Sega considered a Dreamcast or Saturn Mini but it would have been "a difficult and expensive process"
Keep Dreaming.
Sega producer Yosuke Okunari has confirmed that the reason the company didn't pursue creating a mini Dreamcast or Saturn because "both developing and manufacturing new chipsets during the pandemic is a difficult and expensive process".
In an interview with Famitsu, Okunari said - as paraphrased by Gosokkyu (thanks, NintendoLife) - the company did "explore the idea" of a Dreamcast or Saturn Mini but ultimately decided not to pursue it when Sega discovered manufacturing mini consoles had become more expensive post-pandemic (and post semiconductor shortage, of course).
Okunari added that the Mega Drive Mini's internals "can't adequately handle Saturn games", and manufacturing new chipsets would be prohibitively expensive, joking that if they'd proceeded with the idea, the cost of buying a Dreamcast of Saturn Mini could rival that of a modern-day console.
But because the Mega Drive Mini 2 was based upon the existing Mini hardware, it seemed more "manageable".
ICYMI, last week Sega hinted it had a big "new project" to share with us, teasing that the broadcast would reportedly include appearances from Hiroyuki Miyazaki and Yosuke Okunari. Given the guests, it wasn't a stretch to presume the secret new project may have something to do with a new Sega retro console - and it turns out that's exactly what Sega was teasing: Mega Drive Mini 2.
While as yet there's no confirmation that the mini system will be coming to fans outside of Japan, Sega did confirm that Mega Drive Mini 2 will be released in Japan fans on 27th October and cost ¥9980, which is around £60. It will include 50 Mega Drive and Mega CD titles, including Sonic CD, Virtua Racing, and Fantasy Zone.