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The System That's Dying

December 6, 1999

Every time I go to a video game store, most of the people in there keep saying that the Dreamcast is dying and the PlayStation 2 will destroy it.

All this in spite of Sega having the most successful launch in the history of any console, and has the most software available so soon after a new console is released.

For example, the other way I went to Software Etc., and the cashier was saying that the Dreamcast was not that good, and that it would be all over as soon as the PlayStation 2 were released. And I am 99% sure that she has never seen a PlayStation 2. As a matter of fact, the only thing you can see right now is the development system, and only if you work at a video game company.

I also went to a FuncoLand next to my house, and the employees and costumers (who had an obvious Sony bias) were bad mouthing Sega and the Dreamcast. They were saying that they were hoping the Dreamcast would wither and die, that the PlayStation 2 was a lot better than the Dreamcast (again, without seeing one), and that the PlayStation 2 will destroy it. What a nice thing to say when they need the profits from Dreamcast software and hardware this Christmas!

Also, most of the video game articles end up saying that even though the Dreamcast had a very successful launch, it will be very hard for them to hang on once the PlayStation 2 launches. They point out that the PlayStation 1 has a much larger installed user base, and that it has a lot more software. Of course that's true. It has been out for five years!

They also say that many developers switched platforms from the Dreamcast to the PlayStation 2 once the PlayStation 2 was announced, and that the few developers who are supporting it are only doing so as a "stopgap" measure until the PlayStation 2 launches. That might be true. However, the Dreamcast is approaching a "critical mass" that occurs when the system has sold enough units, so future sales feed upon the previous sales. It has sold one million units already, before Thanksgiving weekend! Quite a few third parties will come back when that happens.

The industry analysts are now saying that the PlayStation 2 will sell 1 million units on the first day, and 3 million units in the first week. They seem to forget that Japan is in a recession right now, and that Japanese people don't have that much expandable cash. Also, if Sega were smart, they would make sure that the Dreamcast sells for half the price of the PlayStation 2 when the PlayStation 2 comes out. Not hard to do when the system will launch at more than $300.

Don't take me wrong: I believe that Sony is a very powerful adversary for Sega and that it will continue to be very successful in the video game business in the years to come. But let me tell you something: the main reason why Sony owned the market with 85% market share was because Sega and Nintendo floundered. Sega made a system that was more expensive than the competition ($400 vs. $300 for the PlayStation), more difficult to program, and who missed the paradigm shift from 2D to 3D. Nintendo lost most of the third parties because it held on to cartridges at a time when most third parties embraced the CD format.


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