Why did sega quit console industry?

Hello,

So i was just thinking something when next gen consoles are around the corner. there was company called Sega who used to make consoles. but now not anymore.

They were king in console gaming industry, they were chosen ones before the rise of PC gaming. i remember when i had Sega genesis. it was like best console ever of its time. it pretty much blow anything nintendo out of water quality wise but sale wise nintendo were more popular.

I remember when i was kid and played mario. many kids loved that game but i hated it even as kid let alone now. then i played sonic. the fast paced ring collecting innovative platformer blew me away. it was fantastic. they were competitor but sonic destroy mario in every way. plus sega were more carter towards older while nintendo carter towards younger audience as sega recieved so many ports of arcade games which were graphic king back then.

then sega saturn failed and then dreamcast also failed. what went wrong? they couldnot compete with sony i guess. i imagine if sega decide to enter console market. they cant capture the audience.

so my friend what went wrong?

lets discuss

PlayStation killed the Saturn on price point, Dreamcast was marketed poorly. They were bleeding money so they called an audible and left the console market.

Hasn't this been analyzed for 18 years?

and how come xbox survive when they have 0 exclusives???

@ghosts4ever: Because Xbox is profitable.

Because they couldn’t afford to stay in it any longer.

but how? with no exclusive

but sega didnot survived.

@ghosts4ever: They clearly have a better infrastructure than Sega ever had. Xbox isn't just a console, it's an ecosystem. They have money coming in from Live, gamepass, PC, console etc... They have a far superior buisness model and gaming is more popular than ever. Its pretty simple.

so in other words. if sega exist today. they would survive.

@ghosts4ever: Nobody knows. Any answer would just be a guess.

Long story short, they ran out of money. A slightly longer version is that SEGA of Japan refused to listen to and treated SEGA of America like crap, then on top of it, SoA didn't localize most of the Saturn's exclusives, and had a dumb E3 surprise release to go along with its $400 price tag. Everything was working with the Dreamcast, but they were so desperate for cash by then, SEGA's CEO was personally funding Dreamcast production at one point.

The reason MS didn't exit early too is because they have unlimited funds. The OG Xbox was a money guzzler, and the 360 didn't break even until halfway through the gen. I don't know if the Xbox brand, as a whole, has ever been in the green. With that said, to them, it's probably more about market share and brand awareness anyway.

@ghosts4ever:

This was discussed like, millions of times by now. If it wasn't bad enough that it was poorly marketed, the Dreamcast had a shit-ton of hardware issues. The disc drive had a cheap wear and tear, there weren't enough vents on the console, which caused it to overheat easily. It was a mess.

I went through 3 Dreamcasts in the course of that gen. The 3rd one still runs but the AV output is too worn out and the disc drive barely reads a few games.

Redundant topic, Sega ran out of money and couldn't sustain keeping Dreamcast on the market. Microsoft is a mega corporation like Sony, can fund for losses and take hits for failures unlike Sega

My long running theory is that the industry can only support three major players. If there's a 4th entry, the weakest dies.

Atari, Sega, Nin

Sony jumped in, Atari died.

Sony, Sega, Nin

Microsoft jumped in, Sega died

Sony, Nin, MS ever since.

i though atari has not been relevant since atari 2600. there was jaguar at some point but still. they have been dead long ago.

@ghosts4ever: During the 90s they had Jaguar (93-96), Jaguar CD (95-96) and Lynx (89-95)... all dead shortly after the PS1 released.

Biggest mistake Sega made with the Saturn was by making timed exclusivity deals with retailers. By the time the exclusivity deal ran out, some of the major other retailers simply refused to carry Saturns.

I never had a Saturn. My mom bought me a Sega CDX, which was a more aesthetically pleasing Sega CD with a Genesis slot...for an extra $100 than if you just bought a Genesis and a Sega CD. She felt so burned, that she refused to by me anything Sega again. I know that is anecdotal, but I think a good argument could be made that Sega simply lost the trust of their Western consumers.

@Renegade_Fury: Between SOJ & SOA, it all falls down into one thing, jealousy. SOJ were stunned and jealous that the Master System and Genesis had done so well everywhere except Japan, where they were never really in the running. Actually, the Master System didn't have much to do with it, but the Genesis/Mega Drive definitely did. There was also internal disagreement over internal development. Sonic Adventure 2 was , iirc, developed here in the States, which did not sit well with SOJ. Overall, with the exception of the Saturn, SOJ was outperformed in every way that mattered on each of the consoles.

PlayStation nuked them: The End!

Instead of taking a chance and going down with the ship they cut their losses and downsized.

Sega was bleeding money and incompetence on the higher up side. Someone bring that chart of the 90s on how much sega is losing money please.

Money and poor decision making!!!

Comparing sega to Ms is foolish, when did sega ever had any monopoly???

Don't you remember that Ms was bleeding money at the beginning before Xbox turned out profitable.

Sega did have that stronght way back then so... they decided to quit. A SURVIVAL

ps :

read : Sega did not have...

Editing is not allowed anymore????

The OG Xbox was actually not profitable at all, but was a big loss for Microsoft. If it was a smaller video-game-only company in their position, they would've quit the console industry. But the difference is that Microsoft had a ton of money in the bank, and could afford to eat the losses. Whereas a smaller company like Sega couldn't afford to eat the Dreamcast's losses. Hence why the Dreamcast led to Sega exiting, whereas Microsoft continued after making big losses on the OG Xbox.

The purpose of the OG Xbox was to establish a foothold for MS in the console market, which paved the way for their success with the 360. And even then, it wasn't until years after the 360's release that the Xbox brand eventually broke even. This is a strategy that only works for a multinational conglomerate like MS, which has other profitable divisions funding its lossy Xbox division. A video-game-only company like Sega couldn't afford to eat the losses on video games, which was all it had.

After Sega exited the console industry, they merged with pachinko maker Sammy into a conglomerate, Sega-Sammy. They dominate the Japanese pachinko market, where they make a ton of cash. In turn, the pachinko money helps fund Sega's video game business, e.g. developing many arcade games for Asian markets, expanding into the PC and mobile markets, and buying-out studios like Atlus, Creative Assembly, Relic and Sports Interactive.

Now that Sega has a stable source of income with pachinko, they could afford to make a comeback with a new console. But the console market is crowded with three big competitors (Sony, MS, Nintendo), so Sega probably doesn't think it's worth the effort. The days of Sega taking big risks (which they were known for up until the Dreamcast era) are long gone.

They had a bad habit of patching hardware to alleviate shortsightedness. This is expensive and confused parents (32X, Sega CD).

Their first party games aren't consistent.

Their handhelds were expensive and missed the point.

SoJ and SoA both f'ed up. It wouldn't have made a difference whether or not SoJ listened to SoA. Some of SoA's ideas were no better. For example, the 32X was mostly being pushed by SoA. The May '95 Saturn release was also SoA's idea (Tom Kalinske took full credit for it, before later changing his story and blaming it on SoJ). And SoA's Saturn ads were terrible, compared to SoJ's legendary Segata Sanshiro ads. Either way, the SoJ vs. SoA feud shows that Sega had become a dysfunctional company suffering from internal conflict, unlike Sony and Nintendo which had international teams working together in a cohesive manner.

Agree on the Xbox. Microsoft could afford to eat the losses, whereas Sega couldn't. That's why Sega left the console industry, while MS continued to build up its market share despite the losses.

@so_hai: Their handhelds were more expensive due to the technology used in them. Backlit color screens were not cheap in the early to mid 90s.

As for missing the point, I'm not sure what you mean by that. Both Game Gear and Nomad provided quality gaming on the go. Game Gear was an incredible piece of tech with great versions of Sonic, Jurassic Park, NBA Jam, etc. I'm still collecting games for mine currently on the lookout for Road Rash and Double Dragon among others.

Nomad was essentially the first Switch... a portable that could be plugged into a TV for home console use. Given the awesome library of games on Genesis, there's no reason to say that Nomad missed the mark at all.

/thread

They didn’t quit. They died. They were killed by PlayStation.

People were easily copying Dreamcast games.

A big problem with Sega is that they were too ahead of their time. Both in a good way, and a bad way. Sega was at the forefront of experimenting with technological innovation in video games. At certain times, this led to a revolution, like the Sega Model arcade systems and Virtua games which sparked the 3D revolution. But at other times, they were experimenting with technology still in a prototype stage, before being mature enough for a consumer market.

Like you said, the Game Gear was the first handheld with a backlit color LCD display, and the Sega Nomad was a portable-console hybrid decades before the Switch (although it's worth noting that the first portable-console hybrid was actually NEC's TurboExpress, which released just months after the Game Gear). The problem with these handheld innovations is that they came out in the era of Ni-Cad batteries, which had terrible battery life. That's why the backlit color LCDs of the Game Gear and Nomad couldn't compete with the Game Boy.

Battery technology was later revolutionized by the lithium-ion battery, which enabled long battery life for backlit color LCDs. While the Li-ion battery was first commercialized by Sony for cell phones in the early '90s, Li-Ion batteries didn't penetrate the mass-market until the mobile revolution of the late '90s. That was when it became practical for handheld devices to have backlit color LCDs with long battery life. If Sega had waited for the right time, they could've released a backlit color LCD handheld that supported Li-ion batteries with long battery life.

I skimmed the thread, and I didn't see it mentioned, if so, I apologize. I think one factor was no EA support. I remember working with a bunch of people who passed on the DC, because they wanted their Maddens so they got the PS2 instead. What's funny is that EA wouldn't support the DC, but they supported the N-Gage. o.o

@JustPlainLucas: it's definitely a thing, there's a huge amount of people who buy consoles just to play sports games and next to nothing else

@Jag85: True. I generally didn't bother with batteries. I took mine basically everywhere. Often had long car drives but I had the car adapter. Then for home use, I had the AC Adapter.