Why SEGA stopped making consoles

By Ellie Gibson Published 15 September, 2008

It's all Peter Moore's fault, says Peter Moore.

Long before he was the boss of EA Sports, and even before he was the boss of Xbox, Peter Moore used to be a big deal at SEGA. Now he's admitted it was he decided the company should stop making games machines and just make games instead.

Speaking to the Guardian, Moore got all misty-eyed when talking about SEGA's final foray into the hardware market.

"Dreamcast was a phenomenal 18 months of pain, heartache, euphoria... We thought we had it," he said.

"But then PlayStation came out... And of course, EA didn't publish which left a big hole, not only in sports but in other genres. We ended up that Christmas period not being able to get to where we needed to be - we weren't far short, we just couldn't get that critical mass."

In other words, Moore explained, SEGA Japan set a target that just couldn't be reached. "I can't remember the exact figures - but we had to make N hundreds of millions of dollars by the holiday season, and shift N millions of units of hardware, otherwise we just couldn't sustain the business.

"So on January 31st 2001 we said SEGA is leaving hardware - somehow I got to make that call, not the Japanese. I had to fire a lot of people, it was not a pleasant day."

According to Moore, there was no way the Dreamcast could compete with PS2 by this stage - so a tough decision had to be made. "SEGA had the option of pouring in more money and going bankrupt and they decided they wanted to live to fight another day," he stated. "So we licked our wounds, ate some humble pie and went to Sony and Nintendo to ask for dev kits."

Moore's philosophical about it all, however. "In the end, it didn't work out," he observed. "It was tough, but those were great days and I've never met anybody who regretted buying a Dreamcast."

Read the full interview for more from Moore.

Picture of Ellie.

About Ellie Gibson

Since joining Eurogamer in the mid 2000s, Ellie has written about subjects as diverse as the fall of Gizmondo, the rise of Hollyoaks actresses in Red Alert games and the noise a bear makes under NSFW circumstances.

Read more articles from Ellie by visiting the Ellie Gibson archive page.

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Comments (70) Latest comment 4 years ago

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  • JohnnyWashnGo #1 4 years ago

    Dreamcast RIP

  • woodnotes #2 4 years ago

    I never regretted buying a Dreamcast either Peter. I'm with you!

  • Colin8703 #3 4 years ago

    I loved my DC. I loved the Saturn too as it had tons of amazing arcade conversions.

    A shame.

  • peteb #4 4 years ago

    Same here. Best console that ever flopped IMO.

  • Widge #5 4 years ago

    I inherited a DC, but sold it quite quickly once I noticed that everything I wanted to play on it had pretty much been done on the Xbox.

  • Ranger101 #6 4 years ago

    The King is dead, all the hail the King.

  • woodnotes #7 4 years ago

    It's funny that with the fishing rod controller, a cheap price, casual games like Samba de Amiga and Space Channel 5 etc, it was the ultimate console for casuals back then. The Wii of that generation. The problem was that SEGA couldn't afford Nintendo-sized marketing to back it up.

    But SEGA delivered with the first party games, BIG TIME. They just didn't stop coming at the time. It was awesome. From stuff like Shenmue, Phantasy Star Online, Jet Set Radio to Crazy Taxi, Virtua Tennis and Daytona USA. Not to mention the quirky stuff like Cosmic Smash, Space Channel 5, Rez etc.

    SEGA delivered, no matter what way to look at it.

  • HolyJebus #8 4 years ago

    I love you Dreamcast

    Good points woodnotes

  • The_Pope #9 4 years ago

    The PS2 had inferior hardware compared to the Dreamcast which had already been on the market for a full YEAR already. The graphics looked cack in comparison.

    Sadly, Sony already had huge momentum from the original Playstation and too many fanboys just blindly bought a PS2.

    Dreamcast FTW

    @Woodnotes - don't forget Metropolis Street Racer!!!
    Edited by The_Pope at 15/09/08 @ 14:25

  • hoster #10 4 years ago

    Mmmm, lovely console, nice and compact, with neat pressed corners and a giant red triangular LED. Shoddy design though, I went through two of them, both developed the same problem of resetting halfway through a game (apparently it was a design fault with the internal PSU melting the mobo? something like that, I head it could be repaired by opening it up and spraying it with wd40, but I never had the guts)

    Actually the dreamcast is a lot like the 360

    -both white
    -both technically less powerful than their nearest Sony rival, but capable of display nice graphics none the less,
    -both prone to breaking (at least for me)
    -uh...
    -that's it.

    :)

  • redneon Verified Programmer, SUMO Digital #11 4 years ago

    "too many fanboys just blindly bought a PS2. "

    And then a PS3 ;)

    Oooooh!

  • Bagpuss #12 4 years ago

    'Best console that ever flopped'

    LOL....what an epitaph.

    Still got mine tucked away in the cupboard, drag it out occassionally when i need to scratch the Rez,Ikaruga,JSR itch.

  • thesombrerokid #13 4 years ago

    god bless sonic shuffle

  • Redeye #14 4 years ago

    Yep, loved the DC too - absolutely brilliant first-party stuff, and ahead of its time for online gaming.

    *relives mental late-night sessions of Daytona, Q3 Arena and Worms*

  • Bagpuss #15 4 years ago

    'The PS2 had inferior hardware compared to the Dreamcast'

    No...thats not true, as much as i loved my DC, theres no doubt the PS2 had the more powerful polygon pushing ability....in the right hands of course.

    Where the DC had the edge though was in its fully hardwarel anti-aliased TV output. The DC's video output was sooo much sharper and more vibrant than the PS2.




  • Dodgymat #16 4 years ago

    Dreamcast was doomed from the day they blew the entire advertising budget sponsoring Gooner scum. Great machine though still got my JAP one, albeit boxed up, along with the peerless Tokyo Bus Guide :)

  • Arcadiian #17 4 years ago

    Still my favourite console by far.

  • seasidebaz #18 4 years ago

    First proper online service in a games console as well.

    The DC was an awesome beast.

  • SEVQA #19 4 years ago

    Dreamcast = Xbox 0.5

    Anyone who goes into business with Microsoft it’s a guarantee they won’t be around for much longer! Or get bought out!

  • mattigan #20 4 years ago

    I heard an interesting story from my mate who was at an industry PR do a few years back, and got chatting to the supposed head of European Projects/R&D/Development or whatever the department was called back then, who reckons he was the one who brought down SEGA.

    Apparently, at the time, he was given carte blanche to spend SEGAs money on a series of incredibly expensive and ambitious projects. The thing is, the guy was a waster and all the projects pretty much never amounted to anything, as no real work got done, SEGA never checked up on him accepting his assurance that things were progressing nicely and supplying more cash when asked. So with Millions riding on the success of these releases, SEGA asks for the goods, only to be told that there are no goods, which apparently tipped them over the edge into industry obscurity and 3rd party software developer status.

    Of course it could all be pub talk, but my mate reckons he was VERY convincing in is account of how it all played out, and said he was quite smug about it too, the twat.

  • DDevil #21 4 years ago

    I love my Dreamcast. It too developed that resetting problem. But it's easily fixed by opening it up and gently bending a couple of connecting pins.

  • Widge #22 4 years ago

    There is no way the Dreamcast had better visuals than the PS2. I mean even early games like Zone Of The Enders looked better... and then if you bunged in the demo disc of MGS2, a completely different league.

  • MiY4MOTO #23 4 years ago

    The Dreamcast for me was one of the finest consoles ever to be released. It had some of the greatest games, and some of the sharpest visuals every seen. Remember the first time you ever saw Soul Calibur? Or Sega Rally 2? Or House of The Dead 2? Or Resident Evil: Code Veronica? Or Shenmue? The list just goes on.

    First console to support online play, complete with a web browser, supported 480p via the VGA adapter. I have so many great memories of my Dreamcast. I worked in video-game retail throughout it's life-cycle & the console had such a great following of die-hard fans. Unfortunately it was indeed the non-gamer, mass-market chumps that the Sony Playstation picked up that were ultimately the killer blow for the Dreamcast, & they still live on today in the "SDF". ;-)

    Also there were some underhand tactics taken by Sony to prevent the success of the Dreamcast. Anyone remember Bleem! or Bleemcast? Sony soon put a stop to those, or who knows what REALLY happened to the Half-Life:Blueshift? I have a copy of that game & it's a crying shame that it was never released before the PS2 reared it's head. In retail we weren't even allowed to have our Dreamcast demo-pods running around the PS2 launch period.... *sigh*

    Oh well, it might not have been around for long, but to quote Bladerunner; "The candle that burns twice as bright burns half as long". (or something)

    RIP Dreamcast, sadly missed.

  • Reihn #24 4 years ago

    I think Gary just threw up a little bit in his mouth..

    And yes, I adore my Dreamcast. Jet Set Radio was an absolute epiphany for me. Back in the day I was hit at high speed by an oncoming car (well, enough that I smashed in their windscreen with my shoulder), and upon release from hospital I spend six peaceful days in bed playing Shenmue 2. I came through just fine - albeit with a piece of glass in my shoulder that makes me think of Joy.
    Edited by Reihn at 15/09/08 @ 15:04

  • Xerx3s #25 4 years ago

    @hoster: Funny that you are wrong on all of those points in that comparison while forgetting the biggest link (the OS). The 360 comes in black as well and iirc there where different colours of DC's as well. Neither are technologically less powerful. The DC is afaik not prone to breaking while the 360 is the shoddiest pos since the ps2.

    I wonder how the games world would be if sega had the advertisement budget to push their machine. Advertisement is criminally underused by some parties. Sega didn't use it while sony did (have never seen a DC advert but ps2 adverts by the truckload). Sony won. Nintendo does use it while sony and ms don't (can't remember the last time I saw one of their adverts while nintendo usually has 2 per night). Nintendo wins.

  • seasidebaz #26 4 years ago

    @xerx3s:

    Sega blew their advertising budget on really crap adverts featuring kids doing things like fishing, playing football, etc and having the tagline "6 million players at once!" or something like that.

    Truly diabolical adverts for such a wonderful machine.

  • Tzetrik #27 4 years ago

    take note sony.

  • Stuz359 #28 4 years ago

    The Dreamcast failed for one reason and one reason only. EA refused to support it unless Sega stopped doing sports games that competed with EA Sports output. Sega refused and Dreamcast failed.
    EA did the same thing to Microsoft and Xbox. MS had to sell off its sports divisions so EA would develop on Xbox. That's why there has been no more Links games, despite at the time being totally superior to EA's golf games. So MS releanted, sold it's sports divisions and EA developed for Xbox which was a success comparitive to the Dreamcast.
    Amazing how one publisher can have so much power in the industry.

  • imamazed #29 4 years ago

    "SEGA delivered, no matter what way to look at it. " (WOODNOTES)


    could not agree more. Dreamcast was the best last-gen concolse for me, no doubt.

  • Nithron #30 4 years ago

    Wow, this sounds like it isn't even true.

  • Cappy #31 4 years ago

    Sega killed the Dreamcast, but people prefer to blame Sony.

  • Xerx3s #32 4 years ago

    "Sega blew their advertising budget on really crap adverts featuring kids doing things like fishing, playing football, etc and having the tagline "6 million players at once!" or something like that.

    Truly diabolical adverts for such a wonderful machine. "

    True. But that doesn't change how I wonder how the world would have looked if the DC had proper advertising.

  • HEAVYface #33 4 years ago

    widge = There is no way the Dreamcast had better visuals than the PS2. I mean even early games like Zone Of The Enders looked better... and then if you bunged in the demo disc of MGS2, a completely different league.

    i've have both machines and theres not a lot between them...ps2 throws more polys (but not loads more...) but thats about it.

    +shenmue looks better than MGS2 IMO.....

    its the games that count tho and both have some absolute classics

  • clarkec321 #34 4 years ago

    I loved Sega

    The Master System, and Megadrive were amazing, the 32x and segacd were good, and were great technical innovations, being add-ons for the top selling console,

    The Saturn & Dreamcast were amazing, but Sega had already spunked loads of money, and didn't have enough in reserve to fight off the challenge from Sony

    I just wish they'd stop bastardising their games in 3d/hd for the current consoles, and start making retro games for download on the PSN

  • illusiondance #35 4 years ago

    You're not wrong about the ultrahardcore fanbase for the dreamcast, anybody come across that little French game coming out this ir debut and the year for the DC? and all those G-Rev beauties that made their debut (and the companies reputation) on the machine long after the official 'death' of the DC.
    Wicked all-rounder machine and still my favourite for the odd evening of SNK and capcom scrappers.
    Thats pretty interesting and massively depressing about EA and their hand in the dissembowling of sega.... the sony cheap tricks are old news though, thats how to conduct business it seems.

  • clarkec321 #36 4 years ago

    Broadband

    That was one of the reason the Dreamcast failed

    It was billed as having 6 billion players.... not even 10% of them had dial-up at the time

    It was ahead of it's time, I hope Sega have another go, or at least stop doing crappy remakes which ruin your memory of the originals, Sonic was a great 2d game, but shite in 3d

    The dreamcast had some great games, and my loyalty to Sega stopped me defecting to the ps2 until it became inevitible

  • Darren #37 4 years ago

    I thought the Dreamcast was a terrific console. During its time EA were going through a poor patch so in a way them not supporting the console was as much a blessing as it was a curse really. Certainly I don't regret having bought one; in its all-too-short life it was perhaps one of the most memorable platforms for games IMO, many of which eventually surfaced on later consoles (MSR, Sonic Adventure, Soulcalibur, Jet Set Radio, SEGA Rally, Shenmue II, etc., etc.). It deserved to do better really. It was certainly a better machine for the three years I owned it than the PS2 was during its disappointing first few years...

  • Xerx3s #38 4 years ago

    On the plus side, sega may have stopped making consoles but it seems to be quite successful in licensing it's hardware designs to 'kid consoles' (you know, the ones for 3-7 yo's with funky colours). If they are successful in that, maybe there is still hope that they might one day return to hardware.

    Most likely when one of the three current ones drops out (my bet being on ms).

  • hoster #39 4 years ago

    "@ hoster: Funny that you are wrong on all of those points in that comparison while forgetting the biggest link (the OS). The 360 comes in black as well and iirc there where different colours of DC's as well. Neither are technologically less powerful. The DC is afaik not prone to breaking while the 360 is the shoddiest pos since the ps2."

    Wow, thanks for pissing on my Stawberries. :p

    but this is the internet, so allow me to retort ;)

    Afaik, The DC is the first and only console to use WinCE, I'm not sure if the xbox even runs on windows tbh (isn't the whole point is that its just directX in a box, hence the name?) I remember Seamus Blackley saying in an interview with Edge years back that the first xbox did not actually use windows, and how that had initially irked the MS top brass. As for the 360, who knows? though tbh I was under the impression that WinCE was the forgotten step child of the windows family, having largely failed to take off (tivo and all of the consumer electronics devices it was designed for tend to use cheaper linux based OS's and Windows Mobile has surperceded it for phones and mobile devices). So I would be surprised if the heart of the 360 was a ten year old OS...

    "The 360 comes in black as well"

    wouldn't know mate, colour blind between blacks and whites, I spent 10 minuets the other day looking at a video of Madworld wondering what the fuss was about.

    "DC is afaik not prone to breaking while the 360 is the shoddiest pos since the ps2."

    I was talking annecdotally of course :) My 7 year old PS2 is still going strong (touch wood)

  • oreillymj #40 4 years ago

    I worked in the US for a while and picked up a 2nd hand DC for next to nothing. I think I bought MSR, Crazy Taxi & Shenmue. I couldn't figure out what all the hype was about Shenmue. I just never got into it.

    But MSR is a gem on that system. if there was ever a game I'd like to have seen ported to the PS2, it was MSR. Hopefully with Bizarre creations having separated from MS, I might finally get to play one their games on my PS3.

    Having had a DC, I don't understand why the PS2 managed to kill it off. Probably an equal of marketing, lack of EA games and lack of migration from the poorly supported Saturn. Sony had a lot of people who migrated from PS1 to PS2. BC was a strong advantage. Are you listening Sony?

    However, I've never heard anyone say that Sony engaged in any dirty tricks to win. Japanese companies have too much honour to do that sort of thing.


    Oh yeah, I just remember the shit controller. The triggers were a great addition for driving, but apart from that, the thing was huge and tiring to hold for any length of time.
    Edited by oreillymj at 15/09/08 @ 16:14

  • Pulsar_t #41 4 years ago

    mattigan
    Interesting how everyone ignored your story, but I believe there's some truth to that bloke's account at all. But without evidence who can pin the blame squarely on him? SoJ on their own didn't fully realise the threat Sony posed with their established household name.

  • johnboy_johsnon #42 4 years ago

    "However, I've never heard anyone say that Sony engaged in any dirty tricks to win. Japanese companies have too much honour to do that sort of thing. "

    You're joking me right? And Nintendo were even worse.

  • mingster #43 4 years ago

    I think piracy killed the dreamcast personally..

  • hoster #44 4 years ago

    @Mattigan

    So that's what became of nick leason!

  • oreillymj #45 4 years ago

    @johnboy_johsnon Not I'm not joking. Are you talking about paying for exclusives or are you talking about patent disputes where you buy part of the company and then stop them licensing stuff to your rivals?

  • miiiguel #46 4 years ago

    http://news.bbc.co.uk/2/hi/business/2375...

  • miiiguel #47 4 years ago

    http://techluver.com/2007/11/20/antitrus...

  • miiiguel #48 4 years ago

    [link url=http://technollama.blogspot.com/2007/01/sony-fined-by-french-court-for-drm.html
    ]http://technollama.blogspot.com/2007/01/...[/link]

  • robg #49 4 years ago

    I've never met anybody who regretted buying a Dreamcast.

    I've never even met anyone who bought a Dreamcast.

  • Ranger101 #50 4 years ago

    Haven't seen anything on my Wii that looks better than what was on the DC.

    And well done to miguell for putting to rest any notion that the japansese corporations were above being anti-ethical. Japanese people like money too.
    Edited by Ranger101 at 15/09/08 @ 16:51

  • Quint2020 #51 4 years ago

    The Dreamcast was a phenomenal system, I never regretted buying mine, it's the only console I owned until the original Xbox arrived.

  • SEVQA #52 4 years ago

    If you look at the Dreamcast from the top it has all the Playstation’s symbols combined into its design! Square, Circle and Triangle, ending with a spiral at its center! Now the shape it missed out was the Cross, but if I remember Microsoft had an interest with Dreamcast and Sega by having Windows CE on it and putting in bids to buy Sega out amogest them, with Sega splitting into 12 separate entity’s making it practically impossible for Microsoft to buy them. And before long Microsoft blessed us all with the Xbox, Which maybe the X missing shape! Just an idea!

    For me too the Dreamcast was a console for which I never bought so many good and engaging titles during its short life time! I was talk of the town for almost a year as I imported mine from Japan thanks to a student loan. Great console, even though it sounded like a dog grinding on a bone sometimes!

  • bioreit #53 4 years ago

    @oreillymj

    It was pretty common knowledge among indie game stores and the dev crowd that Sony had 'persuaded' EA to not publish any games on the DC, a fact which helped kill the DC dead in Europe, what with no FIFA for Christmas. Also, Sony was paying for Dixons Group employees to go on 'orientation seminars', ostensibly to increase knowledge of Sony products to be passed on to customers. A friend was an Ass Man at my local Dixons and he told me about the 'incentives' offered by Sony - "recommend a Sony product over a competitor's and you'll get 2% of the RRP as a bonus" and stuff like that.

    And Game employees were instructed to play up the fact that the original Xbox required you to buy a DVD remote if you wanted to watch DVDs, whereas the PS2 could use the controller. And once people were hooked in, they were flogged the essential memory card too - which cost the same as the DVD remote. A fact which Game never, ever mentioned when doing their sales pitches.

    And the whole Bleem! thing was just a precursor to Lik-Sang, in my opinion. Sony kept taking them to court, and every time, the courts said "Shut up. If anything, Bleem! makes you more money, because you have to buy genuine Playstation discs". But Sony kept appealing and appealing and appealing and eventually, Bleem!'s makers ran out money for lawyers and had to quit. Sod all to do with Sony winning - they just had more money.

  • Ranger101 #54 4 years ago

    I have the arcade stick (fantastic!), the fishing controller and the steering wheel setup.
    Ferrari F355 was good on it too, but it was king for 1st party support and beat-em-ups. It definately was the Blueprint for Xbox, MS have pretty said everything but admit that directly. Also the xbox controller (original) is a derivation of the DC one, including how the headset, and memeory cards slot in, not to mention the controller layout.
    Edited by Ranger101 at 15/09/08 @ 16:57

  • Ranger101 #55 4 years ago

    Reminds me, need to find Garou on ebay...

  • Tomo #56 4 years ago

    /wipes tear

  • Pulsar_t #57 4 years ago

    bioreit
    I can justice can only be achieved if the PS3 flops. But that's not happening. As for the PS2 I learned to detest the console but love the games.

  • pac666 #58 4 years ago

    The DC was such a good console of it's time the arcade ports were bang on. Just goes to show the best don't always win. Still have mine and boot it up now and again, it still manages to impress.

  • IneptPercy #59 4 years ago

    We had the dreamcast out at my mates the other night on 4 players on a 60" TV.

    God bless pen pen and power stone (+vodka) kept us entertained for hours.

  • XBoxDragon #60 4 years ago

    I don't believe the DC actually used Windows CE as such, it was an option developers could use as a base, but AFAIK very few games actually did. most games went lower level.

  • yagisencho #61 4 years ago

    The Dreamcast fulfilled all the promises Sega had made with their previous consoles. *brushes away the tears*

  • bad09 #62 4 years ago

    I always feel warm inside and smile everytime anyone mentions the DC it's one of my all time fav machines. I miss you Sega :(
    Edited by bad09 at 15/09/08 @ 21:12

  • Baggies1879 #63 4 years ago

    I've still got my DC connected up sitting proudly next to its current gen siblings. I couldnt bear to pack it up in a box and shove it in the loft.

  • Collymilad #64 4 years ago

    "Just goes to show the best don't always win."

    Indeed, you only need to look at this gen.

    360 deserves to win (at least up to this point and taking into account the games we know about coming for each system), but eventually it's going to lose to the PS3 and the Wii.

    I'm just glad that it's MS that made the Xbox brand, I dunno if anyone much smaller would have taken the losses they have, and stayed in the console market.
    Edited by Collymilad at 15/09/08 @ 22:19

  • Ryze #65 4 years ago

    @woodnotes

    The problem was that the Dreamcast was marketed horribly.

    The adverts were there, but Sega haven't been able to market a console since Sonic 2's day and the Cyber-Razor Cut.

    Damn shame - as like you say, the Dreamcast is pretty much a Wii + hardcore - VC & motion.

  • Slipstream #66 4 years ago

    SHENMUE FOREVER!

  • Bleh #67 4 years ago

    To bad, really loved the sega consols.

  • oreillymj #68 4 years ago

    @bioreit The only thing in your post that can be considered a dirty trick is perhaps asking EA not to publish for DC. However at the end of the day, if EA thought they would make money from publishing on the DC, they would have done that.

    The day offering a commission to sales people, as an incentive to sell your product, is made illegal, is the day 90% of salespeople in the country will be locked up.

    As for Bleem!. While it may have sold more PS1 software for Sony, it also played back-ups. And reverse engineered patented, copyrighted hardware. Blem had no right to sell a product based on another companies work. Had they taken their product off the market and developed their own console, perhaps they might not have got bust. But it's easier to copy someone else's work.


    As for miigguel. How are any of the links you provided demonstrating dirty tricks towards a competitor. if anything, the price fixing mentioned hurts the consumer. Th Sony France case is laughable. How is selling ACTRAC files which only work on Sony players any different to what Apple do with DRM'd AAC tracks for iPods, which they've sold billions of. It's typical of French protectionism to try to hurt non-French companies.
    Edited by oreillymj at 16/09/08 @ 19:50

  • SEVQA #69 4 years ago

    “It's typical of French protectionism to try to hurt non-French companies.”

    Well at least they can change or choose service provider for the iphone for example!

  • RustyBullet #70 4 years ago

    I love my DC it is happy to sit along side my 360, PS3 and Wii.