Sega Technical Institute (STI) was the flagship research and development division of Sega of America which created many of the company's popular first-party titles. Established in January 1990 as a collaborative Japanese-American studio to support domestic software production for the Sega Genesis, it once housed most of the original Sonic Team and produced the system's top selling game, Sonic the Hedgehog 2, along with its sequel, Sonic the Hedgehog 3. It also designed more experimental offerings such as Sonic the Hedgehog Spinball, Comix Zone, Kid Chameleon, and The Ooze, among others.
However, by mid-1995, Sega's corporate strategy shifted toward the upcoming Saturn and the broader Windows PC and online markets, prompting a reorganization of its American development studios. As Sega of America's primary R&D division, STI was able to weather these changes until late 1996, when the cancellation of its ill-fated action-platform game, Sonic X-treme, sounded the death knell for the floundering studio. Following its closure, its game development responsibilities were either incorporated into Sega of America or transferred to SegaSoft, with a number of staff following suit.