sony dominating the American market, the Dreamcast fell 2 million short of Sega's desired sales numbers. As Sony was preparing to release their next console and Microsoft deciding to join the home console market, Sega announced they would stop production of the Dreamcast and move to third-party development after five years of financial loses

Throughout the early 2000's, Sega went through a number of management changes and later became Sega Sammy Holdings after the company Sammy bought a controlling share in Sega. Sega would go on to publish games for Sony, Microsoft, and even its longtime rival Nintendo. Today, Sega has expanded and acquired many development companies expanding the styles and genres of games they release while still coming up with new adventures for their more classic and iconic series.