The Dreamcast: 10 Years On, part one
By Damien Wilkens
09 September 2009 — "The Saturn is not our future."
When Sega of America's Bernie Stolar said those six words, it was the final nail in the coffin of what had been, at best, a troubled life for Sega's 32-bit console. Though loyal Sega supporters were already considered the battered wives of the industry at that point, the statement was thought by many to be Sega's final step towards a pitiful, whimpering death. Stolar, a snide, balding man who looked as if he'd be just as comfortable selling used cars, was by all accounts a smart businessman with the habit of saying and doing very rash and foolish things. Before working at Sega, Stolar was President of SCEA during the launch of the original PlayStation. He was the man who famously decreed that RPGs were not welcome on the new hardware, a move that did a lot of damage early on to Sony's third-party relations. Forever fighting for second place, and with the growing habit of making the worst business decisions available to them at the time, Sega naturally hired Stolar as soon as they had the opportunity.
Stolar never liked the Saturn, seeing it as a rushed-out, underachieving piece of plastic — which, in all fairness, it was. The nicest thing that most can say about the Saturn is how amazing it is that developers were able to make such quality games on such cheaply constructed, overly complicated hardware. There have been arguments for years about what truly killed the Saturn, but Bernie's comment certainly didn't help. There was supposedly a method to this madness, however. While most would agree that a high-ranking executive making a public statement for the purpose of killing his company's product is a stupid move, Stolar was simply making a play to his colleagues to get started on Sega's next console. It worked, but it also left Sega without a viable console in the market for over a year and a half. Stolar then endeared himself even more to his peers by having a dispute with Victor Ireland of Working Designs (one of the Saturn's few third-party supporters at the end), and making statements about how Namco's Tekken series on the PlayStation was dead now that the new Sega system would have Soulcalibur. Not surprisingly, Bernie Stolar was let go by Sega a few weeks before the American launch of the Dreamcast — along with a five million dollar severance package, naturally.
For all the mistakes that were made with the Saturn, Sega was determined to make sure that none of them were made with the new system. The first step: good, sturdy hardware that was easy to develop for. Of course, this process wasn't without problems of its own. Shoichiro Irimajiri, new President of Sega at the time, took it upon himself to hire a team of outsiders in 1997 headed by IBM's Tatsuo Yamamoto to design the new console in the US. The problem here was that Sega already had a hardware dev team, and their leader, Hideki Sato, wasn't open to the idea of being pushed aside for an American team — even if their figurehead was Japanese. What resulted were two separate teams designing their own version of what was then called the Dural.
Sato's team used reliable Japanese technology to design a prototype that would be known as the Katana, housing a processor manufactured by NEC. The US group settled on using a 3dfx Voodoo 2 processor, which would be known as the Shark. In April of that year, 3dfx declared its initial public offering, leaking the details of their contract with Sega and letting the public know that a new system was in development, a move that Sega was less than thrilled about. Most cite this as the main reason the Katana design was eventually chosen, though the power of Japanese loyalty can't be understated. In September of 1997, 3dfx sued for breach of contract, stating that Sega had no intention of ever using their design and were simply attempting to steal their technology. They later settled out of court and production of the Katana was under way, with a few design choices still to be made. A proprietary format known as GD-ROM was chosen for storing games, as CDs were seen as too small for the ambitious system, and DVDs had not yet become the format of choice in Japan, where laserdiscs were still in use. A partnership was also formed with Microsoft, who offered their Windows CE OS for the new system as a way to make development even easier for third-parties. Though CE was rarely used — and implemented poorly in most all cases except for the standout ChuChu Rocket — it was Microsoft's first taste of the home console market, one they would join years later.
Sega went for months before finally scrapping the Katana name in favor of Dreamcast, though some early discs were actually printed with the Katana symbol, a sign of just how far along the idea had gotten.
Seemingly every attempt possible was made to make Dreamcast the exact opposite of what the Saturn was. But in a strange bit of irony, that simple truth was one of the factors leading to the system's downfall. While the Saturn was a blow-away failure in the US, it enjoyed a long and healthy life in its native Japan. The US "surprise" launch of the Saturn — along with a line-up of just three games and high price point — made the system dead on arrival in the States, a lesson that most assumed Sega would learn from. But when the Dreamcast was released in Japan on 27 November 1998 with, again, only three games, it killed a market that would later prove to be the one thing that could have saved them. It was the anti-Saturn, most definitely. Japanese gamers loved the Saturn and had no time for the Dreamcast.
Knowing that they had once again launched too early, Sega took another year before releasing the Dreamcast in the States, working towards a much stronger launch library and a renewed sense of marketing. Saturn adverts in the US were abstract, featuring bald figures and cryptic imagery. The Dreamcast marketing, on the other hand, was nothing short of brilliant. Simple and striking, the forefront of Sega's hype machine was the "It's Thinking" motto, and a release date that fans still recall to this day: 9.9.99. While Japanese Dreamcast owners only had three games at launch, the US release had 18, including Sonic Adventure (the long-awaited 3D debut for Sega's mascot) and Soulcalibur (a beyond-perfect port of the arcade game, boasting what were at the time the most visually impressive graphics in console gaming). If that weren't enough, a partnership was formed with Hollywood Video, allowing impatient gamers to rent the Dreamcast months before release, serving only to build anticipation.
The launch was, by all counts, a resounding success, with sales nearing $40 million on the first day, breaking sales records across the board. Thousands of gamers actually went home empty-handed, as console shortages were prevalent during the first few weeks; Sega was simply unable to anticipate the demand of the new hardware.
Though sales were steady, issues still lingered, not the least of which were the strained third-party relations that had plagued the life of the Saturn. While Namco had partnered with Sega, Electronic Arts (a once stern supporter of the Genesis platform) declared that they would not be developing any software for the Dreamcast unless it sold a million units. A little over 90 days later, EA was forced to show their hand, and instead retracted their statement in favor of developing for Sony's new PlayStation 2. Aware of the fact that they would not be home to EA's trademark sports titles, Sega opted to instead develop their own, creating the 2K line. NFL 2K1 on the Dreamcast later went on to outsell Madden 2001 on the PS2, a fact Sega loyalists love to point out as a reason as to why EA eventually bought the exclusive NFL license a short time later.
The Dreamcast's success would maintain through the holiday season, but the lingering arrival of Sony's PS2 cast a heavy shadow on the industry. Japan, quick to abandon Sega's underwhelming system, immediately embraced the upcoming juggernaut. And as press releases poured in about the Emotion Engine — promising a machine that would actually feel — US gamers followed soon after. Sega maintained an audience through to the launch of the PS2, but their focus on the core gamer — hardcore fighting and shooter fans — left a hole in the mainstream that the PS2 was more than happy to fill, even though the launch in October of 2000 was astoundingly weak from a game standpoint. Early PS2 games — most not taking advantage of the system's much-hyped DVD functionality — paled in comparison to those that launched with the Dreamcast. And with a year head start, Sega had a strong library of high-quality, if not entirely wide-appealing titles that took advantage of the system's strengths.
None of this mattered during the 2000 holiday season. The PS2 dominated the Dreamcast, crushing every record that had been set by Sega the year before, and signaling the start of a new era in gaming. The PlayStation 2 wasn't just a game machine, it was a DVD player, a multimedia powerhouse that represented the bleeding edge of graphical accomplishments. Though in practice, the PS2 never delivered on the lofty promises shown in tech demos and press releases, the fact remained that Sony had spent the previous five years building brand trust, making the word "PlayStation" synonymous with gaming as "Nintendo" had once been. Sega, on the other hand, spent the past decade destroying any name they had built, and a lot of consumers, tired of being burned, simply ignored the Dreamcast despite its strengths.
On 31 January 2001, Sega announced that it was stopping development of the Dreamcast console and bowing out of the hardware business, closing the book on what had been a fascinatingly tragic tale. While it's easy to point to the power of the PS2 as the reason for the Dreamcast's death, the truth is that Sega was already making plans to discontinue the system before the holiday season; documents were leaked showing planned ports of Sega games, such as Crazy Taxi, for the PS2. Though the real damage to the Dreamcast was done by the tepid Japanese launch; despite their successes in the States, Sega couldn't break even in Japan — the market that made them.
In the end, the Dreamcast was ended by one man: Isao Okawa, head of the CSK Holding Corporation, a benefactor that had for years watched Sega accumulate debt in the tens of millions. Okawa was a hero to Sega, and without his support, there would not have been the sort of funding necessary for the Dreamcast to even exist. But it had become too much, and the failures in Japan became too large for even Okawa to ignore. In late 2000, Okawa sat with a select few members of the gaming media and somberly admitted, even if the Dreamcast did well through the holiday, Sega was done with the hardware business.
Okawa died only a few months before the official announcement was made, his death signifying the end of what had kept Sega alive for so long.
Through fan support, Sega continued to produce the Dreamcast until March, and managed to continue limited software support to 2004. To this day, games are still being released for the console from various third-parties, most using the tagline of "the last ever Dreamcast game" as their main selling point. Some of the systems most unique titles, such as Ikaruga and Rez, didn't see the light of day until after the death of the system, and were never released in the US until much later on other consoles.
In almost a year and a half, the Sega Dreamcast released 250 games in the US, a comparatively small but quality library that stood the test of time. Perhaps that's why whenever the Dreamcast is mentioned the phrase "ahead of its time" is likely sure to follow. It was the first 128-bit home console, the last in a generation where counting bits mattered to the consumer. It was the first to have online capability out of the box — a feature that wouldn't be seen again until almost a decade later with the PlayStation 3. It was the first to offer functionality with a handheld system, using the Neo Geo Pocket to enhance certain titles — a feature that the GameCube would later attempt with the Game Boy Advance, with mixed results.
While Sega's renewed focus as a software developer created excitement early on, the company soon fizzled into a shell of its former self, reduced to being just another third-party developer. To loyal Sega fans, the Dreamcast represented the bright success in a long history of failures, a supernova that burned out quickly, but could never be forgotten. Evidence of this falls on every fan disenfranchised with the current gaming climate, who all waited in blind hope for 9.9.09 for the microscopic chance of another miracle. Clearly, that's not to be. But it's a resounding indication that though the video game industry has forgotten the impact the Dreamcast made on gaming, fans haven't.