Sonic Team

Formation and creation of Sonic the Hedgehog

In the late 1980s and early 1990s, a rivalry was forming between Japanese video companies Sega and Nintendo due to the release of their 16-bit era video game consoles: the Sega Genesis and the Super Nintendo Entertainment System. Sega needed a mascot character that was as synonymous to their brand as Mario was to Nintendo. To distinguish themselves from Nintendo, Sega wanted a killer app and character that could appeal to an older demographic than preteens, demonstrate the capabilities of the Genesis system, and ensure commercial success in North America.

In 1988, Sega established an internal development division known as Sega AM8, led by Shinobu Toyoda. Sega of Japan held an internal competition to submit characters designs for a mascot. Artist Naoto Ohshima designed a blue hedgehog named Sonic that had sharp teeth, a human girlfriend, and fronted a rock band. The hedgehog was inserted into a prototype game created by programmer Yuji Naka. The design of Sonic was refined to be less aggressive and appeal to a wider audience before the division began development on their platform game Sonic the Hedgehog. Naka and Hirokazu Yasuhara respectively served as programmer and designer on the game which was released in 1991. The studio, of around 15 employees, was then renamed to Sonic Team to match the name of their video game and its titular protagonist. The game proved to be a huge commercial success for Sega, contributing to millions of sales of their Genesis home console.

Sega Technical Institute

Shortly after the release of Sonic the Hedgehog, Naka, Yasuhara and a number of other Japanese developers relocated to California, United States to join Sega Technical Institute, a development division led by Mark Cerny. Cerny's aim was to an establish an elite development studio that would combine the design philosophies of American and Japanese developers. In 1991, they began development on several titles that would lead to the creation of Kid Chameleon, Greendog: The Beached Surfer Dude!, and Sonic the Hedgehog 2, which all released the following year. While Sonic the Hedgehog 2 was a successful release, its development suffered some setbacks; the language barrier and cultural differences created a rift between the Japanese and American developers. Once development on Sonic 2 concluded, Cerny departed from Sega Technical Institute and was replaced by Atari veteran Roger Hector. The American developers would go on to develop Sonic Spinball (1993), while the Japanese developers worked on Sonic the Hedgehog 3 (1994) and Sonic & Knuckles (1994). During the development of Sonic 3 the team began experimenting with 3D computer graphics, however they were unable to implement such technology with limited hardware power available on the Genesis system. Following the release of Sonic & Knuckles, Yasuhara quit Sonic Team and began working on titles for Sega of America, while Naka returned to Japan to continue work with the team.

Sega Saturn, Dreamcast and structural changes

In the mid-1990s, Sonic Team started work on new intellectual property, eventually leading to the creation of Nights into Dreams... (1996) and Burning Rangers (1998) for the Sega Saturn. Meanwhile, the studio also began collaborating with external developers, such as Traveller's Tales, to continue development on the Sonic franchise. The Saturn did not achieve the same commercial success as the Genesis, and so Sega focused its efforts on a new home console system, the Dreamcast, which would debut in Japan in 1998. The creation of the Dreamcast was seen as opportunity for Sonic Team to revisit the Sonic series which had stalled in recent years. Sonic Team was originally creating a fully 3D Sonic game for the Saturn, however development moved to the Dreamcast to align with Sega's future plans. Takashi Iizuka took the helm on the project; Iizuka had wanted to create a Sonic role-playing game for a long time and felt the Dreamcast was a powerful enough machine to achieve his vision. The game would eventually become Sonic Adventure which launched in 1998. Sonic Adventure would go on to be the best-selling game on the Dreamcast. In 1999, shortly after the release of Sonic Adventure, twelve members of Sonic Team relocated to San Francisco, United States, to establish Sonic Team USA, while others remained in Japan. Sonic Team USA was led by Iizuka and began work on a sequel to Sonic Adventure, which released for the Dreamcast in 2001.

During this period in the late 1990s, a number key employees—including Ohshima—left the company to form a new video game development studio named Artoon. Sonic Team achieved success in the arcade game market in 1999 with the launch of rhythm game Samba de Amigo, which was released the following year for the Dreamcast. Sonic Team also began exploring online gaming; they developed ChuChu Rocket! (1999) a puzzle video game that made use of the Dreamcast's online capabilities. In 2000, the studio delved further into online gaming with the release of the role-playing video game Phantasy Star Online, which became a critical and commercial success. Despite Sonic Team creating a number of well received titles for the Dreamcast, Sega would discontinue production of the system in 2001, and consequently drop out from the hardware business. Sega transitioned into to third-party developer and began developing games for multiple platforms. One of the first titles to be released on a major non-Sega platform was Sonic Adventure 2, which was released for Nintendo's GameCube console in 2001.

In 2000, Sega was struggling financially and opted to split their numerous AM development divisions away from the main company to form a series of subsidiaries; Sonic Team retained their name in the transition. Many of the smaller subsidiaries were unable to support themselves and were forced to close or merge with other studios. Sonic Team was financially solvent and decided to absorb United Game Artists (Sega AM9) in 2003. United Game Artists was led by Tetsuya Mizuguchi and known for creating music video games Space Channel 5 (1999) and Rez (2001). In 2004, Japanese company Sammy acquired a controlling interest in Sega and formed Sega Sammy Corporation. This ultimately led to Sonic Team's re-integration with the main company; Sonic Team USA became Sega Studios USA.

Naka announced his departure from the studio on 8 May 2006. He went on to form his development studio, Prope. He left during the development of the 2006 video game Sonic the Hedgehog, which was released as part of the 15 year anniversary of Sonic franchise. The game was met with negative reception due to technical issues. In the 2000s and 2010s, the studio developed a series of Sonic games exclusively for Nintendo platforms as part of the collaboration between Sega and Nintendo.