What Killed Sega Dreamcast? A Few Thoughts

Sega Dreamcast, released in Japan in 1998 and the US/PAL regions in 1999, discontinued in 2001.

What killed Dreamcast? In a single word, hype. Massive, staggering, bewildering hype for Sony’s Playstation 2.

From my own experience in Minneapolis, Dreamcast was really popular in 1999. Sega appeared to achieve a successful comeback after five years of fading away. Most kids never knew the Saturn even existed and simply stopped caring after the Genesis days were over. DC was bright, stylish, the console looked terrific, and most importantly, Sonic was back and US Football was back. I cannot emphasize how important that was. Add in excellent show-off hits like NFL/NBA2K, Ready 2 Rumble, Power Stone, Hydro Thunder and especially Soul Calibur, and Sega was back in the groove. The future looked bright.

Then the year 2000 rolled in and everything just dropped dead.

Sony were masters of hype. They did a great job overselling the original Playstation (500k polygons, the dinosaur demo) and they steamrolled into overdrive on Playstation 2. Just take a look at their famous 1999 tech demo that drove gamers into a frenzy.

We were told that these were actual games that were coming out for PS2, that these were the kind of graphics you would get, not pre-rendered, but in-game. How’s that for a bullpucky sales pitch? And then we were told the system could generate 88 million polygons per second. By comparison, gaming magazines were constantly telling you that Dreamcast could only draw 3 million. “Only three million” became the DC’s “can’t doo three dee.”

My favorite line was when Sony claimed that they might not be able to bring PS2 to the USA, because the machine would have to be classified as a “supercomputer.” The PS2 was so powerful, in fact, there were rumors that Saddam Hussein wanted to steal the technology for use in his secret nuclear weapons program. These things that actually happened.

When PS2 finally launched, supplies were low and it was hard to find one. That only added to the frenzy, as the console became this almost-legendary relic. One night, somebody brought their newly-bought PS2 to the Dinkytown Pizza Hut where I worked and the guys were just crowded around it, like those apes with the monolith in 2001. It didn’t matter that there were only three games available at launch, while Dremcast had a large and growing software library. Aside from NFL2K1, Virtua Tennis and Crazy Taxi, Sega was already tossed aside and forgotten.

And, of course, let’s not forget Sony’s secret weapon: DVD. This was a massive win, as the new format was just beginning to take off and PS2 was the cheapest player on the market. You can thank The Matrix for making that happen. “Does this thing play DVD?” the kids would ask of Dreamcast. The answer was no. “Sorry, not interested.” 

Moving along for other subjects to blame…

The question of Electronic Arts has long been debated, and while we cannot prove that their withholding support from Dreamcast killed the console, that perception immediately took hold and it had long-reaching repercussions. According to Peter Moore, the sticking point was Visual Concepts. EA wanted to have exclusivity on all sports titles and specifically demanded that NFL2K and NBA2K be cancelled. Sega refused and EA walked away from negotiations. Two years later, DC is cancelled, Sega bows out of the hardware market and EA earned a reputation as stone-cold killers. Within a few years, Sony and Microsoft killed their own sports franchises in order to keep the mobsters happy. After all, you saw what those guys did to Sega. And let’s not get into that whole 2005 NFL licensing catastrophe, which killed off the NFL2K series for good.

Piracy is another controversial issue surrouding Dreamcast, and it’s one with a very deep irony, as the very thing that caused piracy to explode on the system–the lack of any copy protection–is what created the console’s post-2001 indie gaming scene that flourishes to this day. Indeed, in the last two decades, new videogames are created for nearly every classic console and home computer format. The idea of playing new games for “old” or “obsolete” systems was unimaginable before Dreamcast. Today, it’s as common as snow on Christmas Day, and nobody even bats an eye when they learn of an indie programmer or software team publishing games on older formats.

In 2000, software piracy exploded on Dreamcast as someone (whose name I’ve long since forgotten) learned how to rip the original discs and compress the files to fit onto a CD-R. This quickly spread like wildfire and there were many websites where you could download everything. And this was happening just as Napster was spreading like wildfire across college campuses, so we all had this new idea that we could get literally anything we wanted off the internet for free. That had to have impacted software sales, if only a little.

Peter Moore once remarked that Dreamcast was actually selling pretty well by the start of 2001, around 50K units per week. It just wasn’t enough to cover the staggering losses suffered in Japan, where the console pretty much tanked. For that, you can definitely blame Sega of Japan’s bosses, who clearly learned nothing from the Saturn era and made the exact same mistakes: to few launch games, nothing in popular genres like RPGs (you’d think they’d port over Shining Force 3, Wachenroeder or Panzer Saga), an over-reliance on Virtua Fighter 3 to save the day. Sonic Adventure was rushed to market and plagued with glitches and bugs, Virtua Fighter 3 didn’t even have a proper two-player mode (or any modes at all). Honestly, if I were living in Japan in 1998-99, I wouldn’t have bothered with Dreamcast. Saturn had all the best videogames.

Another notable issue: Sega’s toxic reputation with gamers. Magazines and websites were convinced that Dreamcast was about to be dumped at any minute. “Sega’s going to quit the hardware business!” “They’re going to release a Dreamcast 2!” And can you blame gamers for feeling paranoid? After Sega CD, CDX, Menacer, Activator, Pico, Game Gear, 32X and Saturn, anyone would feel a bit skittish about buying a Sega system. The 32X especially left players feeling burned and betrayed and although it seems a bit overblown in retrospect, it caused a real and lasting grudge at the time.

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?

Here’s my own controversial pet theory: Dreamcast was never meant to last for more than a couple years. Sega was hoping to put their finances in order, repair their damaged reputation and–most importantly–find a buyer. The videogame industry was becoming too expensive and they simply didn’t have the chips to remain in the poker match. The success of Sony, the threat of Masushita and I’ll bet a million dollars they were looking for Microsoft to buy them out, and I’ll bet another million dollars that MS today wishes they made that purchase 20 years ago. You sell the Xbox in Japan under the Sega banner, with exclusive access to their vast software library? That would have been a game changer.

Leave a Reply

Your email address will not be published. Required fields are marked *