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Today you are most likely to find the name Sega on the back of a case for a Playstation 3, Wii or Xbox 360 game but there was a time when this company, so noted for its originality, innovation and sheer creativity, was more than just a 3rd party developer.

For the better part of almost two decades, starting in the early 80s, Sega designed, manufactured and distributed their own home consoles.

From the early days of the poorly crafted SG-1000 through to the North American launch of the vastly improved and greatly advanced Master System – and later the glory days and mega-success with the Mega Drive and Genesis. Sega impacted the ever growing home videogaming console market with a force that by the early 1990s saw SEGA as the Number one games company, worldwide.

Home videogaming was now big business and with the next generation's technology expected to deliver true 3D graphics Sega were going to have more than just Nintendo and its Mario franchise to combat. Sony and the Playstation were coming.

For the world's most popular home console and Videogames Company, Sega's next steps were ill-considered, ensuring that the life of their 32-bit Saturn console was terminated prematurely.

Technically innovative and supported by a slew of quality titles, first appearances might suggest that the Saturn had a lot going for it, everything that is except the support of Sega itself. The subject of intense divisions between Sega of Japan and Sega of America, the Saturn succumbed to a combination of not only poor but also utterly inexplicable decisions.

This at a time when not only the Saturn but Sega themselves were being overwhelmed by the advertising and marketing onslaught of Sony. Both the console and the company paid the price. After just three years the Saturn ceased production and the world's Number one home console and videogaming company found itself not only a long way behind Sony but running a poor third to Nintendo.

What was hurting Sega more than the loss of place, and the loss of face this entailed, was the resultant financial position. The company was losing a lot of money, and not just due to the fiasco surrounding the Saturn. Both the Mega CD and 32X peripherals for the Mega Drive and Genesis were costly commerical misadventures.

As things now stood Sega simply could not afford another failure. Executive heads of both Sega of Japan and Sega of America decided upon a single strategy that ultimately boiled down to crash through... or crash.

Sega had both their US and Japanese R&D departments work on the design specs for the Saturn's replacement - the project was dubbed 'White Belt' in Japan and 'Black Belt' in the United States. Once reviewed it was decided that the Japanese design, with elements of the US architecture, would become their next console. With the help of industry giant IBM, Sega put together a console utilising Videologic’s PowerVR2 chip to provide sensational graphical power. The rather noisy final console would be the first games machine to use water cooling to take the heat out of the processors.

The console development was supported by a restructuring of Sega’s in-house software design teams. Each were granted semi-independence, it was hoped that the artificial sense of competition this created would bring out the best in the games of each team.

It was to prove a shrewd, if costly, move as Sega once again faced one of the major problems that hamstrung the Saturn; that many third party developers now simply refused to have anything to do with Sega and their home consoles. Burnt by the frustrating complexity of trying to program for the Saturn and wary of Sega's faltering commercial reputation, most of these companies declined overtures to develop for the new format.

Most, but not all.

At this point in time, Sony dominated the home console business. They virtually controlled third party game developers, leaving them powerless not just against rising licensing fees, but often wrestling with creative control. Just like Apple and their App Store today, developers were often left jumping through ever rising hoops just to get their game published.

The Saturn was famously difficult to develop for, thanks to multiple processors and a poorly implemented operating system. With lessons learned, Sega contracted Microsoft to create a bespoke version of Windows, Windows CE, to provide the third party community with the easiest development path ever incorporated in a home console.

The final, and for many, the most important part of Sega’s concession to game developers, what its proprietory GD drive. Developed by Yamaha, this slightly higher density version of traditional CD Rom technology meant that games were incompatible with CD drives, making them very hard to copy. In reality it didn’t take hackers long to get around the formatting issues these discs provided, but for developers hacked off at the level of Playstation piracy, it provided a valuable selling point for what became, the Dreamcast.  

Arcade Industry heavyweights Capcom, Midway and Namco stood behind the format, giving the new console one of the greatest 3D Fightng games of all time, Soul Calibur. Opinion with third parties was still divided, but Sega’s licensing was cheaper, and developers were echanted by a console so capable of producing such beautiful graphics.

Once again Sega's trademark innovation and originality changed the way we play games today. The Dreamcast was the first internet ready home console, with its in-built modem a standard feature, fully supported by both mouse and keyboard peripherals along with the Dreamkey browser software. Pioneering design also extended to the Dreamcast's controller and compatible Virtual Memory Unit, or VMU, a detachable memory card for the console, with its own display screen turning it into a portable gaming device in its own right.

As last throws of the dice go, the Sega Dreamcast was more than a good one. It looked to be right on the money. That was before Sega began to indulge in another round of profoundly baffling self-sabotage.

Not having learnt all the lessons of the Saturn, Sega Japan launched the Dreamcast early in its home market, once again, like the Saturn, failing to support its new console with sufficent titles. The predictable results followed with opening sales proving dismal.

However, on the other side of the Atlantic it was to be a refreshingly different story.

For once having allowed themselves enough lead time to have a sufficent number of launch titles ready and supported by a decent marketing campaign the launch of the Dreamcast in North America was to prove the single biggest opening day for any electronic entertainment medium in history. Bigger than any opening day box-office for a movie or first day returns on a DVD or CD launch, Sega of America hadn't experienced such success since the days of the Genesis.

But there was a problem.

Sports games were vitally important to the North American market and even though the Dreamcast launched withNFL2K, Sega was engaged in a very public falling out with the premier third party sports game developer - Electronic Arts. In just a short space of time EA vowed that they were going to "crush" not only the Dreamcast but Sega itself.

Sega’s long and checkered history of trouble with third party developers couldn't have been illustrated in a more damaging fashion. But, as with the Saturn, Sega looked to its own in-house developers to supply the games the format desperately needed. Thankfully they didn't fail to deliver.

After such a poor showing on the Saturn, Sonic the Hedgehog returned on the Dreamcast in Sonic Adventure, and it’s much better sequel. Unique coin-op conversions like Crazy Taxi, 18 Wheeler, Sega Rally 2, House of the Dead, and Virtua Fighter 3 helped keep the arcade faithful... faithful. Weird games kept the format flavour of the month with the gaming press, Sonic Team’s Chu Chu Rocket provided groundbreaking puzzle action, Space Channel 5 proved that dancing really could be cool, and Samba De Amigo providing the greatest party game you could ever shake your marracas too.

Sega were never afraid to experiment. One of the most bizarre games in home console videogaming history must be Seaman, an ugly virtua-pet who evolves if you keep talking to him through the included microphone. Eventually your sureal friend develops a freaky human face.

Add in next generation editions of Daytona USA 2001 and SEGA Rally Championship 2 plus the on-line support for games such as Phantasy Star Online I&II and the Dreamcast quickly established itself as having a rather stunning catalog of titles.

Another groundbreaking title is possibly one of the most ambitious, influential but ultimately flawed and costly masterpieces, Shenmue and its sequel. This iconic arcade adventure saw you living a virtual life through your Dreamcast, earning money doing regular jobs to further the story. Just how much development of this title from its no compromise creator Yu Suzuki cost SEGA has become the stuff of industry legend, with estimates ranging from 20 to 47 million US dollars.

But in the end even a wealth of quality games couldn't stave off yet another and this time final format failure for Sega.

The Dreamcast was in many ways a console genuinely ahead of its time, nonetheless it had some serious shortcomings, ones Sony were quick to capitalise on with their release of the Playstation 2. Sounds rather pathetic now, but the lure of playing DVD movies on the PS2 had enormous market appeal. The initial Playstation 2 releases were terrible, buyers waited almost an entire year before a triple A product came from Sony. The Dreamcast should have built a huge lead during this period, but with buyers looking towards DVD functionality, the tide was against Sega.

After two desperate efforts to claw back market share by radically slashing the price of the console, Sega were now losing money on every unit they produced and even with late releases like critically acclaimed, Rez, Ikaruga, and Shenmue II, the software sales just couldn't earn the income needed to remain viable. With the GD-Rom copy protection cracked, software sales were greatly undermined by the fact that Dreamcast games were now easy to burn. Boot discs removed multi-region protection too, meaning that a lot of people who owned a Dreamcast never paid for a single game they played on it.

The Dreamcast's official end came in early 2001, just two years and two months after its November 1998 launch in Japan. It was to be something of a lingering death. Though offical titles for it had ended, during the next decade games continued to be released for the Dreamcast, the most recent release was in 2010. The irony here is that all of these post-Dreamcast games are the work of third party developers, ports of Japan only coin-op games - that have become sought after in the West.

Sega never lost their courage to innovate, quirky versions of the hardware, like the ill devised ‘Divers’ Dreamcast system, limited edition box sets featuring a plethora of different coloured consoles, the fishing controller, the Maraccas, even right at the end, the Segagaga retrospective box set. It’s no wonder that Sega remains so highly collectible today with such a rich vein of novelties to track down.

Even today, the Dreamcast back catalog looks fresh, that classic Sega sheen dripping over ever fast moving sprite. The little incidental details, like a hot air balloon or hang glider travelling overhead, or clouds parting to reveal that classic deep blue Sega sky. Or that undefinable musical style that lived on after magical sound shower to infect every Sega title. Nurtured the king of 1980s coin-ops, the Dreamcast evokes so many feelings, the first time you saw the After Burner coin-op in action, or wrestled with Space Harrier, or the way we all want to sing ‘Daytonaaaaa’ in that idiotic way. Somehow that same Sega magic has been suringed into pretty much all their first party titles.

The end of the Dreamcast was also the end of Sega as a home videogaming console producer. In perhaps the final irony Sega intended to embark upon a new career, hiring themselves out as a third party developer to the rival companies who helped destroy them. Super Monkey Ball on the Nintendo Gamecube and Virtua Fighter 4 on the Playstation 2 were massive hits and Sega also supported the newest entrant to the home console videogaming market - Microsoft - by releasing follow up titles to both Panzer Dragoon, and Jet Set Radio, and converting the classicShenmue 2.

If nothing else these games prove that Sega’s in-house software designers had lost none of their originality or creative flare but to parent company, CSK, even these belated successes were greeted with indifference. With Sega still in major financial crisis CSK sold their controlling interest to fellow coin-op manufacturer, Sammy in 2003.  

In the years following the new owners have scaled back the arcade division of Sega as well as re-amalgamating all of the creative teams that were established to support the Dreamcast. Several of Sega's best designers have left while those that remain have had to watch as many of their own creations have been sold off to third party developers.

New titles are few and far between these days and to younger generations of gamers Sega are perhaps only known either for the Yakuza franchise - a gritty yet colourful take on the Japanese underworld (which recently took a bizarre turn by incorporating Zombies into its on-going storyline) or the umpteenth repackaging of Sonic The Hedgehog, this time available for download for the iPhone or iPad.

Of course the Master System, the Mega Drive, the Saturn and the Dreamcast have all gone on to have a life amongst the Retrogaming community, and I for one am glad of that. I grew up with Sega and whilst I played the games as a kid and loved them, it is only now as an adult that I fully appreciate the imagination and indeed sheer artistry that went into so many of those games. As a commercial entity Sega failed, missed opportunities, blown chances, incompetent and plainly strange decision which today make Sega a ‘how to’ lesson in the ways a business shouldn't be run.

But as a legacy of failure, when I think of all those great games, it's one I can live with.


RELATED LINKS

Our Sega Dreamcast Sections: European / USA / Japanese 
More Technical Details at the Sega Dreamcast Wiki

Tony Flynn's Guide to the Sega Saturn
 
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