Sega's last console shipped a modem in every box and still flopped
The Dreamcast was the first console with a built-in modem for online play, an idea Sega's own staff resisted over the extra $15 per machine. It launched before the PlayStation 2, pioneered downloadable content, and lasted barely two years. Sega then quit making hardware altogether and became a software company.
Sega arrived at the Dreamcast bruised. Its Genesis had sold 30.75 million units, but the Saturn that followed was costly and hard to program, and by August 1997 Sega held just 12 percent of the console market against Sony's 47 and Nintendo's 40. For the year to March 1998 it posted its first loss since listing on the Tokyo Stock Exchange, a consolidated ¥35.6 billion.
The new machine was built to be cheap and friendly. Rival design teams competed: one in the US under IBM's Tatsuo Yamamoto favoured 3dfx graphics, while Hideki Sato's Japanese team chose a Hitachi SH-4 processor and a PowerVR2 graphics chip made by NEC. Japan's version won, and 3dfx sued for breach of contract before settling. Off-the-shelf parts, closer to a personal computer than a traditional console, meant developers could start coding before kits existed. A Sega-Yamaha disc format called GD-ROM dodged DVD licensing fees, and Microsoft supplied a tailored Windows CE to ease PC ports.
Economist Brad Huang persuaded chairman Isao Okawa to put a modem in every unit, designed to be swappable as home internet changed. The name, a blend of dream and broadcast, came from a public contest of more than 5,000 entries, and Ryuichi Sakamoto wrote the startup sound. Sega poured roughly $300 million into worldwide promotion.
Japan's November 1998 launch was hit by supply shortages; the American launch went well, but sales slid as hype built for the PlayStation 2, and price cuts only deepened the losses. Sega halted the Dreamcast on March 31, 2001, after 9.13 million sales and over 600 games. Critics now rank it among the best consoles, praising titles such as Shenmue and Crazy Taxi, and hobbyists run private servers to keep its online features alive.
Source: Dreamcast
