In the early 1980s, Sega Enterprises, Inc., then a subsidiary of Gulf and Western, was one of the top five arcade game manufacturers active in the United States, as company revenues rose to $214 million. A downturn in the arcade business starting in 1982 seriously hurt the company, leading Gulf and Western to sell its North American arcade manufacturing organization and the licensing rights for its arcade games to Bally Manufacturing. The company retained Sega's North American R&D operation, as well as its Japanese subsidiary, Sega Enterprises, Ltd. With its arcade business in decline, Sega Enterprises, Ltd. president Hayao Nakayama advocated that the company leverage its hardware expertise to move into the home console market in Japan, which was in its infancy at the time. Nakayama received permission to proceed. The first model to be developed was the SC-3000, a computer with a built-in keyboard, but when Sega learned of Nintendo's plans to release a games-only console, they began developing the SG-1000 alongside the SC-3000. To keep costs down while ensuring sufficient longevity, Sega opted to create the platform from popular off-the-shelf components.