How Dreamcast Killed Sega's Hardware Reign

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Dreamcast didn’t kill them, it was the Mega-CD, 32X, and Saturn that killed them. Launching three architectures over three years and not giving them space and focus burned a lot of political capital with developers (including those in house) and consumers. By the time the Dreamcast was out, it was already too late.
Which is a shame. Dreamcast was a masterpiece and so ahead of its time.
- It was definitely the CD and 32X coming out in quick succession. Then also here is a completely new game system. Just throw that other crap away. I heard that Sega of Japan wasn't communicating with their American counter parts that well.
  Sega Saturn was good and so was the Dreamcast, but those bread crumbs improvements beforehand made it feel like a cash grab. Shame too, since I was on team Sega.
  
  You can tell how bad it was for developers when even Sega Technical Institute moved Sonic X-treme development off 32X to Saturn and then, after the designer and programmer basically had mental breakdowns, they cancelled it entirely.
  I agree with you, Saturn would have been fine if developers had the time to learn the architecture and if Sega hadn’t pulled the launch forward by 6 months by surprise.
  I feel so sorry for all those devs who started work on things for the CD or 32X to totally find them defunct before they were able to release their games.
- ... and then Yuji Naka killed one of their biggest Saturn projects by throwing a hissy fit that a Sonic game was using the NiGHTS engine.
  Frankly it's a miracle the Dreamcast worked so well and had such great games. Sega was a fucking mess throughout the 90s.

It died with Dreamcast but the console was certainly not the cause.
- At least part of it was being the last CD-based console when the DVD juggernaut was around the corner. Games wouldn't take long to outgrow CDs.
  
  There was a plan for a DVD add on but obviously the console died before any of that stuff was released. I still think that was a minor reason for the failure though as it was more about consumer/studio trust in Sega.

We miss you Bass Fishing & Marine Fishing. 🎣
- "OK, average size, GOOD JOB!!!!!!"

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