Despite its impressive game library, powerful hardware, and highly innovative features, the SEGA Dreamcast was a commercial failure. The console itself was impressive, it was well built, had a nice design, and boasted several features, such as online gaming, that have now become industry standards. In reality, the only place SEGA's console failed was in sales to its main competitor, the PlayStation 2.
SEGA made a few mistakes that caused the company to cut the console's lifespan and unfortunately become abruptly discontinued.
The first of these issues arose during the development of the Dreamcast's predecesor, the SEGA Saturn. Back in 1995, before the SEGA Saturn had been released, SEGA had gotten word of a brand new competitor to the market -- the Sony PlayStation.

Sony's console gained a lot of attention from the gaming community and this made SEGA nervous. SEGA originally planned a release for the Saturn for the Fall of that year, giving developers enough time to finish launch titles. Around this time though, Sony announced a release for the PlayStation at about the same time as SEGA had planned for its console -- this is where the first issue occured. SEGA panicked and feared that their console would suffer in sales if the PlayStation release date was too close to that of the Saturn. SEGA tried to counter Sony by moving the Saturn's release date up by several months to May of 1995 in order to get a head start on sales from consumers anxious to join the next generation of gaming. As a result of the sudden change of the Saturn's release date, many software developers became upset. Companies, like Electronic Arts, now had to rush their titles if they wanted to be ready for launch day -- now 5 months earlier than originally planned. Because of this, many developers, including Electronic Arts, vowed to, and surely did, boycott SEGA in the future. What did this mean for SEGA during the Dreamcast's life? It meant that the Dreamcast wouldn't have popular games such as Madden available to consumers thus hurting console sales once the Dreamcast's competitors hit the market.
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Sega's online gaming service,
similar to PSN & Xbox Live. |
The next issue, and probably the issue that hit sales most, was the Dreamcast's lack of DVD playback. Before the PlayStation 2 was released, the Dreamcast had excellent sales worldwide, but once consumers realized they could get a DVD player AND a game console -- the Dreamcast had lost its appeal, especially to the general consumer. You have to keep in mind that back in the year 2000, DVDs were not mainstream yet and DVD players were very expensive. Not only was the PS2 a DVD player, but it was, especially in Japan, one of the cheapest DVD players on the market.
The third and final issue for the Dreamcast was piracy. The piracy protection could easily be bypassed and backups of games could be played with no modifications to the console. People soon realized that the image of a game could be burned onto a standard CD-R and played with (and later without) a boot disc. Keep in mind though, that in 1999 most people had dial up internet and CD-Rs were expensive. Piracy was not enough to floor the console's lifespan alone.
Despite these few unfortunate issues, the console is top notch. The Dreamcast is still popular amongst retro gamers and collectors and is a fun console to play to this day because of its extensive library and vast homebrew scene.