Financial decline and failed merger with Sega (1995–1999)
In 1993, Bandai entered the home video game console market by launching its own video game console called Playdia which was released exclusively in Japan. However, in that year, Bandai planned to produce a second owned scaled-down version of the Macintosh purely for CD-ROM game-playing, Bandai's former president & CEO Makoto Yamashina chose the Macintosh platform over other platforms over that time.[24] Around that year, Bandai exited the publishing business and dissolved its publishing division with them selling the remaining of its publishing operations MediaWorks, whilst Bandai retained B-Club and continued to publish the magazine.
In early 1994, Bandai approached American technology company Apple with an idea of producing a gaming console; later to be called the Apple Pippin (known as Pippin@mark in Japan) partnership with Apple. Bandai originally never intended to develop a system with Internet connection, however after receiving customer feedback, Bandai and Apple established a modem into the Pippin design. Once Bandai licensed the Pippin from Apple in December 1994, the former spent US$93 million in marketing alone to sell the Pippin line. One year later in June 1995 during the 1995 Tokyo Toy Show, Bandai established its unit Bandai Digital Software to promote early Pippin development; four months later in October of that year, Bandai launched its software publishing division Bandai Digital Entertainment Corporation in order to support the platform and developers in the United States. One year later in January 1996 two months before the launch of Apple Pippin console, Bandai established Bandai Digital Entertainment Co., Ltd. was formed on January 9, 1996, to support the platform in Japan.[24]
The Apple Pippin console was released two years later in March 1996 but both the Pippin console and the Playdia were both unsuccessful for Bandai and lead them into discontinuing the console in that year, most of the unsold consoles were converted into coin-operated Micha King machines by its subsidiary Banpresto.[25]
In January 1997, Bandai announced it would merge its operations with Japanese video game developer Sega.[26][27][28] The merger, a $1 billion stock swap where Sega would acquire Bandai and dissolve the company,[26] would have established a new entertainment conglomerate named Sega Bandai Ltd. with an estimated $6 billion in revenue.[29] The announcement followed a ¥9 billion loss from Bandai the same month, attributed to declining game sales and the poor reception of the Apple Pippin console.[26] Bandai felt Sega was an appropriate company to merge with, as it possessed an American management model and several international offices, in addition to owning several successful franchises like Sonic the Hedgehog.[26]
One year later on February 27, 1998, after the merger between Bandai and Sega had fallen, Bandai sold all of the remaining inventory of hardware to American manufacturing company DayStar Digital with Bandai continued to support its own consoles until the end of 2002.[33] Later in that year, Bandai's American distribution division Bandai America launched its anime entertainment distribution arm called Bandai Entertainment in order to license and distribute anime in North America and originally released its titles on VHS under the AnimeVillage label before releasing it under its own name.
In 2002, Bandai released the pre-painted kit of a railway car shorty model with a shortened length called the "B-Train Shorty". Similar products similar to the "B-Train Shorty" were released around the same time as the "B-Train Shorty" such as the "Star Train" a candy toy that realistically models the lead car at the same scale as N gauge, and the "ZZ Train" a battery-powered scale model with a rail width smaller than Z gauge.
In the beginning of March 2003, Bandai announced the merger its subsidiary Yutaka with its garage kit division B-Club to form a new subsidiary named Popy, reviving the Popy brand after its folding with Bandai back in the 1980s.[34] However four years later in 2007, when Bandai's new parent Bandai Namco Holdings announced its restructuring, Popy was folded back into its parent Bandai into its subsidiary Plex whilst retaining the Popy brand.
Later in that same month of that year, Bandai achieved record-high operating and ordinary profits with the launching of the "Real Dream Doraemon Project" to create a real Doraemon. Meanwhile, Bandai launched its upgraded version of its handheld game console WonderSwan called the "WonderSwan Color" was released in 2000 as the successor to the first WonderSwan handheld console enjoyed moderate popularity following the release of the "Final Fantasy" series for the first time on a handheld game console. However, a lack of popular software and the onslaught of Nintendo's handheld competitor "Game Boy Advance" led to a gradual decline and in that same year, Bandai announced its de facto withdrawal from handheld game hardware development.
In April 2004, the company decided moved its headquarters to its current location. The new building has four elevators, each uniquely equipped with the voice of characters from its franchises and licensed properties such as Mametchi from the Tamagotchi franchise, Kamen Rider No. 1 from the Kamen Rider franchise, Anpanman from the picture book series of the same name and Amuro Ray from its anime subsidiary Sunrise Gundam franchise making announcements.
