Understanding the Dreamcast pt 2

Journalists would have you to believe that Nintendo is in the exact point where Sega was with the dreamcast, but in order to paint a better picture of what Sega dealt with, I wanted to talk a bit about the history of Sega during the Saturn and Dreamcast era. In our last post we discussed the Saturn's perfect storm that lead to it's untimely demise. This week I want to discuss the story of the Dreamcast and the things that lead to it's end, and the end of Sega as a hardware developer.

Let's get back to the show, shall we?





Sega has a dream...

 Instead of throwing out a huge exposition this time around I want to bring to your attention, this video on the DC's history from an old G4 episode of Icons.



Like the Saturn, the Dreamcast was a big push for a console that provided games featuring the arcade gaming values that Sega was still into at the time. This is one of the advantages that Sega had over the PSX. That and wealth of popular titles (Not as many as Nintendo had under their belt, but a decent amount with strong supportive fanbases).

As stated in the video the Dreamcast was a means to fix all the problems that the Saturn had. Programming was easier, the design of the controllers were (arguably) better ( Personally I loved the setup of the conroller, but hated the hand cramps that came from playing games like Marvel vs Capcom 2, Capcom Vs SNK 2 and Street Fighter 3 for hours on end), The Marketing for the Dreamcast was amazing, and generated tons of hype for the console. Even the pricing was better this time around as Stolar fought to keep the price point of the DC to a low $199, despite SoJ wanting a $249 price for immediate profits. Despite a successful US launch, Stolar due to continual clashing with SoJ higher ups was let go from the company, then things began to slowly fall apart again for Sega...



The second part of this video is the most depressing. You tend to realize that the PS2's two biggest things going for it at the time was it's massive software library (due to Sony's practices of courting developers with trails of money to their camp), and an having an affordable DVD player in a time when it was a necessity to have a DVD player. This was a serious one-two punch to Sega's system, but I wouldn't say that the lack of a DVD player was their downfall.  After doing some digging I came across an interview with Stolar where he explains a bit more about the situation from an insider standpoint. Here's what's said in that via Bitmob's site.

Bitmob: If we could send you back in time, with the benefit of hindsight, what would you do to make the Dreamcast survive and thrive?

Bernie Stolar: It’s called money. And a commitment from the company.
When [former Sega President Hayao] Nakayama was pushed out of the company, the company really changed.

Bitmob: How so?

BS: The heart and soul of Sega came from him, and he really believed that software drove hardware -- which is true. He also believed that if you’re going to be a major competitor in the gaming world, you needed to own the hardware platform.

Bitmob: So what did Sega do wrong after you guys left?

BS: When Nakayama was pushed out and when I was pushed out, I think what took place was, Mr. [Isao] Okawa, who then became the chairman of the company -- he was an investment banker from CSK [Holdings Corporation].... I don’t believe he was committed to the hardware. He just believed it should be a software company.

Bitmob: And that was ultimately the Dreamcast’s downfall....

BS: Yeah, the company didn’t put the money into it. The company basically abandoned the system. 

At that time, it was the largest launch in the history of the industry! The consumer judged that it was the right hardware and the right software. Look at the software that was on that system. Look at the sporting titles that Visual Concepts built for the system -- after I bought Visual Concepts for Sega...those titles outsold EA’s titles. That tells you something about the software and the look, feel of the platform. 

I fought to have a modem on the platform. Maybe it was early -- who knows. But I fought for a modem in the beginning because I wanted to have massively multiplayer online games on that system. 

Regardless of whether it was too early or not, the modem was the start of an innovative push for online console gaming. It's not original, because it's been done before both by the SNES in the mid 90s with Satellaview, and PC gaming was doing well before even then, but it was something that immediately began to change the way we played console games thanks to competitors taking the idea and running with it full tilt.

You could tell that by the end of the DC era, Sega had put little to no effort into the console. The Dreamcast obviously had the potential, to the point of were developers were still putting out games for the DC long after it's death (the last DC game was released in 2007). However the company mentality seemed to be that there was no possible way of keeping up with the demands made by the parent company, and the SoJ president, as well as SoA president at the time Peter Moore, had already had it decided that going third party was the way to go.

Bitmob: Could you see the Dreamcast struggles coming before you left Sega?

BS: No. When I was pushed out, I assumed that the company would continue [supporting the Dreamcast]. Mr. Okawa was very close friends with [Masayoshi] Son-san, who was the chairman of [tech investment firm] Softbank. They indicated to Mr. Okawa that if we have a modem put into the system -- we spend the extra money to put the modem in -- that we should just meld the hardware online and not go through retail...that we should just abandon retail.

So do I believe there could’ve been a turning point where they would abandon this? The answer is yes. 

To this day, you still can’t abandon retail. Retail may have shrunk -- there may not be as many storefronts -- but retail’s the whole point. Look at what Best Buy’s doing. Look at what Wal-Mart’s doing. Look at what GameStop’s doing.I agree with this. Retail is still a strong part of revenue. Even now with the heavy shrinkage of brick and mortar outlets compared to the convenience of online shopping, there's still a need for both. I, myself do most of my shopping at retail and purchase the things I can't find online. Then again, I do work in a retail setting so I'm always around something I want to purchase. Even then, I still find that many others do the same, as the weekends seem to be where retail is at it's busiest.

Bitmob: Does it surprise you that Dreamcast’s online capabilities didn’t catch on better at the time?

BS: It doesn’t surprise me, because there wasn’t software tied into it. They were not building and going after software to start that.

I mean, I was looking for developers and content providers to start doing that. Sega did not do that after I left. They just abandoned it.

Bitmob: A lot of gamers swore off Sega hardware after the days of the Sega CD, the 32X, and to a lesser extent, a poorly supported Saturn. Do you think this backlash affected the Dreamcast?

BS: I don’t think there was a backlash at all. The Dreamcast was very well accepted. The consumer was thrilled that Sega was back with a great hardware system.

Bitmob: What are the biggest cultural differences between working at Sega and working at Sony? [Ed. note: Before taking over Sega of America, Stolar was the excutive vice president at Sony Computer Entertainment America.]

BS: [Long pause] That’s a question I’d rather not answer.

Bitmob: Were there a lot of differences in hardware-launch philosophies between Sega and Sony?

BS: I think both companies are very market-driven. Both their philosophies were, “Go big or go home.”

Bitmob: What do you think about where Sega is now, being a third-party publisher?

BS: I think they’re going through some really difficult times. I don’t believe they have the content, developers, and producers there that they had at one time. I don’t know their financial position, but they’re probably not spending the type of money they should be spending. You tell me the last time you saw a great Sonic game.

This is exactly the same fate that Nintendo could possibly meet if they decided to go third party. Oh sure, you'll get games across a wide variety of different platforms, and some fans would love to see that happen, but who's to say those games will still hold up over time. I still haven't seen one Sonic game that has held up to the original Genesis games. Golden Axe has gone to crap with Beast Rider. The best Streets of Rage game I've played was made by Bomber Games, and Sega issued a cease and desist order after they produced a completed version. I'm sure Nintendo's people know this, and they know that Sega is a shell of it's former self since it's hardware development days.

Bitmob: How do you see Sony?

BS: I’ll tell you the other difference between --
I’ll answer the question of the differences between Sony and Sega. Sony is a very corporate structure. It’s a real corporate company. Sega was really run by entrepreneurs. It was more of an entrepreneurial company. That’s the difference.

Bitmob: So how do you see Sony now? Do you still feel that way?

BS: It’s a very corporate culture. The team that’s there right now -- I hired a number of those individuals -- they’re terrific people. They’re really trying to make this work.

Bitmob: The big thing I think people would like to hear in your own words is, why were you let go from Sega right before Dreamcast’s launch? Why right then?

BS: As I said before, Mr. Okawa...he wanted to release this strictly on the Internet and I refused! He and I just went through major differences.

One of the problems also -- I had just bought Visual Concepts for $10 million. When we were signing up third-party publishers, Larry Probst came to me, and at the time, he was CEO of EA -- and also a good friend of mine.

Larry said, “Look, we’ll come on your platform, but this is the royalty rate we want to pay.” I asked what is it. He said, “We want to be the only sports franchise on Dreamcast.”
I said, “I’ll agree to that, but you’ll be the only third-party publisher that will have sports. But you’re going to have to compete with us because I just bought Visual Concepts.” And he said, “No, no, no, no...then you should not do the deal with Visual Concepts.”

I said, “No it’s too late.” [Laughs] “We’ve already signed the documentation. We’ve already taken the steps.” So because of that, he did not go onto the platform.

And now EA has a major monopoly over much of the sports games being produced. That's equally sad considering competition is what makes for better products. Likewise if Sega would of sealed an exclusivity deal with EA they probably could have hung on for a little longer.

Compare and contrast...

So Now that we know what we know about Sega during that point in time do we see Nintendo anywhere near that? Nintendo just came off of a very successful handheld and console cycle. The DS and the Wii were phenomenal moneymakers, selling well in the face of most if not all of the factors that hurt the Dreamcast (Lack of third party developers, consoles with additional format features, Lack of particular games). Even the 3DS situation isn't that much of a setback, considering the company is already working towards rectifying some of the problems that plagued the handheld at launch. The results are already generating interest as people are talking about purchasing 3DSs and the price drop has effectively caused disinterest in the Vita, with pressure now on Sony to either perform or suffer to sell at an even greater loss than it started with. 

Sega's last three hardware cycles were plagued with a series of good ideas, and bad execution starting with the 32X and ending with the Dreamcast's willful abandonment by Sega brass. There was no game changing turnabout, no consoles that printed money, and despite having a motion control device in the Activator, None of the things that happened in 2006 for Nintendo ever happened for Sega during their twilight years as a hardware developer. So how is it possible that we're to say that Nintendo now is in the same situation that Sega was in during the declining years of the Dreamcast?



Internet journalists tend to work within a sort of revisionist history when establishing points. The facts seem to be twisted into whatever seems suitable to push an agenda. Here, the writer took something he had little to no understanding of in order to say that Nintendo is doomed. Nothing new. The problem is that when we're just blatantly disregarding things such as facts and relevancy in order to just state our own opinions does that make us any better journalists?

I don't post these things for my own well being or health. I do because I believe that you, the reader have to fully understand the past in order to understand the present or future. It is then that you, the reader can take the information and make your own judgement based on this.

Game On!