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Why Did The Sega Dreamcast Fail?

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The Sega Dreamcast was a home video game console. It was released on September 9, 1999 in North America. 6 months after Sega launched the Dreamcast, Sony released its next console, the PlayStation 2, which was fierce competition to Sega’s Dreamcast. It was the end of Sega’s game console as it was the final console created and released by Sega.

So Why Did The Sega Dreamcast Fail?

When Sega Released the Dreamcast, it was intended to boost the company from their slump. Alas, the Dreamcast that was launched by Sega also became a failure because of wrong timing, previous performance and other simply better consoles on the market. 

If you would like to know more about why the Sega Dreamcast failed, you will want to keep reading this article. You can also check out this video if you do not like to read and you want to know more about exactly what killed the Dreamcast. 

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Sega Missteps

Sega improved over the expensive hardware of its Sega Saturn and designed the Dreamcast with reduced cost. Sega launched the Dreamcast with large marketing and campaigns, but the interest of people towards Sega had already declined. Sony was the new up and comer and would launch its next console, the PlayStation 2, which had great hype. 

Because of this hype, sales did not meet the expectations of Sega and they cut down the prices. Even with the cheaper prices, the company continues to face financial losses. Finally, on November 31, 2001, Sega discontinued the Dreamcast, and let it be the end of its 18 year long game console business.

Ahead Of Its Time

The Dreamcast was created with many features like internet modem and online gaming. These impressive features gave the Dreamcast strong online capabilities, which made it ahead of its time. Even though Sega released a broadband adapter, unfortunately, the internet was not at its peak time yet. The Internet was still in its developing stage, which meant that the amazing feature of the Dreamcast was rendered obsolete. The feature excited many customers, but was unable to persuade them to buy the console.

It was ironic to see that after many years, an internet connection became a crucial part of game consoles, after Sega launched Dreamcast too early and could gain nothing. Although most people do not realize this, if the Dreamcast would be rereleased today it would be widely accepted. The problem was simply that the dreamcast was so advanced that it was ahead of modern technology and therefore was not as popular as it should have been. 

The Dreamcast Launch

Sega launched its Dreamcast in North America just 6 months before the launch of PlayStation 2 by Sony. This caused a lot of damage to sales. Looking at the previous performance in Japan, Sega was expecting fruitful results in the North American market but because of this odd release date, when there was already the hype of PlayStation 2, it dramatically affected the sales.

Gamers were eagerly waiting for the update by Sony about DVD playback, more popular games, and high-quality controllers, because of which Dreamcast suffered. Because of prior releases from PlayStation, consumers thought they were better off waiting for the new console from Sony than to be disappointed with their expectations of Dreamcast. People who were not waiting, still had multiple options at a budget price like PlayStation 1 and Nintendo 64.

Simply put, Dreamcast was launched at the wrong time. Because of this mistake, it failed and the sales were low.

Era Of The DVD

During the launch of the Dreamcast, it was an early stage for DVD players. It was expensive to have a DVD player; therefore, purchasing a game console with an inbuilt DVD player at a budget price encouraged the people. 

The Dreamcast became the prey, which also led to Nintendo GameCube’s failure. They launched its rival PlayStation with an inbuilt DVD player which could store and run more heavy and high graphic games as compared to the Dreamcast. 

The Dreamcast works on the CD-ROM format. CDs would store up to 1 GB of data; on the other side, DVDs could store 4 GBs of data. This large size difference gave PlayStation 2 an edge over the Dreamcast. Similar to Microsoft’s Xbox.

Past Performance

For 11 years, Sega was into game consoles but its performance was poor. Looking at the background: The Sega CD, the 32X, the Game Gear and Sega Saturn, all were failures. For the past 11 years, Sega had launched no successful consoles in the market. Because of this, people were forgetting Sega; they were getting attracted to Sony and Microsoft, new players in the market. People had already switched to the PlayStation, so if Sega launched a new console, people did regret moving over to other systems because of its past performance. 

For the last 6 years, Sega did not have any new franchise games except Sonic, but Segas rivals were creating a lot. So Sega was not in a great position to fight with its competitors which led to the end of its console business.

Lack Of Franchise

For the last 6 years, Sega had only one major franchise game which was Sonic. It must be understood that developing the console is not the only step needed for growth. Consumers want exclusive franchises to be played on these consoles. The goal behind buying a console is to play games and if you don’t provide exciting games, then the console is of no use.

On the rival side, the PlayStation had many franchises such as Tomb Raider, Crash Bandicoot, Ocarina of Time, Resident Evil, Metal Gear, F-Zero X. Final Fantasy, Pokemon, Mario Kart 64, Golden Eye, Symphony of the Night, all of which were among the top successful games of the era. The Dreamcast launched only 4 games, out of which only one became popular.

So, the lack of franchises played a crucial role in the failure of the Sega Dreamcast.

Third-Party Support

Having third party support is an important factor for success in the gaming business. One of the easiest ways to attract customers is to provide them with new and exciting games. Being a console developer, a company can develop the first few games, but to make this flow consistent, one needs third-party support. 

For that, Sega purchased a sports game developer company, to produce arcade sports games for its consumers. Because of that decision, one of the leading sports game developers, Entertainment Arts told Sega that they would not work for the Dreamcast unless they had the exclusive rights. They wanted to have the exclusive rights for the sports game developing for Dreamcast.

Sega declined that offer though, which turned out to be unwise. EA Sports, the publisher behind NBA Live, FIFA and all other popular games was not supporting the Dreamcast which discouraged the consumers and increased the sale of its rivals, Xbox and PlayStation. This decision also led to the decline of the Dreamcast.


Sega was a popular game console brand in the 1980s but could not maintain its progress. The Dreamcast launched by Sega also became a failure because of wrong timing, previous performance and other tie-ups of Sega. Being a good quality console, it faced failure and was discontinued in 2001. It had a lifespan of only 3 years. With this, the Dreamcast was the final console of Sega and the long journey in the console business of 18 years ended.