SegaBase
Volume 7 - Dreamcast

by Sam Pettus (aka "the Scribe")

Provided courtesy of

 
Death of the Dream
PART THREE OF THREE (June 2000 - December 2002)
 
The long, hot summer

     After he assumed the helm of Sega of America, a self-assured Peter Moore made the long trip to Japan to see his new masters.  His boss, Sega CEO Isao Okawa, wasted no time in letting him know just how precarious the stakes were.  While the full scope of everything that was said between the two is not and will probably never be known (due to non-disclosure agreements), two important facts have come to light about what happened during that meeting.  Moore left Japan with US$500 million in his pocket for Sega of America and a firm command from Okawa:  Make the Dreamcast a success in North America ... or else.  "Or else what?" the uniformed might ask.  "Did this mean Okawa was going to can Moore if he couldn't pull off the Dreamcast gamble, given that the odds were as long as they were?"  No, not at all; in fact, quite the contrary.  Okawa had given Moore what amounted to Sega's last cash reserves.  The Dreamcast had bombed in Japan and was, in Okawa's opinion, not doing well in every other worldwide market save one.  Dreamcast had proven to be a bigger than expected success in the United States and was, by any reasonable estimate, poised to take the #2 spot on the market away from Nintendo by Christmas 2001.  If there was any hope at all that Okawa could pull off the Dreamcast gamble, his best bet was North America - where the odds were the shortest and the market most favorable to his designs.  If he succeeded, then Sega could stay in the console business for at least another year, clean out its hardware back inventories, and be in a better position to remake the company once the time came.  If not ... well, at least Sega would beyond all doubt have its much-soiled reputation back in the one market that really mattered.  Moore's job was not on the line and he knew that.  It was the very existence of Sega itself that was at stake.  The year 2000 would have to be "the year of the Dreamcast" insofar as the United States videogame market was concerned.  Sega would not be able to survive if it wasn't.  Armed with this knowledge and the last of Sega's cash reserves, a determined Peter Moore went back home, faced with the daunting task of single-handedly saving Sega before all was lost.

     Over in the Old World, Sega of Europe was not waiting around for orders from above.  It knew the situation as well as anybody; besides, as the last of Sega's major markets to roll out the Dreamcast, it was constantly winding up on the tail end of directives from Japan.  Not this time.  Sega of Europe president Katsutoshi Miyake conferred with COO J.F. Cecilion and his staff as to how to start pushing Dreamcast sales.  Thus, credit goes to Sega of Europe for leading the way in dropping the price of the console.  On 31 May 2000, Sega of Europe dropped the price of the base Dreamcast console to £150 for ten days during the British Bank Holiday.  Although the move was only a temporary one, it was welcomed by the markets and sales surged as a result.  On 12 June 2001, Sega of Europe kicked off a US$8 million advertising campaign based around the theme of international competition, as various representatives of the European Common Market battled it out for bragging rights as to who could both make and play the best Dreamcast games. It aggressively pushed its Dreamcast lineup for all it was worth, including the just-arrived megahit Resident Evil - CODE: Veronica.  While European software sales figures as a whole were paltry when compared with the Japanese and American markets, Sega of Europe pushed them as hard as they could for all they were worth. CODE: Veronica, as it had elsewhere, rose to the #1 spot on the charts and brought along other Dreamcast titles, such as MDK 2 and Zombie Revenge, along for the ride.  It was a daring move given the financial woes that Europe's software development community were suffering at the time, but Sega of Europe really had nothing to lose.  They were out of the loop insofar as the big decisions at Sega were concerned, so they were pretty much free to try anything.
     Sega of Europe's devil-may-care advertising attitude was not without its consequences, though, and manifested itself in a rather unexpected and inconvienent manner.  On 22 June 2000 the Independent Television Commission (ITC) of Great Britian pulled the plug on one of Sega UK's Dreamcast television commercials for its popular sports sim Sega Worldwide Soccer 2000 Euro Edition.  They had been deliberately designed to tap into the nationalistic fervor surronding the Euro 2000 football (soccer) championships, and it was feared by the ITC that Sega UK's in-your-face advertising would help promote more than the usual fan violence at the event.  Here's how SegaWeb reported the incident:

The entire campaign is quite stereotypical in nature .... In fact, they take xenophobia - not the cool arcade game - to a new low.  We will show the ads here for illustrative purposes from which you can draw your own conclusions.  The particular ad in question showed a German in a pronounced mullet stating, "Come and have a go if you think you're hard enough."  The Independent Television Commission decided to have the ad pulled on Friday, a day before a grudge match between Germany and England in the Euro 2000 soccer championship.  The ITC issued a statement late Friday, "The ITC believes the advertisement was calculated to tap into the current nationalistic fervor surrounding Euro 2000. There is considerable public concern about violence breaking out during this championship. In this climate we consider the provocation implied in the advertisement to be ill-judged and irresponsible."  "We took the decision on Friday. What happened after Friday only served to show that we have taken the right decision," the regulator told CVG [the original source for the story - ed].  A ban of England has been suggested by championship organizers in light of fan violence involving English fans due to Saturday's match. The UK government is even considering legislation meant to curb soccer violence ....  Currently, Sega has not voluntarily pulled any other advertisements in the series and has until Wednesday to makes its case for the lifting of a ban on the Dreamcast Online ad.
Approximately one month later, no less a figure than Sega of Europe COO J.F. Cecilion himself would deny rumors that Sega had yet another such game in the works.  Memories of the stink over the Euro 2000 ad campaign, perhaps?  Perhaps, but that didn't stop him from inking an exclusive contract with Virgin Games at the end of the month for distribution rights to Sega's online-capable Dreamcast games.  It needed all the help it could get, too, because to put it in the words of one quip-throwing industry reporter, "European Dreamcast sales just plain suck."
     In the meantime, though, a number of Sega's most important third-party houses in Europe were suffering financially and seriously reconsidering their Dreamcast commitments as a result.  The French-based Infogrames, Europe's largest software distributor, posted a net loss for fiscal year 1999 of some US$320.7 million due to "... changes in internal management and write-off of excess inventory."  Eidos Interactive, creators of the popular Tomb Raider franchise and one of the early Dreamcast supporters, was buried under a mountain of debt, enduring both the ignonimity of one buy-out offer after another and the unwelcome presence of investigators from Her Majesty's government checking to see whether or not Eidos executives had planted rumors of unprofitibility in order to score some quick and easy stock profits (sound familiar, Atari fans?).  The troubles with Sega of Europe's third party support would go on through the rest of the year, but they did result in one unexpected and potentially beneifical side effect.  Due to limited funds and the cloud hanging over the console's future, a number of European-produced Dreamcast software titles would not make it overseas.  Thus, Sega of Europe could proudly proclaim that it had its own Dreamcast market exclusives, such as Sega Worldwide Soccer 2K1, Agartha, and Headhunter and thereby give some of the more arrogant American gamers "something to chew on."

     Dreamcast's long, hot summer in America did not get off to a very good start.  Moore may have had the money and the Okawa diktat, but he still had to contend with the fallout from the console's end-of-spring slump.  Internet gaming, one of the lynchpins upon which the success of the console rested, was months behind schedule and still slipping.  The Dreamcast Network, which was supposed to have launched in March, had been plagued by numerous technical delays and would not be ready until the end of summer.  Frontier, the multiplayer space shooter that was supposed to have launched the Dreamcast Network in the States, was quietly cancelled.  By the end of the summer it would also lose another high-profile title as well:  Baldur's Gate, Microsoft's multiplayer AD&D RPG effort.  Software imports from Japan were being delayed in many cases due to their networking features, which in a few notable instances were removed altogether in order to meet shipping deadlines.  While 63% of Internet gamers surveyed by PC Data confirmed the Dreamcast as their choice for most popular online gaming console, Dreamcast's online gaming potential was still just that.  Most industry analysts and reporters treated Sega.net's "free Dreamcast" promotion for the joke that it eventually turned out to be.  Far fewer gamers than expected took advantage of the offer, and this was blamed by the pundits on "a weak, ineffectual advertising campaign that is simply not doing its job in promoting SegaNet." To be fair, it was hard to advertise for a network that as of this date still had next to no content for use besides its browers.  U.S. Dreamcast gamers had Chu-Chu Rocket to play but little else, and many were simply getting fed up with having nothing but mice and cats with whom to interact online.  "So then, what do we have?" quipped SegaWeb's Eric Barzeski.  "Sega falling flat on its face as far as promotions.  What else is new?"
     To his credit, Peter Moore and his new staff at Sega of America tackled their problems head-on.  The old "It's Thinking" ad campaing which had gathered mostly jokes from hardcore gamers was quickly ditched in favor of a new one - "Opponents Are Everywhere."  Moore and his staff constantly sang the praises of Dreamcast's networking potential in public while constantly pressuring their Japanese counterparts for network-capable hardware and software in private.  As far as the software was concerned, Moore wanted more than Chu-Chu Rocket to give to Internet-hungry Dreamcast gamers, and he got it.  By the middle of June, all three of the world's best first-person shooters - Quake III: Arena, Unreal Tournament, and Half-Life were confirmed for release on the Dreamcast by the end of 2001.  The entire Sega Sports lineup was going to have network play added for multiple players, and both NFL 2K1 and NBA 2K1 would have it by fall 2000.  For a while there during the early days of summer 2000 it seemed that every other Dreamcast game Sega of America was announcing would have online gameplay.  In the meantime, Sega of America worked quietly in the background in order to make sure that it would meet its Dreamcast online gameplay goals this time, and by 8 August 2000 everything was in place for full-scale beta testing of the system.  It was late, but was going to happen after all, and both the hardware and software would be in place to make Sega CEO Isao Okawa's dream of Internet gaming a Stateside reality.
     The glory that was Dreamcast's second generation of games continued in its full splendor throughout the summer of 2000.  Aero Wings 2: Air Strike ... Bang! Gunship Elite ... D2 ... Deep Fighter: The Tsunami Offensive ... Draconus: Cult of the Wyrm ... Hidden & Dangerous ... Jeremy McGrath Supercross 2000 ... Namco Museum ... Project Seaman ... Railroad Tycoon 2 ... Silver ... Tony Hawk's Pro Skater ...Toy Story 2 ... Vanishing Point ... WWF: Royal Rumble ... and more.  In fact, several of the more notable titles from Dreamcast's summer of 2000 release schedule deserve special mention in and of themselves:

If most Dreamcast gamers were limited to just one word in describing Ecco the Dophin: Defender of the Future, the 128-bit remake of the old 16-bit Genesis classic, then that word would have to be "WHOA!"  Its quirky and difficult controls may have survived the test of time, but Ecco's graphics received a major overhaul during the porting process.  The dead-on-accurate realistic aquatic environments, complete with bubbles, shadowning, and light and water effects, proved so mesmerizing that many game shops would show the game in its demo loop to tout the power of the Dreamcast.  While there other more playable Dreamcast games out there with graphics every bit as good, no other title save Ecco managed to capture so perfectly just how powerful the console's graphics capabilities could be in the hands of skilled programmers.  It remains to this day a testament to what was the Dreamcast was ... and could have been.

Evolution 2:  Far Off Promise was the highly anticipated sequel to the quirky yet loveable little RPG that Sega of America sneaked under the wire just in time for the 1999 holiday shopping season.  It was just what the RPG crowd needed - another good (if rather small) game to whet its appetite for the monster Dreamcast RPG that UbiSoft was bringing Stateside at the end of summer.  Not much of a plot, as before, but the already impressive graphics were souped up even more and certain features (standardized dungeons) were added at the request of players of the first game.  It was nice to know that Sega's third parties, unlike those of certain other consoles, actually listened to its customers and did something about their inquiries.

Fur Fighters by UbiSoft was without a doubt the oddest multiplayer shooter that Dreamcast gamers (or gamers of any system, for that matter) had seen come down the pike in a long time.  In concept it was not all that far removed from the 16-bit "furry fighting" game Brutal: Paws of Fury, itself a big hit for Gametek back in the early 1990s.  The whole idea of cute little animals with really big guns blasting the crap out of each other scored well with Sega's traditional demographic, young adult men, and Fur Fighters proved to be one of the bigger Dreamcast games of the summer.  Not surprisingly, it also saw release on other platforms shortly thereafter.

Arguably the first Dreamcast hit of summer 2000, Crave's perfect port of Tony Hawk's Pro Skater did for extreme sports videogamers what CODE: Veronica had done for horror-survival fanatics - it brought them en masse to Dreamcast.  The PlayStation original had been called the best skateboarding videogame ever made up to that time; that is, until the graphically superior Dreamcast version hit retail store shelves on the last day of spring.  It may not have offered any new gameplay features over its Sony counterpart, but to play the world's best skateboarding game in full 128-bit graphical glory was a tempting lure that few could pass by.  It remains to this day one of the select few Dreamcast titles that by themselves caused gamers to buy the console.

Wacky Races was one of the more popular kart/rally racing games from Dreamcast's summer 2000 offerings.  Based on a now-forgotten Hanna Barbara TV cartoon series, it gave gamers the chance to compete in various types of cartoon-inspired vehicles, with the requisite graphics and sound effects from the show to boot.  What few people realized was that Sega's 16-bit heritage was peeking around the corner once again in a game that had once been slated for release (and actually coded in beta form) during the last days of the good ol' Genesis.  It was an excellent game that not only added to Dreamcast' software arsenal but also gave fitting tribute to its mighty 16-bit predecessor of old.

The one game for which Sega Sports fans were eagerly awaiting during summer of 2000 was the Dreamcast incarnation of World Series Baseball.  They just knew it was coming, because it was the only major U.S. sport that Visual Concepts had not yet touched.  So it was that when the game was finally released in August it was instantly snapped up by eager Dreamcast gamers across the nation.  It quickly earned the reputation of being the crappiest sports game Sega Sports ever released for Dreamcast due to poor game control, yet WSB 2K1 eventually proved to be one of the biggest games Sega of America would have that season.

In contrast to the anticipation that built up around the impending release of WSB 2K1, Sega's Virtua Athlete came out of nowhere and had no welcoming committee.  Basically an upgraded remake of the old Saturn multievent sports game Decathalete, Virtua Athlete was not slated for a U.S. release had not Sega found an overeager and willing distributor in Agetec.  Virtual Athlete was not Sega sports programming at its best; nevertheless, it helped round out the Dreamcast software library on the sports end.  Given that the Olympics took place the same year and former Sega licensee Konami chose to do an about-face and port its own multievent sports game to Dreamcast (Sydney 2000 Olympic Games), it was probably a good thing that Sega's own effort made it out the door after all.  It may not have looked as good as Konami's game ... but it certainly played better.

Without dispute, the dark horse Dreamcast hit of the summer of 2000 was Sega's own Virtua Tennis.  It was so good that people who didn't give a crap about tennis (like this author) found themselves playing the game for hours on end.  The game looked real, the players looked real, the game engine was spot-on perfect, the controls were easy to master - in fact, the only thing wrong with it was that it didn't have any female players for girl gamers to choose.  Sega later admitted that this had been a terrible oversight on its part and promised them for the sequel (which it delivered by the end of the year); nevertheless, Virtua Tennis went on to become the biggest hit Dreamcast would have all summer.

     Speaking of Dreamcast software, it was around this time that Electronic Arts (EOA) decided to rub some salt in an old wound with some rather nasty public comments by EA president John Riccitello.  In an article with Forbes Magazine concerning how the company made its decisions to support various systems, Riccotello refused to admit the mistake that EOA had made in not developing software for Dreamcast (and thereby losing a potential 20% increase in profits for Q4/1999).  Instead, he inadvertantly revealed that EA's exclusive and profitable product contracts with Sony would have been placed in jeopardy had it decided to go through with its announced DC development plans.  Sega's Peter Moore was justifiably upset at the revelation, as were many gamers like Tom Moore. "For every dollar EA would have spent on the DC, they'd have gotten over ten back.  Losers," he snarled in an interview with IGNDC at the time.  That fact was made painfully clear at the end of July, when EA's first quarter 2000 earnings statement was made public.  The company had suffered a staggering 30% drop in revenue during that particular accounting period - and all because (as everybody pointed out) they had stubbornly refused to back the Dreamcast.  It was money they would never recover, but then again they were backing Sega's more profitable competition.  The U.S. launch of Sony's PlayStation 2 was practically right around the corner, so as far as Riccitello and his gaggle of goons were concerned, it would eventually pay to wait.
     You see, despite the massive amounts of positive spin that Sega of America was putting out regarding its summer efforts, all was not well for Dreamcast.  Every month that went by that summer saw the loss of yet another high-profile title or port.  Soul Calibur 2 ... Max Payne  ... Galleon ... Rayman 3 ... Anachronox ... Messiah ... Supreme Snowboarding ... and so on and so on.  The list continued to grow as the weeks rolled by as one by one major vendors began shutting down their Dreamcast efforts citing their questions regarding the future of the plaform in the wake of the arrival of Sony's PlayStation 2 in the West that fall.   While we're at it, let's not forget the colossal failure of Tetsuya Mizuguichi's rhythm and dance game Space Channel 5 to catch on with the American gaming public despite a massive marketing effort and heavy promotion on MTV.  Late in the summer, a spokesperson for Bandai announced that it would not be releasing any more Dreamcast games in the U.S. based on its popular Gundam sci-fi anime franchise due to sluggish North American sales of its first such effort, Gundam Side Story 0079.  Yes, there were still a lot of impressive games on Sega of America's summer release schedule, but Dreamcast continued its downward slide far faster than could be explained away by the normal summer doldrums.  As a result, many in the software development community did not see much of a future for Sega's little white box.  Former Sega executive Bernie Stolar, now working for Mattel Interactive, probably summed the situation up as well as anybody.  "I have financial concerns [about Sega's marketing model], and until that's addressed to me, I have to wait and see."  Many others in the videogame industry were doing just that as the Dreamcast continued to flail away at the North American market.  I felt the same way at that time, and here is what I had to say at the beginning of that fateful summer in my monthly Dreamcast newsletter:
Dreamcast has got one good year left in the U.S., maybe two at the outside - especially if they can pull off their Internet plans as expected.  After that, it's all over.  One verse, maybe a chorus, and that's it.  End of song.  I don't care how you look at it and from what angle.  If you'll just sit down and honestly run the numbers, then this conclusion is inevitable .... [The problem is] not in the hardware, it's not in the software, it's not in the advertising, and it's certainly not in the user base.  It's in [Sega's] market strategy.  It's not yesterday's console market anymore.  It's today's, and it's quite a different animal than yesterdays.  It nailed Sega of Japan right between the eyes.  Sega of America is in the clear for now, but their turn is coming within mere months.
It was known that Dreamcast console sales were trailing well below Sega of America's intended sales targets.  It wasn't just the hardware that was suffering, either.  Software sales were being significatly impacted during the summer of 2000 as well, but by another entirely different reason.  The tale of why Sega's second and subsequent generations of Dreamcast software never managed to meet sales expectations on the whole from the summer of 2000 onward will have to wait for a bit, however.  First, we need to jump across the Pacific and see what tune Sega of Japan was fiddling while Sega's Western fortunes were burning.

     It was over in Japan where the real story behind the fate of the Dreamcast was unfolding.  Week after week, month after month, Dreamcast sales continued their steady downward spiral.  By the end of June worldwide Dreamcast sales were poised to break the 6 million mark, but less than 1 million of those were in its home country of Japan.  With the exception of certain franchise titles such as Sakura Taisen, very few Dreamcast games stayed more than a week or two on anybody's weekly Top 10 Console Games chart.  Add to that all of those brand new PlayStation2s out there, even though most Japanese had (by the record) bought them as cheap DVD players, and some very nasty conclusions might be made by any Sega executive with a modicum of intelligence.  Sega's days on the home console market were numbered.  It was just a matter of when, not if.  Isao Okawa had already tipped Sega of Japan's hand back in December 1999 when he was widely quoted as saying that Dreamcast would be Sega's last home videogame console.  It remained for the year 2000 to see just where Sega might be headed next.
     The first clue as to Sega's future direction had occurred back on 13 April 2000.  On that date, Sega of Japan announced on behalf of the company that Sega was splitting its highly profitable arcade division into five wholly owned subsidiaries in an attempt to increase profitability and offset continuing losses in its console division.  In street talk, that meant that Sega was taking huge Dreamcast losses and was having to make up the difference elsewhere.  "Elsewhere" quickly became "everywhere else" just two weeks later, when on 24 April 2000 another Sega of Japan press release announced company intentions to cut operational expenditures by some ¥30 billion across the board.  Three days later, a story "from inside sources" leaked on the Internet that Sega didn't even have enough money to continue development on NAOMI/Dreamcast successor hardware, which had been rumored to have been well underway for months.  As the fiscal axe began its long and ponderous swing across all of Sega's worldwide operations, its development divisions began to seriously ponder possibilities that even just a few months before would have seemed unthinkable.
     The departure of former Sega CEO Shoichiro Irimajiri on 23 May 2000 was also significant with regard to Sega's future plans.  It was he who in true Japanese fashion personally took the blame for the failure of Dreamcast to achieve a significant foothold in the Japanese videogame market.  Under his watch and despite his best efforts, Sega had only sold about 600,000 Dreamcasts in Japan instead of the 1.1 million it had originally forecast.  It wasn't Irimajiri's fault - after all, there was the problem with the PowerVR 2DC chip shortage - but he took the blame nonetheless and stepped aside.  Okawa accepted his resignation and then announced that he was personally assuming the role of Sega CEO.  Not since the days of Hayao Nakayama had one man assumed the twin roles of corporate chairman and CEO at Sega, but now it was Okawa's turn to play the dual role.  He confirmed for the record that Dreamcast would be Sega's very last home videogame console, but that was all he would say.  Apparently far more was left unsaid, for knowledgeable sources tipped off the Nippon Keizai Shinbun that a lot more was fixing to take place within the hallowed walls of Sega corporate. The company wasn't just going to abandon Dreamcast, reported the newspaper's sources.  Sega would eventually abandon the console hardware business altogether.  As if to confirm the story, a Sega press release issued the very same day confirmed Sega's long-standing plan to break up its revered software development division into nine independent entities and its recent announcement concerning the reorganization of its arcade division.  Sega investors promptly praised the move as a wise one, for it was now obvious to anyone with eyes to see that something major was afoot inside Sega.
Hisao OguchiYu SuzukiYoot SaitoYuji Naka     Not only was something major afoot inside Sega, it had in fact been afoot for months.  Okawa was no fool; he could read the numbers as well as anybody.  That was why he eventually focused Sega's remaining Dreamcast marketing in North America and more or less left Europe to its own devices.  Back in Japan, he had already put out the word inside Sega to "maintain face" while at the same time start evaluating the potential of developing for and porting existing software to Sega's competitor platforms.  A final decision about which of these to support would not be made until the summer, so Sega's R&D dutifully began evaluating one console after another.  Personal computer porting and development was a no-brainer, as Sega had been doing this for years in one form or another, but the new nextgen consoles were a different matter entirely. Yuji Naka and his fellows at Sonic Team were openly contemptuous of Sony's 128-bitter.  "I do not think much of PlayStation2," Naka was later quoted as saying.  At the same time, though, Naka and company were intrigued by the possibilities that Nintendo's latest hardware had to offer.  They had already developed a 16-bit Sonic game for the failed NeoGeo Pocket and were candidly eyeing the prospect of ports to both GameBoy Advance and soon-to-be-launched GameCube.  Perhaps the public admiration by Nintendo überprogrammer Shigeru Miyamoto for Sonic Team's recent Dreamcast efforts had a lot to do with it.  Perhaps it was simply Naka's personal familiarity and years of unauthorized experimentation on Nintendo hardware.  Perhaps it was something else altogether.  Whatever the reason, Sonic Team began gravitating towards Nintendo platforms for the bulk of their future efforts.  In this move Naka was joined by others at Sega, most notably Toshiro Nagoshi and his team over at the Amusement Vision division.  On the other hand, Yoot Saito and his staff - who were already well underway developing the sequel to the hit Dreamcast game Seaman - quickly gravitated toward Windows based personal computers and also began evaluating the prospect of doing the Seaman sequel on Sony's nextgen console.  "What's important is installed user base," Saito later shared with reporters as to the reasons behind his decision.  Yu Suzuki and AM2 found themselves siding with the quirky Saito insofar as PS2 and PC porting and development went, but were not the first to seriously consider the possibilities of XBox.  Hisao Oguchi and his crack team of programmers within Sega's Hitmaker division were so excited at the possibility of developing for XBox that they were already beginning to jot down ideas for XBox games.  The software development teams at Sega of Japan were not alone, however.  Overseas in America, Sega Sports had also seen the handwriting on the wall and were salivating at the prospects of releasing its flagship titles on both XBox and PS2 as soon as possible.  So on it went, with each one of Sega's software development houses evaluating and then picking those of its competitors' systems that it liked the most.  By the time summer 2000 rolled around, everything was in place to proceed.
     On 6 June 2000, Sega of Japan penned a deal with Motorola to develop Internet-capable videogames for a new generation of cell phones soon to hit the Japanese market.  A few days later, it was revealed that both old and new Sega titles would be making the transition, including the venerable Columns and several games based on Sega's flagship Sonic the Hedgehog franchise.  Most industry watchers lumped this announcement in with the NeoGeo Pocket port of Sonic Adventure and went on about their business.  In retrospect, it was a portent of things to come.
     It was not until the end of June that Dreamcast console sales in Japan finally broke the 1 million mark.  By then, though, other news from inside Sega corporate eclipsed any recognition of that dubious milestone. On 20 June 2000, Sega officially released all of its software development divisions to develop for whatever platforms they chose.  It was merely public acknowledgement of what had been quietly building inside Sega for the past half-year or so.  The move was welcomed by practically everyone within the industry and correctly interpreted for what it was.  By swallowing its pride and commencing development of Sega games on non-Sega platforms, Sega could spread its product around to a wider user base and thereby increase sales, thus dramatically improving its chances of returning to profitability.  Word on the street had it that Sega was already developing ports of hit Dreamcast titles for both XBox and GameCube, and in retrospect those surmises were about as correct as could be.  Strangely enough, the possibility of Sega developing for Sony's PlayStation2 was discounted even though Sega had already licensed a port of its own Crazy Taxi 2 by Acclaim for the platform.  Apparently internal security surrounding the home console version of Yu Suzuki's latest incarnation of Virtua Fighter was so tight that nobody knew for sure on just which platform it would appear.
     It cannot be said that Sega of Japan did not have a sense of humor as to the precarious predicament that the company was in.  At the annual stockholder's meeting on 21 June 2000, all 62,239 Sega corporate shareholders received (or were mailed) their own individual "Poo-Chi" electronic dogs, products of the company's Sega Toys division.  The custom Sega shareholder version came with its own exclusive bone. Some were quick to quip that the bone symbolized their growing frustrations with a company that was still sucking bilgewater at the bottom of the Nikkei stock exchange.  Others took it in stride, because it was one of the few Sega ventures that was generating a profit.  The toy had proved to be a phenomenal hit in Japan when first released and was soon exported worldwide to moderate success, thus adding desperately needed cash to Sega's ever-dwindling coffers.  It was not soon enough for Sega of Japan employees, though, who saw their annual bonus checks slashed by 20% as a result of the company's bad financial predicament.  It wasn't about to get any better.  Dreamcast console sales results for Japan had just come in, and they showed an alarming downward trend - from over 80,000 units sold per month at the beginning of the year to just over 34,000 units per month by the end of May.  Dreamcast was now the #3 console on the Japanese videogame market with some 282,238 units sold to date that year, having just edged out Sony's original PlayStation for the spot, but it was over 800,000 units per month behind #2 Nintendo with its handheld GameBoy Advance.  "And who was number one in Japan for the first half of 2000?" you ask.  Sony's PlayStation2, with 1,924,581 units sold.  Cheap DVD player wisecracks aside, Sony was wiping the floor with the financially beleaguered Sega and there was precious little the latter could do about it.  Console sales were going in the toilet and dragging software sales right along with them.  Even such highly anticipated titles as Genki's street racer Shukoto Highway Battle 2, Sega's own unconventional Jet Set Radio, and the home console port of Yu Suzuki's arcade racer F355 Challenge only stayed on the Dengeki Top 30 charts for a few weeks before slipping off, never again to return.  It was a pattern that would become all too familiar to Dreamcast gamers in Japan as the months dragged on.
     Starting on 30 June 2000, all new shares of Sega corporate stock were no longer issued in the name of Sega Enterprises, Ltd.  Instead, they were issued in the name of Sega Corporation, or just plain SEGA for short.  Why the name change?  Sega was now a household word.  Most people either didn't know or didn't care how the company got its name; that's what everybody called it, so it was more convienent to change the name than continue wasting money on ink printing out the older, longer one.  It was not without precedent.  Back in the 1980s, the American Telephone and Telegraph Company had its name legally changed to its corporate abbreviation, and it is by the trademarked name AT&T that we still call the same company today.  If anything, it was confirmation that the Sega brand and identity were now firmly ensconced in the world consciousness.  That, after all, was one of the things that Isao Okawa had been hoping to accomplish in his determined drive to rebuild his beleagured company.  Their finances might have been in the toilet, their profit projects still in the red, but at least Sega still had its name and the reputation for excellence and innovation that went with it.  That would prove crucial to the company's future plans once the year 2000 began to draw to its close.
     Speaking of which, Sega of Japan managed to surprise everybody by pulling a rabbit out of its hat the following month.  On 5 July 2000, after three straight years of heavy losses, internal projections showed Sega barely eeking out a profit for the first quarter of 2000 to the princely figure of ¥5 billion (US$47 million).  The news was as much a surprise to Sega's own people as it was the industry, but everybody knew why.  If the projected profit held and Sega finally made it back into the black, then it would be entirely due to Isao Okawa and the drastic cost-cutting measures he had implemented earlier in the year.  It was only a projection and the rest of the year could change everything, but Sega trumpeted this unexpected bit of good news for all it was worth.  After all, who could blame them?  Encouraged by its unexpected turn of good fortune and spilling over at the rim with new product to show, Sega elected to follow the lead of both Nintendo and SNK and skip the Fall 2000 Tokyo Game Show, holding its own in-house event instead.  It had the programmers, it had the product, but most importantly it looked like it finally had some profits once again.
     Still, there was no question who had won the 128-bit nextgen console war in Japan.  Sony was easily selling nine times as many consoles as Sega despite less time on the market.  Sony held 65.3% of the Japanese videogame market in comparison to Sega's dismal 11.1%, and even that small share was being squeezed out still farther by a resurgent Nintendo.  Sega may have sold almost 6 million Dreamcast consoles worldwide, but it was taking about a ¥10,000 hit (US$95) per console sold and selling less and less consoles every day.  That plus software sales falling far short of expectations meant that the handwriting was on the wall insofar as Sega of Japan was concerned.  It was time to leave Dreamcast behind and move on to other platforms.  It simply had no choice.  Daily Radar put it best in its online article "Sega's Chances" when it said, ""If Dreamcast does fail, it will not be because there were no good games available for it.  Few if any consoles have been blessed with such an astonishing catalog of games so early in their lives as the Dreamcast has.  No, if Sega suffers defeat, it will be because other machines are backed with more cash."

     Despite all of the maneuvering by Sega's various worldwide branches, the steady exodous of third-party developers from the Sega fold continued throughout the summer of 2000.  SNK and then Koei were the first to go in June - SNK due to bankruptcy more than anything else and Koei due to lukewarm reception of its wargaming sims among Dreamcast gamers.  Namco officially discounted the possiblity of Soul Calibur 2 for Dreamcast that same month due to sales of the first game not meeting projected expectations.  More left the Dreamcast ranks as the weeks rolled by.  Gathering of Developers swore up and down that not only would a Dreamcast port of Max Payne not be released, but that it would not be released for any home console - then quietly went to work on doing just that for Sega's competition.  Confounding Factor's long-anticipated first-person RPG Galleon was suspended, then "delayed indefinitely" due to "development issues."  UbiSoft quickly put to rest all rumors of another Rayman title being released for Dreamcast and quietly began killing off all of its remaining Dreamcast projects one by one.  Bandai publically dashed all hopes that additional Gundam titles for Dreamcast would be exported overseas, citing sluggish sales of Gundam Side Story 0079 in both Europe and North America.  One company that was not supporting the Dreamcast was quick to say why.  "The Sega Dreamcast ... is not a strategic platform ... in the long term," noted TH*Q company president Brian Ferrell.  "We believe that once PS2 is released [overseas], the Dreamcast revenues will trail off in both Europe and America very quickly and very significantly."  It should be noted that similar doubts about the future of Dreamcast had prevented TH*Q from supporting the platform in the first place.  The slow bleeding of Dreamcast developer support that had started at the beginning of "the year of the Dreamcast" was fast turning into an unstoppable hemhorrage.
     As for Sega's attitude?  It plowed right on with its plans, seemingly undaunted by the mounting red ink, oblivious to the increasing number of departures within its third-party fold and unsympathetic to the howls beginning to arise from within the ranks of its own supporters.  Well do I remember how I felt by the sad state of Sega's affairs as the summer of 2000 wound down, and again I quote from my old Internet newsletter:

I think it was ODCM {Official Dreamcast Magazine - ed.] who recently noted that Sega's new mascot should be Samba the monkey.  After thinking about it for a while, I kinda agree with them.  Samba just dances right along with that stupid yet infectious grin on his face, without a care in the world, not really aware of what's going on around him but not giving a flying, er, flip either.  All he knows how to do is dance, and he does it very well, so that's all he does in the face of trouble - dance.  Kinda like Sega.  All they know how to do is videogames, and they do them very well, so they plow merrily along, seemingly oblivious to what's happening to their markets.
Sega would receive its wake-up call far sooner than it had dared hope, and when it did, it would be in the form of a direct assault on its projected year 2000 profit margins from which it would never recover.

The pirates strike back

     The one marketing front on which Sega was still nervously chewing its nails was Dreamcast software.  Why?  Software piracy.  So far, Sega had been incredibly lucky that no one had been able to pirate Dreamcast games.  The custom GD-ROM format Sega employed for Dreamcast software thwarted many an effort by the best Asian software houses to duplicate it in a cost-effective manner.  Despite rumors of pirated Dreamcast games showing up in the usual places (Hong Kong, Taiwan, Malaysa, etc.), very few people had actually seen, let alone buy, a Dreamcast bootleg.  The GD-ROM format required specially modified CD-R/RW drives to duplicate and simply would not play in a standard CD-ROM without extensive modification.  Thus, Sega had enjoyed 100% of what profits were available from Dreamcast software sales, low as they were, for the simple reason that Dreamcast piracy was practically non-existent.  In fact, Sega was so confident that the status quo would continue that some of its future software sales predictions didn't take potential Dreamcast bootlegging into account.  Sega had managed to prevent bootlegs of Dreamcast games from being released for almost two years now.  It was a timespan quite unprecedented in recent videogame history, yet the sands of Sega's hourglass were about to run out.
     Ironically enough, it was none other than Sega of Japan who had made Dreamcast piracy not only possible, but an inevitable reality.

     Back up if you will to the spring and summer of 1998.  Sega of Japan's R&D divisions are finishing up their work on the Dreamcast.  For their convenience and in order to speed up software development on the console, Sega's programmers hide a series of special routines inside the code of the master console BIOS that will eventually be duplicated and burned into every single Dreamcast console produced for all markets.  Mind you, this hidden code is buried fairly deep inside the Dreamcast BIOS.  You would have to know where it is and for what you were looking in order to find it.
     "What was this hidden code?" you eagerly ask.  It was the ability for a stock Dreamcast console to boot and run software using standard CD-ROMs instead of Sega's proprietary GD-ROMs.
     Remember, these hacks were something nobody was ever supposed to learn about.  According to my inside sources (which shall forever remain anonymous), Sega of Japan intended to add protection features to every Dreamcast game released that would prevent it from being booted from CD-ROM should those hidden BIOS routines ever be discovered.  The only problem was that they did such a good job of hiding Dreamcast's secret CD-ROM game-playing capability that they soon stopped protecting the software against it.  Once official Dreamcast devkits went out to the third parties and everybody accepted doing business Sega's way with GD-ROM, the whole affair was apparently forgotten.  Thus, Sega set itself up for its own downfall - one that would take place a mere two years later.  You see, it was only a matter of time before software pirates would stumble across a means of unlocking Sega's proprietary GD-ROM disc format for Dreamcast and devise a means of duplicating the software.  The key would be getting their bootlegs to work on a real Dreamcast console without any major hardware hacks involved.  This is where Sega of Japan's hidden BIOS routines come into play.  If a hacker somehow found those BIOS routines and got that code to work with a game that had been dumped from GD-ROM to standard CD-ROM, well then ... Sega's software sales were going to take a royal pounding before all was said and done.

     The first such public indication that the hackers were getting close to cracking open the Dreamcast's secrets was on 19 June 2000, when RealWorld Technology released the Dreamcast Debug Developer.  It was a wonderful piece of reverse-engineering that gave this team of German hackers what they needed to code their own demos on the console.  It was a pure hardware hack interfaced to a Wintel-based PC or high-end Amiga computer running appropriate host software, but it was still quite an accomplishment and worked as advertised.  All those who saw the Dreamcast Debug Developer in action were suitably impressed, and many of them rightly guessed then and there that it would not be long before other such efforts would surface.
     Actually, at the beginning of 2000, several pirate groups had obtained full-blown legit copies of both Dreamcast SDKs along with the appropriate hardware through various and sundry means, enabling them to read GD-ROMs directly and figure out how to decode them onto standard CD-ROMs. The key breakthrough apparently came in the spring of 2000, not long before the Dreamcast Debug Developer was made, when one of these groups chanced upon a security hole in the Dreamcast's bootstrap sequence that had been deliberately put there by Sega of Japan. When activated by what has been described by some as "a convoluted control sequence," it enabled a stock Dreamcast to access those hidden BIOS routines we talked about earlier.  Instead of reading a Dreamcast GD-ROM the way it was supposed to do, from the outside in, it resequenced the bootstrap routine to read the disc from the inside out.  This meant accessing the low-density, standard format area of a GD-ROM (the inner hub) instead of the high density area with its proprietarly format (the outer, larger hub).  In other words, this group had just uncovered how to make a Dreamcast boot off of a standard CD-ROM.  From that point onward, it was only a matter of time until this or another such group devised a means to both enable standard CD-ROM support for Dreamcasts games and to come up with a way to convienently download game program code stored on GD-ROM to CD-ROM.

     On 23 June 2000, another group of German videogame hackers stunned the world.  Team Utopia became the first "release group" to successfully decode and burn a GD-ROM based Dreamcast title onto a standard CD-ROM, thus enabling it to be copied at will.  Use of their so-called "DC backup" required a special boot disc for the console, which was distributed along with the illegal bootleg (and quickly made available for sale by a shadowy Chinese firm named Lik-Sang).  The subject of the first Dreamcast bootleg was the highly acclaimed fighting game Dead or Alive 2, but other such "Utopia backups" of games like Soul Calibur and Resident Evil - CODE: Veronica followed within days.
     Approximately one month later on 21 July 2000, in a joint press statement with the IDSA's Douglas Lowenstein, Sega of America's Charles Bellfield publically commented on Sega's action against the sudden rise of the Dreamcast piracy scene.  More than 60 Internet sites and over 125 online auctions had been shut down due to the presence of illegal DC "Utopia bootlegs."  Bellfield also announced that Sega had formed alliances with many leading service providers to ensure that its intellectual property would continue to be protected under the newly enacted Digital Millenium Copyright Act of 1998 (DMCA).  Sega's actions marked the first time that a videogame vendor had invoked the DMCA to go after Internet piracy  It was a bold move by Sega and it wasted no time making good its word with swift prosecution of all offenders it could find, yet the bootlegs continued.  The day after Bellfield made his anti-piracy statements to the press, the Dreamcast release group Kalisto unleashed the bootleg version of World Series Baseball 2K1 on the Internet.  Kalisto had timed it to hit the Internet the same day that the actual game appeared on retail store shelves.  By the following week, Sega of Japan had joined the legal battle, joining the efforts of Japanese law enforcement in cracking down on the hundreds of illegal "ROMz sitez" on the Internet promoting the distribution of Dreamcast bootlegs.  It was of no avail.  Dreamcast piracy had become so rampant within so short a time that by the end of July the company was begging anyone who could (or would) give them information regarding the production and distribution of Dreamcast bootlegs to contact them immediately.
     The conflict between Sega and the Dreamcast pirates continued straight through the end of summer and beoynd.  On 1 August 2000, the noted online audiovisual store Amazon.com earned a ringing endorsement from Sega for thwarting Dreamcast piracy in all forms via its website.  Not to be outdone, the hackers quickly learned how to get around the copy protection that Sega was now requiring its third-parties to include with their games, and the "ripped" Kalisto release of Toy Story 2 was the first such product from that effort.  Two weeks later, Kalisto again made people's head spin when it announced it had managed to come up with a way to combine the Utopia bootloader code and Dreamcast bootlegs onto a single CD-ROM.  It left a little less space for the pirated game on the disc, but self-booting bootlegs would soon become the standard format for distribution of pirated Dreamcast games.  Ironically enough, Kalisto chose Sega's own Virtua Fighter 3tb and Dynamite Cop to tout this accomplishment.  Sega and its allies was understandably unimpressed.  On 25 August 2000, the eBay online auction service shut down all auctions involving so-called "Dreamcast backups" and promised swift legal action against any customer who used its site to deal in so-called "infringing goods."  Kalisto abruptly left the scene one week later, but their shoes were quickly filled by the release group Echelon and the steady stream of Dreamcast bootlegs on the Internet continued unabated.  Echelon made the self-booting tools widely available on the Internet in September, and this coupled with pirated versions of both Dreamcast SDKs that got out meant that anybody who wanted make and distribute a Dreamcast bootleg could do so at will.
     And as for Team Utopia, the German hackers that started it all?  Their true identities were eventually discerned, due in part to their foolishly including a picture of themselves on their Utopia Boot Loader disc. They were eventually arrested by German police on 5 July 2000 and charged with multiple counts of copyright violation. No other news has surfaced concerning their fate as of this date.

     For Sega, it was a losing battle and the end results were quite predictable.  Every month or two, Sega would succeed in shutting down almost all of the major Dreamcast bootlegging sites on the Internet.  Within two to three weeks, even more new ones would appear, many with the latest releases.  Sega could never stop the millions of transfers taking place via UseNet, IRC, FTP, FXP, and so on all across the Internet.  For every site or auction that Sega and the IDSA managed to shut down, at least three and perhaps as many as four more sprang up in their wake.  It still remained dreadfully easy to get Utopia backups off the Internet, provided you knew where to look and were willing to put up with the hassles and posturing of the many strange denizens inhabiting the darker corners of the Internet underground.  For all their trouble, Sega's efforts at shutting down Dreamcast piracy on the Internet worked about as well as shoveling sand with a pitchfork.  C. H. Phoon, president of Hong Kong's Golden Harvest Studios, described the problem with another metaphor.  "[Combating piracy] is like pushing water uphill.  We are talking about piracy in 10 or 12 different countries around the region, all with their own legal systems and interpretations of copyright laws.  You can solve a problem in one market and it just moves to another."  For their part, the pirates claimed that their actions were justified because they helped increase Sega's dismal console sales, with some unofficial sources claiming as much as a 20% boost.  The number sounds ridiculously inflated (a lower figure of 11% sounds more reasonable, based on my own independent research at the time) yet in the end it really doesn't matter.  Why?  Because the software pirates were hitting Sega hard below the belt in the one place where profit mattered - Dreamcast software sales.
     If you were an Internet-savvy Dreamcast owner in 2000 and you knew how to get the Dreamcast bootlegs and from where, then one question was obvious.  "Why pay for the game when I can download it for free?  I know it's illegal, but I've got better ways to spend US$50 than on a videogame that I might only play for a few weeks."  Many of these gamers around the world chose to set their morals aside and do just that.  Oh, a few would hear the calls of their conscience and actually go out and buy some games, but not all of them.  Some, especially the out-of-market releases, could not be obtained in any other way save through pricey export shops.  No gamer in their right mind was about to pay close to US$100 for a game in a language he or she couldn't read when it could be downloaded for free off the Internet back channels, and again many chose to do just that.  It has been estimated by the Dreamcast bootleggers themselves that they averaged between one and three million hits a day on their pirate file servers whenever popular Dreamcast titles, such as Shenmue, Grandia 2, Resident Evil 2 or the Sega Sports games came up on the Dreamcast bootleg release schedule.  The millions of people illegally downloading Dreamcast games from the Internet for the most part didn't care that Sega was losing millions of dollars in lost software revenue as a result of their actions.  In the words of one proud FXPer, "F--K SEGA I'LL LEECH THEM DRY."
     Dreamcast software piracy was more than just an annoyance to Sega.  It was one of the major factors, if not the major factor, that kept the console from ever turning a profit.

Down to the wire

Nintendo N64Sega Dreamcast     The last four months of the year 2000 would prove to be the most crucial for the continued future of the Dreamcast.  Remember, in the eyes of Sega CEO Isao Okawa it was no longer a question of if the console was going to be scrubbed.  It was merely a question of when.  Dreamcast had failed in Japan.  It was not failing in Europe, but the overall weakness of the 128-bit nextgen market there coupled with Sega's own limited market penetration meant that European sales made hardly a dent in Sega's massive debt load.  The only major market left where Sega might be justified to keep Dreamcast alive a while longer was in North America.  Dreamcast had been well received where once the 16-bit Genesis had ruled the roost, and Sega of America's marketing and support efforts had realized the first of of Okawa's restructuring goals:  the rebuilding of Sega's public image.  Dreamcast, while not as strong a contender as had initially been hoped, nevertheless was making a significant market impact and seemed to be gaining momentum.  One more big push might displace Nintendo from the #2 spot in the North American market - and if sales were indeed strong enough to do just that, then Dreamcast might actually turn the corner in the one market that mattered the most.  This time around, Sega of Japan was not about to leave Sega of America high and dry.  They were kept up to speed with developments back at Sega corporate and given all the technical support that the financially ailing company could muster.  The odds were long, but Sega had faced long odds before in its corporate history over the years.  Thus, Okawa and his staff back in Japan willingly turned over the future of Dreamcast to Peter Moore and company over in the United States along with the last of Sega's cash reserves, then went back to finalizing their plans to transform Sega once Dreamcast had been laid to rest.  Dreamcast might still fail, but it would not be from lack of trying.  Sega's last home videogame console would have everything at its disposal that Saturn had not a mere three years earlier - plenty of cash, plenty of support, and full backing from all branches of the company.
     The long-held rumors of a significant price drop in the price of the base Dreamcast system began to gain credence at the beginning of August, encouraged by reports from U.S. videogame magazines and deliberate leaks from Sega of America.  Even Peter Moore himself hinted at a coming price drop several times.  It was just part of Sega of America's overall strategy to aggressively advertise Dreamcast like no other Sega console had been marketed since the days of the Genesis.  Peter Moore and his staff were taking no chances with the monstrous impact that PlayStation2 would obviously have on Dreamcast sales.  They had spent a lot of time and effort launching the system, getting the software out the door, getting the Internet strategy in place, and overhauling Sega of America's marketing strategy.  Now it was time to go for broke, pushing Dreamcast as long and hard as they could to as many customers as possible before they got overtaken and buried by the Sony juggernaught.  Sony was launching they PlayStation2 in the United States come November and eager buyers nationwide were already scrambling for advance orders.  GameBusiness magazine hit the nail on the head when they printed that the arrival of Sony's newest console had "...a good chance of forever making the Dreamcast a niche - and narrowly appreciated - game console."  Sega of Japan had been working nonstop to make sure that Sega of America had enough consoles were ready for its big holiday 2000 marketing push in North America.  There were already 2.1 million Dreamcasts sitting in the homes of U.S. gamers by this point.  Sega of America had as its stated goal 5 million Dreamcasts sold by March 2001, with the bulk of those being moved during the highly competitive holiday shopping season. Now was the time for Moore and company to put the other pieces of their Dreamcast strategy into place:  more high-caliber software, online gameplay realized, and competitive pricing.

     Good news for Dreamcast bargain hunters came at the end of summer, when on 1 August 2000 Sega of America officially announed off its All-Stars lineup.  Similar to Sony's discount lineup for the venerable PlayStation, it consisted of past hit Dreamcast titles (all of which had turned a profit, by the way) selling for "the incredibly low price of US$19.99."  Having moved some 9.1 million units of Dreamcast software overall in North America mean that Sega of America could ease its pricing a bit on older but still popular titles.  The first six games in the Greatest Hits lineup made quite an impressive lineup for the cost-conscious gamer:  Crazy Taxi, House of the Dead 2, NFL 2K, NBA 2K, Sega Bass Fishing, and of course Sonic Adventure.  The Dreamcast All-Stars lineup officially began shipping on 22 August 2000, and U.S. gamers jumped on it with such fervor that soon Crazy Taxi and Sonic Adventure were once again competing for bragging rights on the various top software charts.  That was not all, for Moore and his staff had assembled and had waiting in the wings of the Dreamcast release schedule what would become the console's third and grandest generation of videogame software.  If you though that previous titles in the Dreamcast arsenal were impressive, then check out some of the ones that were first offered to gamers in the fall and winter of 2000!

18-Wheeler: America Pro Trucker (Sega)

Capcom vs. SNK (Capcom)

Grandia 2 (GameArts) - Long awaited by RPG freaks worldwide, this was the sequel to what is considered to be the finest old-school RPG ever to grace the ill-fated Sega Saturn.  The original had never been released on a Sega platform outside of Japan, and many gamers (rightly or wrongly) named this as one of the reasons why Saturn had failed.  Sega would not repeat this mistake a second time.  North American and European gamers had finally gotten to see the original once it had been ported to the Sony PlayStation, and now many were frothing at the mouth at the chance to see a full-blown über-RPG in all of its 128-bit glory.  "Screw the pretty yet shallow Evolution series," they demanded.  "We want Grandia 2!"  Even the RPGers who weren't Dreamcast gamers were watching for this one, if only to show them the shape of "real" nextgen RPGs to come.   Anticipation was high, the graphics coming from Japan were impressive, UbiSoft had outbid Working Designs (!) for the U.S. distribution rights - and most of all, in the words of one reviewer, "The word has come down from on high.  Grandia 2 kicks ass."  It would eventually take its rightful place among the hallowed halls of Dreamcast software as the best third-party RPG ever created for the platform and one of the greatest RPGs of all time.

Jet Grind Radio (Sega)

Metropolis Street Racer (Bizzare Creations)

NFL 2K1 and NBA 2K1 (Sega)

Phantasy Star Online (Sega)

Resident Evil 2, Resident Evil 3, and Dino Crisis (Capcom) - Yes, these were ports of PlayStation games, but the Resident Evil franchise was among the most popular in the videogame community.  Resident Evil - CODE: Veronica had been well received by Dreamcast gamers and had set the standard for future installments of the series to come.  In releasing graphically enhanced ports of these two older titles, Capcom was paying tribute to the hundreds of thousands of gamers worldwide who had shown their approval for Capcom's support of Dreamcast.  Now it would not be just PlayStation and PC gamers who would enjoy the thrill of two of the franchise's earlier adventures.  Capcom also through in a nice port of Dino Crisis in the process, thus continuing their reputation of being the one Japanese videogame company more inclined to support Sega than any other in its endeavors.

Quake 3: Arena (idSoft)

Red Dog (Argonaut) - One of the very first Dreamcast games ever developed took over a year to finally make it to market, but the wait was well worth it.  Programmed by the same software house that had helped Nintendo develop StarFox for the venerable 16-bit SNES, Red Dog was a decidedly unconventional 3D first-person shooter in which players piloted a heavily armed and armored all-terrain tank around and inside a decidedly hostile alien planet.  It was the only game that Argonaut ever released for the platform, but its outstanding graphics and high-octane gameplay make it a standout among the many Dreamcast shooters out there.

Samba de Amigo (Sega)

Sega GT (Sega)

Shenmue (Sega)

Skies of Arcadia (Sega) - The only real contender with Grandia 2 for the coveted title of best Dreamcast RPG ever made was this impressive effort by none other than Sega itself.  Its storyline may have been lighter, but its scope was just as sprawling and its graphics every bit as impressive.

Super Runabout: San Francisco Edition (Climax)

Test Drive: LeMans 24 (Infogrames)

Tony Hawk's Pro Skater 2 (Activision)

Unreal Tournament (Epic Games)

It was an impressive lineup by anybody's yardstick.  "Sega fans can look forward to the best software lineup the videogame industry has seen in years," noted SegaWeb's John Benn, and he was right.  No other videogame console at the time - not PlayStation, not N64, not even the up-and-coming PlayStation2 - offered the overall excellent and scope of what Sega offered its Dreamcast users the rest of that year.  The first generation of Dreamcast software was good, the second had been outstanding, but the third promised to be simply phenomenal.  Best of all, it was this generation of Dreamcast games that would have the long-advertised yet still-largely-unavailable online gameplay capabilities that had been advertised ever since the console had been launched in North America almost a full year before.  The games were waiting in the wings - now where was SegaNet?
     Full-scale beta testing of SegaNet began on 8 August 2000.  This was another of Okawa's dreams realized in the one market that mattered the most, and his enthusiasm for online gameplay was shared not only by Sega of America but by eager Internet-savvy console gamers across the United States.  Long had they lusted after their PC counterparts busily fragging each other with popular multiplayer first-person shooters such as Half-Life and the Quake series of games, or engaging in EA Sports's many Internet-capable multiplayer professional sports simuations, and so on.  Now it was their turn, and Sega was the one company making that dream a reality.  Two weeks later, on 21 August 2000, as the result of a special drawing, 100 lucky Dreamcast owners got the fledgling SegaNet all to themselves for a full week of non-stop user testing.  After some more tweaking, the testing resumed with both Sega personnel and those select 1000 lucky gamers breaking in more Dreamcast's new lineup of SegaNet-ready software.  The final testing cycle was completed by 6 September 2000, with rave reviews all around by both participants and onlookers alike.  Long delayed and decidedly overdue, Dreamcast's online gameplay network would finally be realized the following day.  It was a good thing, too, because console sales had already started to pick up dramatically.
     On 12 August 2000, Wal-Mart Discount Cities (the world's #1 discount retail store chain) dropped the price of the Dreamcast to US$150 nationwide due to, as it put it, "sluggish console sales."  To say the folks at Sega of America were pissed would be putting it mildly.  There were two reasons for their muted yet obvious irritation at Wal-Mart's move.  First, Wal-Mart's stated reason was bad press at a critical time, just as Sega of America was ramping up its marketing campaign for the holiday 2000 shopping season.  Second, it was too early.  A price drop was definitely in the works, but it was supposed to be according to Sega's plans.  Being the leading retailer in the business meant that others would naturally follow in Wal-Mart's wake, and that is exactly what happened.  Both J.C. Penny and Target followed Wal-Mart's lead a week later, even though by that time Wal-Mart had let Sega talk them into restoring the price back to US$200.  Everybody knew that a US$50 price drop was coming, and soon.  "Sega's denials ... are looking sillier and sillier," noted SegaWeb's Scott Twining.
     The first official permanent drop in the price of the base Dreamcast system actually took place in Austraila on 17 August 2000.  The system had sold so poorly that Sega had no choice but to begin unloading it as fast as they could.  While they were also at it, Sega finally rid itself of Australian distributor OziSoft and the poor performance it had consistently displayed Down Under in both marketing and supporting the Dreamcast.  Eight days later, reports leaked from Sega of Europe indicated that an official US$50 price drop was imminent and that it too would be adopting a similar reduction across the Atlantic.  On the very last day of the month, Sega of America officially dropped the price of the Dreamcast base system in North Amercia to US$150.  Many gamers and some reporters cried that this move had been long overdue, but most of them either did not know or care how desperate a predicament Sega was in.  Sega of Europe did the same the following day.  Dreamcast was now the lowest-priced 128-bit nextgen console available, competing toe-to-toe with Nintendo's aging 64-bit N64 for rights to second place in the U.S. console wars.  It was going to be interesting to see who would cross the finish line at the end of the year - would it be Sega's nextgen graphical prowess or the Nintendo's legendary "inventory management" tactics?  Only time and market share would tell.
     Sega of America was ready to meet the challenge it faced in the weeks to come.  Peter Moore was quite proud of what his company had to offer to its Dreamcast customers for the coming holiday shopping season, and he let it be known on 31 August 2000 in no uncertain terms.
We are confident that our combination of great hardware, unsurpassed title lineup and access to online console gaming will prove irresistible to consumers - especially those who may be frustrated by the high price point and lack of availability of other game systems this fall. Sega is in a great position now to extend to a much wider audience, and continue to be an innovative and dynamic force in the videogame industry.
The hardware was available, the software was ready to ship, the Internet gameplay support was finally in place, and the price was just right.  The time had come for Peter Moore to unleash his last little surprise on an unsuspecting North American public.

     7 September 2000 will be a day long remembered by Sega fans around the world.  Yes, it was the day that Sega of America officially kicked off its holiday 2000 marketing campaign.  Yes, it was the day that SegaNet finally launched, introducing thousands of eager console gamers across the United States to the wonders of online gameplay.  Yes, it was the day that NFL 2K1 was released, with many of its buyers firing up its online gameplay features almost as soon as they got the game home.  Yes, it was the day that Unreal Tournament was officially confirmed for Dreamcast.  All those were fine and good, but that is not the reason why this day is remembered.
     7 September 2000 was the day that Peter Moore brought back the Sega Scream.
     Earlier that summer, Moore had contacted the advertising agency of Foote, Cone, and Belding about the possibility of reviving Sega's trademark advertising campaign from its glory days during the 1990s.  "It was always in my plans to bring back the Sega Scream," Moore noted later.  He had never forgotten the impact that the original Sega Scream ad campaign had made on him back in his early days as an executive, and it was (by his own admission) the echoes of that scream still ringing in his mind that had helped encourage him to join Sega's ranks back in 1999.  "That enthralled me," Moore recalled, "from the simple fact that the way a name of a brand is said evokes an experience, evokes a mentality, and that was exciting."  He knew that gamers had long associated Sega's unconventional image with the Sega Scream, and for him bringing it back had always been a matter of timing.  The launch of SegaNet at the beginning of the holiday 2000 shopping season seemed the perfect opportunity, so onward he went.  His staff at Sega of America was delighted by the news, for it had been the top question of many a nagging Sega gamer.  "When are you going to bring back the Sega Scream?" they would hear or read hundreds and even thousands of times a week.  "Your current ads suck!  We want the Sega Scream."  Sega of America was listening, long-suffering Sega fans now had a high-placed friend ready and willing to do something about - and this time, he had the full support and blessing from his superiors back in Japan to do something about it.
     The first three spots in the new Sega Scream campaign were unveiled to the public during the 2000 MTV Music Video Awards - the same television network where the original Sega Scream had made its debut.  They were designed to promote the next generation of online-capable Dreamcast games, with two 30-second spots specifically promoting the release of NFL 2K1 and one long 60-second spot promoting the entire lineup.  All three featured Sega's tradtional screwball advertising humor, and all three were well received.  Digital copies of the new Sega Scream ads appeared on the Internet within minutes of their debut.  Word-of-mouth was quick on this news - "The Sega Scream is back!"  Sega quickly farmed out the ads to other broadcast and cable television networks, dutifully running the NFL 2K1 ads during NFL football games whenever possible, where they soon found themselves almost as popular as the shows on which they appeared.
     To show you just how faithfully Moore's staff recreated the spirit and wacky zaniness for which long-suffering Sega fans had yearned, I invitie you to read the text of the original 60-second "Civil War" ad that helped mark the triumphant return of the Sega Scream.  It was performed by none other that Seaman, Sega's own intelligent virtual pet.  It was an apt choice for Sega's new commercial spokesman, for only a screwball character like Seaman could deadpan this screwball commercial and get away with it.

It's evening in America, and across this great land young men and women are coming together through the power of the Internet with one common goal - to whoop each other's bootys.  Sega Dreamcast games are now online, unleashing the ultimate horror - your fellow Americans.  Jack into SegaNet through your Dreamcast console and join your countrymen in the virtual arena.  Play NFL 2K1 and cream four meatheads you've never even met.  Play NBA 2K1 and school some farmboy without suffering the scent of livestock.  Or, play Quake III and waste some Jersey punk from the sanctity of your own home.  And so, America, SegaNet is born - and suddenly we are one proud nation, indivisible, united in the pursuit - of whooping booty.  SEGA!
     It was now down-to-the-wire time for Sega of America.  Everything was in place, and they had hit the ground running with everything they had.  The entire future of Dreamcast was riding on Peter Moore and company.  Isao Okawa's gamble, for better or worse, now resided in their willing hands.  If Dreamcast failed to take the #2 spot away from Nintendo's aging N64 in North America by the end of the year, then it was all over.  Most videogame industry analysts were predicting that Sony would wind up dominating the 128-bit nextgen market with a whopping 70-75% market share by the end of 2001.  Sega might not ever overcome such a formidable opponent in the end, but it certainly had a decent chance of keeping its wonderful little white console competitive in North America a little while longer.  If it could do that, then Dreamcast would definitely see another year on the market.  All eyes were now focused on Peter Moore and his staff over in the United States to see if they could manage to keep the dream alive going as the holiday 2000 shopping season began to take shape.

Dreamcast's last stand

"When looking at where you'll put your money this holiday season ... the Dreamcast will clearly be the best place ...."
- Brandon Justice, IGNDC editor, "The Year of the Dreamcast"

<The wierdness of the U.S. PS2 launch - Sega enjoys the fallout, but so does Nintendo>
<Sega and Nintendo battle it out for second place over the holidays - Nintendo wins by a nose with the help of Conker>

""Dreamcast is a fabulous product.  It just hasn't caught on.  Everybody I talked to loves it.  It just hasn't caught on to the mass consumer, and that's unfortunate."
- Perrin Kaplan, Nintendo of America executive vice president of sales and marketing, as reported by Gamer's Republic

     There was no question that the name "Dreamcast" had been on everybody's lips all though the year 2000.  Whether it be the excellence of its software library or Sega's valiant struggle to keep the world's first 128-bit nextgen system alive, all agreed that that the year had belonged to Sega's little white box.  "Despite what the hypemasters and ad flacks have told you," proclaimed Daily Radar, "2000 was the year of the Dreamcast.  Sega little console that could did, and did so in a very big way."  Unfortunately, it was not enough to save it from its ultimate fate.  It may have been the darling of the videogame industry in the West, but all that mattered to its masters in the East was the bottom line.  Peter Moore had done his best and it was an admirable job by any measure, but it had not been enough.  Sega was still the weak number third in the North American videogame market, and it had neither the resources nor the will to make such a desperate gamble again.
     The day of reckoning was at hand.  It was time for Sega to set the Dreamcast aside and move on.

It's the end of the world as we know it

<01/01/2002 - 03/31/2002>
<The sudden and unexpected death of the Dreamcast>

Danse macabre

<04/01/2001 - 02/28/2002>
     Back on 28 July 2001 the International Data Corporation released a study titled "The Console Wars."  It was an in-depth look at the state of the current home videogame console market and where it projected consumer trends might go.  Among its many other observations, two are of particular note to the story of the Dreamcast.  IDC predicted that sales projections for all vendors would fall far short of expectations by the time that the holiday 2001 shopping season came around, which in turn would provide a massive, large-scale price war among the remaining major players.  Closer to home, IDC predicted that overall videogame revenues during the year 2000 for the home console industry would be at least US$1 billion less than expected.  Both of these predictions came true, albeit in ways that IDC had not expected ....  Even so, at least one of the 128-bit nextgen players did not remain in the market long enough to see this happen.  The one that started the 128/256-bit nextgen revolution had long ago become its first casualty.  Both Sega and the Dreamcast were long gone by the time Microsoft and Nintendo began their titanic battle for seconds in the console market at the back end of 2001 ...

*                    *                    *                    *                    *                    *                    *                    *

Afterword

     It was already beginning to get dark at the Mexico City Olympic Stadium.  It was no less a challenge back in 1968 as it is today,and the grueling pace of the marathon had taken its toll on the contestants.  Many were being helped away to the first aid stations.  The race had already been won over an hour ago and what spectators who remained were getting ready to leave.  Suddenly, without warning, police sirens rang out and the stadium gates reopened.  A single runner wearing the national colors of Tanzania staggered inside, limping badly but eyes firmly fixed ahead.  He had torn both his knee and ankle in a bad fall earlier in the marathon, yet he had insisted upon resuming the race once his wounds had been dressed.  The awed spectators watched as the injured runner, his leg bloodied and swollen, trailing part of a rough bandage behind him, resolutely made his way across the finish line and then collapsed in agony.  The crowd came to its feet and roared.  He had been one of the first to start the race, yet John Stephen Akhwari of Tanzania was the last man across the line.
     As he was being carried off the field admist the cheers of the throng, a documentary filmmaker named Bud Greenspan came up to Akhwari and said, "Why didn't you quit?  Why did you continue the race after you were so badly injured?"
     Akhwari's reply is the stuff of Olympic legend. "I do not think you understand," he gasped to Greenspan.  "My country did not send me 7,000 miles to start this race.  My country sent me 7,000 miles to finish."

     So it appears to be with Sega.  First out of the gate in the 128-bit next-gen way, first to fall, injured and bleeding, yet staggering on.  It still has its goal in mind:  to return to profitibility and resume its place as one of the premier companies of the worldwide videogame industry.  It has made many drastic changes and altered its entire focus in order to stay alive and continue doing what it does best - pumping out many of the best videogames in the business to grace any platform.  It will not finish this race as it started, yet it is determined not to fall by the wayside.  It intends to finish the race regardless, come what may.
     Will Sega succeed as a content provider, selling its wares for a variety of platforms as it once did of old?
     Only time will tell.

I have been advocating the idea that Sega should become a content provider, providing software for all existing systems and systems to come such as XBox.  Hardware has been such a drag on Sega.  Selling software on one system is to limit your mobility. Why put yourself to a disadvantage to the Electronic Arts, TH*Qs, and other companies who have the ability to sell software to all systems?.... I've been advocating this for more than seven years now and always felt it was a bit of a folly for [today's Sega] to be limiting their potential to Sega hardware .... Unfortunately, it took the situation that they are going through today to make them realize that they had to make a change.

- David Rosen, co-founder of Sega Corporation.


For more outline info on the last days of the Dreamcast, look here and here!


 
Death of the Dream
PART THREE OF THREE (June 2000 - December 2002)

Page last updated: 31 January 2002

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