Shenmue

Once upon a time there were two huge corporations dominating the videogames business and, I kid you not, none of them were Sony. Wether you find this believable or not depends mostly of your age, but it’s the truth. When it came to videogame consoles, SEGA and Nintendo ruled the last decades of the previous century.

While Nintendo is still running strong, SEGA eventually met its end in the videogame console business at the turn of the century, remaining only as a game publisher. Even if many can’t say for sure why it went down like this, it followed the launch of the company’s most ambitious project — the SEGA Dreamcast — which turns 20 this year.

What a beautiful beast it was

SEGA Dreamcast

Dreamcast was a machine like no other at the time. Impressive hardware, Internet access (it was something new by then) and all the ambition in the world to surpass the failure that was the previous system, SEGA Saturn (although it also had some pretty nice games).

Dreamcast launched in Japan in 1998 and worldwide in the next year and everything about it seemed new and desirable. From the spaceship like controller to memory units in which you could actually play additional minigames, there was nothing about it that wasn’t screaming success.

It had a good game library and some loyal customers that turned games like Phantasy Star Online, Shenmue or Sonic Adventure into huge successes. Even if the company had lost the support of developers like EA Sports, it didn’t seem to hurt the place that Dreamcast surely had among the stars.

So, why did it fail, really?

Timing is everything

Shortly after SEGA launched Dreamcast, Nintendo came up with GameCube, Sony launched PlayStation 2 and Microsoft entered the business with Xbox. Unlike SEGA, who had piled up huge commercial failures (Game Gear, Sega 32X, Sega CD, Sega Saturn) all other companies were building on success.

If a product fails — or a series of products, as it was the case — a good strategy is to try something different the next time we come around. Dreamcast was packed with hardware juice and some good features, but it wasn’t as different as Saturn as it needed to be, so that users could forget everything about it.

Dreamcast tried so desperately to succeed that it’s failure was almost inevitable. However, when everything started to go south, SEGA showed how bad they were at managing a crisis and decided to lower the console’s price to numbers that were not lucrative anymore. This is when everything went bananas.

A product misaligned with the stage of the market

Sonic Adventure 2

We usually say that a system is ahead of its time when it anticipates the market and beats the competition. However, that was not the case here.

The massive controller was way more complex than it needed to be at that time and, even with all the complexity, it lacked a second analog stick, something that Sony had already fixed on the first PlayStation system. As for the memory unit, it did look awesome on commercials, but it was very short on space, wasn’t very practical, broke easily and was not needed at all at that stage.

Having internet access was great, but it was too soon to take such step. Even if it was free to play, the majority of the internet providers imposed low traffic limits, making it unbearable to play for long periods of time without blowing up the limits. Nine out of ten moms and dads were very unhappy with their Dreamcast systems and internet bills.

The SEGA Legacy

Phantasy Star Online

It’s strange that SEGA knew that Dreamcast was their last chance to take part on that market and, still, were not prepared for failure. Or maybe they just wanted to go out with a blast, we’ll never know for sure.

The best lesson we could learn here is that quality isn’t everything. The Dreamcast was powerful and it had great games that were re-released over the last decade in many other gaming systems. Shenmue 3, for instance, is still one of the most awaited games today, but it’s not the only one.

There are a lot of other good examples, such as Skies of Arcadia and Sonic Adventure 2, that were re-released on the GameCube, or fine additions to existing series such as Resident Evil: Code Veronica. However, as a gaming system, Dreamcast was not profitable.

SEGA left a rich legacy scattered throughout all their gaming systems, but couldn’t handle the new challengers that entered the business by the turn of the century. While Nintendo could always bring something new to the industry, with the GameCube, Wii and, more recently, Switch, SEGA just kept doing the same thing over and over again, expecting different results.

“Did I ever tell you the definition of insanity?” (*Far Cry 3 — not a Dreamcast game)

It’s a shame for gamers around the world, but a huge lesson for high-end companies that feel they’ll never need to change. Adapting to new environments is essential and it was something that SEGA wasn't able to do.

All that’s left now is to remember Dreamcast as a good system, but better yet, as a great lesson learned.

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