Editing Sega (section)

===Shift to a third-party software manufacturer (2001–2005)===
On 23 January 2001, a story ran in ''[[wikipedia:Nihon Keizai Shimbun|Nihon Keizai Shimbun]]'' that said Sega was going to cease production of the Dreamcast and develop software for other platforms.<ref>{{Cite web |title=Sega Sinks Console Efforts? |last=Justice |first=Brandon |publisher=[[Wikipedia:IGN|IGN]] |url=http://dreamcast.ign.com/articles/090/090435p1.html |archiveurl=http://web.archive.org/web/20020613212945/http://dreamcast.ign.com/articles/090/090435p1.html |archivedate=13 June 20003 |date=23 January 2001}}</ref> After the initial denial, Sega Japan then put out a press release confirming they were considering producing software for [[PlayStation 2]] and [[Game Boy Advance]] as part of their "New Management Policy".<ref>{{Cite web |title=弊社ドリームキャスト事業に関する一部の報道について |publisher=[[Sega]] |url=http://sega.jp/corp/release/2001/0124/ |date=24 January 2001 |archiveurl=https://web.archive.org/web/20071202025805/http://sega.jp/corp/release/2001/0124/ |archivedate=2 December 2007}}</ref><ref>{{Cite web |title=Sega Confirms PS2 and Game Boy Advance Negotiations |first=Anoop |last=Gantayat |publisher=[[Wikipedia:IGN|IGN]] |url=http://dreamcast.ign.com/articles/090/090442p1.html |date=23 January 2001}}</ref> Then on 31 January 2001, Sega of America officially announced they were becoming a third-party software publisher.<ref name="SegaRestructure">{{Cite web |title=Sega announces drastic restructuring |url=http://www.gamespot.com/news/2680518.html |first=Shahed |last=Ahmed |publisher=GameSpot |date=31 January 2001}}
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The company has since developed primarily into a platform-neutral software company, known as a "third-party publisher", that creates games that will launch on a variety of game consoles produced by other companies, many of them former rivals, the first of which was a port of ''Chu Chu Rocket'' to [[Nintendo]]'s Game Boy Advance.

Arcade units are still being produced, first under the Sega NAOMI name, and then with subsequent releases of the Sega NAOMI 2, Sega HIKARU, Sega Chihiro, Triforce (in collaboration with Nintendo and Namco), and the Sega Lindbergh.

By 31 March 2002, Sega had five consecutive fiscal years of net losses.<ref>{{Cite web |url=http://www.taipeitimes.com/News/worldbiz/archives/2003/03/13/197881 |title=Analysts say Sega taking its toll on CSK's bottom line |publisher=Taipei Times |work=Bloomberg |date=13 March 2003 |page=12 |archiveurl=http://web.archive.org/web/20030402160854/http://www.taipeitimes.com:80/News/worldbiz/archives/2003/03/13/197881 |archivedate=2 April 2003 |accessdate=10 November 2018}}</ref> To help with Sega's debt, CSK founder Isao Okawa, before his death in 2001, gave the company a $695.7 million private donation,<ref>{{Cite web |url=http://edition.cnn.com/2001/BUSINESS/asia/03/18/tokyo.okawalegacy/index.html |title=Late Sega exec leaves legacy, new leadership |publisher=CNN |first=Kristie |last=Lu Stout |date=19 March 2001 |archiveurl=http://web.archive.org/web/20121207092834/http://edition.cnn.com:80/2001/BUSINESS/asia/03/18/tokyo.okawalegacy/index.html |archivedate=7 December 2012 |accessdate=10 November 2018}}</ref> and also talked to Microsoft about a sale or a merger with their Xbox division, but those talks failed.<ref>{{Cite web |last=Gaither |first=Chris |url=http://www.nytimes.com/2001/11/04/business/microsoft-explores-a-new-territory-fun.html?pagewanted=2 |title=Microsoft Explores A New Territory: Fun (Page 2 of 5) |work=The New York Times |date=4 November 2001 |archiveurl=http://web.archive.org/web/20130504135821/http://www.nytimes.com/2001/11/04/business/microsoft-explores-a-new-territory-fun.html?pagewanted=2 |archivedate=4 May 2013 |accessdate=10 November 2018}}</ref> On 13 February 2003, Sega announced plans to merge with [[wikipedia:Sammy Corporation|Sammy]], but plans fell through. Discussions also took place with Namco, Bandai, Electronic Arts and again with Microsoft.

With this shift to software development, this affected Sega's Australian operations. Sega Ozisoft ceased to operate in its current form with Sega Enterprises selling its share in Sega Ozisoft and was bought over by Infogrames in 2002. This led to Infogrames having an Australian presence for the first time but decided to change the company name for its Australian operations to GameNation. Sega then went to find an Australian distributor, and made a deal with THQ Asia Pacific, who at the time until 2006 had deals with Capcom. In 2003 GameNation was changed to Atari Australia and then challenged THQ Asia Pacific to the distribution rights to Sega's IPs in Australia but failed. In early 2008 Sega Corporation announced that Sega would re-establish an Australian presence, effectively ending THQ's distribution of Sega's products in Australia and would be a subsidiary of Sega of Europe, rather than being a separate local subsidiary like Atari Australia, Nintendo Australia and THQ Asia Pacific.

In August 2003, Sammy bought the outstanding 22% of shares that CSK had,<ref>{{Cite web |last=Niizumi |first=Hirohiko |url=http://www.gamespot.com/news/2004/05/18/news_6098677.html |title=Sammy merging with Sega |publisher=[[Wikipedia:GameSpot|GameSpot]] |date=10 June 2004 |archiveurl=http://web.archive.org/web/20040611003203/http://www.gamespot.com:80/news/2004/05/18/news_6098677.html |archivedate=11 June 2004 |accessdate=10 November 2018}}</ref> and Sammy chairman Hajime Satomi became CEO of Sega. With the Sammy chairman at the helm of Sega, it has been stated that Sega's activity will focus on its profit-making arcade business rather than its loss-making home software development. In late December, Sega released ''[[Sonic Heroes]]'' selling over 2 million copies. It was the first ''Sonic'' game to be on both the [[Xbox]] and the PlayStation 2.

[[File:SegaSammy.svg|thumb|250px|right|The [[Sega Sammy Holdings]] logo.]]
During the middle of 2004, Sammy bought a controlling share in Sega Corporation at a cost of $1.1 billion, creating the new company [[wikipedia:Sega Sammy Holdings|Sega Sammy Holdings]], one of the biggest game manufacturing companies in the world. With the merger, Sega reabsorbed its second party studios and began to reorganize them. Tetsuya Mizuguchi, father of ''[[wikipedia:Sega Rally|Sega Rally]]'' and ''[[wikipedia:Space Channel 5|Space Channel 5]]'', cited the changes in the corporate culture after the Sega-Sammy merger.<ref>{{Cite web|author=Kikizo Staff|url=http://archive.videogamesdaily.com/features/tetsuya_mizuguchi_iv_oct05_p1.asp|title=Tetsuya Mizuguchi Interview 2005|date=13 October 2005|accessdate=13 August 2008.</ref>

In 2005, [[Mike Hayes]] became head of Sega in Europe. He would help to transition the company into becoming a third-party developer. He would later become head of Sega America in 2009.

On 25 January 2005, Sega's Visual Concepts, a studio Sega dubbed a "1.5" developer, was shut down by Take-Two Interactive. Sega used the parlance "1.5" as a mid-point of sorts between first-party and second-party developer status: that is, a wholly owned studio that would otherwise be known as a first-party developer but was outside of internal development teams. Visual Concepts was known for many Sega Sports games including the ''ESPN NFL Football'' series, formerly ''NFL2K''. The sale also came with Visual Concept's wholly-owned subsidiary Kush Games. Take Two subsequently announced the start of the publishing label 2K Games because of this purchase.