Probably derailing the thread a bit but it was more due to the poor business decisions and the lack of co operation between SEGA America and Japan that hobbled the Dreamcast at launch, it was never a failure and sold well but never was going to sell enough to dig SEGA out of the financial black hole it was in especially being tarnished by SEGA’s past decisions.
Mega CD never harmed SEGAs reputation, it was a disc based add on at a time when every hardware was expected to have a disc based add on, and every one did, at least in late development if it never got released. It was a luxury add on for the fmv game market. The main issue is that SEGA overloaded it with tech which it didn’t need therefore giving it a prohibitive price point.
32X was a bit more damaging, a ridiculous add on to extend the MDs life when exploring chip options would have been more suitable especially as SEGA of America knew the Saturn was in development.
The Saturn itself did very well in Japan. SEGA thought that 2D sprite scaling was the future (which did make far more visually appealing games) which disadvantaged it in the polygon crazy western market. Sega America could have pushed it as a second/alternative console once the PlayStation’s lead was inevitable (which wasn’t the case until ‘97), promoted it’s strengths and published many of the games that were left untranslated in Japan instead they inexplicably killed it off leaving SEGA with no market in the west.
This is what hobbled the Dreamcast. SEGA had to fast forward the development of the Saturn’s successor to plug the losses they were now making in the west. They rushed the decision for its chipset, awarding the contact to a rival of a company EA had invested in thus causing them to break their long standing relationship with SEGA. The cost of replacing the loss of EA sports brands with the SEGA 2K range was an unneeded. SEGA had planned to build the Dreamcast around technology it had experimented with since the MD days, movie playback for example, a planned DVD drive for the Dreamcast was dropped early due to cost, online gaming was something SEGA had experimented with for years but they didn’t have the time to have it refined for the Dreamcast at launch. Probably most damaging was in their home market where the Saturn was hugely successful SEGA were forced to cut its lifespan short and alienate its user base.
The Dreamcast was launched a year or two earlier than planned with technology that was scaled back due to the cost limitations at the time. At a time where having no market share in US/Europe meant that they were haemorrhaging money and had no core user base ready to adopt the new format. The fact that the tech held its own for so long with the PS2 and that it sold pretty well was a huge success even if it didn’t pull SEGA out of the red.
Rather than SEGAs hardware tarnishing it’s name it was more SEGAs own business strategy. SEGA built many great franchises and IP but lacked a familiar set of core franchises, SEGA failed to build upon many of the franchises the developed in the MD era and rather than having ones that were synonymous with the brand they were more or less synonymous with the format. SEGA consistently failed to carry its IP from console to console and develop its best selling franchises. A SEGA that was tied to some loved and relatable characters and titles would have a pre existing market ready for the Dreamcast.
SEGA also gained a reputation for prematurely killing off its formats. The master system (outside Europe and South America), Mega CD, Game Gear, 32X and Saturn were all dropped early. Only the Megadrive was given a long lifespan. The more experienced gamer by the time the Dreamcast came would be wary of investing in a SEGA console. And they’d be right as the Dreamcast itself was killed early, right after SEGA promised to support it as a multi format publisher/ developer.
Amongst this they were never going to compete with the successor to the hugely successful PlayStation with its hype train in full flow.
Anyway I’m still playing new Dreamcast releases in 2022 such as Xenocider, Xeno Crisis and Intrepid Izzy long after the PS2 has long croaked. Long live the Dreamcast!!!!