Remembering Sydney’s Sega World: The little theme park that couldn’t

A decade following the closure of the indoor theme park, PC World looks at the near non-existent legacy of the ambitious venture

The Sega World facility in Sydney's Darling Harbour district in 1998. Image: Wikipedia.

The Sega World facility in Sydney's Darling Harbour district in 1998. Image: Wikipedia.

After spending just over a decade in Darling Harbour, with just a quarter of that time operating in its original capacity as Sega World, the unique red building with the glass cone roof was unceremoniously demolished by construction company, Lend Lease Development, between late October and early November 2008. The Sydney Harbour Foreshore Authority’s initial “Darling Harbour 2010” plan had evolved into the “Darling Walk” project, which was essentially an upgrade of the area where Sega World had once stood. The Commonwealth Bank’s lease of the property included an arrangement with the Sydney Harbour Foreshore Authority for a structure that would not only fit in with the overall atmosphere of the Darling Harbour area, but also host restaurants, cafes and shops that would be beneficial to visitors.

After almost three years of continuous work on the former Sega World site, the Commonwealth Bank opened its new 70,000 square metre, ten floor office building in Darling Harbour on September 2011. The whole endeavour was estimated at costing around $600 million, a number that dwarfed the original investment of $80 million for Sega World. The interior offices are now used extensively by Commonwealth Bank staff, and visitors to the Darling Walk area can often be found in the restaurants and cafes the line the lower level of the building. After years of sitting in limbo, the former Sega World site had been transformed into something that was both practical and beneficial to visitors.

Entering a legal minefield

Although the Sega World site had been redeveloped, the saga was far from finished for Jacfun. While the consortium initially found itself dragged into litigation with the restaurants and cafes that operated at the Sega World facility, who were unhappy with the way that Jacfun was maintaining the building, Jacfun would launch its own litigation against its former business partner, the Sydney Harbour Foreshore Authority, in March 2009. The grievance that Jacfun had with the Sydney Harbour Foreshore Authority was in regards to plans to construct a commercial high rise building on the Sega World site.

Jacfun alleges that it approached the Sydney Harbour Foreshore Authority in 2000 after the closure of Sega World with a plan turn the site into a commercial tower. After the Sydney Harbour Foreshore Authority apparently turned down the plan, Lend Lease Development, expressed interest in paying for the lease on the site, which Jacfun estimated between $18 to $23 million. Jacfun claimed that the Sydney Harbour Foreshore Authority blocked the sale but would approve the redevelopment if they became joint venture partners. In the end, the Sydney Harbour Foreshore Authority only offered $10 million for the site to Jacfun, an amount lower than the one offered by Lend Lease Development, because it felt that the development of a high rise would not be approved.

Jacfun ended up taking the $10 million, but only because it says it was threatened with being paid nothing by the Sydney Harbour Foreshore Authority. The consortium made the sale under the added condition that the Sydney Harbour Foreshore Authority would pay Jacfun a share of any profits if the Sega World property was turned into a multi-story building before the end of June 2008. Two months after the deadline, the Sydney Harbour Foreshore Authority announced its plans to build a commercial tower on the site, one that was apparently taller than the one Jacfun originally pitched, through Lend Lease Development.

As a result of this history, Jacfun decided to sue the Sydney Harbour Foreshore Authority for what it felt was move to cut it out of a profit agreement, one that would have netted the consortium a share of the $560 million redevelopment of Darling Walk. For its part, the Sydney Harbour Foreshore Authority stated that Jacfun ended their involvement with the Sega World site in early 2003 following an agreement to sell their share of the lease. While the Sydney Harbour Foreshore Authority admitted that it had been interested in redeveloping the Darling Walk in late 2005, its stance was that the tender to develop the former Sega World property into the Commonwealth Building was awarded to Lend Lease Development only in late 2008.

Sega’s death and rebirth

The legal battle would continue into early 2011 as Lend Lease Development was finishing up construction work on the Darling Walk project. In another hearing in February 2011, Jacfun repeated its earlier claims that the Sydney Harbour Foreshore Authority denied it the opportunity to turn the Sega World into a viable office space, and that it had to accept a lower payment for its share of the property lease. For its part, the Sydney Harbour Foreshore Authority admitted at the hearing that while senior management supported redevelopment plans presented by Jacfun, the board would ultimately overturn the decision.

One interesting fact that came out the February 2011 hearing was that Jacfun had been in negotiations with a Korean dinosaur theme park, speculated as being the Goseong Dinosaur Museum, to become the main tenant of the empty Sega World building following its closure in 2000. The deal clearly never went far, considering that the Sega World building was demolished and replaced with the Commonwealth Bank office building instead. Had it gone through, one can only speculate how the new amusement park would have weathered the economic climate of the ‘00s, which included a global financial crisis and a high Australian dollar.

Despite the former Sega World site finding new lease of life as Darling Walk, very few parties came out of the Sega World experience unscathed, except for maybe the Sydney Harbour Foreshore Authority. Although Sega had had the foresight to exit out of the Sega World venture earlier than anyone else, the fact was that the company was struggling with its own financial problems in the years since.

Despite experiencing success in the 16-bit generation with its Mega Drive console, Sega was unable to maintain its momentum with its following products. The Mega CD add-on for the Mega Drive never really hit off and saw low software sales, and the 32X add-on performed even worse. Sega had also failed to capture a significant segment of the handheld market that was dominated by the Nintendo GameBoy with its short-lived GameGear, and in the U.S. the Nomad, consoles.

The biggest issue for Sega, however, was that its flagship 32-bit Saturn console had failed to stave off the PlayStation by newcomer Sony, which quickly and methodically captured the console market with its strong third and first party software support, as well as competitive pricing and strong marketing. By the time the Nintendo 64 launched between 1996 and 1997, the Saturn found itself in last place. Low software sales in all regions except Japan also meant that it was an unprofitable venture for Sega. Although Sega discontinued all of its other hardware platforms, such as the 32X and GameGear, to cut costs and exclusively focus on the Saturn, it did little to stop Sega’s financial troubles.

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Patrick Budmar

Patrick Budmar

PC World
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