In the early 1980s, Sega Enterprises, Inc. , then a subsidiary of the American conglomerate Gulf and Western, was one of the largest arcade game manufacturers active in the United States, with company revenues of $214 million by mid-1982. A downturn in the arcade business starting in 1982 negatively impacted the company, leading Gulf and Western to sell the North American manufacturing and licensing of its arcade games to Bally Manufacturing. The company retained its Japanese subsidiary, Sega Enterprises, Ltd. , as well as Sega's North American research and development division. With its arcade business in decline, Gulf and Western executives turned to Sega Enterprises, Ltd. 's president, Hayao Nakayama, for advice on how to proceed. Nakayama advocated that the company leverage its hardware expertise gained through years working in the arcade industry to move into the home console market in Japan, which was in its infancy at the time. Nakayama received permission to proceed with this project, leading to the release of Sega's first home video game system, the SG-1000.
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