The game also sold really well, which gave the team confidence in being a third party developer.
While Nagoshi could not convince Nintendo on several things, Nintendo was considerably impressed by the final product and asked for the source code of the game, as the game achieved a much higher quality than they anticipated. After some thought in regards to which Nintendo franchise he wanted to work on, Nagoshi ended up developing an entry for the F-Zero franchise, which was F-Zero GX. As a game developer, Nagoshi wanted to know how Nintendo worked, and wanted to be a sub-contractor for them. The CEO was impressed, assuming that Nagoshi had the western market in mind, which Nagoshi didn't at all. It didn't sell well in Japan, but became a hit overseas. That game was Super Monkey Ball, which initially launched as just Monkey Ball in the arcades. As a type of protest, he developed a very simple and inexpensive game that just needed a lever to control with no buttons, just to prove that it was possible. The CEO of Sega at the time complained that games became too expensive to make, and Nagoshi told him that they couldn't do it any cheaper. Specifically, he was interested in developing for Nintendo and acquired information about the Gamecube at an early stage. Nagoshi became interested in console development as a result of Sega leaving the hardware business. Nagoshi has said that there is no developer that he learnt more from than Suzuki. The CEO knew that Nagoshi was the only person that Suzuki trusted. He recognized that as one of the turning points in his career.
However, he was called in by the CEO at the time to get the game finished, and as a result, he had to serve as producer and director on the final months of development. Shenmue was the last time he worked with AM2 and Yu Suzuki he first was a supervisor on the project but was dissatisfied with how the game went and asked for his own development division, which later became Amusement Vision. It was well received by players, although arcade operators complained that it didn't bring in much money, due to the players not needing many credits if they properly work together. Next, he worked on Spikeout, a cooperative beat em 'up with up to four players. Afterwards, he mentioned he did not want to make any racing games anymore, thinking that he graduated from the genre. His next project, Scud Race, became once again a very technologically advanced game, however due to expenses, made less money than Daytona USA, though still made profit. The development of Daytona USA brought great responsibility for Nagoshi as he was promoted into leadership positions relatively fast in comparison to anyone else. He also says that he stayed persistent in creating a more difficult kind of game, despite what other people said.
He cites this as his first instance to not follow a trend, something that he still pursues. In Japan, only F1 racing games were popular, though Nagoshi decided to not develop one. When Nagoshi paid them a visit, he happened to see a NASCAR race, which inspired Daytona USA initially. Daytona USA was the first game to use the Sega Model 2 arcade hardware which produced very advanced graphics and was developed jointly with General Electrics, which was located in the US. Afterwards, he worked on Daytona USA, where he was made director.
In his own words, it made him feel like an actual lifesaver. But when I said I was lucky before, it's because during the time I began working, 2D was on its way out, and the industry was switching to 3D." According to Nagoshi, despite the fact the change to 3D had occurred, "nobody had actually studied the techniques needed to work in a 3D space." He knew the basics and gave them advice it was easier for him to apply his knowledge after the transition to 3D took place. Before that point, he stated, "It really didn't take long for me to feel like I had come to the wrong place. It was then when he found his niche at Sega due to his study of movies being useful at adjusting and implementing the right camera angles in early 3D games this was a major turning point for him at Sega. His first title as a designer was Virtua Racing.
Nagoshi graduated from Tokyo Zokei University with a degree in movie production and joined Sega shortly thereafter, working for the second arcade department ( AM2) under Yu Suzuki as a CG designer.