Sega’s Exit from the Biz

by Rick Powers - February 26, 2001, 1:08 pm PST

Emerging from hiding once more, the ever controversial Rick Powers tackles what it means now that Sega's out of the console business.

It’s been a long time coming, but Wednesday, January 31, 2001, Sega announced that they were ceasing production of the Dreamcast console, and were going to focus on making games for other platforms. Many owners of the unit are now furious, but they have only themselves to blame. Sega has a history of ditching a console early when it learns it can’t win the current conflagration in the market.

Sega’s strength has always laid in the arms of its arcade division. Sega’s coin-operated machines are a beauty to behold, innovative and inspiring. Its console business, on the other hand, has resulted in frustration for both consumers and Sega alike. It’s not the first time that it was suggested that Sega get out of the race altogether and focus on games. We’re just all wondering what took so damn long.

Sega hasn’t been at the forefront of the video game race since the early years of the Genesis. The Master System was a decent machine, but couldn’t withstand the NES juggernaut. The 16-bit Genesis stepped up and grabbed market share with better technology, more mature games, and wide developer support. But eventually, bad business decisions (high-priced add-ons with little developer support) would lead to the SuperNES overtaking the Genesis and Sega quickly cutting both it’s losses and support for the machine.

This started a trend replayed over the years in consumer homes. Sega looked to reposition itself as a market-leader with the Saturn machine, but it was practically stillborn in the US, due to bad hardware design which in turn frustrated developers. It fared marginally well in Japan, but a high-price and few games pushed buyers to the fledgling Playstation. In a market where consoles have a lifespan of around five years, Sega ruthlessly axed Saturn in it’s third year, and started work on Dreamcast, leaving Nintendo and Sony to battle it out for supremacy of the late 90’s. Sony would eventually trounce Nintendo with it’s marquee titles, and strong developer support … not to mention low-cost software.

Everyone in the industry knew that Dreamcast was likely to be Sega’s last hurrah in the console world. Time and time again, the industry has proved that it can only support two strong players (as evidenced by the quick demise of TurboGrafx, 3DO, CD-I, and others), and pundits doubted Sega could resurrect the company to right off Sony and Nintendo (and soon, Microsoft). The Dreamcast looked good on paper, very powerful and fairly easy to program for. Developers, however, were not as convinced, and neither were the gaming public. The machine sold well, but not at what anyone would claim was a brisk pace. Still, support slowly seemed to be growing for the machine, and with fantastic titles like Soul Calibur (a first-gen title yet to be eclipsed), Crazy Taxi, NFL2K1, Shenmue, Dead or Alive, Dreamcast looked ready to reclaim Sega’s throne as a dominant videogame maker.

Then came PS2. Sony’s attempt to capitalize on a 90 Million(!) unit installed base was a machine that could seemingly do it all … DVD, CD, Playstation 1 support, and everyone was convinced that PS2 was to be the next coming. Sega didn’t stand a chance. The problem was, it wasn’t true. PS2 wasn’t all that it was cracked up to be. It was hard to program for, early machines had hardware problems, and there simply weren’t enough machines to fill demand. Sony had made a colossal misstep, and Sega had a golden opportunity to claim all of the disenfranchised gamers who wanted next-gen gaming, but couldn’t get it. Perhaps Dreamcast could survive after all.

It wasn’t to be. In standard Sega fashion, someone dropped the ball. Sega didn’t do the one thing it could to get gamers who wanted PS2 and couldn’t get it … advertise. At half the cost, Dreamcast should have been a sure sale. Sega either couldn’t or wouldn’t capitalize on the situation, and now, Sega hardly exists as a console manufacturer anymore. Once the existing stock of Dreamcasts are sold, Sega’s not making any more.

We shouldn’t cry. While Dreamcast was indeed a great machine, Sega’s support of its platform has always been spotty. If their exit from the business means that we can enjoy Sega’s incredible games on other platforms, then we all win. We get great games on consoles that will be around well into their twilight years, and Sega has a chance to shore up the company and start turning a profit. Plus, there are a great many excellent games that enthusiasts can now enjoy at extremely low prices, allowing us to save some hard-earned money for the next salvo in the console war.

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