Why former Sega president Bernie Stolar is still proud of the Dreamcast

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In 1996, Bernie Stolar joined Sega of America as president and chief operating officer to help release the company’s upcoming console: the Dreamcast. He says he immediately restructured the company, leading to nearly 300 job losses.

“I felt that everybody wasn’t strong enough to do their jobs,” he says. “I fired most of them, then I wanted to rebuild the staff.”

It was seen by the leadership team as a bold move, and so was one that followed: Peter Moore, who worked at Reebok, came on to help with a marketing campaign that would tackle the impossible and compete with Sony’s PlayStation.

“[Sega CEO] Mr. Nakayama immediately asked me, ‘Bernie, you’re hiring someone who doesn’t know anything about games!’

“But he knew how to build a brand.”

Such was Stolar’s vision, and Sega’s predicament. Stolar had spearheaded the PlayStation launch by nurturing relationships with third-party developers, but was left standing after a string of firings in the executive team. He was invited to join Sega to help restore the company’s falling glory after the decline of the Saturn, and he immediately made his presence known.

Stolar’s tenure at Sega is infamous for the Dreamcast’s financial failure, although the console itself enjoys cult status among fans. A declining, but still active, homebrew culture exists, and consoles are regularly traded on eBay for prices akin to more successful hardware.

Stolar acknowledges the console’s criticisms and offers reasons for decline — one being the system’s focus on downloadable content and online features. Even though the Dreamcast wasn’t the first to include these, Stolar admits it was ahead of its time.

But its biggest problem, he says? A lack of content.

“What I think happened was that Nakayama got pushed out by [Sega Chairman] Mr. Isao Okawa. [Okawa] just didn’t understand what the software was supposed to be like, and he didn’t really understand the gaming industry ... and he was our biggest shareholder."

“Sega didn't have the money that Sony had, but ... I think I had the same frustration of making sure that the software would be there. To me, software drives hardware,” he says.

Keep your eye on the games

It’s a story that Stolar says he’s seen time and time again — a fixture on hardware without the software to back it up. And it’s one that began for him even when he started in the industry by opening a coin-operated arcade in San Francisco.

The State Street Arcade carried over 300 games and caught the attention of Atari, where Stolar was invited to help develop content. But the focus on hardware over software prevailed, especially after the firm was sold to Jack Tramiel in the 1980s. Stolar was placed in charge of the Lynx division, and he was frustrated by the small library available to players.

“I had a lot of respect for Jack, and it was a good place to work but Jack wasn’t investing money in content,” he says. Stolar left, but not without a sense that Atari could have commanded the market had it made a few different choices.

“The Lynx, I thought, was better than Nintendo. Atari had a patent infringement case against Nintendo and they lost ... I think part of that was because they didn’t have strong enough lawyers.

“He really wasn't investing money in content. I remember I got a phone call from Steve Race, who became the first president of PlayStation, to help take that over and become head of third-party for PlayStation.”

Stolar felt the Japanese executive team would be able to focus more on delivering solid, player-focused experiences, and he immediately went out to speak with every CEO of every major publisher.

“Sony was willing to spend the money to do this,” he says.

But yet again, Stolar ran into problems. Sony was almost too eager to have a volume of content for the PlayStation, and he was being pressured to approve games that simply weren’t ready for release.

“Sony Japan wanted me to approve all this software that was being delivered by all third parties. Whatever the software was, I should just approve it. I said, "This is not a record company where you make an album and it's hit or miss. Here, if it's not visually attractive it's not going to sell, period."

When Japanese control of the company overhauled leadership in North America, Stolar was left standing. With two companies down, Stolar moved to Sega — where the company’s desire to capture a lost legacy made him feel as though he would gain more power in putting an emphasis on content over hardware.

Ahead of the curve

Immediately, some wins were on the table: online gaming was to be a key part of the console, even though the majority of consumers still didn’t have an internet connection.

“I was trying build a new platform to compete against PlayStation. I felt that getting a multiplayer, online console at a strong price point of $199.95, would be very compelling to the consumer. It turned out to be that was the case.

“To do multiplayer gaming, to me, was the whole vision.”

The Dreamcast sold 372,000 units in the first four days of sales in the United States. The launch lineup was extensive, with support from critical reception for the games including fighting game Soulcalibur.

But production stopped within a year. Some Sega executives have said that it was simply too expensive to build, and Sony had an advantage due to its sprawling component base. Stolar says while games were being released, there were fewer tentpole releases than he would have liked.

“It was so successful at launch ... but the company was just not putting money behind it,” says Stolar. “We had bankers running it.”

At one point, Stolar says he was asked by the Japanese leadership team about his thoughts on whether games should be online-only. Even though Stolar had pushed for online capability, he wanted a blend between online features and platform-based games.

“They just didn’t understand the business,” he says. “The frustrating thing was always having to go to Japan to convince the Japanese what was necessary for the U.S. market.”

Stolar left — and found success at Mattel and then at AdScape Media, which sold to Google for $23 million in 2007. But despite a sour end to the Dreamcast, he’s still proud — and adamant that any future console makers learn from his own experience.

“The fact that Dreamcast still is alive in some sort of form, it’s because those players want that software,” he says. “I think they have to really know that if they’re going to come out with a product, it better be fun.”