It’s more than a little ironic that Sega’s death as a hardware developer came not after one of its terrible consoles or console expansions, but after what is perhaps its greatest console ever: one that could spawn an entire week of love here on Destructoid. I’m talking, of course, about the Dreamcast: the home of Shenmue, Skies of Arcadia, Jet Grind Radio, and the first truly great online console experience, Phantasy Star Online.

By most accounts, the Dreamcast was a wonderful piece of hardware, and widely considered ahead of its time thanks to some great graphics processing and its focus on online play; after all, sported a modem at launch, which not even the PlayStation 2 did despite its later launch date. Yet, even with all of these seemingly great advantages, we all know Sega’s fate: it would drop out of console development forever just a few short years after the launch of the Dreamcast.

There are plenty of long diatribes that have been given in answer to the question “What happened?” Of course, there’s no one definite cause. However, there are plenty of potential causes that, taken together, paint a pretty clear picture of how Sega’s Dreamcast became doomed to fail, despite our love of it.

Burn me once: Past failures and the death of consumer confidence

Looking back on Sega’s console history, we can see a few blemishes pop up here and there. In fact, for every decent decision that Sega made in terms of its consoles, it made at least two bad ones. Many people had gotten to the point where Sega’s very name was like a curse word. One Cnet writer said of the Dreamcast “If it wasn’t Sega, it would have been considered one of the greatest game consoles of all time.”



It’s a strong sentiment with quite a bit of conjecture, but it does point to the underlying problem of the Dreamcast: it was the Sega Dreamcast – the same company that constructed the Sega CD and brought about the Black Age of FMV Garbage; the same company that burned consumers with the technically problematic 32X, pretty much right before the Saturn; and, yes, the same company that gave us the Saturn, with one of the worst launches in console history (Surprise! Go buy our expensive console NOW) and one of the most unnecessarily complex pieces of hardware ever.

In essence, by the time that the Dreamcast came about, Sega had already been blacklisted by gamers. Too many people had lost all confidence in Sega, believing the Dreamcast to be just another console that would be buggy, expensive, complex, and largely unsupported. While plenty of people still held out hope, which is evidenced by the high numbers of preorders for the system, a very large portion of gamers had already moved on or would quickly do so after the release of the PlayStation 2.

Hell, even before the launch of the Dreamcast, many gamers had found solace in Sony or Nintendo after picking up the PlayStation or the Nintendo 64 and having a great experience with them. With a solid set of games and a promise of strong support no matter what region you hailed from, many of those “good feelings” that were once reserved for Sega were instead transferred to one of these other companies.

So, even as awesome as the Dreamcast was, plenty of gamers just weren’t willing to give it a chance. Even I wasn’t: I had moved on to a full-up Sony fanboy at this point (don’t worry, I’m not anymore), enjoying my PlayStation and PlayStation 2 and caring about little else. I mention this because, though I didn’t realize it at the time, I think my own situation was similar: I knew my experience with these consoles would be great, and while I had loved my Genesis, I hadn’t enjoyed my time with Sega’s other consoles. Especially that damn Game Gear. Jesus.

Burn me twice: Retailers and developers lash out after a series of dick moves



It’s never a good idea to piss off the people who are selling your wares. Retailers generally don’t like to be pissed off. Something about money…I don’t know. Anyway, that’s exactly what Sega did with the launch of the Saturn, which, as I alluded to before, was one of the worst console launches in history.

Before the Saturn, Sega was all buddy-buddy with most U.S. retailers. The Saturn was planned for September 2, 1995, and retailers were preparing for its release. Sony, not wanting to be left behind, announced its first console, the PlayStation, for one week later, on September 9th, 1995. It was looking like an epic series of days in the world of videogames.

Then, Sega did something unprecedented. At E3 ’95, the company announced a new release date for the console. The date was “now.” In essence, Sega admitted that the original release date was a trick (or was it?) and that the console could be purchased immediately. On the surface, it seems pretty smart: this was nearly four months in front of the original release date, meaning that it would have a pretty sizeable lead over Sony.

Of course, many people didn’t see it this way, especially retailers and developers. Many retailers felt betrayed by this ruse, feeling that Sega was leaving them out of some big plan. Two retailers, KB Toys (remember them?) and Wal-Mart, were left entirely out of Sega plan, and didn’t receive any consoles for the launch. Understandably, they were pretty pissed. KB threw quite the tantrum, stating that they would never stock the Saturn in their store and allegedly removing all Sega-affiliated merchandise from the stores. If KB wasn’t allowed to sit at the cool kids’ table, it might as well just start stealing pudding from the cool kids.

This actually carried over to the Dreamcast. Many retailers were very reluctant to stock the console, likely in the hopes of avoiding future SNAFUs similar to what happened with the Saturn. Of course, even having one retailer that doesn’t stock your product is a bad thing, as a consumer coming for a Dreamcast and not finding one might just as easily pick up one of its competitors. It also doesn’t help the company’s or the console’s reputation among gamers.

Developers also felt burned by the Saturn and were much less excited to support a future Sega console. This surprise North American release pissed off a lot of American developers. The Saturn was problematic from the beginning, as developers found it extremely complex and difficult to develop for. Many gave up entirely. On the Japanese side, developers had a pretty good relationship with the Saturn in the beginning, but this would soon change.

Developers worldwide were put off when Sega started talking about the future. Just as devs started to get used to development for the Saturn, Sega began to say things like “The Saturn is not our future.” The future was a new console, codename “Katana,” that the company would be discussing soon. For the game companies that were just getting used to the Saturn, this was a problem. Unsure about what the future of the Saturn would be, there was a rush of game cancellations, a drop in hardware and software sales, and a somewhat premature death for the Saturn. It’s easy in this case to say that Sega killed its own console by announcing the Dreamcast too early.

Soon, big companies like Electronic Arts announced that they would not be supporting the Dreamcast, likely worried that they’d be burned by Sega in a similar situation to the Saturn’s surprise release and rapid abandonment. Despite the fantastic design of the Dreamcast, many developers just didn’t care anymore. They were fed up. And if developers and retailers didn’t have confidence in the Dreamcast, why should consumers?

Seeing the wrong future: DVDs vs. Internet



Both the PlayStation 2 and the Dreamcast offered one of two exciting advances in videogames: the DVD format and online play, respectively. Both of them were widely advertised, seriously hyped, and each console in its early days became defined by these advances. In essence, they represented the future as each company saw it: Sony felt DVD was the direction gaming needed to move, and Sega felt that it needed to steer the industry toward the Internet.

It became a battle to see which version of the future would win, and, at the same, DVD won pretty easily. In a way, it’s really not surprising. DVD games were not only billed as being able to offer much better graphics than other formats, but the PlayStation 2 was also advertised as allowing consumers to easily switch over to the impressive new DVD format for movies – something that many people at the time hadn’t done. My first DVD player, after all, was the PlayStation 2.

The advantage for Sony here was that it allowed consumers to adopt this new technology easily. If you buy a PlayStation 2, you’re immediately able to watch DVDs. All you need is your TV, your console, and your DVD. It was incredibly simple, and where many consumers were scared of a new technology, Sony helped to make it easy.

This wasn’t exactly the case with the Dreamcast. In 1999, home Internet connections were still in relative infancy, with many homes not equipped with Internet connections at all. Those that were likely had one modem, no router, and connections that required lengthy connection processes, offered low speeds, and were expensive and somewhat unreliable.

Basically, hooking up a console to the Internet wasn’t particularly realistic for many homes thanks to a lack of the infrastructure required. For most homes, playing online meant that the phone couldn’t be used, leading many parents to say “hell no” to the presence of the Dreamcast in their homes. While online play was a huge advantage, it was one that far too many people were unable to fully enjoy.

So when the PlayStation 2 released, many saw the Dreamcast as being obsolete, despite the fact that the Dreamcast, in many ways, was ahead of the PlayStation 2. The problem was that it was ahead in the wrong way; Sega had seen the wrong future (or perhaps just looked too far into the future), and it would pay the price.

The Dreamcast was also often called “ahead of its time.” In the Internet argument, this might be true. But otherwise, I’m not sure if I agree with this. It’s the job of a new product developer to make the future happen now, so that a product ceases to be ahead of its time the very moment that it is placed into the hands of a consumer. I feel like (again, other than the Internet thing) that Sega did this. Its console wasn’t nearly as complex as the Saturn, and while it offered a lot of new ideas (like the VMU), they were relatively easy to understand and adopt. If this idea of the console being “ahead of its time” contributed to the console’s and Sega failure, it was in a very minor way that’s secondary to nearly everything else.

What have we done? Did we kill Sega?



We’ve already looked at how consumers in large part didn’t buy the Dreamcast thanks to low confidence in Sega. Is this a failing of Sega, or of the consumer? And did the consumer fail Sega in other ways? There’s no easy answer, but one thing is for sure: the sales of Dreamcast games were criminally low, especially considering the incredible critical response to many of them.

Shenmue comes to mind, of course. Its enormous cost to produce has gone down in history. There’s an oft quoted statistic that every single Dreamcast owner in the world would have had to purchase the game twice in order for it to break even. Of course, this didn’t happen. But the surprising part is that it didn’t even come close to happening. While it became the fourth best-selling game of the Dreamcast, many were expecting it to be a runaway success and a system seller. Neither of these happened.

Then you had all of the incredibly original ideas present on the Dreamcast, such as Samba de Amigo, Jet Grind Radio, and Space Channel 5. Not only were these games visually impressive, but they were also loved by many critics. Yet compared to the comparably vanilla franchises on other consoles, these games sold like crap. Gamers didn’t buy originality. They bought sports games.

Of course, we can’t expect games like Jet Grind Radio to compete with Madden. Gamers can’t really be held accountable for not purchasing the hell out of that game, despite its quality. It’s sad that this has to be the case, but it’s the reality of the business that quirky titles are rarely successes among consumers.

We can also talk briefly about the insane piracy present on the Dreamcast. In all but the latest version of the Dreamcast, the drive was able to read any CD-R. Many gamers used this for legitimate reasons, such as backing up the games that they owned or running harmless homebrew applications. Others pirated the living hell out of games. I don’t need to tell you the effect of piracy on games, especially on the level that it happened with the Dreamcast. There was a ton of lost revenue here, especially with many of the big first-party games.

So, did we kill Sega? To some extent, maybe. But without having given so many people valid reasons to ignore the Dreamcast, Sega’s story might have been very different. As it stands, Sega enabled gamers to have a hand in its death. If anything, it was the piracy that we, as gamers, should feel bad for. But those who would feel bad about it probably weren’t the ones pirating, so it’s kind of a moot point.

To dream of what may come



By this point, you may be wondering where I was going with that subtitle. Well, wonder no longer. In an article filled with sadness and death, it’s only appropriate, for Dreamcast week, that it ends on a positive note. In fact, the entire writeup here is meant as a tribute to a console that I never got to experience in its short glory days, but one whose greatness is still talked about ten years after its debut.

So, what is the lasting legacy of the Dreamcast? Well, the fact that we’re having an entire week here devoted to the console should answer that question. We’ve even seen plenty of people entertain the idea that Sega would announce some sort of epic reentry into the console market on 09/09/09. We’ll find out on Wednesday, but…no.

Hell, the very reason that I decided to purchase a Dreamcast, aside from my sudden aspirations as a collector, is because it is very much still alive today. The ease with which you can run homebrew on the Dreamcast means that there are still those out there playing on their Dreamcasts every day. Phantasy Star Online even has private servers still going, so that if you want to jump into a game online, you can.

But perhaps the most important lasting effect of the Dreamcast is that it showed us what the future would be like, even if the console itself showed us before we were ready. I am, of course, talking about this generation of online consoles. Can you imagine this generation without the ability to be connected to the Internet? Dreamcast offered all of this, and though its vision of online play was not complete, it showed other console makers that it was possible.

So, while Sega’s hardware development died, it wasn’t a meaningless death. In some ways, it gave room for Microsoft to enter the hardware business, which had a profound effect upon our concept of online gaming. Today, we can’t imagine a world without online gaming, but in the early days of the Dreamcast, many of us couldn’t imagine a world with online console gaming. However, the Dreamcast allowed us to look to the future that we now enjoy, and without it, perhaps we never would have dreamed of PlayStation Network, Xbox Live, and the countless games that we enjoy with our friends who, rather than sit on the couch next to us, play with us from distant places.

Do you have your own thoughts on Sega’s downfall as a console manufacturer? Want to give me some advice about awesome things that I can do with my new Dreamcast? Just want to share some Dreamcast love? Hit up the comments!