Why did the Dreamcast fail?

  • The PlayStation 2 destroyed it!
  • Sega was loosing money on it.
  • Developers were wary of it.
  • It didn't have enough exlcusives.
  • It was ahead of its time.
  • It had only one analog stick on the controller.

The short answer is cost. The console was too expensive to produce. Sony was able to source components less expensively. They were driven into a price war when they were already loosing money on each console. It was a great console but it wasn't bringing in enough money to offset the cost. There were other reasons but this is the main answer to the question, "Why did the Dreamcast fail?".

Dreamcast vs PS2

If you were ever a fan of Sega at all, back in the day --- whether it was the Sega Genesis, the Sega Dreamcast, or even some of the classic Sega characters, all in all, then you likely know what this question is asking. Indeed, we all remember the very short rise, and even shorter fall, of the original Sega Dreamcast, despite how well it seemed to be doing as a gaming console. I mean, back in the day (and now, too), people loved Sonic the Hedgehog and his friends. Many were hoping to see beloved characters like this blue hedgehog, and all his buddies, in many more games to come….that were anticipated for the seemingly ‘bright’ future that was ahead for the Dreamcast.  

A Turn for the Worst

But as we know, things did instead take a turn in the other direction --- in fact, it was a full 360 that caught every fan off guard, and even a few new players as well who were not as hardcore. And even several years after the tragedy of disappointment that ensued, we still tend to ask ourselves that very same question : Why did the Dreamcast fail? There was plenty of speculation floating around, in addition to some fact - based statements and testimonies by actual Sega developers of the time, but it still seems a bit shallow, like the issue was never fully addressed or ‘gotten to the bottom of’ as a whole…..

What we do now, at this later point, are a few things we did not know then, looking back in retrospect. The first is that it had only been on the market for about two years. It officially ‘stopped production’ in 2001, just as it said it would (despite many prayers, petition letters and other feedback from thousands of fans wishing otherwise, some who even held onto hope and believed Sega had something else up its sleeves….or was simply going to “give in” and change its mind on the matter before then). This, indeed, was probably the shortest - lived gaming console of all time. 

Tough Development on Previous Consoles

Furthermore, Sega corporate executive Tadashi Takezaki has even stated, in his own words, the following : 

“Developing for the Saturn and its two CPUs was difficult enough in itself, but the development environment was also chided for being too lacking. So we fully fleshed out our libraries to make development easier. Even today, the Dreamcast gets a lot of praise for its dev environment.” 

It did seem, after all, like things were going so well, even on the cusp of new progress altogether, with a revolutionary breakthrough in future gaming on its way. And if you want more evidence of that, take a look at this. Mr. Takezaki further states:

“We did our best to make the console approachable to a mass audience….”

Sega corporate

Were their efforts just vain, then, not truly living up to all that was expected, even all that was invested into? That only raises further questions. And the tougher part of the matter would be that those in Sega corporate leadership, at the time, also kept a tight lid on things...either, perhaps, because they did not know if things would change in the future (and the dreamcast or a newer sequel console of it would be coming back) or if a hard hit for the company that was to be kept out of the public eye. I think for the most part, some of the managers in development, design and manufacturing themselves did not even know the answer as to when --- or even if -- the Dreamcast would ever be heard of again. And it’s tough to be in such a position and speculate --- if, under the watchful eye of the entertainment media and press, you ‘speculate’, ‘venture’, or ‘guess’, rumors get started….and you could face revocation of privileges, including those of your own employment with the company, and potentially even court charges per being in violation of an NDA (if one was in effect, which is highly likely, given the nature of the industry at the time). 

EA Sports

There was also a potential negotiation agreement between Sega and EA Sports, at the time, which went south. In essence, EA Sports offered to include some of its top - selling games for the Dreamcast if Sega would simply grant them exclusive control over all sports titles for the console, meaning Sega would transfer full creative control rights to them and not be able to sell sports games on the Dreamcast that were made by any other sports game developer. This was a hard one to decide upon, and say ‘yes’ to, especially after Sega had just bought out Visual Concepts. So Sega decided to stick with its original deal ; Visual Concepts, by the way, is also a top sports game developer that has produced many popular NBA games, in particular, that carry a high level of professionalism in the way they’re made. 

Content was Lacking

Some of the most popular titles from Visual Concepts include the NBA 2K games like 2K14 - 2K19, one for each year, respectively. There was another fact to consider, and it was this : Sega was not in the best place, at the time this all went down, to be honest. Sonic the Hedgehog, for example, its top - selling gaming characters, had not had a successful hit in about six years ; the last Sonic titles that came out were doing terrible and simply lacked what some of the original Sonic games had. And with the amazing success that Nintendo and Sony were having, at that time, Sega kind of took another hit and fell to the wayside just a bit.

Too Much Competition

And on top of all this, PC games were also becoming a thing. At least, they were high in the conception phase, and there was much development and planning around them. A few had already been successful. And it seems like PCs, Nintendo consoles, and Sony consoles were truly exploding, so where would that leave Sega? It was very hard to keep up.