Why Sega Stopped Making Consoles

Sega has been a pillar of the gaming industry since the 1980s.  They were the first real competition against Nintendo and for a brief period, stole Nintendo’s crown. The NES dominated the 1980s and Nintendo had almost no competition.  Nintendo had a monopoly on gaming industry.  There were many aiming to dethrone Nintendo.  This is where Sega emerged.  The Master System gained a cult following but could hardly compete with the NES.  In 1989, the Sega Genesis was released in North America.  The 16-bit console mesmerized gamers with its impressive graphics.  Sega launched an aggressive marketing campaign aimed at Nintendo, kicking off the Console Wars of the 90s.  With the release of the SNES around the corner, Sega unveiled Sonic The Hedgehog.  He was the anti-Mario.  Sonic had that rad 90s attitude and was all about going fast.  Nintendo’s monopoly had evaporated, and Sega even managed to swipe the crown away from them, in North America at least.


Sega’s success wasn’t meant to last and eventually left the console market all together.  Now they put all their efforts on software development and publishing.  But what led Sega to leave the console market?  Simply put, Sega made many boneheaded decisions from which they couldn’t recover from.  Sega only thought as far as overtaking Nintendo and didn’t know what to do after that.  From poorly conceived add-ons to marketing disasters, Sega couldn’t get out of their own way.

Not long after taking control of the North American gaming market, Sega became very paranoid about maintaining that lead.  Sega unveiled several unsuccessful add-ons.  The Sega CD was a disc-based add-on that had only a few worth while games, like Sonic CD.  Not enough games were released on it for most consumers to validate purchasing the add-on.  Next, Sega became very worried about Sony’s upcoming PlayStation.  Sega’s new console was also close to release.  Many would have expected Sega to begin lessening support for the Genesis.  That’s where you’d be wrong.  Sega decided that the Genesis needed yet another add-on.  The 32X was released in Japan the same day as the PlayStation’s launch and with the Saturn right around the corner.  They created competition with themselves when the 32X and the Saturn’s North American release were only months apart.  The 32X was a poorly conceived attempt to put the Genesis on life support before the Saturn came out.  Which brings me to the next reason why Sega no longer makes consoles.

Sega Genesis on life support
The Genesis on life support

Sega of America horribly botched the Saturn’s North American release in what may be the worst marketing strategy ever conceived.  The Japanese office mandated an earlier release to get an early start over the PlayStation.  Sega of America’s CEO Tom Kalinske at a 1995 E3 press conference had announced that the Saturn had shipped to stores and was available now.  This was a surprising announcement, especially for retailers, who were not informed by Sega of this decision.  The Saturn never recovered from its poor start.  Many retailers responded to Sega’s stunt by no longer carrying any of their titles and consoles.  This might be one of the top ten anime betrayals.  Between all of the subpar add-ons and a dumb publicity stunt, Sega’s reputation tanked.

Sega tried to rectify their mistakes when the Dreamcast launched in Japan in 1998.  The Dreamcast was the most powerful console on the market at the time and was positively received by critics.  The console was ahead of its time.  It was the first console with a built-in modem to support online play.  The Dreamcast had many innovative and creative games. Games like Sonic Adventure, Jet Set Radio, Shenmue, and Crazy Taxi.  Along with these games were impressive ports of arcade games.  Unfortunately, it was too little too late.  Sega lost public trust.  The PlayStation 2, GameCube, and Xbox eventually came out and the Dreamcast couldn’t measure up to the competition.  The console officially bit the dust in 2001, only 3 years after launch.  Alas poor Dreamcast, you died too young.

dreamcast console

With two straight financial flops, Sega was bleeding money.  They could no longer justify manufacturing more consoles.  Sega was left with little choice but to leave the console market for good.  Dreamcast games saw ports to the GameCube, PlayStation 2, and PC.  Most of Sega’s IPs also bit the dust alongside the Dreamcast.  Many Genesis era series now only see releases in the forms of classic games collections.  Only Sonic seems to get most of Sega’s attention, with wildly mixed results.  Sega has put most of their efforts into publishing and a fruitful partnership with Atlus.  The Sega we see today is a shell of the 90s icon.  A sad, self-inflicted death.

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