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The Rise And Fall Of The Dreamcast

September 9, 2009 Article Start Page 1 of 7 Next

In celebration of the 15th anniversary of Dreamcast's North American launch, we're featuring this classic Gamasutra article about Sega's gone-but-not-forgotten console.

[In this ten-year Dreamcast retrospective, Gamasutra looks back at Sega's last effort in the console market through interviews with former president of Sega of America Bernie Stolar, former Sega of America COO Peter Moore, former SOA Vice President of Communications Charles Bellfield, and former vice president of Electronic Arts, Bing Gordon.]

For a console that broke entertainment retail records, made the Guinness Book of World Records, and laid the blueprints for today's online-centric consoles, it's striking to think the Dreamcast's lifespan was shorter than nearly any console in video game history.

Ten years after 9/9/99, the memorable date of the launch of the Dreamcast in North America, Sega's machine has left a lasting legacy in online gaming, retail history, and the sports genre. But the brief, fiery life of the Dreamcast was fraught with conflict, questionable executive decisions, and ultimately, a shocking and abrupt ending.

A Change in Attitude

The video game world into which Sega launched the Dreamcast was vastly different than today's highly connected wireless experience. The arcade market was still successful, 80% of consumers connected to the internet used a modem, and the PC market was at its peak -- and, more importantly, was the sole domain for online games.

After a successful Japanese launch in late 1998, Sega looked toward the North American market to achieve a head-start over its biggest competitor, Sony Computer Entertainment America, by growing a strong install base and by rebuilding excitement for its products.

In 1995, Sonic the Hedgehog was better known than Disney's Mickey Mouse, but the Sega Saturn, from its disappointing launch to its inevitable cancellation, had soured many gamers on Sega products.

In 1997, Sega hired Bernie Stolar, fresh from his role as president of Sony Computer Entertainment America, as the new president of Sega of America. Stolar was a shrewd, successful businessman who knew the games business from his time working at Sony, the arcades, and at Atari.

In a phone call with Gamasutra, Stolar, currently running Getfugu, Inc, explained how it all started. "Saturn, as you know, was a failure. I was brought in to help restructure and rebuild Sega of America. When I started, there were over 300 people; I trimmed the company down to about 90 people."

Among others, Stolar brought in 17-year Reebok executive Peter Moore, former Sony third-party executive Gretchen Eichinger, head of sales Chris Gilbert, and Charles Bellfield, as well as several other important figures.

Stolar's task was to wage an uphill battle with gamers, many who had bought the short-lived 32X, Sega CD, and the Saturn, and retailers, who were still wincing from Saturn sales and an exclusive launch that cut many retail chains out of the picture.

"We had to change the attitude of retail to believe we were a serious player," said Stolar. "And because of the whole Saturn thing, retailers really hated Sega. It took me a lot of work to change their minds. I went to every retailer and told them this was going to be a great system, it was going to have a modem, it was going to have online play, this was the content it was going to have, and this was what it was going to look like. They all bought into that. They all trusted me. Plus, they really liked the team I put together. They felt this was the right team."

Before Stolar could change anyone's minds, however, Sega had to make up its own mind.

Article Start Page 1 of 7 Next

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Fiore Iantosca
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Great article. I can't emphasize how much I loved SEGA and still do. This article only reinforces the big role money plays. I can't stand EA. I despise them more after reading this article. Madden 10 is utter shit. The 2K football games were far and away better than the Madden games.

Stephen Northcott
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I worked on Tecwar / Netmerc at Sega shortly before the time the Dreamcast (prototype) was supposed to get it's first VR HMD. Not surprising really as we were working on the first VR arcade game at the time, and Virtuality in the UK (who we were on loan from) were involved in developing the Dreamcasts' headset.. Go figure. :)

Working in Haneda was a fantastic experience, and getting to hang out there during the time that Daytona was hot, and Virtua Racing and Virtua Fighter were also supremely popular meant that it was an exciting time.

Those were the good old days, and Sega really was throwing money at so many different projects.

The timeline in this article has me a bit confused though because we knew all this stuff about the Dreamcast in 94/95. By 97 I was on other projects elsewhere..

Stephen Northcott
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I was just doing some research to see if I am confused in some way and came across the Sega VR Wiki.

I presume my confusion is that perhaps the Sega VR was called "The Dreamcast" internally, but even then that Wiki has dates that seem too early for my timeline. Because I have only ever been aware of the name Dreamcast, even in 1994!

"The company claimed the project was stopped because the VR was so real users would move while wearing the headset and injure themselves."

What is funny is that I remember coming up with this quote as a group inside Sega when decisions were being made about whether home equipment really could carry VR. The obvious answer was no. How we laughed when we read that sentence out!

All any of this confirms for me is that (as we suspected when we were there) Sega does indeed (or did) run many overlapping and competing projects as backups to each other all the time.

They did it with us (working on the older non-textured 3D arcade PCBs which were designed for Virtua Racing and Virtua Fighting) while other divisions ran similar projects on newer untested textured 3D arcade engines.

Fun times! So much intrigue, and so many expensive toys!

John Mason
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Thank you so much Douglass for putting up this piece; rest assured I'll give it a read a little later today. I personally thank Sega for getting me into video games in the first place, and I still think many (hell might as well say all) of their classics are examples of gaming in it's most pure, undilutued and pristine form, as it *should* be (and is of such the industry can learn a lot from ;).

Though I sadly didn't have a Dreamcast when it still a player on the block, believe me I would have if I could, and when I start my Sega console collection it'll obviously be there (I already have a Saturn as a start x3). Really interested to see what this article might have to say insofar as the politics behind the scenes. Later, and thanks.

John Mason
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Really cool to have someone from the company up here; just adds to the article I feel.

Above you said that you knew of the Dreamcast all the way back in 94/95; is that true?!? If so it really astounds me that Sega was that far ahead in the console's conceptualization when the Saturn hadn't really even started out on the market yet. I understand that the console manufacturers begin concepts on new consoles in R & D after production of the current console is completed in R & D, but from the sound of it Sega was moving *fast* xD.

Yannick Boucher
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You could write 10 more pages about this and still more could be said! Great piece. Long live the DC...

One thing that stands out in my mind as I read this though, is that piracy was often said to be one of causes of the DC's demise, yet when I read these guys' accounts, and put the timeline together, basically, piracy didn't even have enough time to be felt much...? I mean, I personally thought it made sense, but here it really seems to be purely internal reasons that led to it's demise...

Yannick Boucher
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As for the different accounts between Sega and EA as to why it didn't work out... I guess we'll never really know. But for some reason, in hindsight, looking at what EA Sports did with its exclusivity deals later on, I wouldn't be surprised if Stolar was right.

I mean, after all, Visual Concepts probably wouldn't have had the time to put together NFL 2K in time and with such quality if they'd started to work on it as a filler _after_ they'd learned of EA pulling out, right?

Yannick Boucher
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Inaction/conservatism at SEGA of Japan had always been an issue, that's true...

Stephen Northcott
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@John: As we get older I am sure our memory plays tricks..

However, what I am certain of is this:

In 94/95 we (Virtuality PLC) were working with Sega on a VR Arcade game, commissioned by Sega. I was personally involved in that project as a lead engineer in Haneda with 4 other people producing the game, 1 Sega project manager overseeing and acting as liaison to super high up Sega people, and a satellite office of 2 or 3 people staffing Virtuality, Tokyo. We worked inside Sega for most of the project, and for a while at our own offices. The project was of massive importance to Virtuality, hence us basically setting up a company over there at a few days notice after a nod from Sega that they wanted us *in Japan*.

Whilst in Sega we had enormously interesting hands on meetings with the most senior staff in Haneda on a regular basis about a wealth of projects, both potential and ongoing. We did feel a little bit like rock stars for a while there!!

You can read some comments about the VR arcade project, generally, from a fellow engineer Andy Reece, on this web page :

I also know that we were aiding in the design of a VR HMD (Head Mounted Display) for home use for a console yet to be produced in any form other than a "prototype". The name I was aware of in 94/95 was the 'Dreamcast', which was to have an always on network connection (at least in Japan).

It's possible that this might have been an add on for the Saturn, or a new iteration I suppose, but that is certainly not what I recall, and the name Dreamcast was used often.

I do remember looking at production prototypes for the HMD with some pretty small LCDS in them for the time, and an incredibly nice form factor compared to our home grown almost industrial design UK HMDs, which were for the original W.Industries / Virtuality VR units. The prototype units I remember even matched the colour and style of the Dreamcast console's casing. Although that could be a red herring as plastic prototypes are often made in those lighter colours.

I do also know that another VR partnership with Sega had not gone well prior to our involvement (perhaps the earlier 91/92 Sega VR unit) with another company, which was why our company was of great strategic interest to Sega, and also perhaps why the whole thing was so dynamic and involved a lot of intensity!

Good times!

Alex Chiang
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Fantastic article! My only point would be to point out the lack of interview content or quotes from the Japanese end of Sega. The article was very informative for me, but also very North America-centric.

The chronicle of picking between the two designs would have been more illuminating if some reasoning from the decisionmakers in Japan.

Ben Hopper
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I really enjoyed reading this. I really miss Sega being in the hardware business. They definitely made some major mistakes, but they were a game company through and through, unlike Sony and Microsoft. I still have all my old Sega consoles hooked up, because those were the days when games were really, really fun.

Jonathan Kim
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Bravo, sir. That was a most excellent article and a great insider look at the peaks and valleys of the Dreamcast's life. 9/9/99 is still a very memorable day for me and it was because of all these key players that the Dreamcast stays so special in my heart.

John Mason
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Thanks for that link; I frequent that site every now and then and have read Alex's testimony on Tecwar; it's a little surprising at how quickly Sega moved from Model 1 to Model 2, and how and why there were so little Model 1 pcbs. I don't know how the market worked but it certainly seemed face paced xD. VR for the Dreamcast would have been unbelievable and, while maybe no commercially viable, definitely lending it massive tech cred (though it got a lot of that anyway). Just mentioning VR has me thinking of why it hasn't yet made a comeback in the industry, though again I suspect the commercial viability (lack thereof) is a reason. This motion control 'phase' has to be a warm-up for the masses for VR again, it just has to xD.

Sounds like the roller-coaster ride during those years was very awesome indeed.

Mike Lopez
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Great article!

I loved, loved, loved the Genesis and games for it and developed multiple versions of Road Rash for that and most every successive system up to 2000 (minus the DC). But IMOHO Sega got what they deserved. I too saw extreme arrogance out of them in the mid 90s with their money grubbing ways of minor hardware upgrades like the 32X and the Sega CD and both as a consumer and a developer that pissed me off and made me not want to support them either with my purchase of new systems/games or with developmental support. Not that EA has not had their fair share of it, but Bing makes a good point about arrogance of past dominance and I think Sega got shellacked for that arrogance, which seemed fitting to me. It also seems to parallel with successive generations of consoles; Nintendo took the bottom place for a generation and a half or two as payment for their sins of arrogance, s/w market protectionism, and foolishly high license rates (they were lucky to have GBA to fall back on for profits), which they had tamed significantly by the time the Wii launched. More recently Sony has taken a beating for their arrogance with the PS3 that was so brutally hard to develop first gen software on even for developers who had PS1/PS2 experience, and from consumers who just didn't see the benefit of such an expensive machine with much less differentiating software. Burn me once, shame on you. Burn me twice, shame on me and you've lost my business for ever no matter how much you spend on marketing/PR.

Back to the article, it kills me to see how incestuous and nationalistic business-wise many Japanese companies can be, and here Sega clearly paid little attention to what would have been a better machine that was easier to develop for. At the time the 3DFx and PPC tech would have been cutting edge but old-boy networking seemed more important to them than consumer/developer value. I have no illusions that that was the only reason EA backed out of support and I am sure the sports genre protectionism played into it but still I do not think the Dreamcast would have survived even with EA.

John Mason
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Great read; covers all the key points w/ just enough clarity to understand the deeper roots of it all. In retrospect, I always get the feeling that money was the one thing that hurt the Dreamcast the most; for example, there were plans for a DVD drive b/c Sega knew DVD would be big, but they couldn't afford the tech. They had to let it pass them by and because of that the PS2 gained a major advantage on the DC, especially in Japan.

A few things that did stick out to me in the article was the disgruntlement over the choice of the PowerVR chip for the system (I didn't know it caused that much of a problem w/ the development community, particularly EA from the sound of the article but chances are other developers were a little sidewinded over the choice, from the sound of it) and the hardlining going on between EA and Sega insofar as sports licensing on the Dreamcast; having read an older Next Generation magazine not too long ago, it's not hard at all to imagine EA of 1999 saying something like that to Sega; it reeks of arrogance on their part. Unfortunately it's just that w/ all of those factors (and others) mangling together in such a short timeframe, the only result that could've feasibly been concocted would've been an ugly one.

But alas, the Dreamcast made its mark, and who knows, maybe Sega can develop another console someday. Again, great piece, especially the last words from everyone...everyone except Stolar. *Jeez* that was short Stolar xD.

Josh Milewski
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Good, I managed to read this before 9/9/09 was up.

When you combine two of my favorites, Gamasutra and the Dreamcast, the results are bound to be excellent. Thankfully you've proven me right, Douglass.

There was just so much information here, it's really helped to clear some things up about the system for me. So for that, I really thank you for this piece.


"At the end of the day, it was a great experience for everyone who was there, and we are all proud of our association with Dreamcast. Everybody who works there keeps a little bit of Sega inside his heart."

This is great to hear. Even though the system is long gone, it will live on with the fans, so it's always nice to hear that the people who worked on it and brought it into existence can still be called fans of it.

Stephen Northcott
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@John : One of the big problems with VR is actually latency. It's the same problem that the Wii faces now.

It's all well and good having motion sensors in controllers, but once you clamp those onto a device which affects what you see your brain smells a rat, and any latency a) gives you motion sickness, b) destroys emersion. VR, quite simply in it's 90's incarnation does not work as a mass market product.

At the end of the day latency, and the massive cost / lack of the average consumer "getting it" is what killed it off for Sega, and ultimately led to the demise of Virtuality shortly after I left. :)

Stephen Northcott
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One thing I'd like to throw in about the article, and touching on a point that another comment made, is that the Japanese side is not very well represented here. It's a very different culture. One which has as many plusses and minuses as say US vide entertainment culture has.

My gut feeling (I was not directly involved with Dreamcast as referenced in this article) is that the EA side is not 100% accurate, and is definitely subjective.

From my experience with Sega they ran a very dynamic operation, but most of their revenue came from arcade locations they owned, and arcade system sales. That market slowly disintegrating is what hurt Sega. They also had so much going on, main projects, backup projects, and backup of backup projects, that when it worked it was amazing. However, when it went wrong it was very expensive!

But overall they were always 150% committed to anything they did, and working at Haneda was the closest I ever got to being inside Willie Wonka's Chocolate Factory. :)

Fiore Iantosca
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In honor of the anniversary, I went online and purchases a Dreamcast :)

Samuel Fiunte Matarredona
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I buyed one dreamcast just after they announced its production was being to be stopped, that was just because of my love for, 10 years later i find myself working for them, but i'd loev much more to have worked for the HRADWARE 1sr party SEGA than for the Software 3rd party SEGA...well...what can i do?

great read!

Alex McAuliffe
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A great read. I also owned a dreamcast and have very fond memories of alot of the games. Quite interesting to read about what i would have never known at the time.

@Stephen: Thanks for your insight :) Good reading

Tom Newman
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Great article! Dreamcast was one of my favorite systems of all time, and I was shocked when it turned out to be unsuccessful. There were some awesome exclusives like Power Stone, Seaman, Tech Romancer; etc. that still have a good home in my memory. One thing that I didn't see discussed is the rampant piracy that occurred with burned cd-rom games in the system's later days, but that could be an entirely different topic all together.

Yasuhiro Noguchi
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I had the honor of working with Tatsuro Yamamoto and the rest of the Blackbelt team at SegaSoft, which was renamed Dural after information on the project leaked over at SOA.

It's too bad the Japanese dev side is not represented in this story at all. Hopefully, the real story will be told some day as it's full of drama, good and bad.

@Stephen Northcott

We didn't have a console in development called Dreamcast in 94/95.

Stephen Northcott
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@Yasuhiro san,

If I remember correctly SegaSoft was in the US, right? Completely separate from Sega in Haneda.

And you only came into existence around 95, right?

Do remember that I was working directly under Shima-san in Haneda in Tokyo, and with both #AM2 and #AM4. We were involved in both software and hardware products for both the home and arcade divisions.

It's quite likely that we knew about things that you didn't being based in SanFrancisco.

But if you have some more info I'd love to hear. :)

Stephen Northcott
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I meant to add that I was under the impression that Dural was one of the code names for 'Dreamcast' and nothing to do with the 3DFx based Blackbelt....

Waylon Winn
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Great article, I enjoyed reading this.

Yasuhiro Noguchi
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The whole SegaSoft/SOA/SOJ relationship was really weird and will take a book to explain. We were never separated from Sato-san's CSR&DHW group in the end. We worked very closely with them.

Blackbelt == Dural. I should know- I was the one who suggested the name change to the team in honor of AM2 and VF3. :)

There were other stillborn console projects prior to the Dreamcast that never saw the light of day, but I'd rather not discuss them here.

Stephen Northcott
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All really interesting stuff. Thanks for joining in. :)

Anytime you feel like discussing any of this offline I am always interested.

It seems like we have some overlapping history. :)



kevin williams
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Great article, really evocation of the situation - brought back memories.

Just for the record we still have new Dreamcast games - just that they are on the NAOMI!

A platform that Peter could not kill, not matter how many tantrums he threw!

Salim Larochelle
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Back in the day I only bought nintendo consoles and stayed away from the genesis, 32X and the saturn. And yet, I bought the dreamcast on its release date. I was waiting for sega to release a system that could propely show off their amazing arcade games. I knew it would be the Dreamcast.

Roberto Alfonso
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Just had time to read the entire feature. It was really interesting, and hopefully everyone in the industry will take the lessons. I don't think the DC is the last good console that will die painfully quick.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Rick Reyes
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I was doing some personnel research on the rise and fall of 3dfx, of which I read a couple articles. My research led me to this article. What a great article! I never owned a DC, I did have an Atari, Nintendo, and finally Genesis. After that gaming pretty much died down for me. It is a great and marvelous thing to learn from the past mistakes from others and ourselves.

David Lee
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Just one small point from the EA SPORTS side. At the time of the Dreamcast launch of course EA was very much against the Dreamcast. But we had a Dreamcast in the department and I can say that Virtua Tennis and Virtua Fighter got the most playtime--sure, Madden and NFL Live were also played on PlayStation but there was a lot of love for the Sega games. Regardless of what the business decisions were, the first generation of games for Dreamcast were great.

Leonardo Lopez
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oh so much nostalgia. Loved the article. Reminded me of old times.

Theresa Catalano
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The Dreamcast was such a cool system. There were some great original games: Space Channel 5, Jet Set Radio, Seaman, Shen Mue, Power Stone. It's a big shame that it didn't get the success it deserved.

Benjamin Branch
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I don't know what it was with SEGA of the time, but that was a great era for gaming. So many off-the-wall and fun games came through that era.

I can't think of a happier time for me in gaming. I just wish it had held on long enough for the Dreamcast port of Half-Life to have gotten an official release.

Jay Riggs
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I adore the Dreamcast. As with most Sega products, it was a great idea badly managed.

one thing I will never understand is why people always look to the Genesis as a definitive sign of Sega's ability to produce a instant success. The fact is that before the Genesis was the Master System which barely made a dent in the market in North America. The Genesis was amazing for its time and changed the way we thought about video games, especially sports games. EVERYTHING AFTER really was Sega demonstrating that they really aren't a great hardware company in the way other seem. They are really just a company that got very lucky second time out of the gate and could never match that success with anything and when they came across one hardware that could change that, squandered it