Report: SEGA and Microsoft Were in Talks to Merge Companies

SEGA's commitment to Microsoft's Xbox console might be down to more than just a 'platform-agnostic' view of developing titles for the right machine. According to a new report, Bill Gates and his team in Redmond were in talks to merge the Microsoft gaming division with SEGA - or buying them outright - to gain a foothold in the growing console space.

In a piece from the New York Times, which details Microsoft's current struggles with its Xbox marketing pitch to partners, SEGA of America president Peter Moore reveals that 'Mr [Bill] Gates and Isao Okawa, the late president of the Sega Corporation [in Japan], considered having Microsoft merge its gaming division with Sega or buy Sega outright... those talks failed.'

It's likely that such talks began after Sega adopted a scaled-down version of Microsoft's Windows operating system for the Dreamcast - the NYT article states that Microsoft had been shopping Windows to Sony and Nintendo as well, as a means to stake a claim in the games industry without developing its own console. Sony and Nintendo declined, but with Sega 'a desperate third' agreed to implement Windows into its final home console.

Interestingly, Sega did not just run Windows on Dreamcast, but also its own operating system. "Given a choice of platforms, developers chose Sega's. The experiment failed," reads the article, leading Microsoft to try its hand with the Xbox - which, ironically, is getting some heat for not being as enticing a proposition to gamers as it could be.

"'This is an industry that has as much to do with emotion and Hollywood as it does things having to work perfectly out of the box,'' Sega of America's Moore is quoted as saying with regards to the Xbox. ''One could argue that Microsoft doesn't really understand any of those issues yet.''

It's worth reading the article in full, you can find it here.