Features Retro 3

The Rise and Fall of the Sega Dreamcast: 16 Years Later


Although the Sega Dreamcast had one of the shortest console lifespans in history – being released in 1999 and discontinued by March 2001 – its influence and legacy are still very much a large part of gaming today. Sixteen years since its original North American release of September 9, 1999, we take a retrospective look back on where it all went wrong (and initially right) for the console which would signal the end of Sega’s hardware production.

The Birth of the Dreamcast

The year was 1997. With Sega’s reputation in tatters following the monumental commercial failures of their Mega CD and 32X add-ons for the Megadrive and the ill-fated Saturn console, the company knew it was time for a massive shake-up at the top if their fortunes were to be reversed.

Bernie Stolar, the former Sony executive who oversaw the launch of the PlayStation 1, was appointed president of the corporation’s American division. Heavily pushing for the discontinuation of the Saturn in favour of a brand new console, the Dreamcast was eventually born after two dueling designs were considered by Sega’s top brass.

With Sega’s public image being at an all-time low, the decision was taken to completely rebrand its new system, stripping it almost entirely of any of the company’s own name and logos; naming it the Dreamcast (sans Sega), with an orange swirl as its logo.

With Stolar orchestrating an innovative advertising campaign, re-building bridges with retailers to show off the technical prowess of the Dreamcast and promote pre-orders, the hype created for the 9/9/99 release date (which itself featured heavily in promotional material) was enormous.

Record-Breaking Launch

With gamers clearly sold on the Dreamcast’s potential and launch titles – which included Soul Calibur, Power Stone, The House of the Dead 2 and Sonic the Hedgehog’s long-overdue initial foray in full 3D, Sonic Adventure – pre-orders for the console topped an impressive 300,000 units in the US; with a record-breaking 225,000 sold on launch day alone.

Boasting far better technical specs and graphics than the PS1 and N64 – with Sony’s PlayStation 2 a year away from release – Sega seemed to have got their timing spot on with the Dreamcast. By November 1999, the Dreamcast had surpassed the one million units sold landmark, and was named one of the best products of the year by Businessweek.

Innovative Games Library

Besides the technical capabilities of the Dreamcast, its initially strong sales performance was undoubtedly boosted by the release of a number of highly influential, original and innovative titles, which included:

Sonic Adventure: Following the highly-acclaimed release of the 3D platformer Super Mario 64 on the Nintendo 64, fans of the Italian plumber’s greatest rival had yearned for Sega’s mascot to be given the full 3D treatment. However, a great Sonic the Hedgehog game failed to materialise on the Saturn; with Sonic Xtreme being cancelled and a port of isometric Megadrive platformer Sonic 3D Blast being terribly underwhelming.

Things would change with Sonic Adventure and its sequel SA2, though. Boasting stunning graphics, some of the best music heard to date in video games and high-action gameplay, the lightning-quick blue hedgehog transformed into 3D in style.

Phantasy Star Online: Gamers were blown away with the 2001 release of the Phantasy Star Online series. Utilising the Dreamcast’s 56K modem, the much-hyped console gaming over the Internet was finally a reality. The games were bloody good, too; offering players hours of fun in their hack-and-slash RPG action.

The House of the Dead 2: In addition to its fantastic range of exclusive titles, the Dreamcast also boasted a number of first-party arcade ports; one of the best of which was on-rails light-gun shooter The House of the Dead 2. Truly a blast to play, especially armed with two guns and a friend.

Crazy Taxi: Another cracking arcade port, Crazy Taxi had a very simple concept of getting passengers from A to B, but its unique stunt and boosting system provided countless hours of fun and vehicular destruction.

ChuChu Rocket!: In essence, ChuChu Rocket! was the most epic game of cat-and-mouse ever seen. In this unique puzzler, made up of over 100 levels, players were tasked with helping mice escape the clutches of cats by directing them into rockets. A built-in level editor and online capabilities allowed players to share their creations with the world; a concept still emulated heavily today (Little Big Planet, anyone?).

Skies of Arcadia: The first traditional RPG released for the Dreamcast and arguably the best, Skies of Arcadia featured a huge open environment and an engaging combat system in which a team of airship pirates attempted to stop the Valuan Empire from destroying the world.

Shenmue: Although a commercial failure – with a budget of over $64 million in modern terms – first-party adventure game Shenmue continues to be influential today. One of the first massive open-world sandbox adventures, Rockstar undoubtedly took inspiration from the series with its creation of its seminal and critically-acclaimed Grand Theft Auto III.

Shenmue also took interactivity to a whole new level, with quick time events allowing players to immerse themselves in the game and its cutscenes; a feature which continues to be popular today in blockbuster games such as Uncharted and Tomb Raider.

Jet Set Radio: Paving the way for cel-shaded games everywhere, Jet Set Radio was a skating game with a difference. Set in a vibrant, futuristic version of a fictionalised Tokyo, players had to perform tricks and tag walls with their graffiti, all while avoiding the police.

Soul Calibur: It may have been an enhanced arcade port, but Namco’s Soul Calibur can still rightly claim its place as one of the best Dreamcast games ever released, due to its stunning graphics and fantastic weapons-based combat gameplay.

Rez: Though technically an on-rails shooter, Rez is a game that has to be played to be fully appreciated. A psychedelic masterpiece, the team that brought gamers Panzer Dragoon combined electronic music and wireframe graphics to create a fully immersive virtual reality.

The Drastic Fall

Despite its stellar back catalogue of first- and third-party exclusive titles, by March 2001 – only 18 months after its release – the Dreamcast was effectively dead, with a huge number of projects being cancelled and no more units being manufactured. What had gone wrong?

New Sega of America president, Peter Moore, took the decision to cease production of the console; citing Sega’s poor financial position and inability to compete with Sony’s PS2 as the primary reasons for doing so.

The PS2’s launch was the beginning of the end for Sega.

The truth of the matter was that despite innovating video gaming in a number of areas, outside of its initial launch, sales of hardware and software hadn’t been as strong as hoped. By late 2000 – with the impending release of the Playstation 2 – console sales had slowed significantly, with only 2.6 million units being shifted, well below initial projects of five million.

With Sony holding such a strong position in the market due to the success of the PS1, casual gamers and the public at large had resisted splashing out on the Dreamcast with the promise of a more established brand and stunning graphics soon to hit stores worldwide. Similarly, many third-party publishers held back from releasing triple-A franchises on the Dreamcast; then abandoned Sega in droves when it became clear the PlayStation 2 would prevail.

Although the Dreamcast trumped the PS2 in a number of areas, including its native VGA capabilities, innovative VMU memory card peripheral and online connectivity; gamers seemed far more excited at the prospect of the PlayStation’s built-in DVD player (which Sega had rejected in a cost-cutting measure, favouring instead CDs/GD-ROMs) and promises of major PS1 franchises being brought into the 21st century.

It’d be fair to say piracy also had an adverse impact on the sales performance of Dreamcast titles, with the system’s proprietary GD-ROM format providing little-to-no protection from hackers; indeed, most copied games were able to be played without the need for a modchip.

With Sega losing upwards of $160 million, the cessation of the Dreamcast’s production also signalled the end of the corporation’s hardware manufacturing altogether, with the company restructuring to concentrate its efforts on being a third-party software developer and publisher only.

Closing Thoughts

Although a monumental failure in commercial terms, the Dreamcast was different to Sega’s other ill-fated hardware projects. The console had a massively successful launch, and brought many innovations with it which are still prevalent in gaming today.

Crucially, however, the timing of its release proved to be misjudged as it peaked far too soon, with Sega’s previous failures and Sony’s massive launch of the PlayStation 2 giving the Dreamcast little chance of being a long-term success.

Do you hold any fond memories of the Dreamcast or any of its titles? Let us know in the comments below.

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  • orn

    It warms my heart to see the Dreamcast get a shoutout, it had some of the most innovative games of any console I had ever seen. I’ve never played another game like Psychic Force or Tech Romancer to date, though not for lack of searching.

    I blame the pirates. I don’t think I met a single person who had a dreamcast that didn’t also have a cd wallet full of burned games.

    RIP dreamcast, I’d love to see sega give the console world another go

  • Al lobo

    Just bought one! !

    • Adam Hovey

      Got one for my little sisters for their burthday