History of the Dreamcast

The Sega Dreamcast.

The Dreamcast is Sega's last released video game console. While it was aimed to save Sega's home console business after the lackluster response to the Sega Saturn, overwhelming competition from the PlayStation 2 (and to a lesser extent the Nintendo 64) proved to be the end for the system.

Origins

In 1997, the Saturn was struggling in North America, and Sega of America president Bernie Stolar pressed for Sega's Japanese headquarters to develop a new platform. At the 1997 E3, Stolar made public his opinion on the Saturn with his comment, "The Saturn is not our future" and referred to the doomed console as "the stillbirth".

Design

The then newly-appointed president of Sega, Shoichiro Irimajiri, appointed researcher Tatsuo Yamamoto from International Business Machines Austin Research Laboratory as the head of the "US Skunkworks group", which was responsible for designing a new Sega console. However, due to Sega hardware engineer Hideki Sato and his group refusing to cede control of the internal hardware department, each team drafted competing designs.

Sato and his group chose the Hitachi SH4 processor architecture and the VideoLogic PowerVR2 graphics processor in the production of their mainboard, versions of which were successively codenamed "White Belt", "Guppy" and "Katana". Yamamoto and his Skunkworks group opted to use 3dfx Voodoo 2 and Voodoo Banshee graphics processors, and after initially trying other RISC processors, settled on the SH4 as well. The codenames given for the Skunkworks project were firstly "Black Belt", followed by "Shark" and lastly "Dural".

Initially, Sega decided to use the Skunkworks design and suggested to 3Dfx that they would be using 3dfx hardware in the upcoming console, but Sega later opted to use the PowerVR hardware of Sato's design, now renamed the Dreamcast. This was attributed to 3Dfx leaking details and technical specifications of the then-secret Dreamcast project when declaring their Initial Public Offering in June 1997.^{[citation needed]}

In response, 3Dfx filed a $155 million suit in September 1997 ^[1] against Sega and NEC,^[1] claiming that they had misled them into believing that Sega was committed to using 3dfx hardware for the console "while knowing that [they] would ultimately choose to use the NEC chipset",^[2] and that Sega also had confidential materials and hardware relating to 3dfx's intellectual property which they had been deprived of.^[3] In August 1998, 3Dfx, Sega, and other companies involved in the suit settled, with Sega paying $10.5 million to 3Dfx.^[4]

Launch

The Dreamcast was released in November 1998 in Japan; in September 1999 in North America (the date 9/9/99 featured heavily in U.S. promotion and the Dreamcast premiere at theaters everywhere); and on October 14, 1999 in Europe. The tagline used to promote the console in the U.S. was, "It's thinking", and in Europe, "Up to 6 Billion Players."

Due to technical problems Sega did not achieve their shipping goals for the console's launch in Japan. This was due to the lack of a graphics chip manufactured by NEC.^[5]

In the United States alone, a record 300,000 units^[6] had been pre-ordered^[5] and Sega sold 500,000 consoles in just two weeks (including 225,132 sold on the first 24 hours which became a video game record). In fact, due to brisk sales and hardware shortages, Sega was unable to fulfill all of the advance orders.

Sega confirmed that it made US$98.4 million on combined hardware and software sales with Dreamcast with its September 9, 1999 launch. Sega even compared the record figure to the opening day gross of Star Wars Episode I: The Phantom Menace, which made $28.5 million during the first 24 hours in theaters. Chris Gilbert, the senior vice president of sales at Sega of America, said on November 24, 1999: "By hitting the one million units sold landmark, it is clear that the Dreamcast consumer has moved beyond the hard-core gamer and into the mass market."^[7] Four days after its launch in the US, Sega stated 372,000 units were sold bringing in US$132 million in sales.^[5]

Before the launch in the United States, Sega had already taken extra steps in displaying Dreamcast's capabilities in stores nationwide. Much like the PlayStation's launch in North America, the displays of titles such as Soul Calibur, Sonic Adventure, Power Stone, and Hydro Thunder helped Dreamcast succeed in the first year.^[8]

Although Dreamcast had none of Electronic Arts' popular sports games, due in part to EA's losses from the Sega Saturn, Sega Sports titles helped to fill that void. The biggest competition between Sega Sports and EA Sports in the U.S. was their American football and basketball games. This started with one of the launch titles of the Dreamcast, NFL 2K. Both the non-Dreamcast Madden NFL 2000 and NFL 2K were highly regarded, with the Dreamcast boasting a new graphics engine and Madden retaining the same solid engine of previous incarnations. According to a press release, NFL 2K1 outsold Madden NFL 2001 by 49,000 units in its first two weeks of release, selling a total of 410,000 by November 2000, two months after its debut.^[9] In Europe where football is popular the Dreamcast released games where seen as poorer than those released by Electronic Arts and Konami

Competition

In March 1999 Sony unveiled its PlayStation 2.^[5] The actual release of the PS2 was not until March 4, 2000 in Japan, and October 26, 2000 in the United States. Sony's press release, despite being a year ahead of the launch of the PS2, was enough to divert a lot of attention from Sega. The PS2 also featured an integrated DVD player and would cost the same or less than dedicated DVD players. With the looming PS2 launch in Japan, the Dreamcast was largely ignored in that territory. While the system had great initial success in the United States, it had trouble maintaining this momentum after news of the PS2's release.

Dreamcast sales grew 156.5% from July 23, 2000 to September 30, 2000 putting Sega ahead of the Nintendo 64 in that period.^[10] During that time, the PlayStation 2 was plagued by production shortages, with people often paying in excess of $1000 on eBay for Sony's next-generation console.^[11] However, Dreamcast's online capabilities through SegaNet, and a price cut around the second half of 2000 (which made it half the price of the PS2) did little to help sales once the PlayStation 2 was launched with its much hyped graphics and ability to play DVDs.

A key to Sony's relatively easy success with the PlayStation 2 was that they already enjoyed brand-name dominance over Sega after the huge success of the original PlayStation, while Sega's reputation had been hurt due to commercial failure of the Sega Saturn and Sega 32X. In particular, Sega's attempt to quickly kill off the struggling Saturn (which lagged in North America and Europe) in favor of Dreamcast had angered many third-party developers in Japan, where the Saturn had still been able to hold its own.^[12] While initial Dreamcast sales were strong, many prospective buyers and game developers were still skeptical of Sega and they held off from committing, possibly to see which console would prevail. By early 2001, game publishers abandoned Dreamcast development en masse in favor of the PlayStation 2 and canceled many nearly completed projects. In 2000, the announcements of the Microsoft Xbox and Nintendo GameCube fueled speculation that Sega did not have the resources for a prolonged marketing campaign.

Outside U.S. and Japan

For the European and Australian PAL release of the Dreamcast, Sega changed the Dreamcast's familiar Orange swirl logo to blue. This was done to avoid copyright confliction with the German video game/DVD publisher Tivola, which already used an Orange swirl as their company logo.

As part of Sega's promotions of the Dreamcast in Europe, the company sponsored four European football clubs: Arsenal F.C. (England),^[13] AS Saint-Étienne (France),^[14] U.C. Sampdoria (Italy)^[15] and Deportivo de La Coruña (Spain).^[16] The logo also appeared on foosball tables produced for the hotel chain Hilton.

Many important titles were never released outside of Japan, and many were hard to find without importing them. While Dreamcast did receive a price cut in the U.S. to coincide with the PlayStation 2's American release, the European pricing remained the same, even when the PlayStation 2 was released in Europe.

Sony marketed the PlayStation 2 in each country's local media, such as newspapers and street shows. Sega recruited third-party companies to promote Dreamcast, some of which did not allocate sufficient money for advertising.

DreamArena (the European equivalent to SegaNet, the Dreamcast online service) was a fiasco in Finland because the cost of connection was more than three times the amount of a normal ISDN internet connection^{[citation needed]}. This was because Sega allowed open pricing for third-party companies. The companies stated that the price was steep due to a lack of potential customers, but most users believe that the companies were just using the open pricing to their advantage.

End of production

On January 31, 2001, Sega announced that production of Dreamcast hardware was to be discontinued by March of that year^[17] although the 50 to 60 titles still in production would be published.^{[citation needed]} The last North American release was NHL 2K2, which was released in February 2002. With the company announcing no plans to develop a next-generation successor to Dreamcast, this was Sega's last foray into the home console business. Massive price cuts were quickly instituted in order to move the abundance of unsold hardware and the system had quickly dropped to prices as low as US$49.99 new.^[18] By late 2002 in the UK the Dreamcast was sold brand new for as little as £39.99 and was subject to incentive giveaways with contract mobile phones.

Though Dreamcast was officially discontinued in early 2001, commercial games were still developed and released afterwards, particularly in Japan. Unreleased games like Propeller Arena and Half-Life continued to become available to the public through warez groups and independent hackers.

On February 24, 2004, Sega released their final first-party Dreamcast game, Puyo Pop Fever. Afterwards, a small number of games continued to be released, which were mostly conversions of arcade shooters based on the Sega NAOMI arcade board, itself essentially a Dreamcast with extra video RAM.

Sega would sell the last Dreamcast units in stock through the Sega Direct division of Japan in early 2006. Although they were only refurbished units, they did come with the new Radilgy game and a phone card.

The first Sega title to be released on another console following the Dreamcast's demise was Crazy Taxi, which was ported onto the PlayStation 2 and the Nintendo Gamecube, by Acclaim.

References

1. ^ ^{a b} ElectronicNews Newspaper, Inc. (1997) 3Dfx sues Sega, NEC over contract Published Sept 8, 1997. Retrieved on 12 February, 2009 from http://findarticles.com/p/articles/mi_m0EKF/is_n2184_v43/ai_19746977
2. ^ ElectronicNews Newspaper, Inc. (1997) 3Dfx sues Sega, NEC over contract p1 - Citing 3Dfx Director of investor relations Laura Onopchenko; "Sega intentionally led 3Dfx to believe that Sega was committed to the 3Dfx chipset for Sega's new game console, while knowing that it would ultimately choose to use the NEC chipset [,]"
3. ^ ElectronicNews Newspaper, Inc. (1997) 3Dfx sues Sega, NEC over contract p1 - Citing 3Dfx Director of investor relations Laura Onopchenko; "Sega received under the false pretenses of the development contract, confidential design and development information and materials, all of which were proprietary and highly confidential property of 3Dfx."
4. ^ BusinessWire, Inc (1998). 3Dfx, Sega, NEC and VideoLogic settle 3Dfx[]lawsuit Published on August 4, 1998. Retrieved from http://www.allbusiness.com/legal/legal-services-litigation/6861052-1.html on February 12, 2009.
5. ^ ^{a b c d} "Sega Dreamcast". Game Makers. G4 (TV channel), Los Angeles. 2008-08-20. No. 302.
6. ^ Maclean's 24 September 1999.
7. ^ "Dreamcast beats Playstation record". BBC News. November 1999. http://news.bbc.co.uk/2/hi/business/534957.stm. Retrieved 2008-08-19. 
8. ^ "Dreamcast Museum". Chronicgames.net. http://www.chronicgames.net/articles/dreamcast-museum.aspx. Retrieved 2008-08-11. 
9. ^ "Sega Sports NFL 2K1 Outsells the Competition on Its Debut; First Ever Online Console Game NFL 2K1 Becomes Number One Football Game This Fall". Business Wire. November 28, 2000. http://findarticles.com/p/articles/mi_m0EIN/is_2000_Nov_28/ai_67385294?tag=artBody;col1. Retrieved 2008-08-19. 
10. ^ "Price Cut Leads to Surge in Dreamcast Sales". Manjiro Works. http://www.manjiro.com/japannewsocttodec2000.html#anchor113244. Retrieved 2008-08-19. 
11. ^ "PlayStation 2 Timeline". GameSpy. p. 3. http://archive.gamespy.com/articles/february04/ps2timeline/index2.shtml. Retrieved 2008-08-19. 
12. ^ Nick Gibson (2006). "Sega exits the console business". Games Investor. http://www.gamesinvestor.com/Research/Thinkpieces/Past_Thinkpieces/Sega_exits_the_console_busines/sega_exits_the_console_busines.html. Retrieved 2006-09-15. ^{[dead link]}
13. ^ "Sonic signs for Gunners". BBC News. 1999-04-22. http://news.bbc.co.uk/1/hi/sport/football/326010.stm. Retrieved 2007-07-19. 
14. ^ "SEGA EUROPE strikes third major European sponsorship deal with A.S. SAINT-ETIENNE". PRnewswire.co.uk. 1999-06-15. http://www.prnewswire.co.uk/cgi/news/release?id=50451. Retrieved 2007-07-19. 
15. ^ "SEGA EUROPE strikes sponsorship deal with U.C. SAMPDORIA". PRnewswire.co.uk. 1999-06-11. http://www.prnewswire.co.uk/cgi/news/release?id=31106. Retrieved 2007-07-19. 
16. ^ "SEGA announce new price for Dreamcast". SEGA. 2000-09-01. http://www.sega.co.jp/corp/release/2000/0901_4/. Retrieved 2007-07-19. 
17. ^ "Sega Scraps the Dreamcast". BBC. January 2001. http://news.bbc.co.uk/1/hi/business/1145936.stm. Retrieved 2008-08-22. 
18. ^ http://www.allbusiness.com/services/motion-pictures/4861440-1.html