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1UP COVER STORY | WEEK OF DECEMBER 10 | GAME OVER: DEATH AND VIDEO GAMES
A Dream Deferred: When Sega Got Out at the Right Time
Cover Story: The bittersweet story of the Dreamcast's hasty exit, and why it was probably for the greater good.
O
n January 31, 2001, Sega announced that they were ending production of their Dreamcast game system, at the time just barely two years old. After glitzy launches in North America and Europe in 1999, things were looking up for the company, which had been troubled since the end of the 16-bit generation. But Sony's PlayStation 2 had launched worldwide in 2000, and in 2001 was still causing people to trip over themselves (and each other) to buy one. Sega's rise to the top was incredibly fleeting, and many had already called the battle in favor of Sony. Sales of the Dreamcast went from 500,000 on the US launch week to 2.5 million worldwide at the end of 2000; a slow growth that price drops and bundle deals didn't fix.
In the aftermath of the discontinuation announcement, no one quite knew what to think, especially gamers. Especially Sega fans. Longtime supporters of an underdog, the Sega-obsessed of all stripes lamented the situation and wondered aloud about what could have been; if Sega had just pulled through and keep on delivering the fun and interesting games they always did.
This is not that story. This is why the Dreamcast had to die.
If you can't beat 'em...
There was much more to Sega's announcement than perceived surrender. They may have stopped the Dreamcast, but they weren't going out of business. They simultaneously confirmed that they were already transitioning into being a "platform agnostic" developer-publisher, and already had a number of games in development for their former rivals, including a home version of Virtua Fighter 4 exclusively for PlayStation 2.
Sega's shift to being a third-party game maker had a touch of irony to it, considering their well-known struggles and failures to get other companies to develop for their consoles. The Dreamcast and the Saturn before it were lacking in the kind of strong game support that Nintendo and Sony were awash in. In the Dreamcast's case, it got a couple of good software partners such as Capcom and Midway, but the other systems were populated by longtime publishers such as Electronic Arts. To Sega, EA and its sports games like Madden NFL were a linchpin during the life of the Genesis, and at the beginning it seemed the Dreamcast and its great graphics would bring in a wealth of EA games, not to mention general wealth for them. But it wasn't to be, and EA didn't even touch the Dreamcast, which fans and analysts saw as a huge crutch. Sega's own "2K" sports games got lots of love and helped them push systems in America, but critical eyes only saw a (big, lumpy) void in the shape of John Madden.
There was another software-based contributor to the Dreamcast's fading, though less publicly discussed. That was an explosion in piracy brought on by crackers breaking the Dreamcast's copy protection -- or lack thereof. Despite using a proprietary "GD-ROM" disc, Dreamcast games could be easily ripped and then burned onto a blank CD. That wasn't a new practice with game consoles, but the crackers soon figured out how to run copied games on the system without any special tricks. In other words, anyone with a CD-writing drive in their computer (which were just starting to be fairly affordable at the time) could illegally download pretty much every Dreamcast game and play it without worrying about mod chips or swap discs. This happened in 2000, the first full calendar year for the system in America and Europe, and the one where it really had to prove itself. Technically it did with a lineup of great games, but at the same time, ne'er-do-wells didn't even have to buy them, which threw a wrench in the entire "razor blade" model of the business.
'Cast and reel
Call it bad timing, bad luck, bad management, or just plain bad -- the Dreamcast just wasn't cutting it. The what-if scenarios number in the bajillions, though: could they have made it a few more years if EA was on board, or the other consoles took longer to come out, or if they pushed broadband gaming earlier, or if they just made a new Comix Zone? In terms of the games, some later third-party releases had shades of the Dreamcast spirit in them. Jason B. from the fan site Sega Bits explains, "Sega would have likely had Super Monkey Ball premiere on its system as well as Jet Set Radio Future and Crazy Taxi 3. Sonic Heroes would have been Sonic Adventure 3 instead."
The downfall wasn't entirely a situation of cause and effect. In the bigger picture, 2001 was the perfect time for Sega to stop making game consoles, because any later, and it truly would have been too late. The Consumer Electronics Show took place earlier that fateful January, where Microsoft's Bill Gates took the wrapping off the company's Xbox console, formally making their entrance in the video game industry. While Microsoft got equal parts optimism and pessimism with the Xbox, there was no doubt they could stick around and make themselves known. History has shown that the video game market usually only has up to three big competitors -- for various reasons depending on the time frame, but nonetheless establishing a steady and interesting pattern. Dreamcast was the first of a new generation, but was soon to be one of four by the time the Xbox and Nintendo GameCube arrived. And with the software and sales problems that had already befallen Sega, the prognosis was just not positive. The PlayStation 2 was by all accounts sweeping the board, and the others would be fighting hard for second place. All things considered, a Dreamcast that continued fully-supported for the rest of 2001 and beyond would likely bring a lowering of the curtain for more than just the console. Racketboy's Nick Reichert mused that, "seeing the tough work Nintendo has cut out for it now, I don't think Sega would have stood a chance if they stayed in the hardware business longer."
Sega got out at the right time -- not just because they stopped losing too much on the Dreamcast, but because if they didn't, they would almost have to stay in hardware. That sounds fine to anyone who still wishes for a "Dreamcast 2," while sounding pretty crazy to anyone else, but by bowing out before the rise of mobile games, digital distribution and all the competing services within those, Sega kept itself from moving forward and trying to stay relevant with something that would be viewed as yet another game-playing Netflix box. Not to mention that making consoles is a loss-leading practice, and even for the usually in-the-black Nintendo, they couldn't avoid losing some money on this past generation. Business is risky and full of consequence, but giving up has bigger consequences the bigger you are. A Sega that could still put itself in the console wars for at least another five years would not be riding high on great games, but more likely would have its creative soul diluted much faster than some fans claim it has, struggling to stay ahead with more licensed titles and generally rushed games intended to break even and nothing else. "Sega as a hardware manufacturer would not have been financially capable of competing with these larger-budget, 'blockbuster AAA' games that we've seen this past console cycle," said Ben B. of SEGA Bits. "It was a trend that Sega became all too big a part of with the release of Shenmue, an ambitious game which famously cost them massive of amounts of money that it never [earned] back."
Sega ages
After Sega released its first games for the PS2, Xbox and GameCube, it became clear that we didn't need a Sega console for Sega games. In a way, those new consoles were like three Dreamcasts, each bringing sequels and new properties that were as unique as what Sega was known for; not just on Dreamcast, but since the beginning. "To me, the bright side of the death of the Dreamcast was that Sega games were able to be brought over to other platforms," said Reichert. "Granted, many of them weren't great commercial successes, but for a while we saw a number of quirky games and cult classic sequels come to other platforms."
What might be one of the brightest sides of that 2001 announcement is that not every prematurely-pulled game system enjoys the kind of affection the Dreamcast gets. Its American launch is celebrated in gamer communities every September 9th, and the system still gets new games via a small circle of homebrew developers and publishers such as NG.Dev:Team making hardcore games and mass producing them in retail-like packages. Likewise, collectors recently unearthed Geist Force, a sci-fi shooter from Sega canceled before the American Dreamcast launch, and along with distributing it online, they gave it the full boxed release it could have seen.
And it's still kind of fun to think of the what-ifs. Most of the fans questioned for this article mentioned that if Sega found a way to hang in there, they could probably realize the third and final Shenmue, which is the sorest spot for anyone who saw Shenmue II's cliffhanger ending. Maybe Shenmue's progeny could have been a Dreamcast property, says Alex Riggen of Sega Addicts, "I wouldn't be surprised if a Yakuza game could have been a possibility on the Dreamcast if the system had continued to be supported."
In Sega's attempts to steadily grow, nothing's going to go perfectly.
It's been almost 12 years since the Dreamcast said goodbye, and in that time, Sega has gone through more ups and downs, including losing key talent, shuffling others around, and making more than a few ill-conceived sequels and licensed games. But a lot of that is part of the natural balance that the entire industry has been going through. In Sega's attempts to steadily grow, nothing's going to go perfectly. (They probably could have made some better Sonic games, though.)
One of the least perfect moves was a huge restructuring earlier this year that closed most of Sega's European branches and shifted the company's strategy to focus more on digital games than packaged retail ones (previously, Sega of America was refocused on digital while Europe took charge of all Western retail publishing). It wasn't so great that many people lost their jobs, but from a pure content standpoint, Sega was already doing good work in the digital space.
There are several positive things about Sega people don't even talk about, including a string of still-operating full-scale arcades in Japan; reliable successes of the Football Manager and Total War series from Europe, and a line of competitive social and mobile games in all the international markets. On some level, Sega's still doing all right, and though it's no dream scenario, it's better than not doing, or being, anything at all.
Ray Barnholt was most broken up about the fact that the Dreamcast never got at least one more game that used the fishing controller.
See Also
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Comments (34)
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Could have been worse...
Posted: userComment.createdDate by TheRequiem95
I've been a Sega fan since the days of the Master System, but I don't see how Sega could have survived past the Dreamcast days without there being some kind of Microsoft merger to keep them afloat. I miss a lot of their old franchises and all, but Sega's bread and butter came from arcade-like experiences, and so the larger scale games of today simply don't mesh well with their legacy games (See Golden Axe Beast Rider). There are still several great Sega games out there to enjoy following their exit from the hardware scene that were not mentioned in this article: Shinobi (PS2), the Sonic All-Stars Racing games, Binary Domain, Aliens Infestation (DS) and others.
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felt a nibble?
Posted: userComment.createdDate by DankPanties
Real men play Soul Calibur with the fishing controller.
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Sega Fails Due to Suicidally Bad Management
Posted: userComment.createdDate by Egglesplork
_____Like a guest star on that Teen Mother show, Sega's history of the past five years is a history of self-destructive mistakes. The hard-hitting classic franchise Streets of Rage is dead. It's so dead that Sega forced the makers of a fan-remake to close shop. They killed Phantasy Star, putting PSO games on portable consoles with screens so small you need a damned electron microscope to see the screens and tweezers to press the buttons. Virtual On games were made to be Japanese only. Panzer Dragoon Orta, Jet Set Radio Future, Sega killed those money-makers off, too. Good job, Sega!
_____Oh yeah, Sega's management has an awesome track record...of KILLING OFF IT'S TRIPLE-A PROPERTIES! The only thing Sega's got left is Sonic the Hedgehog...or was. Now that little spiky blue mammal has retreated to the 2D shovelware realm. Sega, what ARE you thinking? Are you thinking at all? To paraphrase one of America's presidents, Sega has snatched defeat from the jaws of victory. Either Sega should have waited until graduating from high school to make babies, or at least made games for systems that more people play.
_____Here's what Sega should do but probably won't--seeing as how the company is dead-set on riding a handbasket to Hell. Give the latest Phantasy Star Universe and Phantasy Star Online games the HD treatment and put them on Steam, XBLA and PSN. Take the Streets of Rage Remake, pay the makers some money, and bring it to this century with 3D polygons. Put Panzer Dragoon Orta and Jet Set Radio Future on digital download. And for goodness' sakes, stop making portable game-system shovel-ware. Better yet, stop trying to make portable games, period. The only thing mobile game-systems are good for would be strained eyesight, busted and blistered thumbs from manipulated tweezers, and having to get up all the times of night to feed the brat. Okay, less that last item, but the sentiment is the same.
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Talking about the glass being half full!
Posted: userComment.createdDate by SlackJawedYokel
Nice try to make it sound positive, the author of this article should be a politician or a salesman. Not having a Sega console is just wrong, I don't care what kind of positive spin someone puts on it!
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I miss Sega...
Posted: userComment.createdDate by Master_System
Sega didn't "get out" they"bled out". Sega was bleeding so much red ink when Dreamcast came out it wasn't even funny. I LOVE THE DREAMCAST. I grew up a Sega fan boy. Only played Sega arcade games, and only played their consoled. Wore Sega hats, shirts, the whole nine yards....I was a Sega geek. Still play my Master System, and Dreamcast, I was so depressed when they announced they were leaving the console market. It was an aweful day.
I can tell you where I was exactly when I read Shenmue 2 for Dreamcast was cancelled in the US. So now I play Nintendo. If you told me in 1986 up to Dreamcast I would play Nintendo someday, I would have said you are nuts. I figured Sony killed Dreamcast and (none of their stuff lasts to long) so I wouldn't go their. Micro$oft is a monopolizing machine that doesnt belong in this arena, (same with Sony), So I went to Nintendo, because at least they are a true video game company. But enough of that. I miss the early Sega days like you wouldn't believe. Dreamcast was truly innovative....I miss their exlcusive titles...Fantasy Zone, Space Harrier, Phantasy Star (original), and the list goes on...
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I even had a Master System!
Posted: userComment.createdDate by wwfmankind
I also still have my Dreamcast (Saturn, Genesis w/CD and 32X)... and it wasn't too long ago that my wife beat the crap outta me on "Typing of the Dead". Which is the ONLY video game I've ever gotten her to play. I really miss all those one of a kind games that you could only find on a SEGA system... like Typing of the Dead and Seaman.
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My first Sega
Posted: userComment.createdDate by ThadOchocinco
I always told my friends at the time, "the Dreamcast was the one you shoulda bought." Too bad they shot themselves in the foot with the Sega CD/32X/Saturn stuff. After those, Sega had just burned too many people. For me, the Dreamcast was the first Sega system I ever had.
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...still sad
Posted: userComment.createdDate by TimboII
I regret getting rid of my Dreamcast years back. You know what's funny about the Dreamcast though? It's probably the only system that I can honestly say you really never hear people saying it sucked...because it didn't. It was amazing and even people who never owned one still said how far it is ahead of its time it was. Maybe it was for the better Sega got out of hardware and as much as I never thought I would say this I'm glad Microsoft got into hardware because I do really enjoy my 360...but I sometimes wonder too what kind of a current gen system Sega could have made? Also now that we know what an insane success the PS2 was it's hard to say if keeping the Dreamcast alive would have been worthwhile. One last thing, being someone growing up in the 90's nothing can quite describe the feeling you got from playing a Sonic game on a Nintendo console.
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I've seen a variety of articles on the whole Dreamcast issue...
Posted: userComment.createdDate by GenesisDoes
From what I've read, I've always assumed that the intense conflict between Sega of America and Japan ultimately caused the death of the Dreamcast and Sega as a console maker.
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Peter Moore sold us out
Posted: userComment.createdDate by Sl1m_Shady
That beady eyed, fruity bastard Peter Moore sold us out. He cancelled the Dreamcast early so Xbox would have less competition, so he could get a job at Microsoft. Then the damn Gaylord cancelled Shenmue 2 for Dreamcast so he. Could sell it to Microsoft as an Xbox exclusive. He totally sabotaged Shenmue 2 American sales by delaying it a year for Xbox . He should be castrated. Dreamcast ended WAY too early . They folded in the face of sonys lies and exaggerations about their specs. All the time I was playing Yakuza 1and 2 on PS2 , I was thinking, "Damn this would have looked 10 times better on Dreamcast".-
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A bit old but...
Posted: 12/18/2012 by Aquasol
Just to point this out, Sega was in talks without Moore being around to see if MS would allow the Xbox to run DC games straight out of the box, essentially pairing up with them. They couldn't come to an agreement, but the fact that the DC used a Windows OS made it easier to port their games anyways. Moore didn't kill off the Dreamcast, Nakayama did.
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A successful Dreamcast...
Posted: userComment.createdDate by jellishot
would have probably killed the GameCube and possibly Nintendo (though their handheld business may have been enough to save them). Xbox wouldn't have been as successful either, but Microsoft was just getting its feet wet and was prepared to lose a lot of money anyway.
It's fun to imagine what would have happened. Would Nintendo have become more focused on handheld/mobile games, ala Apple? Where would Microsoft be if they didn't have Xbox to profit from while losing technology marketshare to Apple and Google? Would PS3 have been the dominant console if Nintendo and Microsoft had been considerably weakened during the previous generation, by having to contend with not only Sony and each other, but Dreamcast as well? Would Japanese game development be stronger or more stagnant? What crazy name would Sega have given their next console and would it have been a worse name than Wii?
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The Dreamcast and Shenmue...
Posted: userComment.createdDate by orient
...two of the greatest gaming tragedies. They should give Yakuza a few year's rest and make Shenmue III instead. Just hire Yu Suzuki to direct it. Do it Sega! The tech is there.
Let's not pretend Microsoft was a good replacement for Sega in the console biz, with their sloppy hardware, increasingly slim first-party software pickings and a focus that is slowly but surely veering away from games.
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Shenmue on Wii U
Posted: 01/15/2013 by Master_System
I say put the Shenmue Series on the Wii U, it would be awesome on their game pad.
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sorry vut can't wish the death of the DC
Posted: userComment.createdDate by nsonic79
despite the sound logic behind this I still can't let it slide how the DC was killed off. This system had EVERYTHING going for it, even with the shortcomings I still can't see how the death of the DC was good for us gamers. Too much of a diehard sega fan I guess, too blind to see the writing on this wall.
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The Real Reason
Posted: userComment.createdDate by Alf_Alfa
The Dreamcast died was because Sega was hemoraging money. Sega released the Sega CD with no intrest in it what so ever, then the 32X again, with no interest in it what so ever, and then its nail in the coffin.The Sega Saturn.
Sega had put in all its chips in and had bet on the Saturn and it did not do well at all. The price did not help either, and with Sega pissing off retailers about the quick release of the Saturn, Sega had really stymied the Saturns reception. After all those systems launching, and Sega losing money on everyone of them, plus the huge drop in their stocks, it was only a matter of time before investors were like...LOOK! We have to talk about how to start making this company profitable.
Then Peter Moore spoke. I remember reading an article with him a little before the Dreamcasts release and he stressed, after just about every question, that the Dreamcast had to be a grand slam and that the launch of the system would be very vital to Sega, we would later see how vital. This was why Sega was pulling out all stops for the Launch Of the Dreamcast. (I still have my Dreamcast T-Shirt and bag the system came in...and the official Dreamcast Magazine issue)
The Dreamcast WAS THE SEGA SYSTEM. It is what past systems should have been like.
Great Lineup of games upon release, and contrary to what the writer said, I think it had some great 3rd party support. Minus Squarsoft, and EA, but the 2K series was amazing and showed what the dreamcast could do with sports games, a couple of my friends bought one after playing 2K football on my system. I can honestly say that the Dreamcast system launch was the most excited I had ever been for a system launch, and still one of the best, in my opninion.
But in the end Sega just could not sell enough Dreamcasts to make up for past console mistakes...The console mistakes that tarnished Segas name, and lost a LOT of money for sega as well.
It is still the system I have the most games for (72) and the Agetec Arcade Sticks are still like butter....Love the Dreamcast.
Little Post Script Here
Me and my friends used this little Acronym S.E.G.A.S. and wanted Sega to send a little letter, with that acronym at the top apologizing to us consumers that purchased a Saturn
It stands for
S.orry to E.veryone that G.ot A. S.aturn
I bought one, but with the lack of games coming out for it, I felt really burnt....But It did eventually get one of my all-time favorite games......Panzer Dragoon Saga
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I disagree.
Posted: 12/13/2012 by jgusw
The Saturn was great and it had plenty of games. The Sega CD and 32X were bullshit, but the Saturn? It was freaking awesome. No system has as many 2d shooters & fighters like the Saturn. The Saturn had some awesome rpgs too, but sadly, many of them never made it out of Japan. IMO, it still has some of the best 2d graphics around. It's 3d graphics weren't as good as the PS, but it could pull it off well enough. The Sega Saturn is a great console. I thank Sega for it.
Thank you, Sega!
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you're both right?
Posted: 12/14/2012 by jellishot
Alf_Alfa pretty much nailed the reasons for the Dreamcast's demise. Sega just couldn't afford to keep losing money. It was really their own fault for releasing the 32X and Saturn and confusing their customers.
Sega also failed to predict the rise of 3D gaming. Saturn was a 2D powerhouse, but most didn't care because the industry was transitioning to polygonal graphics. Saturn was a boon to gamers who enjoyed shmups and capcom fighters, and it did well in Japan, but it wasn't the worldwide success the original PlayStation was.
Dreamcast paid the price. I loved the system, but it would have been difficult for it to have succeeded against PS2's prerelease hype alone, even without Xbox and GameCube further dividing the market.
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I just like defending the Saturn.
Posted: 12/14/2012 by jgusw
It's like the Saturn didn't bring great gaming to the table. The Sega CD & 32X brought nothing of great interest to gaming. Between the both of them, you'd be lucky to come up with 20 good games. And I'm sure many of those games could of been awesome if Sega would of just put them on the Saturn. At least the Saturn was a full console. The Sega CD and 32X were add-ons to the Genesis and they were poorly supported, if at all.
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One Correction
Posted: 12/14/2012 by DeputyVanHalen
2K Sports wasn't third party. Those franchises and the developer Visual Concepts were owned by Sega at the time, but sold off to Take 2 shortly after Sega went multiplatform.
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The way I
Posted: 12/28/2012 by Alf_Alfa
worded it may have sounded like I was talking about Visual Concepts as a third party, but what I was implying was that Sega, in my opinion, did not need EA because they had Visual Concepts and the 2K series.
In my opinion Sega really swung for the fences with the Dreamcast and I hate that it failed.
As far as the Saturn goes, I liked it a lot. But Sega just handled everything wrong with the Saturn. From the third party support, to the hasty launch, and the rediculous price (I think it was between $400-450) The saturn was just doomed from the beginning.
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love DC forever
Posted: userComment.createdDate by MOBIUSfuture
What happened with the DC was a traumatic experience... I mean it truly was.
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Really?
Posted: userComment.createdDate by TheInfamousJrod
This article acts as if the majority of Sega games post Dreamcast have not been mediocre at best comparitively to their games in the past. They lost a lot of talent in that transition and if the relationship between the North American office and the Japanese office hadn't been so disfunctional, they could still be making excellent games today. Instead they've let all the great franchises die through neglect or abuse. There are still a couple good games being released here and there but except maybe Yakuza do any of these games feel like Sega games?
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hold on
Posted: 12/14/2012 by lolpapa
It's not totally mediocore. They just had re-mangage and pinpoint what sells.
The only "key" talent that left, and has produced significance, was Mizuguchi with Child of Eden and Lumines. Yu Suzuki and Naka went, but have they haven't made anything of importance after their resignment.
What was profitable to Sega was...Sonic games, Phantasy Star (Online), Virtua Fighter, Virtua Tennis, Light-gun and Racing games.
They keep making those, even those alot of these Light-gun and Racing and other Arcade games stay as Arcade games (probably because previous arcade units from Sega were exactly like their Home consoles, so porting was alot easier)
It's saddening but games like Jet Set Radio, Samba de Amigo, Space Channel 5 sold horribly.
To compromise the key people of JSR and Shenmue went on to make Yakuza, a hugely profitable and critically successfull game in Japan, a goldmine for Sega, and there have 9 games since then.
The Rythum game people went on the "licenced" Hatsune Miku Vocaloid games, and recently released Rythm Thief as a one off.
JRPG's have always been part of Sega and that is still true today, 3 Valkyria Chronicles games, and those Shining and 7th Dragon that probably stay in Japan.
You still see original and fun games from Sega every once in a while. Some Arcade games, and new IP's like Binary Domain.
tl;dr the quirky stuff isn't made anymore, cause it doesn't sell.
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Agree with this...
Posted: 12/14/2012 by San_Andreas
...some of the best games Sega ever made came after they went third party.
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I got one
Posted: userComment.createdDate by homelessrook
last month from my wife for our anniversary.
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Proud to say
Posted: userComment.createdDate by Otaku_Hanzo
I am still in possession of one and about 20 games for it. Also have another one for backup and plenty of controllers and memory cards. Love my Dreamcast!
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