Sega’s Top 10 Biggest Business Mistakes

Sega's Top 10 Biggest Business Mistakes

#6 – Sonic, and the Saturn

When you think of Nintendo, you think of Mario. When you think of “Dead or Alive,” you think of tits. When you think of Sega, you think of a mascot who would get better treatment in a snuff film.

There was a time when Sonic was a respected character in the eyes of gamers. With his huge success on the Sega Genesis, it would only seem natural for fans of the blue rodent to continue his adventures in the 32-bits, right?

Yes and no.

“Sonic X-Treme” was announced at E3 in1996, where a playable demo, and video were available. Sega’s goal was to get this 32-bit 3D platformer out for the Christmas season. Behind the PR talk, the marketable trailers, and feedback from the press, little did the public know that things weren’t going so well for “Sonic X-Treme” development team.

There is a long story behind the demise of the game, but I can’t possibly explain it as well as Lost Levels, as that site provides a detailed history of what went wrong with “Sonic X-Treme.” You can view the story here:

For those who just want a summary of it, the game eventually got canned due to relationship troubles between Sega of America and Sega of Japan. Instead, Sega of America were more concerned about turning “NiGHTS Into Dreams…” into their “Halo” for the Sega Saturn, and while “NiGHTS” would go on to sell well, it couldn’t save the Saturn.

This disappointed many fans, as they were hoping for a true Sonic game for the 32-bit generation but never got anything good. Instead, what Saturn owners received were “Sonic R,” “Sonic Jam,” and “Sonic 3D Blast,” which pretty much foreshadowed what was to come for Sonic. These games didn’t relate much with the Genesis titles, although “Sonic Jam” was a compilation package of the Genesis titles, but why buy a system just for that?

It wasn’t until the Dreamcast when gamers finally got a true taste of Sonic in a 3D environment with the release of “Sonic Adventure.” However, considering they had to wait an entire generation for a new, good Sonic game, many fans were pissed off at Sega for this boneheaded move.

#5 – Dreamcast

DreamcastThe Dreamcast was essentially a package of Sega’s mistakes throughout the years. As I mentioned before, Sega always tried to be the first to the market after the Sega Master System, and the Dreamcast was no different. Because of this, they couldn’t keep up with the launch demand for the console.

SegaNet was also a failure, not living up to the hype created by Sega. I won’t get into detail here, since it is one of their bigger mistakes.

The lack of DVD playback was yet another problem, because the Dreamcast used a GD-Rom (Sega’s propriety format) drive, it could not play DVD movies. Considering that Playstation 2 allowed this, consumers knew the PS2 was a better value since it was more than just a game console. To make things even worse, the GD-Rom drive had no copy protection, so piracy became a major issue for developers of the Dreamcast.

However, even with all those thing, the biggest mistake made with the Dreamcast, and I’m sure this will be up for debate, was that it wasn’t really a Sega console. Put down the pitch forks and think about this for a moment. When you purchase a Nintendo system, you would automatically assume you would get a Mario title, a Zelda title, and a Metroid title. As a guy who enjoyed the Sega Genesis, I only have this to say this… where the hell were “Golden Axe,” “Shinobi” “Outrun” and “Streets of Rage”? Imagine what a 4-player online co-op version of “Streets of Rage” could have done for the Dreamcast. Screw being a generic marine, with no personality, killing flamboyantly colored aliens, I rather be punching people in the face with my friends.

DreamcastThis was the main reason why I, and many others, didn’t buy a Dreamcast, because it carried so few of Sega’s own classic franchises. It was because of this that the Dreamcast had trouble differentiating itself from the upcoming competition. Sure, there were new franchises like “Shenmue” or “Space Channel 5,” but they were designed more for the Japanesse market than for North Americans. Consoles strive on exclusive titles, and, for some reason, Sega, who created and published their own games, did not take advantage of their classic properties to their full extent. A dumb move, considering this was Sega’s last stand. (And before someone mentions it in the comments, yes, I know there was a “Streets of Rage” planned for Dreamcast, but it never came out now did it?)

#4 – SegaNet

SegaNetSega had always been interested in becoming the first (yet again) console to get into online gaming. One of their earlier attempts was the Sega Channel for the Genesis, which was basically a modem that would allow gamers access to downloadable games. Another online service Sega attempted was for PC called, including an original 24/7 RTS game called “10six.” Their last attempt to get into online gaming was SegaNet.

There is much speculation as to why SegaNet failed. Many blame Sega’s generosity, while others state it was the broken promises about the service. Either way, much like the Dreamcast, SegaNet was a compilation of many blunders on Sega’s behalf.

I’ll start with the earliest, being the promises made but not kept.

SegaNet was originally designed to work with the Saturn, but nothing come out of that. Instead, the project moved over to Dreamcast. The plan to get the gaming audience to join SegaNet was simple: Subscribe to SegaNet for 18 months and you’ll not only get a free keyboard but a $150 rebate. Additionally, if you subscribed SegaNet between the launch of the Dreamcast and the launch of SegaNet, you would get 55 hours of online time free. Much like, Sega also planned on doing tournaments for certain games with cash prizes.

In September 10th, 2000, SegaNet was born with the launch of “Phantasy Star Online.” Note that this was an entire year after Dreamcast was released.

That’s when the first problem arose. Most Dreamcast owners didn’t get their rebates or their free keyboards. Needless to say, many Dreamcast owners were pissed.

To add to this mountain of errors, Sega’s generosity made it hard for SegaNet to become a profitable model. When getting a game, you would get 50 free hours. In short, you can buy old cheap games that you would never play just to get those free hours, and Sega would never see a dime in their pockets. There were around 250,000 users on SegaNet and Sega didn’t even know how many of them were paying for the service instead of using the free hours from bought games. The reality was, Sega wasn’t seeing a profitable cash flow from the SegaNet service.

In January 31, 2001, Sega announced that the Dreamcast will be their last console, and in July 2001, SegaNet would cease to exist, although Sega continued to encourage existing subscribers to use EarthLink as their ISP due to their partnership. In short, SegaNet only lasted 10 months.

The old saying “Third time’s a charm” did not apply here.

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12 Responses to “Sega’s Top 10 Biggest Business Mistakes”

  1. 2.o on March 19th, 2009 2:40 pm

    Ohh…. Sonic …. Poor, Poor Sonic


  2. GoNintendo » Blog Archive » Sega’s Top 10 Biggest Business Mistakes- What are you waiting for? on March 19th, 2009 2:47 pm

    [...] Full article here [...]

  3. Maruyama on March 19th, 2009 2:57 pm

    It’s all behind us now. Sega’s finally making a resurgence with HotD: Overkill and MadWorld. All they have left to do is fix Sonic and Sega will be well on their way to becoming a credible developer again. While they’re at it, they need to give us proper sequels to some of their franchises, tah-tah.


    2.o Reply:

    I wouldn’t say they aren’t a credible developer/publisher it…. It’s just they kept trying to “improve” Sonic, but never figured out that he only really works well in 2D


  4. UnitDaGamer on March 19th, 2009 4:15 pm

    let nintendo take a crack at making a sonic game!


    DaveDaGamer Reply:

    You buggin. Nintendo is not about the fans they are anout the $


    Unit Reply:

    They’d still make a hell of a better sonic game than what sega has been doing for the past couple of years! Nintendo already translated some of their 2d games to 3d successfully, Mario, Metroid, Zelda, Donkey Kong, Mario Kart etc. so i think they’d know what they were doing. And if you say nintendo isn’t about the fans, than neither is Sega. Time and time again the fans have all cried out to sega to give us a proper Sonic game or atleast one that doesn’t feel like crap but yet we get what you see today.


    2.o Reply:

    I mean it’d never happen, but I’d be interested to see what they did with it. Unfort. they wouldnt be smart enough ti switch back to the 2D style, they’d try and do something “creative” with it. The funny thing is, they’d prob. figure out how to make it work.


  5. R J on March 20th, 2009 4:11 am

    Say what you want

    But I still consider my dreamcast to be one of the best consoles I have ever bought.

    Best sonic game ever was Sonic Adventure 2, Shenmue 1 and 2, Crazy Taxi, Jet Grind Radio.

    These games made my childhood so happy.


  6. GagaMan on March 20th, 2009 5:27 am

    The Dreamcast didn’t need a bunch of franchise rehashes, it created a whole bunch of new ones: Samba de amigo, shenmue, space channel 5, Jet Set Radio, MSR etc. How can someone even have an opinion on a console they didn’t even buy?

    Also: Sega Net was the first successful online gaming service for consoles. It was an early X Box Live, so it was quite innovative. Being the ‘first’ to do something isn’t a bad thing, you know. I’ll give you the 32X though, that was a huge mistake.

    Sega bashing is getting so old now. Everyone makes mistakes, including Nintendo with it’s Virtual Boy.


  7. MarkyX on March 20th, 2009 6:16 am

    “The Dreamcast didn’t need a bunch of franchise rehashes, it created a whole bunch of new ones: Samba de amigo, shenmue, space channel 5, Jet Set Radio, MSR etc. How can someone even have an opinion on a console they didn’t even buy?”

    Yes they did create new franchises but they weren’t games good enough to make purchasing the console worthwhile. They were also more designed for the Japanese audience rather than Americans. Don’t get me wrong here; the Dreamcast is a great system, but people vote their wallets and in the end, the Dreamcast’s library of games didn’t cater to their market well enough to survive.

    “Sega Net was the first successful online gaming service for consoles. It was an early X Box Live, so it was quite innovative.”

    Not sure if successful the right term. It was workable, no doubt, but from a business standpoint it didn’t make much sense. Sega was literally giving away dozens and dozens if not hundreds of hours with their generosity. Coupled with the broken promises about the rebates and you can have a mixed bag. I was surprised they made these decisions because it was due to Sega’s generosity that killed Heat.Net


  8. pure nintendo » Blog Archive » Sega’s Top 10 Biggest Business Mistakes » freshly-squeezed on March 21st, 2009 5:19 pm

    [...] Full Article HERE [...]

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