Back in the 90s, a console war was raging between SEGA and Nintendo, much like the ongoing PlayStation and Xbox console battle today, as most gamers could only choose one. The Super Nintendo had classic titles such as Super Mario Bros. and The Legend of Zelda, while the SEGA Genesis had a unique line up with Sonic the Hedgehog and Shining Force. The SEGA Genesis console grew to have an impressive, unique library. At the time, it was considered a strong competitor against Nintendo. When Nintendo released a new title, such as Chrono Trigger, SEGA fought back with Phantasy Star IV: The End of the Millennium. Both the Sega Genesis and Super Nintendo consoles raged on until the new console generation brought on the release of the Sony PlayStation.
While Nintendo fought a strong battle with the Nintendo 64, SEGA started to falter soon after. Though they made an attempt with the SEGA Saturn and SEGA Dreamcast, the brand began to fall, as bad decisions hurt the business internally. Gamers felt a disconnect with the company and SEGA made no attempt to patch up the relationship. The mistakes that SEGA continued to make only stacked on top of each other and SEGA consoles and handhelds soon became old relics in basements and cabinets worldwide.
Once a household name along with Nintendo, SEGA has stepped back from console development to focus on game publishing. SEGA has attempted to make a comeback, but has almost completely lost the loyalty of gamers and the trust of retailers. This list covers many the SEGA empire fell.
15 Failing To Add A DVD Player To The Dreamcast
The SEGA Dreamcast launched in September of 1999 and it was praised for being developer friendly. SEGA also learned from its previous mistakes with the Sega Genesis and welcomed more casual gamers. Tadashi Takezaki, who worked in SEGA's PR and marketing departments, stated the desire to bring the Dreamcast to a broader audience.
Sony soon released the PlayStation 2 the following year. The difference is that Sony was able to add DVD technology into their console. A DVD console built into the console made it a valuable multi-tasking and space saving item. SEGA did not have the money or the resources to add a DVD player into the Dreamcast. Unlike Sony, who was able to develop the DVD reading technology in-house, SEGA's hardware was outsourced from different companies. Expensive hardware made the Dreamcast development costs more expensive than its competitor. The Dreamcast was a powerful machine, but the lack of a DVD player limited their audience.
14 Alienating Gamers With Poor Marketing
In the last century, arcades were much more popular than they are today. Local arcades were social spaces for gamers and their friends. With an arcade not far from home, some didn't feel the need to own a console at home. SEGA wanted to change that. They tried to make indecisive gamers believe that they could bring arcade experiences to their homes. "Genesis does what Nintendon't" was SEGA's taunt to its competitors. Instead of family-friendly games, the Genesis had popular arcade ports, such as Altered Beast and Super Monaco GP.
Talking badly about the competition wasn't above SEGA or Nintendo back then. SEGA took it a step further and started insulting gamers as well. SEGA wanted gamers to believe that those who chose Nintendo were casual gamers and not "real" ones. The SEGA Genesis was for serious players, while the Nintendo was for kids. SEGA alienated gamers who just played for fun.
13 Lacking Third Party Developer Support
SEGA released the SEGA Saturn console in 1994, around the same time as the Sony PlayStation. Sony was new to the video game market, but was quickly gaining popularity. Though the SEGA Saturn attempted to rival the Sony PlayStation, its graphics hardware trailed behind.
The early release of the SEGA Saturn made third-party developers believe SEGA only wanted to focus on their most popular properties first, as the SEGA Saturn was more difficult to develop games on. The Saturn had more complex hardware than the PlayStation, which decreased interest in developing for the console. The poor support made third party developers even more uninterested.
Not only did Sony impress gamers with its graphics, but the PlayStation was a more straightforward console to develop games on. They released development tools to aid third party developers. Sony also had a much stronger support system. During this time, SEGA was releasing new add-ons and consoles too quickly and ending support just as fast. The Sony PlayStation had a much broader range of games while SEGA trailed behind.
12 SEGA/Sammy Merger Came At The Cost Of Gamers' Trust
After multiple console failures, SEGA was quickly losing money and looking for a way to turn a profit. To save the company, they decided to merge with Sammy, the leading manufacturer of pachinko machines. By merging, they hoped to make more software for pachinko machines and expand their market. SEGA took over Sammy's much smaller division of video games, while Sammy concentrated on business management and their pachinko machine line.
Though the merger helped SEGA financially, the decision to merge and abandon their past consoles hurt their business reputation. They stopped focusing on providing support on the Saturn and Dreamcast consoles. Gamers were angry that after shortly releasing a new console, SEGA stopped developing games for it. Though the merger helped save them financially, SEGA had to completely revamp their company to regain gamers' trust and make a profit.
11 Internal Strife Between The American And Japanese Branches
SEGA was split into two branches: Japan and America. Both released the SEGA Master System and Genesis within their countries, while the Japanese branch was surprised at how well the consoles sold on the North American market. They were not thrilled about the situation, which led to internal issues between the Japanese and American branches. Japan also made poor decisions for the American market by packaging the SEGA Genesis with Altered Beast instead of the more popular Sonic the Hedgehog game. Yuji Naka, the leader of the Sonic Team, grew tired of the internal issues and he moved to the US to finish development of Sonic the Hedgehog 2.
Though SEGA of Japan did not value their American counterparts, SEGA of America's former President Bernie Stolar also caused strife. He didn't believe that Japanese games on the Sega Saturn would sell in North American markets, so the number of games on the Sega Saturn dwindled compared to Japanese-exclusives. SEGA was well on its way to failure with the amount of the internal strife between both branches.
10 SEGA-CD Expectations Exceeded Reality
In the 1980s, SEGA and Pioneer teamed up to create a revolutionary new addition to the SEGA Genesis. Project Earth would add a laser disc addition to the system. Unfortunately, this project failed due to costs. SEGA decided to evolve this add-on from laser disc to CD-ROM. Project Earth turned into the SEGA-CD, which would double the power of the Genesis.
The SEGA-CD was the first of many expensive add-ons for the Genesis. The game library had several gems, including Sonic CD and the Lunar RPG series, but game releases slowly stalled. The SEGA-CD was powerful for its time. Game developers started focusing too much attention making unpopular full-motion video games. In a drastic attempt to boost sales, SEGA released the Mega Drive II and the Multi-Mega. This confused gamers because they didn't know what to purchase. Sales eventually decreased, and SEGA moved on, eventually withdrawing their support from the add-on.
9 Abandoning The SEGA Channel
In the 1990s, if gamers wanted to try out a game, they would have to rent it from a local Blockbuster store or borrow it from a friend. The SEGA Channel was an innovative new service that worked with cable television providers. In mid-1994, SEGA launched the SEGA Channel in a few test markets in the US. To access the service, gamers had to use a special cartridge for the SEGA Genesis console and pay a monthly fee. This cartridge was similar to a modem.
SEGA Channel gave gamers access to upcoming SEGA news and over 50 games. After picking out your game and waiting a few minutes to download, it would play as if it was a cartridge inserted into your SEGA Genesis. Unfortunately, SEGA discontinued the service in the late 1990s, as SEGA was unable to compete with the popularity of the game line up on the Sony PlayStation and Nintendo 64.
8 Ending Console Development For Digital Gaming
SEGA and Nintendo fought a hard battle in the 1990s. However, in the 2000s, SEGA encountered several setbacks, as the failure of the SEGA Dreamcast cost them millions and they were unable to compete with Nintendo and Sony. They eventually made the decision to stop developing consoles and focus on digital and mobile gaming.
SEGA enjoyed some success with the first-ever console MMORPG Phantasy Star Online, as it was successful in Japan and North America. In an attempt to profit from online play, SEGA decided to make a bold change. SEGA moved their efforts to mobile and online PC games. Employees were let go from the company in an attempt to downsize.
SEGA started branching out to make a profit instead of losing money with consoles. They began working with once-rival company, Sony, to develop games for the PlayStation 2. Instead of trying to create a better console, SEGA abandoned their work for digital game development.
7 Losing Focus With Sonic The Hedgehog
Sonic the Hedgehog was SEGA's gaming icon, just like Mario was for Nintendo. When developing the Sonic character, SEGA wanted to create a new type of hero. Sonic was meant to be faster, more dangerous, and cooler than Nintendo's plumber. Sonic was used to promote SEGA products and soon became a well-known character.
The Sonic the Hedgehog series of games started off strong, but then started to falter. The level designs started going downhill, so SEGA decided to remedy this by introducing several new characters, such as Tails, Knuckles, and Amy Rose. Unfortunately, at that point, the Sonic the Hedgehog series was focusing too much on his friends.
With a focus on adding more to the games, SEGA was losing focus on core gameplay elements. Sonic the Hedgehog was no longer just about going fast. Countless glitches, difficult level layouts, and being forced to play as different characters still frustrates gamers today.
6 Introducing A 3-Button And 6-Button Controller Option
The original SEGA Genesis console came with a three-button controller. The controller was large and bulky, but early games utilized this button configuration.
With the evolution of more complex games, SEGA later made the decision to release a six-button controller. Not only did the newer controller have more buttons, but the controller size itself was smaller. The amount of buttons on the controller made the layout seem cramped. There was an advantage to the six-button controllers, which was that many of them had a longer cord than the three-button model.
However, older games were not made with a six-button controller scheme in mind. Holding down the Mode button would set the controller to a three-button configuration. Unfortunately, this wasn't always guaranteed to work. A six-button controller scheme was helpful in some games, namely fighters, since a six button layout could mimic an arcade machine. However, this caused some backward compatibility issues that SEGA never fully resolved.
5 Turning Down Microsoft Multiple Times
While SEGA and Nintendo competed to see who was the best, Microsoft was watching from the shadows. Microsoft was a well-known international brand in the computer software business. After seeing the popularity of video games, Microsoft decided to enter the video game market. Microsoft was speaking to both Nintendo and SEGA. The software giant was interested in developing a console for either company, but both rejected the offer.
After the poor sales of the SEGA Saturn, the company was starting develoicropment of the Sega Dreamcast. Overstock of Saturn consoles and accessories hurt SEGA, so they were working fast to develop a more popular console, when Microsoft tried again to convince SEGA to develop the Dreamcast. They also knew about SEGA's financial situation and wanted to help the company financially. SEGA stood firm and rejected all of Microsoft's offers. Microsoft eventually gave up and developed the Xbox.
4 Giving Up On The SEGA Game Gear And Nomad
The SEGA Genesis just released in North America and was well-received. At the same time, Nintendo had entered the handheld market with the Nintendo Game Boy. Both companies were starting to compete with their console systems, so SEGA knew they couldn't sit on the sidelines for handhelds. SEGA decided to enter the handheld console market in the late 1980s with the Game Gear.
Compared to the Nintendo Game Boy, the SEGA Game Gear was large, clunky, and had a poor battery life. Despite its setbacks, the Game Gear sold well. After releasing a few original titles, SEGA resorted to porting over existing Mega Drive and Genesis titles. SEGA eventually lost interest in the handheld market, which upset faithful Game Gear fans. Years later, SEGA attempted to re-enter the handheld market in Japan and North America with the Nomad. However, SEGA repeated the same mistakes. They released few original titles and more ports, which caused SEGA to fail as a handheld competitor.
3 Quantity Became The Priority Over Quality
The Sega Genesis and Super Nintendo consoles competed for years and SEGA knew they had to remain relevant and keep impressing gamers. In the 1990s, SEGA quickly released two add-ons for their Genesis console, the Sega-CD and 32X, not to mention their Game Gear and Nomad handhelds. Game developers scrambled to create games for these add-ons. Less than a year after the release of the 32X, SEGA announced the Saturn. Neither developers nor gamers were pleased with this decision. Gamers had to pay more for another SEGA console and developers had to scramble again to create games for a new console. Then, later on, SEGA attempted to take advantage of Dreamcast video game console accessories with various memory cards, controllers, cords, and more.
Due to all the changes, there was a much higher ratio of ports and video motion games. These games were cheaper to release, but known to be low quality regarding gameplay and story. SEGA's desperation to stay relevant cost them more than loyal fans and relationships with game developers. It also cost them money. With the high costs related to console development, it hit SEGA's wallet hard.
2 Hiring Bernie Stolar
Bernard "Bernie" Stolar had a long career in the video game industry. He was the first President of Sony Computer Entertainment of America, but was eventually let go for refusing to invest in RPGs and 2D games. SEGA decided to recruit him as President of SEGA of America. Somehow, he still believed there was no market in North America for RPGs or 2D games.
SEGA was still promoting their Saturn console in Japan, but it was not selling as well in North American markets. Stolar decided to focus on a new console and ended support for the Saturn by stating "Saturn is not our future" at E3 in 1997.
To gain the attention of gamers, he disobeyed SEGA of Japan by offering a lower price for the SEGA Dreamcast. SEGA of Japan wanted to launch it at $249, while Stolar launched the console at $199. Stolar was fired from his position before the North American Dreamcast launch, but the damage was already done.
1 Prematurely Launching The Sega Saturn
After the failures of the SEGA-CD and 32X, SEGA attempted to bring back gamers with the SEGA Saturn. SEGA would be in competition with both the Nintendo 64 and the Sony PlayStation.
The very first E3 was held in May 1995. It was there that SEGA's previous President Tom Kalinske made a huge announcement. The SEGA Saturn was originally scheduled to be released in September 1995. The release date was pushed up four months early, which was a shock to retailers who were not warned. Eager customers swarmed stores, only to find there was insufficient stock. The price was also $399, which was $100 more than the Sony PlayStation.
Issues with retailers and a slim game lineup soon meant the death of the SEGA Saturn, as SEGA ended third party result in 1997. They finally released the last game for the Saturn in 1998, a mere three years after its initial launch.