Sega killed the Dreamcast, this started before the Dreamcast ever launched.
Hate to be that dude but this is pretty much the truth of it.
SOOO many horrible business decisions in the mid '90s, from 32X to Saturn's rushed launch to Gameworks (I mean it was lavish as hell but a financial money sink that could've been better spent on Saturn dev and Dreamcast R&D, maybe even towards DVD out of the gate) to no Sonic on Saturn to
NO retail presence for over a
year in the West (May '98 - Sept '99), no official Streets of Rage sequel on Saturn, killing Saturn too early in Japan for botched Dreamcast launch etc.
If anything Microsoft just saw the writing on the wall and figured they'd be better off doing hardware themselves. And they were right. Even if Xbox was new, it outsold Gamecube and sold over 2:1 the numbers of both Saturn and Dreamcast. Or to look at it another way, it outsold the Saturn and Dreamcast
combined. Then there's other stuff SEGA messed up too, like failing to secure Tomb Raider as an exclusive (it was going to be exclusive until Sony swooped in and got it first) and (at least from what some have said) making the SAME mistake with GTA3 on Dreamcast (think some people said it was gonna be a Dreamcast game at first and maybe even exclusive, but SEGA passed on it), and you can just guess they weren't for long as a console maker after that many stupid decisions.
It's frustrating, too, because even in spite of all that retardation, they still made some absolute
bangers of arcade games and even the 32X and SEGA CD have some great games on them (let alone their other systems like MegaDrive which have a lot of amazing games, and Saturn & Dreamcast which have
tons of great games including cult gems). But the business side (particularly SEGA of Japan) royally
fucked over the rest of the company and it's ultimately no one's fault but their's.
Not Microsoft's.
Not Nintendo's.
Not Sony's. It's purely on SEGA garbage-tier business decisions from most of the '90s.
Well... Duh.
MS shat on SEGA so hard. They refused to make xbox original backwards compatable with DC. I hope SEGA never joins them, which seems to be the latest rumor with PSO2 coming to the west
And Sony's better because...? Go check out Kutaragi making Hideki Sato his bitch around the time PS1 and Saturn were coming out. It's a quote in a Jenovi video; seriously if Kutaragi were a rapper that'd be a diss track.
If anything, SEGA would be a good fit with Nintendo. Sonic's already basically like an extended universe Mario character to Nintendo fans, like the troubled stepbrother trying to kick a hard drug habit but takes two steps back for every step forward.. But even if MS got them it'd probably work out; none of these companies care about shit from two decades ago anymore. SEGA didn't even care a year after they left hardware, that's why they went 3rd party instead of, well, trying to make yet another console.