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Why was Sega's Dreamcast discontinued and considered a "failure"?
- Thread starter Mysterious
- Start date
sechsterangriff
Member
No. EA refused to support it because they wanted sports games exclusivity. But Bernie Stolar had already made an investment in Visual Concepts (now 2KGames) and refused the deal.
A Black Falcon
Member
If the Saturn had been a good platform for EA, and they'd made money on it and it'd been successful, do you seriously think that EA would have tried to force exclusivity?
No, of course they wouldn't. They didn't do that with the Gamecube or PS2, after all. It wasn't just because they thought they could force Sega into it, it was because while EA had been hugely successful on Genesis, Saturn hadn't gone well, and they were kind of looking for excuses to not support Sega anymore, I think. Or at least, to only bother if Sega would give them a VERY good deal.
Synth_floyd
Banned
Shame is that Dreamcast would've succeeded if Sega didn't botch the Sega CD, 32X and Saturn years prior to its launch. The loss of money and credibility, both in gamers and developers minds, seems to have largely sealed the fate of the DC from the beginning.
That's not true. Dreamcast definitely had DRM. The discs were (and still are) basically unreadable. Hackers had to find an exploit in Phantasy Star Online in order to trick the Dreamcast into broadcasting the contents of a GDROM out through the modem to a waiting server (funny enough, hackers used the exact same trick on the GameCube's port of PSO to dump the undumpable GameCube disks, so hackers really loved PSO), and even then the pirated game couldn't be played on a Dreamcast. They needed to find a weakness in the Dreamcast's security to do that, and they eventually found one in it's ability to play multimedia-enhanced CDs.
The pirates needed a specialized "boot disk" to pretend to be an enhanced CD so that it could break the security and then allow a burned disk to run. And even after all that, Dreamcast games were too big to be burned. They needed to be hacked and chopped until they somehow fit on a CD. The DC pirate industry was entirely reliant on individual "scene releases", because there was no way it could ever play clean rips. Once the boot disk was out in the wild, the pirate groups patched their butchered games onto copies of the boot disk's hacking software to create "self booting" games.
The Dreamcast was dead from other causes long before the self-booting piracy wave hit. And guess what? Sega actually came out with a "revision 2" of the Dreamcast which banned multimedia CDs, effectively closing the piracy hole. Piracy on Dreamcast was finished unless it found a new weakness. And even if they found a new hole, all of those existing butchered self-booting scene releases on the internet were made entirely useless by the closing of that hole. If the pirates somehow found a new hole, the progress of the scene releases and entire distribution would have to start all over again from scratch, and you would have two incompatible piracy scenes on the DC (if the pirates were lucky), and a lot of pirate users bitching about pirate release groups not catering to their own specific needs. If piracy had somehow survived, it would've gotten ugly. The problem was, store shelves were still mostly full of launch consoles, all with the same exploit available. All clean and tidy.
College was the hotbed of DC piracy, not the norm. College had stable, fast internet while the rest of the world had trouble downloading 1GB through dial-up. And trying to host massive illegal files was burning through hosts like trying to keep a fireplace running with newspaper, so you needed to know people who knew where to find them since the most recent good source went down. College kids were the perfect people to know someone who knew somewhere else to look.
s_mirage
Member
I'd argue that putting the cash into marketing was a good idea. Putting it all into sponsoring football teams and "trendy" adverts advocating playing online, when they had no online games, wasn't so good.
Only at first and even then that wasn't exactly a barrier to entry.
IrishNinja
Member
ya'll still talkin bout piracy eh
yeah, i recall seeing another video about DVD taking off in japan as well.
and yeah you kinda described where i was around the Saturn era: i'd invested too much into sega stuff that wasn't supported, and nothing about that price/lineup looked right for me. which is why it was so terrible when they fixed both of those things for the DC, but not many seemed to want to give them another chance...granted, there was a lot going on in gaming at the time, but still tragic
kind've a broad assumption to make, no? just because people didn't post on OG GAF, they weren't on the ground floor for that?
this question is pretty terrible
never saw that one, but stateside i recall an MTV special thing (?) about Space Channel 5...ambitious, but i cant imagine that ever paid off
yeah, this (and with PS1 as well) was entirely my experience at the time...it was rampant in the dorms & nearby comic/etc shops, but if i went back to my old neighborhood, there was just TRU
yeah, i recall seeing another video about DVD taking off in japan as well.
and yeah you kinda described where i was around the Saturn era: i'd invested too much into sega stuff that wasn't supported, and nothing about that price/lineup looked right for me. which is why it was so terrible when they fixed both of those things for the DC, but not many seemed to want to give them another chance...granted, there was a lot going on in gaming at the time, but still tragic
kind've a broad assumption to make, no? just because people didn't post on OG GAF, they weren't on the ground floor for that?
this question is pretty terrible
never saw that one, but stateside i recall an MTV special thing (?) about Space Channel 5...ambitious, but i cant imagine that ever paid off
yeah, this (and with PS1 as well) was entirely my experience at the time...it was rampant in the dorms & nearby comic/etc shops, but if i went back to my old neighborhood, there was just TRU
It's existence is required in any discussion of the DC "not having any DRM", and it existed in every self-booting game. It was absolutely effective in breaking DC's DRM, and then it was killed off by a hardware revision which closed it's entire avenue of attack (too late for anyone to notice or care).
Probably using modified CD drives or something. I remember the GameCube had that too. I just remember the PSO hack as the first dumping tool that became public knowledge, and not a guarded secret of a scene release group.
I just can't imagine that pirating on the Dreamcast could have been that common, at least given the state of technology available in the late 90's. Back then my brothers and I saved up and were one of the few kids at high school who had a CD burner. Finding reliable information and instructions on the internet was difficult at the time. And gamers back then were younger than today (and hence, not as knowledgeable about how to pirate games). Most of the first gamers who were born in the 80's were only teenagers by the time of the Dreamcast, and probably not tech savvy enough to pirate games, at least from what I remember of PC technology back on CRT monitors, my Compaq Presario, and Windows 98.
encephalon
Member
What was the purpose of having competing regional branches, anyway?
Aquamarine
Member
Well yeah, it's self-explanatory that the Saturn did extremely poorly and negatively contributed to Sega's financials. That's not what I'm denying.
What I'm trying to say is that ultimately, it was during the Dreamcast's time in the marketplace, without the crutch of 16-bit gen system sales, that caused the company to post massive FY losses.
The key phrase here is "buried in debt"---only during the Dreamcast's tenure did we see that happen (since Sega spent 42.8 billion yen during FY 1998 in special losses for Dreamcast production), EVEN IF the Saturn had built up the requisites for Dreamcast to accrue a bunch of debt.
Dreamcast didn't stave off any of those problems...it just exacerbated them.
If we had better documentation of Genesis / 32X / CD sales curves, we could get a better picture on how Saturn losses in the Consumer Products division were "cushioned" by their success.
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.
It's incredible how many times I've heard people say this.
ArcaneFreeze
Member
Even with Nintendo's recent losses they are FAR from the financial trouble that Sega was in during the DC era. The WiiU could completely bomb the rest of this gen and while it would hurt them they'd still be in a better financial position than Sega was back then. They're just sitting on cash its not even funny. Though atleast they're doing something with it now with that new development building opening up this year and talks of them hiring upwards 1500+ new developers, it'll be interesting to see what they do.
Dreamcast piracy happened long before the release of Phantasy Star Online. I pretty specifically remember using a boot disc to play my imported copy of Jet Set Radio - I wouldn't have even ordered the game if there wasn't a way to defeat region locks on the system. Bootable discs came not long after that.
A Black Falcon
Member
They went through a security hole in the audio CD section of the system.
MrCunningham
Member
Sega also pissed away a lot of money in the R&D department developing the successor to the Dreamcast. They had multiple consoles in development with different partners at some point or another. They worked with Nvidia early on with the NV2 chip for a proposed Sega Saturn 2, which never materialized. Sega of America also worked with 3DFX on the BlackBelt console. Which was squashed in favor for Katana that was being developed at the exact same time in Japan by SOJ, NEC and Hitachi and later became the Dreamcast. This actually breached a contract that Sega had with 3DFX, and something they had to settle out of court and probably pay a nice amount of compensation for all the time and money 3DFX spent on developing essentially nothing.
Sega effectively burned whatever bridge they had with Nvidia and contributed to killing 3DFX in the process while developing this console. Which is odd because Nvidia essentially bought out the remains of 3DFX later on.
Sega was burning away a lot on R&D projects behind the scenes, from what I can gather and it only contributed to their massive debts.
I got one for $200AUD not all long after launch. It was crazy, I remember seeing the sign in the windows of EB and jumped at it. Got a heap of games too - Blue Stinger, Sonic Adventure, Metropolis Street Racer, Jet Set Radio all on my paltry teenager wage. Good times...Best failure ever. Xbox launch failure in Australia was pretty sweet too, $200AUD off 2 months after launch.
The Spoony Hou
Member
Peter Moore killed it because he's an asshole.
Or maybe he knew he was going to MS after that.
Or maybe he knew he was going to MS after that.
MrCunningham
Member
I remember paying something like $199.99 Canadian dollars for my Dreamcast and it came with a $100 mail in rebate. The best part was that after I received my $100.00 rebate in the mail from Sega, they sent me another $100.00 rebate a few days after that. I guess they screwed up somewhere and sent me back $200.00 by mistake. I essentially got my Dreamcast for free (minus taxes) and spent my rebates on games. It was the best damn deal for a console ever!
Illithid Dude
Member
I think the first couple years of the OG Xbox yielded some amazing and creative first party exclusives easily on par with what the Dreamcast put out (though mostly because many where sequels to Dreamcast exclusives).
Rising_Hei
Member
In one word: Piracy
SamuelSupreme
Banned
I thought it was because of Shenmue
I got one a few weeks after launch for about $300. The salesman at the store threw in 3 free games because he was so happy someone was buying a console. I think the Dreamcast had been on sale for over a year before the Australian launch. I believe it was about 3 months later I read in HYPER magazine that the console was dead.
I bought a ps2 after that. I kept the Dreamcast in the top of a cupboard until last year when I found it and sold it.
IrishNinja
Member
in another word: incorrect
this thread is not called "some of the greatest things to come from the DC", friend
though i suppose it's an easy mistake to make at this hour
pearls before swine
Stumpokapow
listen to the mad man
RE: Piracy
Insofar as piracy as purportedly a major factor in the DC's failure, it should manifest itself in an abnormally low software tie ratio. I have complete NPD figures for the Dreamcast through beginning of 2003 (so this should be missing a tiny bit of long tail but not much).
The hardware LTD in the US as of this point was 4.1 million. Software LTD was 27.2 million. That's a 6.6 tie ratio. September 1999 to early 2003 is 3.25 years.
http://www.joystiq.com/2008/04/24/npds-latest-software-tie-ratios-for-consoles/ -- Apr 2008, and figures come directly from NPD
2.5 years Xbox 360: 7.5
1.5 years Wii: 5.3
1.5 years PS3: 4.6
http://www.gamasutra.com/php-bin/news_index.php?story=23308 -- Apr 2009, and these figures are ballpark rather than exact:
3.5 years Xbox 360: 8.3
2.5 years Wii: 6.2
2.5 years PS3: 6.5
http://www.gamasutra.com/view/news/...e_Software_Sales_Keeping_Up_With_Hardware.php -- Apr 2011
5.5 years Xbox 360: 8.9
4.5 years Wii: 7.2
4.5 years PS3: 7.8
I don't have a figure to get a direct 3.25 year comparison between the generations, but it looks like at most that piracy accounted for a 1-ish game per person "loss", or no more than 15% reduced software sales, as compared to the current generation of consoles. An alternative hypothesis is that piracy was a big deal but non-pirate DC owners bought tons of extra software to compensate, which I feel is both highly unlikely and renders the "piracy hurt software sales" claim moot because the claim is about overall software sales capacity and thus best measured by a mean type measure like tie ratio rather than a median type measure.
Piracy was not responsible for the DC's death in the US.
Insofar as piracy as purportedly a major factor in the DC's failure, it should manifest itself in an abnormally low software tie ratio. I have complete NPD figures for the Dreamcast through beginning of 2003 (so this should be missing a tiny bit of long tail but not much).
The hardware LTD in the US as of this point was 4.1 million. Software LTD was 27.2 million. That's a 6.6 tie ratio. September 1999 to early 2003 is 3.25 years.
http://www.joystiq.com/2008/04/24/npds-latest-software-tie-ratios-for-consoles/ -- Apr 2008, and figures come directly from NPD
2.5 years Xbox 360: 7.5
1.5 years Wii: 5.3
1.5 years PS3: 4.6
http://www.gamasutra.com/php-bin/news_index.php?story=23308 -- Apr 2009, and these figures are ballpark rather than exact:
3.5 years Xbox 360: 8.3
2.5 years Wii: 6.2
2.5 years PS3: 6.5
http://www.gamasutra.com/view/news/...e_Software_Sales_Keeping_Up_With_Hardware.php -- Apr 2011
5.5 years Xbox 360: 8.9
4.5 years Wii: 7.2
4.5 years PS3: 7.8
I don't have a figure to get a direct 3.25 year comparison between the generations, but it looks like at most that piracy accounted for a 1-ish game per person "loss", or no more than 15% reduced software sales, as compared to the current generation of consoles. An alternative hypothesis is that piracy was a big deal but non-pirate DC owners bought tons of extra software to compensate, which I feel is both highly unlikely and renders the "piracy hurt software sales" claim moot because the claim is about overall software sales capacity and thus best measured by a mean type measure like tie ratio rather than a median type measure.
Piracy was not responsible for the DC's death in the US.
sometimes i game
Member
I loved the DC as well but I don't know how much longer the market would support it based on power and dat single analog control scheme.
evilromero
Member
I remember it well. The retailers I visited even encouraged customers to consider waiting for the PS2 (EBGames was one).
Grizzlyjin
Supersonic, idiotic, disconnecting, not respecting, who would really ever wanna go and top that
Yeah, things must have been pretty shitty way before 2001. I remember I got my mom to buy one in 2000 for less than $100 at Target. Retailers dropping the price of a console before the manufacturer does it across the board is very bad sign.
TheContact
Member
Became too easy to pirate. You could burn your own discs with very little effort or knowledge.
The dying years of the Genesis were not graceful
Saturn had a very tough time in America (though I think it beat the N64 in Japan)
Dreamcast was the 3rd strike
After arcades started dying, they didn't really have a 2nd revenue stream to prop them up during hard times like Microsoft, Sony, and even Nintendo with the portable side.
Piracy happened after the fact though, it simply couldn't compete with the PS2. I remember dreamcast a being sold in the UK bundled with DVD players to try and make them comparable.
Sometimes people forget about what happened at that moment in time and instead add hindsight thinking that was the cause. The DVD playability of the PS2 was a major factor with consumers not picking up Dreamcasts at least once the PS2 launched.
The PS1's dominance was still very strong too.
Sometimes people forget about what happened at that moment in time and instead add hindsight thinking that was the cause. The DVD playability of the PS2 was a major factor with consumers not picking up Dreamcasts at least once the PS2 launched.
The PS1's dominance was still very strong too.
Projectjustice
Banned
Piracy really killed Sega, if they had a better anti-piracy system in the console they could of pulled in more profits. I really loved the Dreamcast, I still own my Black Sega Sports DC!
IrishNinja
Member
fantastic post, always nice to be able to point to something more concrete when the same answer is given time & again and simply accepted as some kind've truth
like these two, who sadly miss that post entirely
Prime crotch
Banned
Maybe it's hard to remember today but back then the Playstation brand was humongous so the dread of a new sony console was hovering over all software houses and when it got announced they went in droves to it.
The_Sheldon
Neo Member
Short answer: business.
Sega had been bleeding money for a while and the failures of the Dreamcast's predecessors meant that it faced an insurmountable struggle. It did well to begin with but not enough to overcome Sega's long standing problems.
Piracy was something that didn't help but certainly the main issue was just that the Dreamcast just did not sell enough units. Part if this was that he PS2 was right around the corner and the hype machine was in full swing. Another part of it was that people didn't have a whole lot of confidence in Sega. They did have a history of killing of consoles prematurely and that did make some people hesitant about buying one.
At the end of the day the Sega's debtors called in their debts and the Dreamcast had to be killed in order for Sega's to stave off bankruptcy.
Just be thankful that the Dreamcast went out the way it did. What a way to go. Hit after hit.
Sega had been bleeding money for a while and the failures of the Dreamcast's predecessors meant that it faced an insurmountable struggle. It did well to begin with but not enough to overcome Sega's long standing problems.
Piracy was something that didn't help but certainly the main issue was just that the Dreamcast just did not sell enough units. Part if this was that he PS2 was right around the corner and the hype machine was in full swing. Another part of it was that people didn't have a whole lot of confidence in Sega. They did have a history of killing of consoles prematurely and that did make some people hesitant about buying one.
At the end of the day the Sega's debtors called in their debts and the Dreamcast had to be killed in order for Sega's to stave off bankruptcy.
Just be thankful that the Dreamcast went out the way it did. What a way to go. Hit after hit.
Tizoc
Member
People, please stop saying piracy:
PSX and PS2 discs were pirated as well, and the PS4 is coming by next year.
D
Deleted member 47027
Unconfirmed Member
That was the point! Real talk though the PS2 murdered it in its sleep.
Sega going under was totally due to how they mismanaged the dreamcast.
Aquamarine's yearly revenue post bears this out.
Now I'm subscribed to this thread so I can just pull up two great pieces of analysis that can cited whenever this question comes up again.
thesuperfunk
Member
Blame Sony
sketchsanchez
Member
I guess it's no surprise that people's first answer is "piracy" cuz it just felt *so* widespread. I used to be able to walk to my local comic shop and buy ripped copies of DC games for $5 a piece. the owner let this guy set up his own little area where he bought and sold games and one day he pulls out this binder filled with DC games on regular cds, it blew my mind.
Truly, the last of its kind. There will never be another console like a SEGA console. From the best console of all time, the Genesis, to the best 3D focused console of all time in the Dreamcast.
It's ironic that the gif you chose to salute the Dreamcast comes from a franchise that pretty directly helped to kill it.
The Albatross
Member
Piracy certainly mattered on the DC, and you're rewriting history to say that it didn't. Sure, there was piracy on the PSX, PS2, and other disc-based consoles (heck even carts as well), but the Dreamcast was the single easiest console in history to pirate games for. It launched right at the boom of disc piracy in the US, had practically no anti-piracy measures (a disc launcher was required at first, and then a few months later, not needed anymore), and right at the dawn of consumer broadband in the US. Every person that I knew who owned a Dreamcast had pirated games, had an entire catalog of pirated games, where as it was relatively rare on the PSX... You'd know "that guy" who had a mod chip on the PSX or could use a boot loader to swap discs, but everybody (who I knew) who had a DC had a catalog of some 20 or 30 pirates games. It took an hour to download, burn, and play a pirated game on 3MB cable internet, which was as long as it took to get to the mall and back and every game was available on Napster clones.
Piracy may not have directly impacted Sega in the games that they published, but there was a publisher exodus to the PS2 when it came out, not only because it was a juggernaut, but because compared to the Dreamcast, it was leagues more difficult to pirate on out of the box.
Sega's enormous debt, their inability to turn profits for some three years, several high profile marketing disasters (millions spent in online advertising at a time when online console play was not a consideration of most gamers), the juggernaut that was PS2, and the publisher exodus which was spurred by the ease of piracy on the Dreamcast, led to it's downfall.
This all being said -- DC outputting to a CRT monitor via WXVGA was a thing of beauty even years after the PS2 released.
Piracy may not have directly impacted Sega in the games that they published, but there was a publisher exodus to the PS2 when it came out, not only because it was a juggernaut, but because compared to the Dreamcast, it was leagues more difficult to pirate on out of the box.
Sega's enormous debt, their inability to turn profits for some three years, several high profile marketing disasters (millions spent in online advertising at a time when online console play was not a consideration of most gamers), the juggernaut that was PS2, and the publisher exodus which was spurred by the ease of piracy on the Dreamcast, led to it's downfall.
This all being said -- DC outputting to a CRT monitor via WXVGA was a thing of beauty even years after the PS2 released.
clem84
Gold Member
Your post doesn't prove much because it's impossible to predict what would've happened had piracy not being present. I'm not sure why you're referring to the DC's ratio as "abnormally low". That 6.6 tie ratio is fine. It's not that different then the 360's ratio at the same time frame. The reason why I think piracy had an impact is because of personal experience. When the DC came out, I bought it and there was only 1 other person in the group of friends I was hanging out with at the time who also got one. The rest of the people I knew were "waiting for PS2", or had some other reasons to not get it. Once piracy hit in June of 2000, all of a sudden many of my other friends got one. Within weeks all these people had stacks of burned DC games and not a single original game. How do you think that helped Sega who were already selling the DC at a loss and already bleeding money? It made an already difficult situation a lot worse.
Now I'm not saying this little scenario was how it went down everywhere, but I'm pretty sure the people I'm referring to weren't the only one behaving this way. Piracy wasn't the one and only cause, but IMO it was definitely a factor.
Great post, but including software sales up to 2003 might paint a slightly screwed picture, since the Dreamcast has already been declared as dead at that point and a lot of software was given away for pretty much nothing during clearance sales. Do the numbers change when you only take into account software sales until March 2001, when Sega decided to pull the plug?