Sega’s Dreamcast – 20 Years Later

Sega released the Dreamcast on September 9, 1999 at the end of an enormous marketing campaign. The Dreamcast was the most technologically-advanced console released at the time, being met with much praise and was looking to be the triumphant return that Sega was hoping for. This momentum would not last however, as the Dreamcast would prove to be the final console Sega would ever create. Jump forward 20 years and we’re still discussing exactly what happened…

After stepping into the ring to square off against 800-pound gorilla Nintendo in the home console market in the 80’s and successfully cutting the market share of the video game industry in half during the console wars of the early 90’s, Sega found themselves in a tough spot at the end of the 20th Century. A string of hardware failures proved a huge setback as they struggled to keep up with Nintendo, there also entered a new contender – Sony, the original Playstation was released in 1995 to a whirlwind of critical praise and proceeded to rocket past all other competitors for home console supremacy. Sega’s “follow-up” to the Genesis – the Sega CD(released in ’92) wasn’t a follow up, but rather an add-on to the Genesis console, and further confused consumers during the ’94 holiday season when they released yet another add-on for the Sega Genesis – the 32x. Both of these additions sold poorly and were considered failures, the Sega CD was quite costly and difficult to develop games for, and the 32x was rushed out with no support as Sega had already been working on the Saturn. Gaming publications had already began to criticize the number of peripherals Sega had been releasing with the idea you were simply adding building blocks to a Sega Genesis, more recently dubbed the “tower of power”. Merely months after releasing the 32x in North America, Sega released the Saturn – an impressive console that played CD-ROM disc software and was capable of displaying(at the time) very high-quality 3D graphics. This would ultimately prove another failure for Sega as the console was heavily criticized for being both expensive, and having a small library of games due to the console being very difficult to develop games for. It was only a few months after the release of the Saturn that Sony released the Playstation which became the standard by which consoles would be judged as it boasted an impressive array of games as well as being very developer-friendly. All of these failures will eventually prove too much for Sega to bounce back from. The situation was dire as Sega prepared to release its next console – the Dreamcast.

We all know this was the final nail in Sega’s coffin, but why exactly did it fail? For as much as we may view the Dreamcast as an abject failure, there were things it did well, but unfortunately there was just as many things to bring it down, along with variables like simple time and place. Let’s first look at the ways the Dreamcast succeeded…

Hardware – No doubt as a response to the losses taken by the Saturn being quite expensive to manufacture, Sega eschewed proprietary for off the shelf components for the Dreamcast. The decision to utilize a GD-ROM format which proved less expensive than a DVD-ROM but still could hold up to 1GB of data, a rather impressive amount for the time. The 3D graphics boasted by the Dreamcast were certainly impressive, this also was bringing to a close the end of the “Bit Wars” of the 90’s in which game companies would take any excuse to state how many bits their consoles were able to create, most memorably with the Atari Jaguar’s advertisements about its 64-bit graphics. The Dreamcast was also the first home console with a built-in modem for use in playing games online via Sega’s own online service – SegaNet. Remember, this was 1999 – a time when Netscape and America Online were the still relevant and we were all bracing for the imminent apocalypse of Y2K. The Dreamcast also featured a controller with two “trigger” buttons on the back of it that had yet to become commonplace in the industry. Another interesting feature of the Dreamcast was the virtual memory unit or VMU, that was used as a memory card to be inserted into one of two slots found on the controller. There was also a small lcd screen on the VMU that you could see through a space in the controller that could be used for things like calling plays in the NFL 2k series, or raising virtual pets in Sonic Adventure. The VMU also had several small buttons on it allowing the card to act to be played like a Tamagotchi, concepts that would be seen in future Nintendo consoles like the Wii U and Switch.

The Dreamcast controllers and VMU were both intriguing AND awkward.

Online play – The Dreamcast also led the way(for consoles) in the integration of internet in video games as a way to communicate and compete with others. Sega first launched their own internet service – SegaNet which for a monthly subscription allowed players to connect to others and play games like Phantasy Star Online, ChuChu Rocket! or the NFL 2K series, along with the ability to chat and send email, two years before Microsoft would launch Xbox Live and dominate online gaming. This was the type of forward thinking that could have kept Sega in the game for much longer.

Shenmue was impressive back then and is still considered one of the greatest Dreamcast games.

Games – During the Dreamcast’s lifespan, Sega was responsible for some of the most creative and impressive titles around. Sega had divided up numerous teams to go out and create a library of games to support the Dreamcast, one of the biggest marks against the Sega CD and Saturn. Some of the Sega franchises created over this time were Crazy Taxi, Jet Set Radio, Space Channel 5, Skies of Arcadia and Shenmue; the latter two titles were met to great acclaim with Shenmue being one of the most impressive(and expensive to make) games to that point. Sega had also created Phantasy Star Online – an online RPG game that would be a precursor to what we would later know as MMORPGs. Sega’s exclusive 2K Sports series also demonstrated the greatness that lay ahead in online sports titles( I STILL say NFL 2K4 > Madden 🙂 ). The Dreamcast was also home to an impressive collection of fighting games such as Dead or Alive, Power Stone, and the revered first Soul Calibur game. I must also mention the infamous Seaman, where you help to grow a man-fish abomination by talking to him through the peripheral mic plugged into one of the controller slots, adding to the game’s…uh…appeal is Leonard Nimoy as the narrator. Of course, no Sega console would be complete without its mascot Sonic, the title Sonic Adventure was the Dreamcast’s best seller.

One of the most bizarre games in the Dreamcast’s catalog, requiring a microphone to communicate with the…Seaman.

Let’s now take a look at some of the factors that caused Sega’s untimely defeat…

Sony – The first place we generally look when discussing the fate of the Dreamcast is Sony and its behemoth of a console in the Playstation 2. The original Playstation entered the fray while Sega and Nintendo were battling each other and captured the lion’s share of the market as it represented both forward-thinking technology and awesome titles in equal parts. Sony’s stranglehold on gaming only continued as rumors began to swirl about the inevitable release of the PS2. The hype surrounding the release of the Playstation 2 certainly stole away a lot of Sega’s thunder in marketing the Dreamcast. Information had come out that the PS2 was going to have the same horsepower as a government supercomputer, there was also the mystique around the Sony and its “Emotion Engine” which we were told would produce the most life-like graphics ever seen. I remember hearing a kid at my school talk about how the PS2 was going to have “millions and millions of polygons and is going to be so powerful you won’t have ANY LOAD TIMES”. There’s also the fact the PS2 would be backwards-compatible so gamers could still play all of their original Playstation games, something that’s always been a critical element of marketing a new console going all the way back to Nintendo announcing the Super Nintendo and facing backlash from parents who didn’t want to start buying games for a whole new system(I remember that personally). Another variable not to overlook is the fact the PS2 would use a DVD drive, something Sega had decided not to use for the sake of keeping production costs a little lower. This comes at the turn of the century when the world was transitioning from old-fashioned analog format to the newer, shiny, digital formats like DVDs, and MP3s.

Past Failures – The Sega CD, 32x, and Saturn were all a string of market failures that Sega was never able to fully recuperate from. Most consumers had seen the Sega CD an an expensive add-on to exploit current fad of FMV(full-motion video) games and unable to provide a rich gameplay experience. The 32x had a very small library of games, and fewer yet received recognition as being worth playing, with the Doom port for the 32x as being notoriously bad. The Saturn while impressive, cost $399 at launch($671 today!) and suffered from a modest library of titles all while Sony proceeded to dominate the console market with its Playstation. By the time the Dreamcast was released, many out there were understandably hesitant to invest in Sega’s newest console. The Dreamcast was quite ahead of its time as a home console, Sega had suffered huge financial losses by this time and simply couldn’t afford anything but a home run.

Sega Corporate – Both of the aforementioned reasons are responsible in part for the demise of the Dreamcast and Sega being forced out of the console business, but I would believe the final nail in Sega’s coffin is themselves. Sega’s history is full of instances where Sega of Japan would balk at an idea proposed by Sega of America, and vice versa. The Blake Harris book Console Wars(a great read BTW) chronicles former CEO and President of Sega of America Tom Kalinske’s time with the company and successfully competing with Nintendo during the 90’s, during this time there are many situations of butting heads between the two Sega headquarters. Kalinske left SOA in 1996 and the following years would prove quite tumultuous for Sega execs in both Japan and America. The corporate landscape within Sega only exacerbated the issues they were dealing with on a commercial level.

Other contributing factors for the Dreamcast’s failure would be lack of third-party support, as big publishers like EA and Squaresoft contributed nothing to its library of games. Also, the simple variable of place and time were not on Sega’s side as the Dreamcast was a little ahead of its time in online gaming; there’s still people out there with less-than-stellar internet service in 2019, the growth level of the “internet age” was just a step behind the Dreamcast. I also mentioned above the advent of the digital age – the DVD drive used in the PS2 that provided most of us the first DVD player we ever owned.

Sega discontinued the Dreamcast in 2001 and committed to creating software rather than hardware. The Dreamcast sold over 9million units is still remembered as the console that killed Sega, but I feel Sega as a company is more responsible for its fate than any console. In recent years, an appreciation for the console has grown throughout the internet, with many lamenting a console that was too far ahead of its time and disappeared just as quickly. I came across a Eurogamer article by Dan Whitehead comparing the Dreamcast to JFK in both being remembered by what they represented along with leaving us far too soon…I guess that would make Sega both JFK and Lee Harvey Oswald?

What are your thoughts on the Dreamcast? Did you own one? What was your favorite game to play for it? Let me know in the comments below. I’d certainly love to pick one up for old times’ sake. I could also use some of the games as blog fodder…I just may do that sometime 😉

Keep on playing…