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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.
