Sega AM2

Sega AM Research & Development No. 2
Sega AM2
FormerlyAM2 of CRI
SEGA-AM2 Co., Ltd.
AM R&D Dept. #2
Company typeDivision
IndustryVideo games
FounderYu Suzuki
Key people
ProductsArcade games, video games

Sega AM Research & Development No. 2, previously known as SEGA-AM2 Co., Ltd., is a video game development team within the Japanese multinational video game developer Sega. Yu Suzuki, who had previously developed arcade games for Sega including Hang-On and Out Run, was the first manager of the department.

AM2's first game produced was 1992's Virtua Racing, followed by the highly popular Virtua Fighter and Daytona USA. Through the remainder of the 1990s, they developed more arcade titles and focused on fighting and racing games. AM2 was placed under the management of CSK Research Institute in 2000, and a year later became SEGA-AM2 Co., Ltd. Their development of Shenmue was over budget and cost millions of dollars, and despite positive reviews and good sales was unable to become profitable.

Suzuki was promoted and left AM2 in 2003; Hiroshi Kataoka became the head of AM2. A year later Sega was acquired by Sammy Corporation and AM2 was merged back into Sega. Since, the team has continued work on arcade games such as Border Break and the Hatsune Miku: Project DIVA series, as well as smartphone games in Japan. Several games produced by Sega AM2 have influenced and innovated the video game industry from a technical and developmental perspective.


Precursors to AM2: Yu Suzuki and Studio 128

A picture of Yu Suzuki
Yu Suzuki, the first head of AM2

Yu Suzuki joined Sega in 1983 as a programmer. At the time Suzuki joined Sega, there was only one development division at the company. 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. 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, he specified the design of Sega's new Super Scaler arcade system board, which utilized 16-bit graphics and sprite-scaling. Hang-On was very popular at launch and sold well for Sega. Suzuki's success followed with additional titles Space Harrier, Out Run, and Enduro Racer. He and his team relocated to "Studio 128", a more private location where After Burner and Power Drift were developed. He also worked on development of G-LOC: Air Battle and the R360 arcade cabinet. Developer Toshihiro Nagoshi joined Sega in 1989 as a designer with Suzuki's team.

Establishment of AM2 and years as a department

An image of Toshihiro Nagoshi
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. 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. 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.

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 Model 1 arcade system board on which it runs took approximately three years. AM2 also ported the game for the Sega Genesis. Next Generation stated that AM2 "single-handedly chang[ed] the perception of polygons in a gaming environment" with Virtua Racing.

After the release of Virtua Racing, AM2 split into two teams; one began work on Virtua Fighter, while another started on Daytona USA. According to Suzuki, he wanted to develop a game with multiple joint movements, such as a soccer or 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 in the industry at the time, he made the decision to make a 3D fighting game to compete. In developing the game, Suzuki identified the need for the game to be realistic, yet fun to play. Virtua Fighter became a huge success in Japan, and its Sega Saturn port sold at a nearly one-to-one ratio with the console itself.

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, 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. Daytona USA was released in Japan in August 1993, and worldwide in March 1994. AM2 ported the game to Saturn in April 1995. The Saturn port was a launch title in the West. 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. In a 2002 report, Sega reported it to be one of the most successful arcade games of all time.

Over the course of the remainder of the 1990s, Suzuki's primary concern in arcades were the Virtua Fighter series and working as a producer for other titles. Subsequently, AM2 released Virtua Cop and Virtua Fighter 2 for the Model 2. Produced in twelve months, Virtua Fighter 2 was an even greater success in Japan than its predecessor. 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. Further titles developed in the end of 1990s included Virtua Cop 2, Fighting Vipers, Daytona USA 2: Battle on the Edge, and SpikeOut. Daytona USA 2 and SpikeOut made use of the Model 3 system board.

AM2 of CRI and SEGA-AM2 Co., Ltd.

In April 2000, CSK Research Institute (CRI) took management over AM2. CRI was a subsidiary of 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. Also in 2000, Sega restructured its arcade and console development teams into nine semi-autonomous studios headed by the company's top designers. Sega's design houses were encouraged to experiment and benefited from a relatively lax approval process. During the development of Shenmue, Nagoshi requested and was granted his own studio, leaving AM2.

AM2 developed what Sega hoped would be the Dreamcast's killer app in Shenmue, a "revenge epic in the tradition of Chinese cinema." The action-adventure game involved the quest of protagonist Ryo Hazuki to avenge his father's murder, but its main selling point was its rendition of the Japanese city of Yokosuka, which included a level of detail considered unprecedented for a video game. Incorporating a simulated day/night cycle with variable weather, non-player characters with regular schedules, and the ability to pick up and examine detailed objects (also introducing the Quick-time event in its modern form), Shenmue went over budget and was rumored to have cost Sega over $50 million. Originally planned as the first installment in an 11-part saga, Shenmue was eventually downsized to a trilogy. According to Sega of America president Peter Moore, Shenmue sold "extremely well", but the game had no chance of making a profit due to the Dreamcast's limited installed base. The high amount Shenmue went over budget was also a factor in the game's lack of profitability. Its sequel, Shenmue II, "was completed for a much more reasonable sum".

An arcade cabinet with a steering wheel
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'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." 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. 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. The quest mode of Virtua Fighter 4: Evolution on PlayStation 2, used AI mined from players in Japan playing through VF.NET.

In 2001, AM2 of CRI was renamed to SEGA-AM2 Co., Ltd. After serving as a producer on Virtua Cop 3 and OutRun 2, Suzuki left AM2 on October 1, 2003, in order to start a new studio with Sega, called Digitalrex. He was promoted to non-executive board director. Hiroshi Kataoka was placed in charge of AM2. 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. Makoto Osaki became AM2's head of development, reporting to Kataoka. At the same time as the changes, a number of Sega's studios were merged. However, AM2 did not merge with any other studio.

Merge into Sega and years since

Four arcade cabinets with seats and steering wheels in a row, colored green
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. Prior to the acquisition by Sammy, Sega began the process of re-integrating its subsidiaries into the main company, which was completed by October 2004. Sega would also restructure the development studios again, consolidating the divisions further into the Global Entertainment, Amusement Software, and New Entertainment R&D divisions.

The controllers for Border Break

AM2 continued to develop games after the merger. Virtua Fighter 5 was released in 2007. An upgrade, Virtua Fighter 5 R, was released the following year. The last release of the Virtua Fighter franchise was the console port of Virtua Fighter 5: Final Showdown, the final iteration of the game. Ghost Squad, in the style of Virtua Cop, received an arcade and a Wii release in 2008. AM2 has developed games for the Hatsune Miku: Project DIVA series, as well as a number of free-to-play smartphone games in Japan, such as Soul Reverse Zero. Some titles have been developed for consoles as well, such as Hatsune Miku: Project Diva Mega 39’s for Nintendo Switch. AM2 became involved with the Hatsune Miku license with items for Virtua Fighter 5 R and the racing game 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 holographic imagery for Hatsune Miku'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.

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. Other titles from AM2 to get long-term support in arcades are Quest of D, Sega Network Taisen Mahjong MJ, and Shining Force Cross. 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. 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. The latest effort, Soul Reverse, was born out of the desire to create a fantasy version of Border Break. It lasted a year, launching in 2018 with its network features shutting down in 2019. The game was not well received by the Japanese arcade player base. It took four years to produce. Currently running arcade games with AM2 staff working on them are KanColle Arcade, Fate/Grand Order Arcade as well as an updated version of Virtua Fighter 5, Virtua Fighter 5: Ultimate Showdown, co-developed with Ryu Ga Gotoku Studio.

As of 2014, Hiroshi Kataoka was still in charge of AM2. Currently he is an executive for Sega supervising arcade engineers and the technology backend of games developed at the engineering division.


An arcade cabinet with two gun controllers
A Virtua Cop arcade cabinet

AM2 has several arcade and video game series they develop, including Daytona USA, Virtua Fighter, OutRun, Virtua Cop, Virtua Striker, Fighting Vipers, and Shenmue. Other titles developed by the studio include Scud Race, Sonic the Fighters, 18 Wheeler: American Pro Trucker, F355 Challenge, Outtrigger, and Soul Reverse. AM2 has also developed smartphone games in Japan. Of AM2's games, the Virtua Fighter series is "the highest grossing game in Japan arcades." The Hatsune Miku: Project Diva series has sold over 6 million units as of 2018. As of March 2012, the game Border Break has grossed JP¥8.1 billion from arcade machine sales, equivalent to more than US$100 million.

Journalists have praised AM2 as having a "legendary" status in game development, in particular under Yu Suzuki. According to Aaron Souppouris of Engadget, AM2 in the past developed games that defined their genres, and called the department Sega's "most-storied division". While lamenting the changes in development focus in recent years, Souppouris called the Hatsune Miku series "admittedly excellent". In 1995, Edge called Suzuki "the legendary head of AM2, Sega's core coin-op operation". Also in 1995, Next Generation stated that AM2's unusual repeated success came from its ability to release high-quality games on a regular basis. IGN's Travis Fahs stated that "[f]or as long as SEGA has had internal studios, AM2 has been the favorite son of the arcade division... Without AM2, SEGA would not have been able to dominate the arcades the way that they did." Video game journalist Ken Horowitz has stated that AM2 became the most well-known of Sega's in-house development teams and that the studio produced "ground-breaking classics".

List of games developed by Sega AM2
Title Year released Platform Ref(s)
Hang-On 1985 Sega Hang-On hardware
Space Harrier Sega Space Harrier hardware
Out Run 1986 Sega OutRun hardware
After Burner 1987 Sega X Board
After Burner II
Power Drift 1988 Sega Y Board
Dynamite Düx Sega System 16
Turbo Outrun 1989 Sega OutRun hardware
Sword of Vermilion Sega Mega Drive
G-LOC: Air Battle 1990 Sega Y Board
GP Rider Sega X Board
Strike Fighter 1991 Sega Y Board
Rent a Hero Sega Mega Drive
F1 Exhaust Note 1991 Sega System 32
Arabian Fight 1992 Sega System 32
Virtua Racing Sega Model 1
Soreike Kokology Sega System 32
Burning Rival 1993 Sega System 32
Virtua Fighter Sega Model 1
Daytona USA 1994 Sega Model 2
Desert Tank
Virtua Cop
Virtua Fighter Sega Saturn
Virtua Fighter 2 Sega Model 2
Virtua Racing Sega Mega Drive
Daytona USA 1995 Sega Saturn
Virtua Fighter 2
Virtua Fighter Remix
Virtua Striker Sega Model 2
Virtua Cop 2
Fighting Vipers
Virtua Cop 2 1996 Sega Saturn
Virtua Fighter 2 CG Portrait Series
Virtua Fighter Kids Sega ST-V, Sega Saturn
Virtua Fighter 3 Sega Model 3
Fighters Megamix Sega Saturn
Fighting Vipers
Scud Race Sega Model 3
Sonic the Fighters Sega Model 2
Digital Dance Mix Vol.1 Namie Amuro 1997 Sega Saturn
Scud Race Plus Sega Model 3
Virtua Fighter 3tb
Fighting Vipers 2 1998
Daytona USA 2: Battle on the Edge
Daytona USA 2: Power Edition
Virtua Fighter 3tb Dreamcast
Ferrari F355 Challenge 1999 Sega NAOMI Multiboard
Outtrigger Sega NAOMI
18 Wheeler: American Pro Trucker Sega NAOMI
Shenmue Dreamcast
18 Wheeler: American Pro Trucker 2000
Ferrari F355 Challenge
Beach Spikers 2001 Sega NAOMI
F355 Challenge 2 International Course Edition Sega NAOMI Multiboard
Fighting Vipers 2 Dreamcast
Shenmue II
Virtua Fighter 4 Sega NAOMI 2
Aero Elite: Combat Academy 2002 PlayStation 2
Beach Spikers Gamecube
Ferrari F355 Challenge PlayStation 2
Sega Network Taisen Mahjong MJ Sega NAOMI 2
Shenmue II Xbox
The King of Route 66 Sega NAOMI 2
Virtua Cop: Elite Edition PlayStation 2
Virtua Fighter 4
Virtua Fighter 4: Evolution Sega NAOMI 2
Choujikuu Yousai Macross 2003 PlayStation 2
Virtua Cop 3 Sega Chihiro
Sega Network Taisen Mahjong MJ2
The King of Route 66 PlayStation 2
OutRun 2 Sega Chihiro
Virtua Fighter 4 Evolution PlayStation 2
Ghost Squad 2004 Sega Chihiro
Quest of D
Sega Ages 2500 Vol. 16: Virtua Fighter 2 PlayStation 2
Sega Golf Club Sega Chihiro
OutRun 2 SP
Virtua Fighter 4 Final Tuned Sega NAOMI 2
Virtua Quest PlayStation 2, GameCube
Quest of D Ver. 2.0: Gofu no Keisyousya 2005 Sega Chihiro
Sega Ages 2500 Vol. 19: Fighting Vipers PlayStation 2
Sega Network Taisen Mahjong MJ3 Sega Chihiro
Sonic Gems Collection (Sonic the Fighters) GameCube, PlayStation 2
After Burner: Climax 2006 Sega Lindbergh
Quest of D Ver 3.0: Oukoku no Syugosya Sega Chihiro
Sega Golf Club Ver. 2006
Miyazato San Kyoudai Naizou: Sega Golfclub PlayStation 3
Virtua Fighter 5 Sega Lindbergh
Ghost Squad Evolution 2007 Sega Chihiro
Ghost Squad Wii
Quest of D: The Battle Kingdom Sega Chihiro
Sega Network Casino Club Sega Lindbergh
Virtua Fighter 5 Xbox 360, PlayStation 3
R-Tuned: Ultimate Street Racing 2008 Sega Lindbergh
Sega Network Casino Club Ver. 2
Sega Network Taisen Mahjong MJ4
Virtua Fighter 5 R
Border Break 2009 Sega RingeEdge
Cyber Troopers Virtual-On Oratorio Tangram Xbox 360, PlayStation 3
Sega Racing Classic Sega RingWide
Sega Network Casino Club Ver. 3 Sega Lindbergh
Shining Force Cross Sega RingEdge
After Burner: Climax 2010 Xbox 360, PlayStation 3
Border Break Airburst Sega RingEdge
Cyber Troopers Virtual-On Force Xbox 360
Hatsune Miku: Project DIVA Arcade Sega RingEdge
Shining Force Cross Raid
Virtua Fighter 5 Final Showdown Sega Lindbergh
Daytona USA 2011 Xbox 360, PlayStation 3
Sega Network Taisen Mahjong MJ5 Sega RingEdge
Border Break Union 2012
Fighting Vipers Xbox 360, PlayStation 3
Hatsune Miku and Future Stars: Project Mirai Nintendo 3DS
Shining Force Cross Elysion Sega RingEdge
Sonic the Fighters Xbox 360, PlayStation 3
Virtua Fighter 2
Virtua Fighter 5: Final Showdown
Hatsune Miku: Project DIVA Arcade Future Tone 2013 Sega Nu
Hatsune Miku: Project Mirai 2 Nintendo 3DS
Sega Network Taisen Mahjong MJ Microsoft Windows
Sega Network Taisen Mahjong MJ5R Sega RingEdge
Shining Force Cross Elysion
Virtual On: Cyber Troopers Xbox 360, PlayStation 3
Virtua Striker
Border Break Scramble 2014 Sega RingEdge
Shining Force Cross Exlesia Zenith
Sega Network Taisen Mahjong MJ Mobile iOS, Android
Border Break X 2016 Sega RingEdge
Hatsune Miku: Project DIVA Future Tone PlayStation 4
Kancolle Arcade Sega Nu
Soul Reverse Zero iOS Android
Border Break X Zero 2017 Sega RingEdge
Sega Network Taisen Mahjong MJ Arcade Sega Nu
Border Break 2018 PlayStation 4
Soul Reverse ALLS UX
Fate/Grand Order Arcade
Hatsune Miku: Project DIVA Mega Mix 2020 Switch
Virtua Fighter 5 Ultimate Showdown 2021 ALLS UX, PlayStation 4
Hatsune Miku: Project DIVA Mega Mix + 2022 Microsoft Windows
Virtua Fighter 3tb Online 2023 Arcade

This page was last updated at 2024-04-03 05:46 UTC. Update now. View original page.

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