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

TKOFromTokyo

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I think those mentioning the Saturn as well as upcoming PS2 and no DVD player are on to something. I also think the low attach rate has to do with the software that was available. Sure, there are a lot of gems on the Dreamcast considering its lifespan, but I don’t know how much of mainstream gamers would have been interested in the selection as compared to what the PS2 had to offer. Both brands had reputations and the Dreamcast needed more popular titles to change theirs. What’s interesting is that Dreamcast did so poorly in Japan while Saturn did better their than in the US.

I’ll tell you that when I tried out the Dreamcast as a 15 year old at Toys R Us, I was completely uninspired as the game they were displaying was some racing game. I had no interest in racing games or arcade titles at the time. I was also hyped by what was being discussed about the PS2 during that time. If you look at the hardware sales for the DC, they just weren’t as high as management stated were needed. That has nothing to do with piracy. The Dreamcast appealed to a limited crowd, and that hurt it.
 
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namekuseijin

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Sega America was trying really hard to push Genesis against Nintendo. They did much better in the west than in Japan, but they later paid the price of trying to juggle several software partnerships and several hardware at once: Sega CD, 32X and then Saturn. The bill was high and Saturn had no chance against both Nintendo and Sony, specially with its bizarre hardware choices. By the time they decided to streamline with DC it was already too late and Sony was fully entrenched in the gaming market, Microsoft to enter and Valve eventually making their virtual console steam...
 
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*Nightwing

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Nope
I think every piece of data about the failure of sega as a console developer has corporate executive idiocy written all over it. Bernie Stolar being the head of Sega USA and essentially giving up on consoles when his company developed and manufactured consoles sums it up succinctly.
 

Zero7

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I could never get over how noisy the console itself was. I remember returning mine thinking the disc drive was faulty. lol

Dreamcast had an excellent game library, one of my faves ever, the actual console was pretty shoddy though.
 

playoverwork

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I know this is really going to blow some minds and it’s the definition of “to each their own,” but I seriously am able to rationalize in my mind that 1 analog stick > 2. I distinctly remember, in those days, simply being an ace with fixed camera angles while everyone else was struggling and complaining. I had no real issue with it in Mario 64, and using the camera “snap-behind-your-back” mechanisms in third-person games like Phantasy Star Online both came naturally to me and was quite fun.

I even think FPSes can be more immersive with 1 stick instead of the 2-stick shit that we all accept as a way of life now. Goldeneye was amazing with how you would use the one stick for general run and gun, but then you could toggle into an aiming mode where you stood still and manually move your avatar’s arm by holding the shoulder button on the N64 controller. It was highly “VR-esque,” for lack of better words and the truth is, for me, it made the overall experience more immersive and even more true to life than what we accept now as the standard. It’s actually very boring for me to always have the gun robotically fixed in place and I think people are retards in general for thinking it’s cooler simply because everything moves faster. They think the speedy twitch mechanics popularized by UT And Quake3Arena are the ultimate test of masculinity or IQ or whatever else, like it’s really more immersive as an experience.

So I’m literally telling you on no small terms that I kind of resent Sony for bringing that shit along with the Dual Shock, but obviously if they didn’t do it, someone else was going to. You even had some companies seem to tip-toe in between and hesitate on it, like Nintendo with their shitty C-stick on the GameCube that was barely functional. In retrospect I almost appreciate that — almost. You have to wonder if Microsoft would have done it if Sony hadn’t. More than likely.
 
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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.
Distant second in Japan, but they led SNES in America (up until around DKC) and outsold them in Europe. And while it was a smaller market, they dominated Brazil with MegaDrive too; to this day it still sells pretty decently (though in new formats)

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.

Have you seen the latest Jenovi video on Dreamcast? He actually did some pretty good research into why Dreamcast failed and come to find out, Bernie Stolar announced $199 when SoJ were looking at $249. But SoJ decided to roll with it probably due to the good press and momentum the launch price Stolar announced created.

I think that is probably one fo the main reasons they could not get the profits they wanted, as they were losing even more money on each unit sold than what they originally planned. And Dreamcast wasn't quite as cheap to produce as it's usually assumed; in the same video I think he mentioned something around $325 to $350 was the cost to produce each Dreamcast for the two years it was on the market officially.

The PlayStation 2 was better. Not that Dreamcast fans will admit it.

Well when you have five to six years to build up a library and got all the major Japanese 3P devs supporting you out of the gate, of course you'll end up the better console. That doesn't mean Dreamcast was bad tho; it had one of the single strongest years in terms of software releases for any system ever in 2000, that's a fact. Review scores from publications at the time (plus the number of releases in that year that are still fan favorites today) are evidence of that.

I think only the PS4 (2018), Switch (2018) and PS2 (2001) had single years with a level of quality and quantity in releases that rival Dreamcast's year 2000 (not including pure handhelds/portables in this though).

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.

Dreamcast in two years had a higher attach rate than PS2 did for most of its lifecycle, especially in its early years. I believe it also had a higher attach rate than the Xbox, though maybe less than Gamecube. I need to re-watch Jenovi's video to refresh my memory.

And no, piracy was not a factor into why Dreamcast was discontinued, so it's a moot point to bring up.
 
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Starhowl

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If piracy would have been the reason then the Wii would not have sold more than a 100 million, since this was cracked wide open and in contrast to the Dreamcast, nothing had to be compressed or cut in content for piracy to exist. :messenger_ghost:
 

Fat Frog

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The civil war between Sega West and Sega Japan was horrible. As a result Sega failed and suffered even years later.

2020's
Sega West is now a nest of old Sega fans working with the east to port Sega Japan games in the US, in europe.

The enemy became a brother in arm.

Sooner or later, the new Sega will win the war :messenger_beermugs: :messenger_beaming: :messenger_beermugs:
 
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Reading Afro Republican's post now (what happened to that guy btw?), it's nice to see he tempered some of his more..."extreme"....rhetoric on this particular topic. Because of that he actually made a post that brings up some good points, but there's one thing I want to add to it..

..you can NEVER underestimate marketing power, or lack of it. Sega may've had some really effective marketing with the Sega Scream back in the day, but I can't recall too much of it that actually highlighted a focus on specific games outside of Sonic. That ties in with what I've said is general poor long-term IP brand retention in terms of having regular release cycles for new games in those IP, and also questionable promotion practices in various studios of the company.

I don't think it's fair to say a game like Panzer Dragoon had no mass market appeal; the appeal was there, at least to the level of an Ico or Shadow of the Colossus IMHO. However, just look at how bad Sega's early Saturn marketing was and realize how that impacted the perception and commercial performance of otherwise great games. People have GOT to stop underestimating the power and weight of effective marketing in determining a game's sales success.
 

Ozzie666

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Nintendo of Japan never gave Nintendo of America any power, even now. Nintendo of Japan remained the puppeteer's for better or worse, success in America early on, failure in Europe early on. no matter what, they survived their failures after the 8 and 16 bit eras. Other than the virtual boy failure, they've pretty much supported their products. Sega of Japan on the other hand, gave too much Power to Sega of America, it worked early on. But Sega of Japan was so out of touch with the American Market, they still retained enough power, to force the 32X in fear of Atari (Really?). When Sega of Japan took back all the power, the damage had been done. Call it jealously and pride from both sides. A 3DFX console would have been interesting.

However, Sega should of died much earlier, they were given another chance when most of their debt was cleared or a massive influx of cash after someone passed away (sorry forget his name now). Without that, does the Dreamcast even happen?
 

navii

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Dreamcast was a side bitch till the main bitch arrived (the PS2). Was a lot of fun at the time but we all knew the PS2 is going to replace it once it arrives.
 

nephilimdj

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If you come up with any answer other than mismanagement you're kidding yourselves.

This is my view, Sega did well in Europe and ANZ.
Stupidness of Japan and America, instead of actually caring about the areas that had success.

Everytime we have a sega thread its americans blaming Japan for Sega not letting America run it.
 
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sublimit

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No EA killed the Dreamcast together with Peter Moore who were secretly following orders by a new player who wanted to enter the market. Sega was an easy target at that time and they had to go in order to leave enough room for the new player.

No wonder Peter Moore went to Microsoft after he got his "job" done at Sega and then to EA after MS.

Of course nowdays he has the audacity to blame Sony for Sega's demise.

Sega of course did their own share of mistakes but it was EA who put the final nail in the coffin for Dreamcast.
 
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Ozzie666

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No EA killed the Dreamcast together with Peter Moore who were secretly following orders by a new player who wanted to enter the market. Sega was an easy target at that time and they had to go in order to leave enough room for the new player.

No wonder Peter Moore went to Microsoft after he got his "job" done at Sega and then to EA after MS.

Of course nowdays he has the audacity to blame Sony for Sega's demise.

Sega of course did their own share of mistakes but it was EA who put the final nail in the coffin for Dreamcast.

Can't blame EA on bit for not supporting the Dreamcast. If the 3DFX chipset was used, EA would have been fully on board. Also after the 32X and failure of the Saturn, can't blame them at all for staying far and clear. But I believe Sega sports titles did very well.
 
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Have you seen the latest Jenovi video on Dreamcast? He actually did some pretty good research into why Dreamcast failed and come to find out, Bernie Stolar announced $199 when SoJ were looking at $249. But SoJ decided to roll with it probably due to the good press and momentum the launch price Stolar announced created.

I think that is probably one fo the main reasons they could not get the profits they wanted, as they were losing even more money on each unit sold than what they originally planned. And Dreamcast wasn't quite as cheap to produce as it's usually assumed; in the same video I think he mentioned something around $325 to $350 was the cost to produce each Dreamcast for the two years it was on the market officially.
I haven't but that certainly would explain why they couldn't make money on the Dreamcast. I mean $350 per console!?! What were they thinking! They also had that Chip Issue happen in Japan that would have cost them time and even more money to boot!

I always thought it cost around $200 and they broke even until at least mid 2000, but by that time they were giving up the ghost.

Shenmue's budget surely didn't help as they needed...what....50% of their Userbase to buy the game to break even?

I also remember reading that it needed to beat N64 Sales in the US by 2000 or something and it lost by a measly 0.1% or something, which was a sign to them to get out. It's in that Dreamcast Book that British guy did on Kickstarter.

It is certainly crazy that SEGA did so many stupid choices that almost cost them their entire Business.
 

BlackTron

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I know this is really going to blow some minds and it’s the definition of “to each their own,” but I seriously am able to rationalize in my mind that 1 analog stick > 2. I distinctly remember, in those days, simply being an ace with fixed camera angles while everyone else was struggling and complaining. I had no real issue with it in Mario 64, and using the camera “snap-behind-your-back” mechanisms in third-person games like Phantasy Star Online both came naturally to me and was quite fun.

This, at that time I was playing a lot of PSO and Zelda, which had a similar snap-behind-the-back camera mechanic from the Z-button (if there was nothing to Z-Target, it would snap the camera behind your back).

There was nothing wrong with this, and made engagements appropriate twitchy, something you do as fast as you can press the buttons, without all the camera wonkiness.

I don't have any issue with a camera stick either, but there were benefits before we had it. In PSO, when the second stick showed up after DC it was put to better use navigating the menus while the main stick still moved your character. The second stick is a huge upgrade, but it's not always the right choice to just assign it to the camera and call it a day.
 

Hudo

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No EA killed the Dreamcast together with Peter Moore who were secretly following orders by a new player who wanted to enter the market. Sega was an easy target at that time and they had to go in order to leave enough room for the new player.

No wonder Peter Moore went to Microsoft after he got his "job" done at Sega and then to EA after MS.

Of course nowdays he has the audacity to blame Sony for Sega's demise.

Sega of course did their own share of mistakes but it was EA who put the final nail in the coffin for Dreamcast.
EA might be the company with the most "kill counts" in the industry, lol. Killed lots of IPs by fucking them up, killed quite a lot of studios by mismanaging them and fucking them up, almost killed lootboxes up to the point where even Korean companies were like "EA, wtf are you doing?" and apparently helped kill Sega's last heroic effort to preserve its console business.
 
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odd_hatch

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Piracy must have been a big problem. I had like every Dreamcast game, I bought them for 50 bucks off the internet in burned 900MB CDs.

Hey, I was a little kid and my relatives gave me very little money.
 

Celine

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Sega's main issue that brought them to a fast demise after briefly tasting success in the console market was rooted back on their arcade origin (attitude to release a bunch of hardware and copy what's successful) and how they lacked the vision to manage the MD success and growing it to make the whole company stronger and capable to weather through less fortunate times
Instead of building a solid foundation and creating a strong in-house stable of IPs, they kept competing for market share by sticking to the wall every possible hardware and software projects in the hope some worked and stole some market share from Nintendo (one of lesser cited example is the Terra Drive which was a big money pit).
Sega always had the inferiority complex typical of underdogs.

When events started gone wrong, Sega bad habits that started during the MD days placed them in an unfavourable position with a more expensive hardware that was less performing in what was the new hotness department at the time (polygonal graphics) and with a shaking financial status despite the popularity of their previous console.
Even worse Sony had from the start the plan to trigger a price war (dropping the price on PS1 hardware as fast as possible) which bleed Sega dry.
Nintendo could compete in the price war despite a more advanced feature set offered by the 3D capabilities of their console because Nintendo was always smarter than Sega and tried to cut the corner as much as possible to be profitable on day one from the hardware:


With Dreamcast, Sega corrected many of the mistake incurred with the Saturn however they made the same old mistake to be way to aggressive from day one (read by using an aggressive loss leading strategy) in an attempt to gain market share before the other competitors.
The problem was that, even if the launch in America was the most successful ever at the time, the sales diminished a lot in the subsequent months.
Even with a full 12 month period (in contrast to just 4 months in 1999) and with a heafty price cut (to $149) and other promotions in US DC sold less in 2000 than what it did in 1999.
In the meanwhile Sega was sustaining tremendous losses in the attempt to gain market share (with borrowed money).
In the end Dreamcast was a financial disaster even worse than the Saturn despite the console design being better.

Here DC hardware and software shipment for each fiscal year that show how desperate the situation really was:

DC software shipment sales for fiscal year:
FY ending March 1999: 3.01M <- DC launch in Japan
FY ending March 2000: 26.04M <- DC launch in America and Europe (PS2 launched in Japan)
FY ending March 2001: 23.87M <- DC first full fiscal year of availability worldwide which got results worse than the previous one (PS2 launched in America and Europe)
Half FY ending March 2002: 3.03M <- DC discontinued

DC hardware shipment sales for fiscal year:
FY ending March 1999: 0.90M <- DC launch in Japan
FY ending March 2000: 3.91M <- DC launch in America and Europe (PS2 launched in Japan)
FY ending March 2001: 3.39M <- DC first full fiscal year of availability worldwide which got results worse than the previous one (PS2 launched in America and Europe)
Half FY ending March 2002: 0.66M <- DC discontinued
FY ending March 2002: 0.93M <- DC discontinued (Gamecube and Xbox launched in Japan, America and Europe)
 
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Celine

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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.
While I agree with your overall point (that Sega never had first-party software remotely close in popularity to what Nintendo had), the sales of Sonic 1 and Sonic 2 are nothing to scoff off considering the actual size of the market at the time (much smaller than nowadays).

Top 10 best selling games of the 16 bit generation (sell-in; by single system SKU; worldwide)


EDIT:
Oh and by the way Sonic CD on Mega CD certainly sold less than 2M cause Mega CD total shipment worldwide was at 2.24M units as March 1996.
 
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