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Business Retro Why Did Sega Fail? Did Piracy Kill the Dreamcast?

Dev1lXYZ

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Sep 1, 2017
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Sega burned too many bridges.

They pissed off fans by dropping Genesis, CD, 32X, Nomad support, as well as Gamegear, they launched Saturn at a high cost with no games ready, pissed off retailers and developers with it. They then killed the Saturn prematurely, coasted with nothing on the market for a year, and let Yu Suzuki bleed them dry by making Shenmue instead of some other new successful games.

PS2 was mostly all just marketing hype. The Dreamcast was cheap and powerful, playing the best versions of games from the PS1/N64 era, regaining momentum for the brand among gamers, but they then announced that they would stop console production, and that was it. The easy piracy came late to it.

Sega really burned retailers with the CD unit and then the 32x. They didn’t move and their games didn’t sell. In fact Sega made retailers carry 32x or else they wouldn’t be able to get the Saturn. Then they launched it early and only select stores got stock. I spoke to many a manager and store owner who hated Sega with a burning passion for that. They were more than happy to see Sega drop off the map due to PlayStation 2.

I owned every one of those systems and loved each one for different reasons. The CD gave me the ability to buy CD music. The games were more or less an added bonus. The 32x was what I played Doom on since I didn’t own a PC. The Saturn gave me many a good time with VF, Daytona, and Capcom arcade ports, both foreign and domestic. That RAM cart really made it a 2D beast! The DC mainly continued the arcade port trend, House of The Dead 2 was an amazing port and to me was the graphical highlight of the system. I wish they would have ported the first game.
 
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thismeinteil

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Jan 6, 2020
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There is really no reason to question this, Sega is the one who killed Sega HW with their poor decisions. They spent too much time and money on trying to prolong the Genesis's life, which ended up not working. Both the Sega CD and 32X were big failures. They even developed a Sega CD and Genesis in one. And then for some reason they were wasting even more resources on developing a system that was a Genesis and 32X in one.

Then when the Saturn came out, they did a surprise launch months before they were supposed to in an attempt to launch before the PS1. Of course, this meant that most devs weren't ready for launch. This hurt the sales of their games, since they didn't get the push from being one of the few games available, which pissed them off. It also pissed off retailers because they were not only unprepared for the launch, they also didn't get the profit from launch games, since most weren't ready yet, where retailers make most of their profit from consoles.

When the Dreamcast came around, some devs and retailers refused to be involved with the system because of how Sega handled the Saturn launch. That and the approaching behemoth, the PS2, really hurt any chance of the Dreamcast improving on Sega's standing in the market. They did the only thing that would keep them alive, went 3rd party.
 

Amiga

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Jul 8, 2020
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Yes Sony fanboys.

You won't admit it because people love and truly respect SEGA.

But what killed SEGA is Sony.

Because DVD and stupid casual gamers and sheeps, "buy Playstation it's better because it's better".

Playstation = IPhone of gaming nothing else.

PS1 and PS2 killed the Saturn and Dreamcast.

I was there.

And if Sony didn't entered the console market, SEGA would still be there today.

("olol but it's SEGA fault" NO it's Sony fault. N64 and GameCube floped too because of Sony).

when the PS1 launched it had a try hard be cool vibe with one must have game that was Twisted Metal. but the felling was still that it will eventually go away like the 3DO and NeoGeo. but then FF7 happened, and Resident Evil, and Metal Gear, and Gran Turismo, the rest is history.
 

FlashFlooder

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Apr 17, 2008
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Dreamcast was a gamer’s console with no real killer app. Sonic Adventure was mediocre compared to Mario, there was no GTAIII, NFL2k was great but Madden on the PS2 was right around the corner, Shenmue ended up being for a really niche audience...where was the MGS2, Final Fantasy, Mario, Zelda, GTA?

Marvel vs Capcom 2 isn’t going to send units flying off the shelves
it had a damn near perfect port of hydro thunder, you hush your mouth.
 

SkylineRKR

Member
Jun 22, 2011
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Yes Sony fanboys.

You won't admit it because people love and truly respect SEGA.

But what killed SEGA is Sony.

Because DVD and stupid casual gamers and sheeps, "buy Playstation it's better because it's better".

Playstation = IPhone of gaming nothing else.

PS1 and PS2 killed the Saturn and Dreamcast.

I was there.

And if Sony didn't entered the console market, SEGA would still be there today.

("olol but it's SEGA fault" NO it's Sony fault. N64 and GameCube floped too because of Sony).

Sony didn't do that much lol. They rode off a highly succesful PS1, which they supported big time and beyond the PS2 launch which was unheard of. Sony essentially did stuff that changed gaming, like backwards compatibility, slim revisions when its successor launched etc. The latter happened before, but not on a scale like this.

Sony simply showed glimpses of PS2, and the crowd made their choice. Sega was in such a bad place because of their own bad management and their own mistakes. Sony didn't tell them to release the 32x and fuck up the Saturn so bad. N64 same story, Nintendo chose cartridges, which was less than ideal for both producers and retailers alike in the expanding videogame market. Nintendo chose a so called Dreamteam, which in reaility means they lost or ditched the majority of third parties that supported the SNES. Nintendo was in such a place because of their ancient royalty demands, QA and development assist. They were living in the NES days.

The way I see it, both Nintendo and Sega weren't a good fit for modern gaming and the rapidly growing market. They held on to ancient practices, ancient and very self centered architectures, their marketing was also stuck in 16-bit era. Sony came around and really shook things up. They were the only ones with an idea, and ambition to grow the gaming market beyond kids and teens. Playstation was the first system I largely saw in living rooms, also being used by parents. Sega and especially Nintendo didn't seem to have plans to expand gaming itself, they kept targeting the same limited audience. I think Sony, and later MS, changed more than Nintendo and Sega ever did. The mainstream online play and connectivity is largely due to MS. Sega was also kind of forward thinking in these regards, but lacked scope and funds.
 

Kazza

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Oct 6, 2018
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People talk about the leap in development cost when the HD era came, but I wonder whether there was any similar leap in cost over Saturn development? Given how it was easier to develop for the Saturn, maybe costs per game managed to stay the same?
 

RAIDEN1

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Aug 2, 2013
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Sega cd is fine.... remember, without sega cd, there would not be Lunar, Lunar 2.
As add-ons go, it was fairly successful, though massively under-utilized, I saw a video of Tom Kalinske recently and he is happy that the Sega CD came out, as he thought if it wasn't for the add-on, developers wouldn't have been able to get to grips with CD technology for gaming...
 
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PS2 was like the Lakers dynasty in the early 2000s

it was no stopping them

I was a genesis kid so I hated to see Sega die but I sided with Sony and saved my money for a PS2
 
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Nazr

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Dec 8, 2020
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At least in the US, Sega staked its appeal on being the edgy/cool console for teens and young adults. Sony aggressively targeted that same audience and stole almost all of them over the Saturn years. Sega did a lot of things right with the Dreamcast but it was too late. People were very happy with their PS1s, and were content to wait on the PS2. It was now Sony's market to lose -- not for Sega to win.
 

DGrayson

Mod Team and Bat Team
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Dec 5, 2017
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DT MEDIA comes with the SEGA heat as usual.

In my opinion the Saturn killed the Dreamcast. Sega's decision to rush the Saturn out when it wasnt ready just to get "in front" of Playstation means that the Saturn ended up being techncially worse with worse third party support. As Saturn clearly lost to Playstation, Sega wanted to be first with the Dreamcast, so in the end it became the less powerful console again, and was overshadowed by the PS2 as DT MEDIA DT MEDIA menions above
 
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theclaw135

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Following the 32X debacle, Sega slowly began to reign in their squabbling branches and adopted a disastrously Japan first mentality. Sonic X-treme floundered without faith and support of the parent company. A harsh blow in an era Sonic was their flagship mascot in the west.

Although EA may not have seemed important to Japanese executives, it was bad for business. You don't just stonewall a major 3rd party like that. I can only wonder how many other developers who saw how coldly Sega turned away EA, decided not to deal with them.
 

Elios83

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Jun 30, 2004
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Tons of bad decision during the Saturn era left them with no money. Simple as that.
 

Radical_3d

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The hype for the PS2 was nothing else than the industry moving forward Nintendo, who just let down everyone with the N64 (except those who were kids) and Sega customers being fooled for the third time with the Sega Saturn. Sega droped the ball with the Mega CD, the Mega 32X and the Saturn, which was shamelessly dumped in favor of the Dreamcast when it still had life in it. Was there hype for a PSX 1.5 after all the betrayals to the costumers? No. PlayStation for me and for many others was not the best choice but the only choice after the duopolio asked way too much of their fan base.

 
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RaZoR No1

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Jun 17, 2015
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IMO wrong release timing and Hardware.

All consoles released right around the corner where much better.

Powerwise afaik it was between PS1 and PS2 and the GD Discs didnt help either.
Additionally the PS2 hype was too big, you were able to play PS1 games and had a DVD player build in.

The PS2 was the much better package for nearly all gamers at the time
 

REDRZA MWS

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Jan 7, 2018
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EA Sports becoming exclusive to PS2 killed Dreamcast. As American sports go, Madden is king. I don’t remember, other than Dreamcast, Madden NOT being on any other console.
 

MoneySings

Formerly 'WildWayz'
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I always thought the reason it failed was because they released way too many consoles in a short period of time, and consumers got fed up. Also, wasn't there something about Sony trying to sell them the PlayStation and they turned it down? Or was that Nintendo?
 

theclaw135

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Oct 1, 2014
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EA Sports becoming exclusive to PS2 killed Dreamcast. As American sports go, Madden is king. I don’t remember, other than Dreamcast, Madden NOT being on any other console.

Dreamcast lost out on the likes of Need for Speed, James Bond, and Harry Potter. For what it's worth WCW Mayhem was also extremely close to the system's launch.
 
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Jenovi as always with these on-point retro analysis. He touched on this with an earlier video I think a year ago, so it's nice to see him go deeper into it here.

Finally, I will offer one more culprit for Dreamcast's demise: the hardware. Compared to PS2, Gamecube and Xbox, Sega's console is the weakest of Generation 6, and it's not even close. In fact, the system could almost be classified as Gen 5.5, and if you really want to be brutal, you could say the machine was built for upgraded PSX and N64 ports. Which is precisely what we got. Yes, Soul Calibur looks fantastic, as does Skies of Arcadia, Shenmue, Jet Set Radio, Ferrari F355, Crazy Taxi, Test Drive Le Mans and Phantasy Star Online. But look how quickly Playstation 2 surpassed them with Madden 2000, SSX, Metal Gear Solid 2 and Gran Turismo 3. Gamecube was still further ahead. And Xbox was in another league entirely.

Dreamcast just couldn't compete. That was obvious by the end of 2000, and when you look at what followed several years later, well...have you seen Shadows of the Colossus, Halo 2 or Zelda Twilight Princess lately?

I think some of this is questionable. There's several areas where Dreamcast outperforms at least PS2, such as texture mip maps, and output resolution support. Games like Sonic Adventure 2 and Shenmue had great texture work that wouldn't really be seen too often on PS2 until a few years later and, again, PS2's inferior output support wouldn't help.

In a lot of ways classifying Gamecube and Xbox as systems that completely outclass the Dreamcast, you could almost say they completely outclass the PS2 as well spec-wise. In that sense from certain design aspects PS2 has more in common with Dreamcast than the Nintendo and Microsoft consoles, there are feature sets in GC and Xbox that are completely absent in Dreamcast and PS2. If you have the time, give the PS2 vid from Zygal Studios a watch, in fact I'll include it below. Show a lot of what I'm talking about here:


Now I'm not saying PS2 didn't have any hardware advantages: it had a lot. Particle fillrate, geometry culling and rasterization, RAM capacity, DVD-ROM support etc. However it's not a case where it just wipes Dreamcast spec-wise in all categories. Also have to keep in mind that part of what allowed games like GT3, MGS2 etc. to look as good as they did...was budget. Especially 1P games like GT3, they had Sony money backing them, and Sony had WAAAY more money than Sega at that point. Funding counts for SOO much and there were very few Dreamcast games with funding at that level outside of Sonic Adventure, the Shenmue games and arguably Code Veronica.

Scaled-back funding on 1P side plus just not being commercially viable for so long at the bigger reasons why we probably see the gap we do between a lot of the top Dreamcast games and the best-looking PS2 games. Keep in mind a lot of PS2's best-lookers wouldn't even start hitting until well into 2003 and onward, when Dreamcast was only getting a few niche shmups for commercial support. This isn't me saying if funding in 1P were equal that Dreamcast 1P would be completely on par or surpass what Sony's 1P were able to put out visually. However, it's clear that they had the potential to be much closer in terms of visuals if Dreamcast were to remain on the market, games like Shenmue II are proof of this.

Outside of this tho, I'm fully on-board with everything else you've brought up. Smashing post. And there's some truth perhaps to them not wanting Dreamcast to stick around too long because they did have SOME money after exiting, otherwise they'd of never been able to make all those 6th-gen games for competitors. The late Isao Okawa was already noted as thinking Sega aught to of transition to software-only and this was before Dreamcast launch. He did pardon their debts before his death, but I think part of him probably thought Saturn should've been their final system.
 
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lachesis

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Jun 17, 2004
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I don't think there's one single reason, but "all of above".

Bad financial decisions of too much investment and not enough return in short term, easy piracy, impending DVD machine called PS2 with its popularity, rising cost of development (like Shenmue), failing to capture mainstream gamers with their games, and lack of major 3rd party support and their franchises.

All of that created a situation that it wasn't selling fast enough to make profit in short/long term for them, and their money ran out.
 

TheContact

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Jan 22, 2016
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the dreamcast failed because of 3 primary reasons:
1) the japanese launch was terrible (the US team did it better)
2) no DVD player. for a while in japan, the DVD market took off and the ps2 was the cheapest dvd player you could get (ps3 did same thing w/ blu ray)
3) piracy. i still have my original dreamcast (still works! fucking love this thing.) but i can literally take a blank DVD, put it in my computer, burn an ISO to it, put in the DC and it plays. no one wants to develop games for a machine that allows that. i think they fixed it in later hardware revisions but was probably too late
 

sncvsrtoip

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Jul 18, 2019
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yep they failed badly also as purely software company couse they don't have even one big aaa title (I like Yakuza series especially 6th and Judgment but hard to call this games big aaa)
 
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Scars still fresh to this day for the last holdouts of a war long lost. You can tell by avatars and posting habits often.

As others have said, an agglomeration of mistakes by Sega leading up to the Dreamcast bled them dry and Sony's entrance into the market displaced them. Brutally beaten. Even MS with bigger pockets gets the hammer.
 
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Max_Po

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Mar 1, 2015
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oH mY gOD ... how dumb do you have to be in 2020 to blame SONY for the demist of Dreamcast...


SEGA screwed themselves so hard its not even funny. They were on a path to failure.

- 32x Fail.. wasted $$$
- Outright coming and saying Saturn is garbage don't buy it. Screwing partnership with EA and retailers at the launch of SATURN.
- Terrible controller, such a downgrade from Saturn. 1 stick ?
- GDRom, trash easily hackable. No mod chip
- Limited Scoped Hardware, Arcade centric Library.
- Fucking wasted their guts on one of the biggest pieces of shit game franchises... Shenmue ..
- NO learning from PS1's RPG success.


You are bound to fail if you do not bring steady stream of $$$
 
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NeoIkaruGAF

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Didn’t the CEO of SOJ actually gift dial-up Internet subscriptions for a year to everyone who bought Phantasy Star Online in Japan? SEGA did the craziest stuff during those years.

I think Dreamcast was just the final seal to a half decade of very bad decisions on all fronts from SEGA. They had made their bed, Dreamcast was left to sleep in it alone.

Dreamcast’s timing to the market was also unfortunate. Saturn was basically dead when the PS1 was about to really hit its stride in the juggernaut year 1998. Dreamcast came out when the PS1 was living its best years and giving us its best games, so nobody really needed a new console, and when that gen started to show its age, PS2 was already on the horizon. Dreamcast could have a niche, but it’s hard to think it could ever have a sizable slice of the market.
 

Goro Majima

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Sep 2, 2007
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We all know that it was a triple whammy of Sega’s rapidly decreasing mindshare due to the Saturn flop, the PS2 hype, and the release of GTA3 in 2001.

The Dreamcast never had that GTA3 cultural milestone kind of game. Gamecube had Smash Brothers and Xbox had Halo. I don’t really remember anything similar for Dreamcast that regular college aged dudes would get hyped about playing later. I guess in that regard not having EA sucked because there wasn’t any NCAA football even.
 
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Little shitheads spending every day beating Dreamcast games, returning them to Funcoland, and using the credit to get more Dreamcast games to beat and then exchange is what killed the Dreamcast.
 
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I see people keep bringing up piracy but is anyone actually considering how friggin' expensive CD burner drives were in 1998? 1999? It's not like they were anywhere near as fast as today's drives, either. Same goes for internet; broadband wasn't really even a thing until the early 2000s so, you either had shitty 28.8K or slightly-better 56K as your main options...have fun trying to download 650 MB+ files over that without getting disconnected (and then having to restart from the beginning), over a period of hours or possibly even days.

That's how slow dial-up was for files pushing into the 100s of MB in the late '90s, I can guarantee you very few gamers were pirating Dreamcast games, you needed to be a specialists with a lot of cash to throw around for the drives, computers, servers and hosting, and at least a T1 connection if not better (T1 (1.4 Mbps or 175 KB/s) was the highest you could go for a long time before other options like broadband started to pop up in the early 2000s..which was actually about after the Dreamcast's commercial lifespan in the West).
 
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MoneySings

Formerly 'WildWayz'
May 23, 2016
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I see people keep bringing up piracy but is anyone actually considering how friggin' expensive CD burner drives were in 1998? 1999? It's not like they were anywhere near as fast as today's drives, either. Same goes for internet; broadband wasn't really even a thing until the early 2000s so, you either had shitty 28.8K or slightly-better 56K as your main options...have fun trying to download 650 MB+ files over that without getting disconnected (and then having to restart from the beginning), over a period of hours or possibly even days.

That's how slow dial-up was for files pushing into the 100s of MB in the late '90s, I can guarantee you very few gamers were pirating Dreamcast games, you needed to be a specialists with a lot of cash to throw around for the drives, computers, servers and hosting, and at least a T1 connection if not better (T1 (1.4 Mbps or 175 KB/s) was the highest you could go for a long time before other options like broadband started to pop up in the early 2000s..which was actually about after the Dreamcast's commercial lifespan in the West).

Don't forget... when there were 10/10Mbit home connections, Torrents / DC+ / mIRC etc were rife with fileshares. One of the reasons they then made home line upload speeds less.

I remember back in early 00's I had a friend who had a server hosted in UUNet's datacenter as he was an admin there... he ran it as a 0-Day site which was the biggest in Europe. He ran it for about 3 years before UUNet discovered the server lol
 

Zero7

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Oct 3, 2019
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Sega had lost too much money, developer and consumer trust with the Saturn. The Dreamcast had to sell 10 million in it's first year alone in order for Sega to recoup their losses. Of course it fell flat on its ass once the PS2 released. Sega had to pull the plug or go bankrupt completely.
 

jufonuk

not tag worthy
Jan 1, 2009
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Jim.
Didn’t piracy help the DS sell like mad?

I think the 32X, relative failure of the Saturn, mega cd tower of add ons etc helped kill the Dreamcast.
 
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MastaKiiLA

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Jun 11, 2020
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Sega failed because they are Sega. Just look at how they've managed as a software company. They're just not that great.

PS2 had more games and better games. Better hardware too. That's a hard combination to beat, especially when you're the challenger coming off a miserable failure.
 
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I've posted about this before large posts a few years ago so I'll just quote them here to save time.

I think most of it has been explained throughout the thread but I'll chime in anyway with my understanding. If I'm missing anything or if any info is slightly off then feel free to chime in and correct me.

To understand the issue you have to go back to the Megadrive days. Sega Japan and Sega America were trying to compete too much internally and what was good for one market didn't necessarily fly in the other market.

Sega Japan had only moderate success with the Megadrive in Japan, it wasn't an out and out failure, but it certainly wasn't lighting up the charts compared to the NES and SNES. At the same time through clever marketing and the right content/market conditions Sega America were a runaway success becoming the market leader for a period ahead of the mighty Nintendo who were unstoppable in Japan.

This led to a lot of clashing egos on both sides with the Japan branch being sour for being compared non favourably to the highly successful American arm and the American arm feeling like they knew what was best and that they should be calling all of the shots.

This led to internal bickering much of which we likely only hear bits of pieces of now. Rather than working together as a team and doing what's best for the overall company by combining strengths the two branches instead tried to one up each other and compete for brownie points with the top brass.

So coming up towards the Saturn this internal strife and wasting of talent resources came up again. The Mega CD was an experiment which Sega can't really be blamed for as FMV/CD was all the rage at the time and even Nintendo were also working on their own disc drive add on which we all know about but had it released would probably have been as unsuccessful as the Mega CD was.

The American branch believed that they found success with the Megadrive so expanding it's life span with the 32X was the right idea rather than putting all resources into the next console. This obviously was a failure and combined with the Mega CD customers had begun to lose a bit of faith in Sega's direction as a company and brand.

The Japanese branch having been pioneers in 3D graphics in gaming from their highly successful arcade business should have been well in the lead in the R&D/Talent department and their next console should have been a smash hit in terms of wow factor and technology.

However a lack of foresight and a bad read on marketing conditions led the Japanese branch to the thinking that they wanted to maintain a tiered environment where arcades possessed the best technology and gave you that "WOW" factor and home consoles were more simplistic. I suppose you could say the thinking was likely akin to the Cinema experience verses the home video experience at the time.

There was likely an element of not wanting to cannibalise Sega's at the time highly successful arcade business and probably also more egos clashing between say the arcade division and the home console division.

So Sega Japan set out to make a machine that continued advancing 2D graphics assuming everyone else would go the same route and leave fancy 3D tech to the arcades.

Later when Sega realised that everyone else was going the 3D home console route they had to scramble to get the Saturn together causing a mish-mash of design philosophies and chipsets which made the Saturn highly difficult to develop for and although a 2D powerhouse from it's initial design philosophy the console's 3D capabilities were somewhat lacking and certainly a late addition in the development cycle.

But Sega had done their research, at least as far as the Japanese market was concerned and had deals in the works with several Japanese third parties who had only recently been freed from Nintendo's draconian monopoly contracts and wanted to work with someone else.

The Saturn released in Japan and was a huge success over there compared to the Megadrive. The Saturn was going toe to toe with the Playstation for the first year. The Japan branch finally felt they were successful by tailoring everything to what they knew of the Japanese market. This however was in stark contrast to the western release of the Saturn.

The Japan branch decided that because the Megadrive was only moderately successful for them that it was better to put past failures behind them and concentrate all their eggs in the next gen basket so all production on Megadrive games was halted. This may have been good for the Japanese market but not for the US market where the Megadrive was still a huge success. This in the US market was a huge blow to Sega as a company as they were killing off the golden goose as it were and stopping that revenue stream and consumer mindshare.

The Sony Playstation was on the horizon and Sony had been wining and dining developers and publishers to bring software to their platform, and they were doing a great job of it too. Backed by the branding and worldwide success/money of Sony which was an unstoppable brand at the time serious competition was on the way.

In what can only be described as one of the dumbest moves in videogame history the Saturn was launched in the US months early to compete with the Sony Playstation in the strangest stealth launch ever. It was a total rush job with no marketing to back it up yet and almost no software as third parties were still working on their launch titles for the console.

This understandably pissed off everyone: publishers, developers, marketing departments, retailers and consumers.

For consumers especially this was the last straw, coming off the back of the Mega CD and 32X failures, the sudden forced death of the Megadrive and now this stealth launch of the Saturn with barely any software or marketing and no mascot Sonic game anywhere in the pipeline.

The Saturn unsurprisingly failed in the west....hard. The Japan branch had finally started to gain success in it's home territory but all for nothing as their decisions had led to the doom of their own brand/console in the rest of the world. Had things been different and better decisions made in final days of the Megadrive and the lead up to the Saturn then we could be living a very different history now but alas Sega had the ball and dropped it so hard it won't likely ever be forgotten.

So coming off the death of the Megadrive and the costly R&D on it's failed add ons. The failure of the Saturn and the sudden decline of the arcades Sega had pretty much lost all of it's revenue streams in just a few shorts years. The company had lost the faith of consumers and publishers alike and was in financial ruin essentially.

But desperate to regain their success and become a competitor again Sega set to work on the Dreamcast, this time they would finally learn from their mistakes and both branches would work together for the common good.

They borrowed money and got to work on a fantastic console. Learning from the terrible launch of the Saturn the Dreamcast had software coming out of it's ears for the launch and first 18 months. It was very front loaded but it needed to be to make an impact.

And to it's credit despite everything against it, the Dreamcast was pretty successful for a time, but it needed to be an absolute runaway success. The console was perfectly aimed at the hardcore and normally were it around longer the mainstream would eventually jump in too, however this was not the case with the Dreamcast.

The Playstation had been an unprecedented success and brought in gamers from much wider age ranges. Games were no longer for little kids, the mainstream were involved now. The hype for the Playstation 2 was bigger than anything before or since. It was simply monumental, and the marketing both backed and played to this fact. The public mindshare was with Sony now and nothing Sega could do would change this. When combined with the high demand and price of DVD players Sony pulled an amazing move and people were using PS2 as a cheap DVD player too further increasing it's success.

Sega had pretty much ran out of money at this stage, if they had a war chest like what Nintendo does it's possible the Dreamcast could have carved out a reasonable success in the market but there just wasn't anymore money coming through the pipeline.

There were talks with Microsoft to buy Sega which almost happened, and Sega knew that afterwards Microsoft were coming to market with or without them. Given the market conditions of high spenders Microsoft and Sony in the market with longterm darling Nintendo and a broke Sega the writing was on the wall.

The Dreamcast itself didn't fail Sega, Sega failed the Dreamcast to put it bluntly. Had "Dreamcast era" Sega been around since the middle of the Megadrive things would have been completely different but they squandered every lead they had by being Sega up to that point essentially and let a competitor take the market they had helped to foster right out from under them. They ran out of money and the public/industry ran out of faith in them.
It is interesting to think how SEGA had almost everything going for them potentially and how they seemed to screw it up again and again.

As with most things SEGA the main issue was the Japanese and USA branches civil war and struggle for power. Pretty much doomed the company.

SEGA Japan had the development and engineering talent while SEGA USA had the marketing know how and good relations with western developers.

The problem was that the USA branch had caught lightning in a bottle with the Megadrive release there and to also Europe as SEGA Europe back then was mainly just for distribution they didn't really make any big decisions.

The overall management looked at the relatively poor performance of the Megadrive in Japan who were facing an entrenched Nintendo with incredible brand presence and some dodgy protectionist practices keeping them well in the lead.

Japanese branch was likely getting compared unfavorably to the massive success abroad and so the rivalry ensued.

If the company had looked at things from a worldwide perspective and worked towards a single common goal most of the bullshittery that followed could have been avoided. That's the first thing that would need to have been fixed for this alternate timeline to play out.

I think releasing the Mega CD was a fine idea at the time and it was a serviceable add on, after all Nintendo was also looking into similar solutions so I don't really count this among their massive blunders but it certainly didn't set the world on fire and possibly should have been Japan only but again....at the time CD was going to be the big this so can't fault them too much.

Cutting support for the Megadrive was an absolutely terrible idea. Again mostly a pride thing from the Japanese branch as they finally felt that had something in the works that would be popular in their home market (Saturn) and thus didn't want to split their resources and wanted to focus only on the Saturn.

This allowed Nintendo to gain back a lot of ground in the US market towards the end of the 16-bit era (1994 - 1996). This also added to a narrative that SEGA don't support their hardware and will abandon on a whim. If SEGA had kept strongly supporting the Megadrive the way Sony/MS/Nintendo do in the transition phase/end tail of a consoles life then we could be looking at a very different course in the timeline, especially they wouldn't have lost mindshare in the marketplace and would have continued earning massive profits from Megadrive sales/software.

The next thing would be the stupid add ons. 32X should simply not have existed. The money that was wasted on R&D, production and marketing plus the development of games etc... could have been put to much better use within the company at large. The main reason for it again was the US/Japan tug of war. The Japanese branch wanted to stop focusing on Megadrive and go with their new baby but the US wanted to keep the "Genesis" brand going as it was a big success for them. If the 32X doesn't happen due to the above two points in this timeline being fixed then SEGA doesn't loose more money, mindshare and reputation in the market and whole company is focused on a single goal of success.

Add to this things like Nomad which shouldn't have existed, let's take those things out of the picture for this "better" timeline to exist. More money and reputation saved.

So far in this timeline we have a united SEGA working with great synergy and togetherness towards the single goal of worldwide success. We have a long supported Megadrive with some marketing push still behind it and more late gen releases. We have no bullshitty add-ons costing money and reputation in the market and we have a slightly weaker Nintendo in the market due to actually having competition in the tail end of the 16-bit era.

So this could potentially set up SEGA to be in a good position going into the 32-bit era.

Now it seems pretty obvious that the future was going to be 3D. Here's the thing SEGA were pretty much the pioneers for 3D gaming with their arcade business, they had created spectacle arcade experiences that wowed everyone. First 3D Fighter, Racing etc..

SEGA actually approached Lockheed Martin if I'm remembering correctly because they wanted to license their 3D flight simulator technology, or at least a cheaper version obviously. SEGA were ahead of the game in this field, you could say that at the time they had the strongest video game 3D development experience/understanding in the world at the time.

They should have leveraged this into their next home console and made the Saturn a 3D beast. The reasons for not doing this seem mostly to be a fear of cannibalizing their arcade business. "Why go to the arcade if they can get it at home?". Obviously it was a terrible read of the market to concentrate on a 2D first console at the time but I think even they could read the signs but the arcade business came first and their hope was to continue a 2 tiered system where arcades where like an "experience" where you saw the marvels of technology and home market was simpler games. Kind of like those analogies you see about the Cinema experience vs home video on a small CRT.

I can't stress enough how far ahead they should have been on this and how important it was at the time but how they dropped the ball hard. Almost makes my brain hurt.

Anyway to change the course of the timeline if they had focused on the start at making a powerhouse 3D console in the Saturn from the beginning which would also make it much easier to develop for things would have been very different.

Taking the other points of this timeline into account if SEGA come out of the 16-bit era strong and without the BS infighting if they go this route with the Saturn things are looking potentially very good for them. Megadrive still being supported for the early transition years to the 32-bit era. Nintendo still launching really late with N64 exactly as it is, Cartridges an all.

At the time lots of companies were fed up of Nintendo's shit policies and treatment of them and were looking for any excuse to get away from them, Nintendo launching late and going with carts rather than CDs helped seal that deal.

Even in our time line SEGA were making great headway in Japan and with Japanese developers. Like many had said Resident Evil, Tomb Raider etc... were originally going to be Saturn exclusives. So taking all of this into account with a non fumbled 16-bit tail era and strong foundation for the 32-Bit era things could have been very very different for the "new" timeline.

Now Sony were certainly no slouch, their marketing was amazing. They had the money to back up their play into gaming, they had solid hardware and they were offering a way out from Nintendo's grip and also the ability to not compete with the amazing first parties of SEGA and Nintendo, to have the spotlight. Definitely enticing for developers.

Also they were willing to co-fund development, assist with marketing or even pay for all marketing in some cases. Hard to refuse from a dev stand point.

Having said that in our timeline SEGA basically handed them their ball and the whole marker due to all of their blunders so these once Saturn games all because Playstation landmarks instead. But in the new timeline with a strong SEGA with a 3D focused Saturn launched on time and with good pricing it is very possible that Sony could have been ignored in the maket by the hardcore for someone they know and again the developers could have chosen to make most of those games Saturn exclusives.

So it's possible Sony could have fumbled with their foray into gaming and quickly disappeared like some before them. The Saturn could have essentially become the Playstation in terms of dominance, or maybe a slight less successful one without Sony's marketing prowess/financial backing.

Of course the market could have split more evenly with some developers such as Namco and others going mostly Sony and others going mostly Sega. With this Sony has their foot in the door with a solid contender but don't become the phenomenon that Playstation became and SEGA have a strong market presence with the Saturn, possibly leading the generation. This all assumes Nintendo goes exactly as they did in the real timeline so no specific changes there, N64 still launches late with cartridges and sells around the same it did originally.

It's important to note that this Saturn has a wildly successful Shenmue that's marked as a landmark title and system seller. The story completes etc... tons of great ports of things like Virtua Fighter, Sega Rally which actually become successful this time and are competent ports, plus other SEGA games that never existed that would likely have been developed become a strong Saturn library along with likely the lionshare of games that we know now as "Playstation" games.

Also as others have said, have a strong 3D Sonic game early in Saturn's life. This makes a huge difference to the market.

Obviously in this new timeline there is no Dreamcast as the Saturn was a successful generation.

After that it's pretty much impossible to tell where things could go as the timelines would diverge far too much to be able to predict anything. Would PS2 have still been a thing? Would it have been the phenomenon it was? Would Nintendo still make Gamecube? Would there be a Saturn 2? Would Microsoft buy SEGA? Would there still be an Xbox if they didn't?

Just too hard to tell but a fun hypothetical. SEGA had the opportunity to make that timeline a reality or at least elements of it in some form but they dropped the ball hard like nobody has ever done before. SEGA really is their own worst enemy. The main thing to take from it was the in fighting rivalry. Nothing else in the timeline happens unless that gets fixed as it's literally the crux of everything else. Looking at it like that it's pretty clear to pinpoint that as the main reasons for SEGA becoming what they did.
 
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BattleMonkey

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I love when folks try to find one thing to blame a failure on, when it's often a whole multitude of factors combined together. Sega and the DC failed in many areas, it all added together to it's demise.

Sony brand was also massive back then, the PSX was a huge hit and Sega had a dud with the Saturn, and the DC release was overshadowed by the upcoming PS2 release and folks knowing it was gonna be more powerful and it had several big titles planned already for it
 
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Don't forget... when there were 10/10Mbit home connections, Torrents / DC+ / mIRC etc were rife with fileshares. One of the reasons they then made home line upload speeds less.

I remember back in early 00's I had a friend who had a server hosted in UUNet's datacenter as he was an admin there... he ran it as a 0-Day site which was the biggest in Europe. He ran it for about 3 years before UUNet discovered the server lol

I remember some of those days as a pre-teen, using stuff like Limewire (hoping to avoid malware and viruses), etc. But I'm curious how prominent these things were in 1999 and 2000, which were Dreamcast's commercial years in the West. I have a feeling it wasn't very common, and even for the people who had the service speeds, servers, hosting and burning capabilities, you had to compress tons of GD-ROM data to fit on a standard CD. There were games with entire sections missing outright to save space on the burned CDs, or messed-up graphics/textures, scrambled text, glitches etc.

So piracy rarely gave you a 1:1 burn of an official Dreamcast game, not the larger ones anyway, unless they went for multi-CDs, and in that case they'd have to change code in the game itself to treat it as a multi-disc release. It seemed like it was incredibly messy for the time, and while I'm sure pirated games sold cheaper than the retail versions, seems like it was a gamble if you'd get something worth the money.

It's all that kind of stuff why I think piracy wasn't as big a factor in hurting Dreamcast as it's commonly mentioned; if the system made it to 2002/2003 then yeah I can see that argument being more true. But that isn't what happened.
 

cireza

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SEGA threw all their money at the console, probably hoping for a miracle. Miracle did not happen, despite having made a great console and great games. No more money left. End of the show...

Sony did not kill SEGA, they succeeded at selling their PS2 and doing business. Whatever the means, they have always been like this. Blatant lies have always been part of their strategy. Maybe that SEGA USA were good at this at some point, but there was still a Japanese company behind that did not have any money anymore.
 
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Piracy was far more an issue with the PS . The DC didn't have the funds or major 3rd party support and what really killed it was that E3 2000 MGS trailer. Also SEGA GT and SEGA Rally 2 needed and should have been so much better.

Sega Rally 2 should Model 3 Arcade perfect and a showcase for DC online functions witjh online ranking, online racers and being able to upload and download replays Ect . But I really think that MGS 2 trailer was a killer, much like that FF7 demo in Japan killed the Saturn
 

mikefrails

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I came to understand the concept of burning a bootleg game disc with the Dreamcast, so yeah I'd say it was an unprecedented issue.
 
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This same shit over and over again repeating for years and years. The Dreamcast wasn't the problem, the Dreamcast was launched on credit and with someone elses money, so Sega objectively screwed up before the Dreamcast.

The Dreamcast also did well in Europe, initially amazing in NA, and only really flopped in japan, that wasn't a savable project, they would have had to have made bigger games that appealed to a wider audience to make twice as much money as they were making for the machine to be successful, and it wasn't going to happen.

And this goes into us talking about the actual problem, Sega was never competitive when appealing to a wide audience, the Genesis only did well because Nintendo's third-party illegal lock was gone, they were powerful and priced well, and more open to western devs, so people ran to the Genesis, but then Sega messed up management of the genesis and that's why the 3DO despite being $500 or more was able to get as many third parties as they did, even before they dropped the license fee. Then almost everyone moved to the PSX once that proved viable.

The biggest FP game Sega ever had during the Genesis was Sonic, a heavily bundled game that sold 15 million copies, who's sequel sold less than half that despite the hype, also being bundled, and press excitement, who's sequel sold less than half that, who's CD version of could only sell a couple millions when CD games on other platforms were flying off the shelves, and that game was bundled as well.

This already shatters the delusion that the Saturn failed because a lack of a Sonic game because Sonic wasn't even as popular as his inception for that to even make sense, not even half as popular. And Sonic was the only major killer app franchise First Party wise Sega ever made during their console run no matter how much people want to pretend that isn't true, it is, with one exception and that's Virtua Fighter for the first few games in Japan, which took Sonics place because Sonic wasn't a killer app in japan.

You can name Panzer Dragoon, Crazy Taxi, Vectorman, Virtual-on, house of the dead, Fighting vipers, Virtua Fighter, Daytona, Thunder Blade, Thunder Force, etc, all you want but these games ranged from modest selling to niche appeal or flops. Many people never even heard of these games, or played them and had no interest in them, and the ones that did were not enough to bring in the money required to change things around.

Sega was a reactionary company, the SMS and the first years of the Genesis were them selling hardware to make money off ports and control an ecosystem but they weren't originally aggressive competitors, that's why they licensed many of their top games to almost every other platform that was out there.

it was around 1990 when Sega completely switched gears, and it may have been Sega of America or Sega of Japan that started it, but from that point on Sega was aggressive, but they always poorly planned things out, and were reactionary, which in tern led to in-fighting and poorly managed budgets for software and hardware production, which led to losses, which led to the Dreamcast launching on credit and on cash from one of the managements own pockets.

A lot of people don't look at how things went down because they look back with rose tinted glasses, but people have been doing that for 20 years now it's time to be candid. It wasn't ever a well-run company and it didn't really have the games that appealed to bring in the sales needed to be number one, and they over spend trying to get there. If they had been less reactionary and focused more on their strengths, things may have been different.

That doesn't mean the games were bad, but Crazy Taxi or Panzer Dragoon aren't going to bring in the money and audience, Banjo, Crash bandicoot, Star Fox 1 or 64, FF7, Tony Hawk, and Spyro did.

And when you spend tons in R&D money to slap in a chip to try and make your 3D games more competitive with Sony on a console not made for it, raising not only the cost of your console, but making it hard for third-parties to program, and then you have to cut your price to compete with your opponent, taking losses on each Saturn sold, with no plan to try and resolve that and just letting it kill your profits, let's be honest.

That's stupid management.
 
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scydrex

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I love the Dreamcast one of my favorite consoles. Shame it died so quickly. The PS2 ran over it...
 
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LTTP but here it goes.

Looking back at the actual Console, SEGA ensured that the Console made money on every sale, so if that were the case, then surely the Pirates who bought the Hardware to pirate the games on would have gave them a modest boost in Sales and Revenue.

However, I get the feeling that it didn't help the Software front, and made Developers very sceptical on supporting the system (ironic, given the PS1 was very pirated).

I would say it was one of the major reasons why it killed the Dreamcast, but there is also the Brand being tarnished and the system going a different route that was dying.
 

Moogle11

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I was in college at the time and scored a Dreamcast day one and loved it.

But it was just doomed from the start. Sony had taken over at THE brand in gaming with the PS1’s success and Sega was fading after the Saturn bombed and the Genesis was a distant second to SNES. The PS2 just crushed everything and having DVD playback while the DC and GameCube did not was huge. It was amazing how many people I knew in college who barely played games who bought PS2s primarily as it was a good deal on a DVD player, plus could play games if they wanted. DVDs were HUGE in the college scene as no rewinding, skipping around scenes etc. was such a huge upgrade over VHS and movie nights and booze was the 90s and early 2000s version of Netflix and chill.
 
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PS1 piracy was rampant and happened almost as soon as it arrived. Switch has a massive piracy going on and its selling like hot cakes. If anything piracy gets people buying your console if it has the games.