Holy shit buddy, I hope you had all that ready for a while because if you wrote all of that up just like that… whoa.This is an interesting question which everyone gets wrong all the time because they just repeat what they heard without looking into it, so everyone speaks of the same 4-6 ills without realizing those weren't causes but symptoms.
Sonic 1 arguably the issue, and I'm not talking about the game, I'm talking about how SoA handled it. Because it was from there that Sega suddenly wanted to be on war footing with competition when they were not before, I've seen more and more people bring this up and they are right on further inspection, and that grew more and more each year, the Genesis success everywhere but Japan prompted the captains to take control of the ship and compete their way(SoJ). Now all of a sudden Sega was reacting, they were thinking about strategies to attract new customers yet never had the infrastructure to do it, they wanted marketing but didn't know how to do it on a competitive scale without bleeding cash, they thought if they overinvest in product and arcades, the result would cause enough novelty and hype for people to swarm to stores or waste coins in the arcades in crowds, it didn't happen, none of this had a safety net either.
TL : DR Yep, I hope this ridiculously long rant on a gaming internet forum, educates you on the matter.
And yeah, I agree with you. I think Sega just stumbled upon success with Sonic 1 thanks to Kalinske and his aggressive strategies to make the game a Mario killer and have it bundled with the console when SoJ wouldn’t. So Sega suddenly found themselves actually competing with Nintendo, and went on without a clear long-term strategy. Infighting between the US and JP branches made sure no strategy would ever be agreed upon, and when Sega went out of steam in the US, everything came tumbling down. They looked like they could keep staying winning all through 1991-1993, which admittedly was a very busy period in gaming and seemed longer than it actually was - but just as you say, in 1994 the writing was starting to appear on the wall.