Why the Dreamcast Failed

The Sega Dreamcast is widely regarded as one of the most innovative gaming systems of all time when it launched on September 9th of 1999. Many credited the system with pioneering online gaming on home consoles. The Sega Dreamcast also had a significant hardcore following due to its lineup of classic titles that includes Shenmue, Jet Grind Radio and Skies of Arcadia.

Despite the valiant effort from Sega, the Dreamcast was discontinued after being on the market for only one and a half year. It was also the last video game system made by Sega as they eventually left the hardware business and evolved into a third-party publisher and developer for other gaming systems.

So why did the Sega Dreamcast, despite being a great video game system, failed to capture mainstream appeal? Let's take a look at a couple of factors.

Sega's Past Failures

Even before the Dreamcast, Sega had a tough time in the video game hardware business. Sega's most successful system, Genesis, only played second fiddle to the Super NES. Things only went downhill from there for Sega with the poor performances of the Sega CD, Sega 32X, Sega Saturn and finally the Sega Dreamcast. With a less than stellar reputation in the past from Sega, the Dreamcast was fighting an uphill battle from the start.

Playstation 2's Looming Launch

Even with Sega's suspect past, the Dreamcast still got a healthy amount of hype for being the first next-generation gaming console to be on the market. That is, until Sony announced the Playstation 2. The descendant of the most popular system of all time instantly overshadowed all the positive reinforcement the Dreamcast was getting. As a result, despite being on the market a full year earlier, the Sega Dreamcast did not stand a chance against the Playstation 2.

Lack of Third-Party Support

The Dreamcast would have fared much better if Sega didn't have to do it alone. Pretty much all of the Sega Dreamcast games came from Sega. Third-party publishers and developers chose to ignore the system in favor the Playstation 2. The two biggest omissions are Square Enix and Electronic Arts, which could have spur sales for the Sega Dreamcast in the East and West. Instead, both companies decided to ride another horse.

Competition from Gamecube and Xbox 360

The Sega Dreamcast was already getting destroyed in terms of sales against the Playstation 2. With stiffer competition, the Xbox and Gamecube, on the horizon, the Dreamcast had no chance at survival. So instead of continuing fighting a losing battle, Sega decided to pack up early and leave the hardware side of gaming for good to become a third-party publisher and developer.