The Early History of Sega - Rosen Enterprises

For the last few posts, we've been looking at the history of one of Sega Enterprises' predecessors, Service Games. Today, we take a look at the other one - Rosen Enterprises. Before we do, however, a quick correction. Early, I think I said that Service Games did not start making slot machines until the 1960s. Actually, I believe the first machine they manufactured was the 777 - a.k.a. the "Sega Bell," which they began making in 1957. Allegedly, the first one was built when they found an old Mills machine in the rubble of a bar and recreated it. I am still investigating the issue, however, and may come back to it in my last Sega post, which will discuss what the first Sega game was.

One other thing I mentioned earlier was that Steven Kent's Ultimate History (henceforth "Kent 2001") was practically the only extensive source of information I had found on Rosen Enterprises. That actually wasn't true either. Another excellent source was an article that appeared in the July 1982 issue of RePlay. Anyway, on to Rosen enterprises.

David Rosen and his wife Masayo in 1982

David Rosen had served in the US Air Force in Japan during the Korean War from 1949 to 1952. At the time, the Japanese economy was in the doldrums, but Rosen was impressed by the industriousness of the Japanese people and loved the country. After the war, Rosen returned home and set up a new business. He would send photographs from America to Japan where local artists would turn them into portraits. The venture failed and in 1954, Rosen decided to return to Tokyo to set up an import/export firm called Rosen Enterprises. In addition to importing products, and exporting products like paintings, sculptures, and woodcrafts, the company also manufactured small souvenir items, like cigarette lighters and money clips, engraved with advertisements from American companies (RePlay 7/82). Seeing that the Japanese had income to spend and a pressing need for identification pictures for employment, rationing, travel, and other activities, Rosen started a two-minute photo booth company that quickly became a nationwide chain. Prior to Rosen’s company, IDs were costly and took a minimum of 2-3 days to produce. In America, Photomat booths had sprung up offering photo processing in minutes instead of days. The only problem was that the photos they produced lasted only one or two years before fading and the Japanese needed photos that lasted at least four or five. After investigating the issue, Rosen found the problem. The Photomat booths produced photos without using negatives and lacked the temperature control required to produce durable results. Having found the source of the problem, Rosen decided to import some Photomat equipment to Japan and set up facilities where employees could develop the photos while monitoring the temperature to produce long-lasting pictures. The business was called Ninfun Shashin and the brand name was Photorama. The idea was an instant success and before long Rosen had over 100 locations throughout Japan (RePlay 7/82; Kent 2001). Being a foreigner provided Rosen with some advantages. At the time (and for years after) the Yakuza was heavily involved in the Japanese coin-op industry. When Rosen opened a Photorama booth in Tokyo's entertainment district, he failed to pay his respects to the local boss. Because he was a foreigner, however, he was let off with an apology and had little trouble with the Yakuza after that. Business competitors were a different story. Rosen's Photoramas were so successful that local photographers complained to the U.S. Consulate in an effort to put him out of business. As a compromise, Rosen offered to license Photorama franchises (possibly the first franchising business in Japan). The deal allowed Rosen to open up another 100 locations but it also allowed copycats to move in and by the early 1960s, Rosen was forced to shut Photorama down. (Kent 2001)

By then, however, he had already found another potential source of income. The booming Japanese economy and reduced work hours left people with more money to spend and more leisure time in which to spend it. Rosen decided to try and fill both needs. Many of Rosen’s photo booths were located in theatres and department stores and Rosen decided to replace them with American coin-operated amusement games, which had thus far been found almost exclusively in US military bases.
[David Rosen] To fully understand this decision, you have to realize there weren't any coin amusement games in Japan then, period. The games were abundant in the States but not a single one was on location in Japan, except on military posts. The machines were almost exclusively made in Chicago, and were usually target galleries or sports type themes like baseballs or hockey games. It took me about a year to convince the Japanese authorities to let me import these games. Until that time, they concentrated on essential goods only. Games were luxury imports. (RePlay 7/82)
[NOTE - Rosen here is not talking about pachinko machines, which were considered more akin to slot machines. Pachinko actually exploded in popularity in Japan after World War II - though it had also been popular before the war. According to some sources, pachinko was especially popular after the war for two reasons: 1)  people could exchange pachinko balls for scarce necessities like food (many Japanese were too proud to accept aid or handouts) 2) some pachinko parlors awarded tobacco as prizes, allowing people to get around wartime restrictions. I don't know if these stories are accurate or not and there's more to the pachinko story. I may do a separate post on the history of pachinko, but I don't want to do too many non-video game posts.]

In 1956, Rosen convinced the Ministry of International Trade and Industry to allow him to import $100,000 worth of machines. To stretch that allowance as far as he could, Rosen initially imported older, cheaper games. Two of the companies early hits were Seeburg’s Shoot the Bear and Coon Hunt rifle games.


[David Rosen] We set them up in stores, which became known as ‘gun corners." At that time in Japan, it was absolutely illegal for anyone other than the authorities to own or use firearms, so it gave the people the chance to take target practice, even though it was only a simulation. The went for it in a big way, especially after we set the games up in jungle or forest backgrounds by taking the cabinets off and letting the targets run around free. It was a free form shooting gallery. (RePlay 7/82)

Within a year, Rosen got authorization to purchase another $200,000 worth of games and continued to buy more games in the future. Rosen estimates that the number of used games he was buying exceeded the number of new games being produced in Chicago (RePlay 7/82). Eventually, over 1,000 gun corners were in operation throughout the country (RePlay 7/82).

[David Rosen] The Japanese, certainly at that time, were very possessive about their real estate…even when it came down to taking a few square feet of space in a store. But we were lucky at the start to make an arrangement with Toho Films to put games in their theater lobbies, which proved to be very successful (RePlay 7/82)

While Rosen had the market to himself for a year and a half, his success eventually drew in competitors. While the competition mostly concentrated on street locations, however, Rosen focused on arcades (RePlay 7/82) Within a few years Rosen Enterprises Ltd. owned a chain of 200 arcades throughout Japan (Kent 2001).

Meanwhile, flushed with successs, Rosen had begun to expan. He tried his hand at a chain of indoor golf centers, but the idea failed to catch on with the Japanese public, who considered golf an outdoor game. His next venture, a line of businesses built around slot cars, sparked a brief fad, but also eventually failed. With two strikes against him, Rosen set out again, and this time he met with unqualified success. Around 1963, AMF (American Machine and Foundry) and Brunswick had come to Japan to try and establish bowling as an entertainment option in the country. At the time, bowling alleys in Japan were found almost exclusively on US military bases. There was one alley in Tokyo, but it was mostly frequented by American GIs. Noting the new lanes being built by AMF and Brunswick, Rosen decided to give it a try.

[David Rosen] They got one or two centers opened, so we decided to take a try at it. But, to really do it right, we wanted a 'showcase' center, so we went to Tokyo's busiest entertainment area, which is called Shinjuku. This area had bar after movie house after restaurant. It was an 'adult Disneyland.’ Now, land was not only extremely expensive, it was virtually unattainable. So, we went to one of our movie friends and asked if we could build a bowling center on top of one of their theaters…To make a long story short, we installed 14 lanes on what amounted to the seventh story of this theater, with this huge six-story-tall movie house below it. The management was terrified about the possible noise and vibrations ... and, of course, we were all worried about the stress on the building. I was pretty nervous until we rolled that first ball. Guess what? Not a sound could be heard underneath. (RePlay 7/82)

Rosen also added an American style steakhouse overlooking the lanes. Before long, customers were waiting four or five hours to bowl and the center was staying open 22 hours a day, from seven a.m. to five a.m. (RePlay 7/82) While Rosen never opened another lane, Brunswick and other companies began opening them all over Japan, often with Sega or Taito arcade games in the lobby (RePlay 7/82; Kent 2001).