Why did Sega go belly up in the console market?

I will die on the hill that Sega Dreamcast was an amazing console, but it was not a perfect console.

It was less the Dreamcast and more SEGA’s past mistakes. They burnt a lot of retailer, developer, and gamer good will over the 90s. Sony, the Playstation 2, and a lot of shady marketing and business decisions from Sony, did not help.


I’ve been a long time Sega fan going back to the Master System days. I had an SMS and loved it. It had some amazing games like Phantasy Star, Alex Kidd in Miracle World, Zillion, Spellcaster, R-Type, and Shinobi. It had many technical advantages as well over the NES but was hobbled by Nintendo’s monopolistic licensing practices which pretty much guaranteed no third party support.

With the Genesis, Sega seemed to do everything right. They came out first, got some big name publishers and titles, and jumped on the “XTREME” bandwagon of the 1990s by trying to out-cool Nintendo. The SNES was by far the superior console technologically but the Genesis was the cooler one. I mean you could play Mortal Kombat with all the gore! Then Sega started chasing the next big thing.

The SegaCD was a pricey flop that had some really good titles but was a product in search of a market. Most of its titles were really low effort FMV shovelware titles that were more tech demos than real games. For all the “controversy” behind Night Trap, the only real controversy should have been that it was a pretty shit game that would barely rate a PG rating if it were an actual movie. The 32X was another pricey flop that attempted to bridge the console generation gap but was soon undercut by Sega themselves with the Saturn. (Not to mention how ridiculous all the cabling became if you had both a 32X and a SegaCD with its 3 power bricks, and Inception levels of interconnect cables on top of interconnect cables.)

The Saturn came out with little warning, surprising retailers and gamers and having basically no launch lineup of note. The Saturn was also notoriously difficult to develop for and didn’t have true 3D capabilities. The Nintendo 64 and PlayStation came out no long afterward and largely relegated the Saturn to an afterthought for many. Yes, it had some really good games but nobody was buying it.

Finally we had the Dreamcast. It’s hard to say Sega didn’t go balls to the wall with it. Interesting hardware, forward thinking things like a modem (and later a LAN adapter), a web browser, keyboard and mouse support, and all kinds of weird and wonderful ideas. The VMU thingy that nobody ever really knew what to do with but Sony still ended up copying with its JP-only PocketStation. Bizarre ideas like the Seaman game. Phantasy Star Online was a really good and innovative console MMO at a time when those were a PC-only thing. It had some really high quality titles, like Sonic Adventure 1 and 2, Crazy Taxi, and others. But history repeated itself yet again, Sega just couldn’t catch up with Sony at this point despite having superior hardware. Sony had all the top tier publishers locked in, and by the time the PlayStation 2 came out it was game over for Dreamcast. It also didn’t help that Sega’s past mistakes burned a lot of goodwill amongst gamers.

Sega may not be making consoles anymore, but what a console legacy. I’m perfectly happy with Sega as a publisher. Even if Sega can’t get out of its own way with some of its IP like Sonic the Hedgehog, their Altus and Ryu ga Gotoku studios are pumping some absolute out god tier games.

Fun aside: while the Sega Master System flopped in America it was pretty popular in Europe. It was also absolute smash success in Brazil selling like crazy. As far as I know, it’s still sold in Brazil to this day. (@bakaneko or @lanika can keep me honest here if I’m wrong about this.)


I find this hard to believe but would be an interesting footnote if true. Sony was already eating Sega’s lunch at this point and it doesn’t seem like such shady and possibly illegal extortion tactics would have been necessary.

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@jlw Whatever you guys did must have had an effect then! Even on the bundled modem the Netplay on Quake 3 was incredible. I’d tried a few lag-heavy games on the PC and the Dreamcast felt like witch craft at the time.

@ficuswhisperer The Saturn launch was definitely bad for affecting Sega’s relationship with retailers, but i’m not sure it damaged the relationship with the public. The main issue was Sega lacked stock - they only had 30,000 consoles to begin with, and when those sold out they could only ship in around 30,000 more. The launch lineup could have been better but if you compare it against the Genesis line up it obviously wasn’t exactly terrible. I think if they could have sold at $300/£250 and broken even they would have been fine.

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@Shuck - We tend to think about the N64, Saturn and Playstation, but really if you’re looking at the full list you should chuck in the Jaguar and the 3do as well. When you look at that list on a global scale, the PlayStation is the only success story. Released in that time frame failed for one reason or another (yes, even the N64. Before the N64 Nintendo sold 17 million Snes’ in Japan and had owned the Japanese console market since 1983. The N64 lost them about 12 million of those sales and relegated them to third place behind Sony and Sega.) It’s quite astonishing really.


I’m not a video game fan, the little I know about games is what I read in the newspapers. I know that a Brazilian company called Tectoy used to sell Mastersystem and Megadrive (I think It is called Genesis in US) here in the past. This company still sells a version of Mastersystem, but I don’t know their target audience.


About 5 years ago, Tectoy released a commemorative version of the Megadrive, but according to this article, it wasn’t exactly like the original.

I never cared much for video games, I liked pop music and comics more. Another thing that kept us away from the gaming world was the price. This commercial shows a console costing more than Two Million Cruzeiros, the currency of the time in Brazil.



Yeah, the Genesis is called the Mega Drive in other markets. (IIRC it was due to some exec at Sega NA being worried that people word confuse it with a computer or something? I think Mega Drive is a far cooler name but whatever.)

As a gamer, it’s wild to me that the Master System is still sold in Brazil. The Dreamcast had a lifespan of a mere 2 years. The Master System is now over 30 years old.

Also worth noting since I didn’t mention this before while the Genesis/Mega Drive was really successful in NA and EU it pretty much flopped in Japan.

Game consoles are a tough market. Even the big names can’t guarantee a hit every time and any new console is a really expensive gamble for the company often times requiring huge bets on R&D, manufacturing, only for zero or negative profit margins on each unit sold for the first few years on the market. The Dreamcast was no exception, losing money on each sale. (Nintendo famously won’t sell their consoles at a loss but they still end up barely breaking even in most cases.)


Nostalgia. It is a very important part of our psyche.


Exactly - see the updated Galactic Explorer and new Castle sets announced yesterday.

I totally forgot about the Jaguar, but I was thinking of 3DO. I haven’t been a console owner since the early Atari days, and my hands-on experience has mostly been limited to occasional play on whatever device friends own, but I remember the 3DO being a really intriguing machine at the time, at least on paper. (Later hearing from coworkers who had developed for 3DO, I can better understand why it didn’t go anywhere… they had… issues.) I suppose Nintendo have survived on the reserves from when they were the console of Japan. Everyone else gets by on simply being one wing of much larger corporations with other revenue streams.

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I had a 3DO several years after it was released and they could be bought for really cheap. I collecting consoles at the time and was able to get a hell of a deal getting a console and dozens of games from someone on Usenet.

It was….not a great console. It had a few really good games. Star Control II is considered by many to be the definitive version of that title. Its versions of Road Rash and Need for Speed were really good. Lucienne’s Quest was a serviceable RPG. Gex was a pretty good platformer. There were some other interesting if unremarkable titles for it as well — mostly PC ports. It also had a few legendarily bad (not in the “so bad it’s good” sense either) soft-core visual novels like Plumbers Don’t Wear Ties and about a dozen others.

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Nah, Nintendo is actually still really successful - their portable systems print money like nothing else. Even when their consoles were not doing well, their handhelds dominated the space and more than got them through.


My husband collects old consoles, there’s a huge market here for retro gaming. I can ask him details.

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