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Sega Shuts Down GameWorks Arcade-Restaurant Chain

Posted On: 4/30/2010

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GameWorks closes, Sega Entertainment USA Inc., Sega, Sega GameWorks, GameWorks, entertainment complex, videogame, video game, arcade, video arcade, Dreamworks, Skip Paul, amusement business, Corporate Management Inc., Richard Kipperman

ELK GROVE VILLAGE, IL -- Sega Entertainment USA has closed the last of its 15 remaining GameWorks stores and will liquidate their assets under a "general assignment proceedings" in California courts, according to a letter sent to creditors on April 22.

The liquidation and assignment procedure is an alternative to a Chapter 7 bankruptcy filing. Proceeds from the liquidation will go to creditors.

Sega Entertainment itself stopped operating on March 30, the letter stated. Sega Entertainment USA is a subsidiary of Sega Sammy Holdings. Corporate Management Inc. will oversee the liquidation -- and its president told Reuters that some GameWorks locations have been sold and others will simply close.

Sega had earlier said on March 29 that it was closing seven of 15 GameWorks locations, which included the stores in Minneapolis; Long Beach, CA; Columbus, OH; Detroit; Indianapolis; and Miami and Tampa, FL. At the time, Sega said the move was part of a "restructuring" strategy intended to improve profits.

The first GameWorks opened in March 1997 in Seattle. The original concept was formed as a partnership between Dreamworks SKG, Universal Studios and Sega. Skip Paul, videogame pioneer and pal of Steven Spielberg, was chairman of GameWorks during its early years. A typical facility cost about $10 million or more to build, and plans initially called for up to 150 locations. But earnings of the first stores proved disappointing, so the scope of the chain was scaled back significantly. Eventually two of the partners dropped out and Sega Entertainment purchased the chain out of bankruptcy in 2005.

At its height, the chain consisted of 18 venues in the U.S., along with overseas facilities in Guam, Mexico and the Dominican Republic. Collectively, the 18 U.S. locations attracted more than 15 million guests annually, Sega reported several years ago.