Hayao Nakayama arrived at the annex one morning in the early 1990s, a short walk from Sega's main office. He was the president of the company. He was turned away at the door. The person who stopped him was Yu Suzuki, the manager of Sega AM Research & Development No. 2 — AM2 for short — and Suzuki worked with a desire for secrecy so deep that even the president was denied entry. This was not rudeness. It was focus.
AM2 had been formed around the time Sega's research and development divisions were reorganized to handle the arrival of advanced computer graphics technology. Sega employed approximately six hundred people in R&D at the time, and Suzuki's team was about one hundred of them. They had started as a group working out of the main office, then moved into a separate annex where they could control who entered and when. What they built inside that room changed what arcade games looked like.
Their first major release was Virtua Racing in 1992, a Formula 1 racer that rendered the track in fully three-dimensional polygons. It was, at that moment, one of the most realistic-looking arcade games the industry had produced. The following year they released Virtua Fighter, the first arcade fighting game to feature fully 3D polygon graphics. Next Generation magazine would later call it the most significant game of the 1990s. Daytona USA followed in 1994, built on satellite imagery and field photography — the development team sent staff to walk a full lap of the real Daytona circuit to understand the banking in the corners. The games were not incremental steps. Each one proposed something new about what real-time 3D could do in public.
The hardware that ran Virtua Fighter 2, released in arcades in 1994, required technology Sega did not yet have. Suzuki approached Lockheed Martin, the American aerospace and defense contractor, to use the texture-mapping chip from their flight simulation equipment. Lockheed charged two million dollars for access. Using that technology as a reference, Suzuki's AM2 team eventually designed a graphics chip that could be mass-produced for fifty dollars each. The gap between those two numbers — two million to fifty — was not luck. It was engineering.
One story circulated among AM2 staff and later made its way into Japanese game development folklore. Before releasing Virtua Fighter, Suzuki had the cleaning lady at the office play the game. The idea was simple: if someone with no gaming experience could pick up the controller and understand what to do within a few minutes, the design was working. If not, they adjusted it. The test was not condescending. It was a recognition that the best games do not need a manual.
Through the remainder of the 1990s, AM2 developed more arcade titles and focused almost exclusively on fighting and racing games. Virtua Fighter 2, Virtua Cop, Daytona USA, OutRun, Fighting Vipers — the studio built a catalog that defined what Sega's arcade presence looked like during that decade. Later, Suzuki would move into larger projects like Shenmue, a game that cost an estimated forty-seven million dollars and required years of development. But in the early 1990s, when AM2 was at its sharpest, the work was faster, smaller in scope, and built around a single principle: secrecy allowed focus, and focus allowed risk.
The annex is gone now. The team that worked there has long since dispersed. But the work they did — the polygons, the texture maps, the camera systems, the feel of a drift through a corner or a punch that lands clean — became the foundation for an entire generation of 3D games. They did it in a room the president could not enter. Sometimes the best work happens when no one is watching.