Riiven Reverb
Sega Dreamcast
In 1999, Sega shipped the first home console with a built-in modem and online play as standard. Less than two years later, Sega exited the hardware business.
The Moment
By late 1998, Sega was the company that used to make consoles. The Genesis had owned the early 90s. The Saturn, launched as a four-month-early surprise in 1995, had alienated American retailers and burned through developer goodwill in a single press conference. Sony's PlayStation, shipped in 1995 with disciplined third-party courtship and CD-ROM economics, had captured the second half of the decade. By the autumn of 1998 the PlayStation had shipped more than forty million units worldwide and was nearing the end of its cycle. Nintendo's N64 was a year past its peak. The market was waiting for what came next. Sony had not yet shown anything. Sega, written off in the trade press as a hardware company, was about to ship first.
The Original
The Dreamcast launched in Japan on November 27, 1998, and in North America on September 9, 1999 at $199, branded as "9.9.99 for $199." It was the first home console with a built-in modem (56K in North America, 33.6K in Japan), the first to ship with an integrated web browser (PlanetWeb), and the first to design networked play as a default rather than a peripheral. Inside was a 200 MHz Hitachi SH-4, a PowerVR2 graphics chip, and a custom optical disc format called GD-ROM that held 1.2 GB. The launch lineup included Soulcalibur, NFL 2K, Sonic Adventure, and Power Stone. North American opening day moved 225,132 units in twenty-four hours and earned Sega $98.4 million in receipts, which Sega of America's Peter Moore later called the biggest twenty-four hours in entertainment retail history at that point. Phantasy Star Online, the first console MMO of consequence, followed in 2000. The SegaNet dial-up service launched the same year at $21.95 a month.
The Gap
· Decisive forkSega's negotiating decision a year before launch foreclosed the most important software franchise in American console gaming. Electronic Arts told Sega it would only ship games for the Dreamcast if it received exclusive rights to the entire sports genre. Sega offered third-party exclusivity, which would have let Madden compete only against Sega's own NFL 2K series. EA refused. Bing Gordon, then a vice president at EA, later said the company would not enter a market it could not dominate. The talks ended. For the Dreamcast's entire production life, North America's most reliably console-selling franchise, Madden, was sold only on the PlayStation and PlayStation 2. So were FIFA, NHL, NBA Live, and Tiger Woods PGA. Sega's own Visual Concepts studio shipped NFL 2K1 in 2000, which outsold Madden NFL 2001 head-to-head but did not move enough Dreamcasts to close the gap. Sony announced the PlayStation 2 in March 1999, before the Dreamcast had even shipped in North America, with DVD playback the Dreamcast did not have and a full sports library the Dreamcast never received. Production of the Dreamcast ended on March 31, 2001. Sega exited the hardware business the same week.
refused Electronic Arts' demand for sports-genre exclusivity, losing Madden, FIFA, and NBA Live for the console's entire life
Watch
Sega Dreamcast 1999 TV Commercial "It's Thinking..."
Games FreezerThe Echo → 2002
The Dreamcast's online experiment outlived its hardware. Microsoft, which had collaborated with Sega on a Windows CE variant for some Dreamcast titles, watched the SegaNet rollout closely. When the Xbox shipped in 2001 and Xbox Live followed in November 2002, the launch document was almost a corrected draft of Sega's: broadband instead of dial-up, hard drive instead of memory cards, mandatory standardized accounts, voice chat as default. Peter Moore, the Sega of America executive who had announced Dreamcast's discontinuation, was hired by Microsoft in 2003 to run the Xbox business. Visual Concepts, Sega's studio that had outshipped Madden on Dreamcast, was sold to Take-Two and became 2K Sports. NFL 2K5 in 2004 forced EA to sign an exclusive NFL licensing deal that kept the 2K simulation series out of the league for more than a decade. Phantasy Star Online's persistent-world model carried into Final Fantasy XI, Monster Hunter, and the entire console-MMO category. The console that left the market in 2001 had already named most of what came next.
Why Now
The Dreamcast was a hit. The single negotiating choice in mid-1998 about whether to grant Electronic Arts the entire sports genre is what sent the console out of the market less than three years later. The features Sega shipped early went on to define the next twenty years of console design, on consoles built by other companies. When a product's quality is uncontested and it still fails, the postmortem usually points at one room and one conversation. What was being decided in that room that the people in it could not see?
Sources
- Official Sega Dreamcast Magazine (US), Issues 0-12 plus Winter 2000 codebook, Imagine Media for Sega of America, June 1999 to April 2001 (Video Game History Foundation Library, identifier MAG-ODCM) (1999) · primary
- Official Sega Dreamcast Magazine #8 (November 2000), Sega of America / Imagine Media (Internet Archive) (2000) · primary
- Sega Enterprises, Ltd. Annual Report 1999 (year ended March 31, 1999), corporate filing covering the November 1998 Japan launch and the September 1999 North American launch plan (Sega Retro archive) (1999) · primary
- Perry, D.C. "The Rise and Fall of the Dreamcast", Game Developer (formerly Gamasutra), September 9, 2009, interviews with Bernie Stolar, Peter Moore, Charles Bellfield, and Bing Gordon (2009) · retrospective
- "Execs: Tech Changes, Visual Concepts Issues Behind EA's Lack Of Dreamcast Support", Game Developer (formerly Gamasutra), detailed accounting of the EA negotiation collapse (2010) · retrospective