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Why was Sega's Dreamcast discontinued and considered a "failure"?
- Thread starter Mysterious
- Start date
dcx4610
Member
The Dreamcast was basically the Wii U done right.
It came out nearly a year before the competition, had unique features and had one of the best launch lineups in history. Unlike the Wii U, Sega took advantage of being first and really pumped out quality software for the first year.
Once the PS2, Xbox and Gamecube hit, it just wasn't enough and all of the sudden they were underpowered again.
It came out nearly a year before the competition, had unique features and had one of the best launch lineups in history. Unlike the Wii U, Sega took advantage of being first and really pumped out quality software for the first year.
Once the PS2, Xbox and Gamecube hit, it just wasn't enough and all of the sudden they were underpowered again.
Mr_Antimatter
Member
I always thought of the Dreamcast as the go to console for the best Arcade to home conversions.
The problem was, Arcades were dying as a breed, so there was less and less to look forward to converting. Not to mention, arcade games were not known for long playtimes or content.
Outside of that, only a few games really seemed to catch my eye. RE:CV, blue stinger, SA, Grandia 2, Space Channel 5, etc.
Toss in the likes of DOA2: HC compared to DoA2, as well as the greater dev support ffor Sony, the upcoming GCN and Xbox, and well, It was curtains for the DC fairly early.
The problem was, Arcades were dying as a breed, so there was less and less to look forward to converting. Not to mention, arcade games were not known for long playtimes or content.
Outside of that, only a few games really seemed to catch my eye. RE:CV, blue stinger, SA, Grandia 2, Space Channel 5, etc.
Toss in the likes of DOA2: HC compared to DoA2, as well as the greater dev support ffor Sony, the upcoming GCN and Xbox, and well, It was curtains for the DC fairly early.
mr teaspoon
Member
This. Dreamcast remains my favorite system ever. The times I had with that thing....I'll never forget the first time I logged onto PSO and saw a lobby full of real players moving around and communicating in real time.
sixteen-bit
Member
FWIW, DC has a 2 million+ selling game.
The lack of DVD drive really hurt when the Xbox/PS2 were on the horizon. I don't know about elsewhere, but here in the UK there was a DC bundle that included a separate DVD player to try and mitigate lost sales before the end - which underlines how significant an issue it was.
Aquamarine
Member
Dreamcast:
FY 1999 (4 months, one territory) - 0.9 million consoles shipped
FY 2000 - 5.5 million consoles shipped
FY 2001 - 8.2 million consoles shipped
FY 2002 - ~9.2 million consoles shipped
Wii U:
Q3 FY 2013 (1 month) - 3.06 million consoles shipped
FY 2013 (4 months, worldwide) - 3.45 million consoles shipped
The Wii U needs to ship 2 million consoles between April 2013 and March 2014 to bypass Dreamcast standards.
I think it will somehow manage.
...I know you probably meant "software-wise"...I'm just being silly ;-)
suddenlyissoon
Member
It was far too easy to pirate games and they couldn't do anything about it.
Well
1) Sega was broke. They lost a lot of mind share going from the high of the genesis to the failure of the sega cd / 32x and right into the Saturn.
2) The dreamcast was hacked and anyone could copy games for it. I knew people with a full library of games that they paid $50 bucks for in china town
3) People believed the hype about the ps2 and waited for it dispite it being more expensive and a year late and launched with no compelling games.
Those 3 thigns broke the camel's back
1) Sega was broke. They lost a lot of mind share going from the high of the genesis to the failure of the sega cd / 32x and right into the Saturn.
2) The dreamcast was hacked and anyone could copy games for it. I knew people with a full library of games that they paid $50 bucks for in china town
3) People believed the hype about the ps2 and waited for it dispite it being more expensive and a year late and launched with no compelling games.
Those 3 thigns broke the camel's back
captmcblack
Member
This was Sega's magnum opus, as far as I'm concerned.
The DC was the first time that I felt that I had, unquestionably, the best hardware in the game without compromise - as good as any PC, as any console, or any arcade machine that was out at the time. Sega's output during the DC era was awesome as well. Even EA being absent was irrelevant, because Sega Sports was killing it back then.
I maintain that if this thing had a DVD drive, all bullet points in opposition to DC would've been moot. I know the thing was hacked/pirated to kingdom come, but nothing worse than the PS1 and N64 at the time...really, Sega's years of financial failings during the DC era and years of eroded mindshare in the post-Genesis era killed it.
The DC was the first time that I felt that I had, unquestionably, the best hardware in the game without compromise - as good as any PC, as any console, or any arcade machine that was out at the time. Sega's output during the DC era was awesome as well. Even EA being absent was irrelevant, because Sega Sports was killing it back then.
I maintain that if this thing had a DVD drive, all bullet points in opposition to DC would've been moot. I know the thing was hacked/pirated to kingdom come, but nothing worse than the PS1 and N64 at the time...really, Sega's years of financial failings during the DC era and years of eroded mindshare in the post-Genesis era killed it.
Yeah, but it's one of the few salute gifs I like.
U know in italian sega means fap right?
I was under the impression that N64 piracy was pretty much a non-issue :O
A Black Falcon
Member
Very nice numbers to know. I don't see much of an impact there of piracy on the DC...
Once again, there are several reasons why you are wrong. First, the fact that the PS1 and PS2 also had massive amounts of piracy, but did great, should show how piracy had nothing to do with the DC's failure. This applies to the DS as well.
Second, most people in 1999-2001 did not have cable internet. There's a reason that the DC had only a phone modem in it, and that the cable modem for it is so, so rare -- few people had cable during the DC's life. It takes a long time to download a game on 56k. Most people didn't do it. If you think that a significant percentage of the DC's userbase had cable internet, you are wrong.
And third, you don't need a mod chip to pirate games on the PS1. All you need is a system with a parallel port on it and a Gameshark. It's extremely easy. Plus you can copy from a legit disc to a backup; with Dreamcast you have to download the copy. That makes the PS1 even easier to copy games for, particularly considering the internet speeds most people had then. Lots of people copied PS1 games. Dreamcast? That was a bit more rare.
No, that was because it was a juggernaut. And also because DC software sales weren't good enough, but that was mostly because of somewhat slow hardware sales, not because of piracy. The number one reason for them though was because of the PS2 hype, I think. Remember how crazy it was?
Japanese third parties, of course, were ignoring the DC because of how terribly the system had sold in Japan.
They lost money for five years, not three years. But otherwise yeah, this is true.
No, it's because they mismanaged the 32X, Saturn, and Dreamcast, all one after another. Sega would not have gone under because of one failed console, they could survive that. You see that from those Saturn numbers -- the system's failure is somewhat covered up thanks to continuing Genesis/GG sales. What Sega couldn't survive was multiple major failures in a row. And that's what happened.
I think that "without the crutch of 16-bit gen system sales" is the key phrase, myself. I mean, unless you have proof that Sega lost more money on the Dreamcast than the Saturn, I think that both systems did similarly badly. The difference was that Sega didn't have other things holding up their finances anymore in the DC era, since their successful businesses (Genesis, arcades, and such) had faded or were gone. And also of course there was the problem of having two straight disastrously failed consoles; Sega didn't have the money to survive multiple disasters in a row.
Looks like a full quarter of Sega's FY2000 losses come from the fading arcade business, and I imagine that things weren't better the years after that. That's a pretty big impact! 12 billion to 2 billion... pretty catastrophic when the arcade business had always been Sega's biggest moneymaker, I believe.Not even CLOSE to the amount of impact that the Dreamcast had on the system.
The most dramatic impact is FY 1999 - FY 2000:
Arcade Sales + Operations:
FY 1999:
~12.7 billion yen operating profit
(contributed positively to 2.088 billion yen operating profit)
FY 2000:
~2.0 billion yen operating profit
(contributed positively to a ~40 billion operating LOSS)
The YOY discrepancy here (contributing to that ~40 billion operating loss) is around 10.7 billion yen. FY 2001 contributed much more positively to the bottom line.
If these arguments are somehow incoherent, please forgive me...it's 3:41 AM where I am and I might be delirious from lack of sleep.
A Black Falcon
Member
Yeah, didn't they spend so much on Shenmue that they would have had to sell 3 or 4 copies to every person who owned a Dreamcast to make back the cost, or something like that?
Iacobellis
Junior Member
Gaming seemed so interesting in the 90's into early 2000's. Very Japanese-focused.
IdreamofHIME
Member
Similar but different. EA is not the mammoth it was then, at the turn of the millennium it was an uncontrollable beast. Activision and Ubisoft were nothing compared to EA.
Karma's a bitch though and EA got knocked down quite a bit that let Acti overtake them and Ubi come up behind them.
Unless I live in Japan why should I care about their launch line up. All I care is what I was able to get day one in the US. Which was the greatest launch line up in the history of gaming that will never be touched.
The Dreamcast was a failure business wise sure. As a gamer it was one of the best systems I ever bought well worth my 199.99. Never seen a system have so many great games in such a short period of time. It was a golden age of sorts Sega was on a roll creatively on the Dreamcast.
Speaking of old consoles, I was surprised to know that N64 sold more than PS1 in its beginning in the U.S. I found a press release saying that N64 outsold PS1 for 8 straight months on U.S. since launch.
PS1 always stayed ahead in installed base, but the N64 started much stronger than I imagined and in the second half of 1997, began to lose momentum.
PS1 always stayed ahead in installed base, but the N64 started much stronger than I imagined and in the second half of 1997, began to lose momentum.
Ahh that makes more sense.I was really confused by those numbers because my first impression was that those add-ons were a healthy investment. Yet when presented with solid revenue records I didn't see how I could argue against what Sega did during that time. Residual sles from their best selling console and handheld masking their losses puts everything into better focus.
Tatsumaki Senpuukyaku!
Member
It always suprises me that the saturn outsold the n64 lifetime in japan
ZombiePlatypus
Member
Dreamcast did nearly everything right. It's an amazing console that offered so much for its time. Sony just had a ridiculous amount of hype and momentum with the PS2, and Dreamcast had the burden of inherited bad-blood from Saturn and 32x/crazy Sega add-ons.
That's too.
Saturn started really strong in Japan, outselling PS1. In early 1997 came FF VII and the Saturn died.
Aquamarine
Member
Firstly, I want to thank you for your thoughtful replies and your contribution to intellectual discourse. Wonderful posts.
Secondly, here is the full spectrum of revenue / profit within Sega's arcade segments:
Sega Enterprises
Arcade Sector (Sales + Operations)
Net sales + Operating Profit
Sega CD / 32X / Genesis / Saturn / Dreamcast / Post-Dreamcast Eras
FY 1992:
Revenue: 77 billion yen
FY 1993:
Revenue: 117 billion yen
FY 1994:
Revenue: 114 billion yen
FY 1995:
Revenue: 135 billion yen
FY 1996:
Revenue: 167 billion yen
FY 1997:
Revenue: 186 billion yen
FY 1998:
Operating Income: 22.236 billion yen
Revenue: 218.470 billion yen
FY 1999:
Operating Income: 12.730 billion yen
Revenue: 182.518 billion yen
FY 2000:
Operating Income: 1.938 billion yen
Revenue: 153.131 billion yen
FY 2001:
Operating Income: 17.876 billion yen
Revenue: 136.882 billion yen
FY 2002:
Operating Income: 10.071 billion yen
Revenue: 141.183 billion yen
FY 2003:
Operating Income: 18.942 billion yen
Revenue: 145.136 billion yen
FY 2004:
Operating Income: 18.156 billion yen
Revenue: 144.729 billion yen
(Sega + Sammy Merger)
As you can see, Sega was sufficiently able to stabilize Arcade profits despite the massive drop from FY 1999 - FY 2000.
Let's see.
DC failed to sell at a good enough rate in Japan and Europe.
Sega still had faith that if DC could get successful enough in America it could sustain the company.
They slashed the price from US$ 199 to US$ 149 in August 2000.
After a disappointing holiday season in US and with huge mounting losses Sega decide to quit the business.
And that's before the stronger rivals had flexed their muscles.
With more than 2 million unsold inventory they decided to cut the price first to US$ 99, soon after to US$75 and finally at US$ 49 in mid 2001.
So yes, Dreamcast was a failure.
Brainiac 8
Member
The one/two punch of the Saturn/Dreamcast sank the company.
I feel it's one of the greatest consoles in history, but that doesn't mean it made Sega any money...cause it really didn't.
I feel it's one of the greatest consoles in history, but that doesn't mean it made Sega any money...cause it really didn't.
Just to be clear, the extraordinary losses Sega wrote down in March 1998 was related to 40 billion yen losses accumulated by Sega of America Inc to handle the Saturn business.
http://m.gamespot.com/news/sega-news-from-japan-2462352
MrCunningham
Member
I would say that most Japanese games were still at the forefront of sales, but there was still a large presence of Western games on all three consoles during the PS1, N64 and Dreamcast era.
Sony still had Naughty Dog, Core and other UK developers like Psygnosis. Rareware carried a lot of sales on the N64, and was only really second to Nintendo in cartridge sales (and yeah, I do realize that Nintendo published all Rare games except for Conker) . Sega was probably the most Japanese centric of the bunch at that time, though they did have Visual Concepts for sports games, which helped carry the system in the US to some extent.
But most of the best Westren made games were still on PC at that time, and it was Microsoft who really bridged that gap from PC's to home consoles. That really pushed a lot of PC developers over to the console space and this is where we really started seeing a shift from Japanese software sales to Western ones in the non-Japanese markets.
yeah, this is very true. Dreamcast games were larger than PS1 games on average and that was a major factor to why people didn't pirate as much as you would like to believe on that that console. Me personally, I didn't have cable internet for the first time until around 2002, I would think.
It's funny that EA was one of the developers that helped propel the Genesis/ Mega Drive into being a major seller with franchises like Madden and Fifa, but probably also hurt the Dreamcast's chances, by not developing games for that console at all.
You could say that EA was a major contributor to both Sega's success and failure as a hardware manufacturer.
Aquamarine
Member
Sega Enterprises wrote off Sega of America's losses to dispose inventories, to "improve asset quality," and to prepare for the launch of the Sega Dreamcast.
I guess "Dreamcast preparation" would have been a better term to use than "Dreamcast production."
Cymbal Head
Banned
I think this covers the majority of the posters blaming piracy. Here's my anecdotal experience: two of my closest friends and I were all Dreamcast fiends. We probably bought dozens of games each during the console's lifespan, even before the deep discounts that came with liquidation. Maybe it was consumers like us who were responsible for that respectable tie ratio even in the face of piracy.
In reality, by the time of the DC launch, SEGA:
a) had squandered consumer goodwill with the Genesis addons and Saturn mismanagement
b) had been digging themselves a nice financial hole, and
c) had to compete for mindshare with a console that hadn't even launched yet.
It seems like those were the major factors in the Dreamcast's failure.
I assure you the downfall from PC Engine to PC-FX (with the useless SuperGrafx in between) is more tragecomedic.
Those were losses accumulated by SoA through the Saturn years.
More than "to prepare" for a new system, they were caused by the underwhelming Saturn sales in US (less than 2 million Saturn sold) and wrote down by the main company at a later time.
I agree with you that DC was a financial disaster though.
Aquamarine
Member
I'm just regurgitating Sega's official justification behind the write down of the losses.
Yes, part of the losses were Sega of America's debt from the Sega Saturn. But there was definitely more to the picture than just existing debt...according to Sega, the main justification for the losses was for the reasons I described above (disposal of inventories, asset quality, Dreamcast launch preparation).
IrishNinja
Member
im late here, glad black falcon addressed this though!
likewise, falcon wonderfully addressed this but id love to see stumps reply if he swings back around
they actually did with a later revision, but you're likely not reading this, or any other posts here
Firstly, I want to thank you for your thoughtful replies and your contribution to intellectual discourse. Wonderful posts.
Secondly, here is the full spectrum of revenue / profit within Sega's arcade segments:
...
As you can see, Sega was sufficiently able to stabilize Arcade profits despite the massive drop from FY 1999 - FY 2000.
i'd like to 2nd your thanks to falcon & add one for you as well aqua, most helpful & i'm curious where you're getting the #'s from, they really do ground this discussion in a way we lacked at the time of the system's demise.
A Black Falcon
Member
Yeah, the residual sales were key. The Genesis was a quite successful console in Europe and the Americas.
I know there's a thread for this now, but yeah, the N64 started off well, quite unlike the PS1 or, worse, Saturn. Mediocre sales were more than good enough to put Sony far ahead of Sega, unfortunately...
You should care about how awful the Dreamcast's Japanese launch was because a bad launch leaves a lasting bad impression. Think of the Saturn in the US, where everyone making a list of Sega's mistakes always starts with the $400 price and "it's available now" launch. By the end of the year Sega had a better lineup, it was in stores, and the price was down, but the bad impression stuck. In Japan, the DC had very few games at first, limited supply, etc. It was not good. By the time the games finally started coming, a lot of people had moved on to waiting for the PS2... Sega failed to bring over much of their fading Japanese Saturn userbase to the DC. A better launch probably wouldn't have turned that all around, but the decision to rush it out for Christmas ['98], even if they didn't have many systems to sell and had no must-have games yet (Virtua Fighter 3tb wasn't it, even in Japan), was perhaps a mistake. I can see why they did it, though; it gets press, attention, and sales dollars, after all. I don't know if they had a good option... they were kind of stuck, given their terrible financial state. But maybe wait a few months, if they could... sure they'd miss Christmas, but to avoid a launch that poor... maybe? I'm not sure.
Revenue is the amount they got in, and income is the amount they actually made, right? Not having income for the earlier years is a problem, because that'd quite possibly be the more profitable part for arcades, yes? Otherwise though, this obviously shows that Sega was good at making a profit from their Japanese arcades at least some of the time, even while arcades everywhere else had pretty much ceased to exist by the end of the '90s.Firstly, I want to thank you for your thoughtful replies and your contribution to intellectual discourse. Wonderful posts.
Secondly, here is the full spectrum of revenue / profit within Sega's arcade segments:
Sega Enterprises
Arcade Sector (Sales + Operations)
Net sales + Operating Profit
Sega CD / 32X / Genesis / Saturn / Dreamcast / Post-Dreamcast Eras
FY 1992:
Revenue: 77 billion yen
FY 1993:
Revenue: 117 billion yen
FY 1994:
Revenue: 114 billion yen
FY 1995:
Revenue: 135 billion yen
FY 1996:
Revenue: 167 billion yen
FY 1997:
Revenue: 186 billion yen
FY 1998:
Operating Income: 22.236 billion yen
Revenue: 218.470 billion yen
FY 1999:
Operating Income: 12.730 billion yen
Revenue: 182.518 billion yen
FY 2000:
Operating Income: 1.938 billion yen
Revenue: 153.131 billion yen
FY 2001:
Operating Income: 17.876 billion yen
Revenue: 136.882 billion yen
FY 2002:
Operating Income: 10.071 billion yen
Revenue: 141.183 billion yen
FY 2003:
Operating Income: 18.942 billion yen
Revenue: 145.136 billion yen
FY 2004:
Operating Income: 18.156 billion yen
Revenue: 144.729 billion yen
(Sega + Sammy Merger)
As you can see, Sega was sufficiently able to stabilize Arcade profits despite the massive drop from FY 1999 - FY 2000.
Sega of America sold maybe a tenth as many Saturns as they had Genesises plus Sega CDs and 32Xes. Actually, maybe less than a tenth. US Saturn sales were what, 1.5-2.5 million? Those are similar to the US Sega CD numbers, never mind the Genesis. Sega of America shut down most of their internal development teams, downsized, etc, etc, but still, there were going to be some major losses as a result of that failure. You can't see your sales collapse that badly without repercussions...
You must be kidding. The dreamcast had probably the most diverse and original lineup I've seen for its short life span. Maybe late era ps2 produced some interesting original games because it became so successful but for a system that really only lasted 3 years the dreamcast was chock full or fantastic new series. I can't say the dreamcast is the best system ever as some people have, but what I can say is I got more enjoyment out of those 3 years than I did pretty much any other systems 3 years. The amazing thing about is that is was the first 3 years, usually you see waves of great games after a system sells massive quantities and developers get a chance to really max out a systems strengths. I really loved sega even more than Nintendo back then, it seemed like Nintendo would release really fantastic AAA games but only around 4 top level ones a year. Sega on the other hand felt like they were releasing a new AA title ever month if that makes sense.