Ian cites good reasons, including:
- The awful timing of its release: 6 months before the PS2. Hardware-wise, it fit in with its market timing: it was more advanced than the Nintendo 64 but less advanced than the PS2 (and couldn’t play DVDs). So it was only the best system on the market for those 6 months.
- Game piracy. I think this was less of an issue than Ian thinks — sure, geeks pirated Dreamcast games, but most Dreamcast owners didn’t. Piracy was more widespread after the system’s demise when only geeks wanted them, knowing they could pirate all of the games.
But the failure of the Dreamcast was about more than the hardware or market timing. The real killers, by far, were the Sega CD, 32X, and Saturn. Most of the Sega faithful had purchased at least one of these and been burned: the Sega CD and 32X for having small, awful game libraries, and the Saturn for being one of the worst-timed systems in history — it was optimized for rendering 2D games incredibly well, right when the entire industry moved to 3D-everything with the PlayStation and Nintendo 64, and it launched with a small number of terrible games for $400 in 1995. It rendered 3D games horribly, and the best third-party developers opted to publish for the better, easier, more popular, cheaper PlayStation. Then, with the relatively early launch of the Dreamcast, Sega cut off the lifecycle of the Saturn early, just as they had done to the 32X.
Sega had alienated their own fanbase so much and abandoned so many platforms that nobody ever gave the Dreamcast a chance. And I think that was perfectly fair.