Sega Dreamcast: The Innovative Death of Sega’s Consoles

Every generation of gaming brings innovations in hardware, software, and marketing. The next generation of gaming will be released in under a month, but gamers seem to have mixed reactions to the upcoming Playstation 5 and Xbox Series X. These consoles will bring some competition to the ninth generation of gaming, but the excitement for these consoles pales in comparison to the sixth generation.

The sixth generation of gaming is noted for DVD technology on The Playstation 2 and Xbox. It also ushered in an era of Nintendo’s tiny Gamecube Game Discs. Rarely, do we hear people talk about the GD-rom, the disc used on Sega’s Dreamcast system.

Sega’s final console often gets erased from discussions, but it does maintain a unique place in the world of gaming. Sometimes the system is viewed and attempt to undercut Sony and release a next-gen console before the competition. There’s definitely truth to this claim, and it is likely part of the system’s demise. Other times, the console is praised for its cutting-edge technology. The system was ahead of its time in many regards, and laid the groundwork for future generations of gaming.

Now, Sega’s consoles are relics of the past. The company has focused on software and lives on as a third party developer. The consoles are mere memories: regulated to nostalgia and rap lyrics. Rarely does Sega get recognition for their advancements and marketing in gaming, especially when it comes to the Dreamcast.

What Led to the Dreamcast?

In the fifth generation of gaming, Sega saw competition from two companies: Sony and Nintendo. The clear winner was Sony’s Playstation, with Nintendo coming in second. However, Sega was still a major competitor in Japan where the Saturn’s sales were slightly ahead of Nintendo. As a company, Sega needed to improve upon its North American market. This is where they saw the least impressive sales, selling only 3 million Sega Saturn systems.

This was a huge decline from their fourth generation console, the Sega Genesis, which sold over 24 million units in North America. In fact, the Saturn was almost a global failure because its overall sales were about a quarter of the Genesis’s. The only place Sega saw growth with the Saturs was in its home country of Japan. There they saw an increase of about 2 million units between generations.

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Playstation | Sega Saturn | Nintendo 64

Anyone familiar with the Saturn knows Sega did a lot to steal buzz from the Playstation. This was a time when consoles were released in Japan before hitting US shelves, so the Japanese competition began in 1994. Both consoles had a fall 1995 release date in the US, but in a surprise announcement, Sega announced they sent the Saturn to store shelves at E3 in May of 1995. To their dismay, this was not the jaw-dropping news from the conference. Sega announced the Saturn was available NOW for $399. Shortly after, Sony announce they were keeping their September release date, but the Playstation would only be $299.

The Saturn was screwed from day one. The surprise release meant retailers had very limited stock. The toy store KB Toys was so upset by their lack of supplies they vowed to never stock the Saturn. Plus, there were few games available at launch, so by the time the Saturn’s original release date rolled around, it had only sold about 80,000 units in the US.

If you think the Saturn turned its fate around, you’d be wrong. Even Sega realized this and shifted focus to the next generation.

The Dreamcast Launch

Just four years after the Japanese release of the Saturn, Sega would release the Dreamcast in 1998. Just a year later, the console would hit North American shelves. Sega used their “9.9.99” campaign to promote the Sept. 9, 1999 release date and generate buzz. This time, they wouldn’t be outsold by cheaper competition. The Dreamcast cost $199 and was released a year before any other sixth generation console.

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The launch was actually hugely successful, a fact that seems to have been forgotten with time. Within four days of its release the Dreamcast sold 372,000 units. Sega was put in the Guinness Book for World Records for the most revenue generated by an entertainment company in a 24-hour period.

North America also saw the console released with a pretty good lineup of software. The Dreamcast had 18 titles available at launch with a few titles that have withstood the test of time such as: Soul Calibur, Ready 2 Rumble, and House of the Dead 2. The line-up also included Sonic Adventure, allowing the face of Sega to be available to display the console’s 3D graphic.

By the end of 1999, over 1 million consoles were sold. In fact, this figure may have been higher if there weren’t supply constraints. By most measures, this is a strong start for a console. Even though the Dreamcast was outsold by the Nintendo 64 and Playstation in Q4 1999, these consoles were later in their life cycle, likely had holiday promotions, and certainly had elaborate software libraries.

Where the Dreamcast Innovated

As a consumer in the video game market, you expect better graphics on the next generation of gaming. Sega used a format called the GD-Rom, which had nearly double the storage capacity of a CD. This format allowed for better graphic while keeping the cost of the system lower.

In 1999, the 1.2 GB on a GD-Rom was data was plenty of storage space for games. Likely, games didn't even need more space than what was offered by a CD. When developing a new console, games won’t reach full potential at launch and the extra storage space could be an investment in the future. For Sega, the future of gaming wasn’t just in graphic, it was also online.

All Dreamcast systems were equipped with a 56K dial-up modem. Dismal by today’s standard, but revolutionary in the late 90’s. As impresive as this was, North American markets would not be able to use an online service with the Dreamcast until Sega launched their online serivce SegaNet in the September of 2000. Japanese gamers would be able to use their Dreamcast to do basic online tasks like e-mailing and web browsing at launch, but North American players could not.

SegaNet quickly amassed 400,000 player in the US and over 1.5 million worldwide, proving there was a strong market for online gaming. Sega even offered a broadband adapter for more stable gaming and to compete with other sixth generation consoles. This service showed promise, but competition from other consoles would quickly lead to its downfall.

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Dreamcast Controller

The controller also marked an attempt at innovation, with is built-in rumble and support for memory cards. They would be inserted into the tops of the controller and had a small LCD screen where users could see which files were saved on the card. Some games even featured mini games from this screen, which could be played off of your TV. While this did not become an important feature of the system, it was the beginning of a concept we would see on later consoles like the Wii U.

The Dreamcast packed a lot of features into a $199 pricetag. At first, people were interested. Early numbers were strong for Sega. Then Sony entered the sixth generation.

The Sudden End of the Dreamcast

In early 2001, after a year and a half, Sega announced they would discontinue the production of the Dreamcast. Sales were slowing, advertising costs were too expensive, and the competition was getting stiffer. Sega decided they were going to focus on third-party software sales, a concept they had entertained for years.

At this point Sega was starting to face real competition from other sixth generation consoles. The Playstation 2 has been released, the Gamecube was coming in a few months, and Microsoft announced they would enter the gaming market with the Xbox. While Microsoft would establish its footing this era, the PS2 would blow away all competition. It became the best-selling console of all time. Despite their benefits, other consoles could not compete with the PS2. The Dreamcast and Gamecube were cheaper and the Xbox would be more powerful, but Sony offered a key selling point: DVDs.

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The four major sixth generation gaming consoles

The Dreamcast tried to push boundaries, but it was antiquated when the Playstation 2 hit the shelves in 2000. Sega opted against DVD technology because it was too expensive, but Sony accepted the challenge and built the PS2 around on-the-rise DVD technology. At the turn of the millennium, DVD players were expensive and the Playstation 2 was only $299. The PS2 was considered a cheap DVD player, let alone DVD player and gaming console. This meant Sony would lose money with each PS2 sold at launch, hoping the affordability and software sales would make up for losses in the future.

Immediately upon the release of the Playstation 2 it broke any record set by the Dreamcast. Sega’s system was now antiquated, and any hope of maintaining a position in the gaming world would be trounced by the Xbox. So they ended their hardware endeavors with the Dreamcast became a software only company.

The Dreamcast’s Legacy

Despite its short life, the Sega Dreamcast is beloved by many of the gamers who did get their hands on he console. Some great games got their start on the Dreamcast, such as Soul Calibur and Crazy Taxi, and the system also has its share of hidden gems.

It’s not all about the gaming when it comes to the sales of gaming consoles. The Dreamcast may be been a generation ahead of its time, focusing on online gaming and including second-screen action. While these features weren’t full utilized in 2000, they would be celebrated at gaming advances in 2005. Sega saw that potential before other companies did. Though praised for these innovations, consumers made it clear that DVD was the technology they wanted.

The Dreamcast is really a middle-generation system, living in the space between gaming generations five and six. It packed more power than a Playstation One but less than a PS2. This forced Sega to take some risks, such as their cost-cutting measures to include GD-Roms, but it made the console compelling for people who wanted increased performance over the consoles released in 1995. This mid-generation release is currently being replicated by the Nintendo Switch. This console was launched after the failure of the Wii-U, a couple years before the Playstation 5 and Xbox Series X. Though evidence would tell us the Switch did much better than the Dreamcast did, a Dreamcast-like fate was a real possibility for Nintendo.

After Sega pulled the plug, a community formed around the Dreamcast. The console was designed in an era before piracy dictated media production. So, the Dreamcast can read CD-Rs. This did allow people to pirate Dreamcast games, but the system is also able to play independent games. For many people, the real fun of the Dreamcast arrived when Sega lost interest and indy gamers ruled the system.

In large part, the PS2 erased a lot of the history associated with the Dreamcast. When people really dig, they will see an ambitious attempt by Sega to change the path of gaming. It wasn’t as successful as they hoped, but it’s not without its merits. They identified a lot of potential gaming trends years before they ever hit the larger market. For this reason, the Dreamcast was a bit of a trailblazer; a console that was too cool for its time.

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User Analytics | Digital & Brand Marketing | Productivity … hoping to explore topics that interest me and find others with similar passions

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