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S., in part due to a massive advertising campaign and strong third-party support engendered by Sony's excellent development tools and liberal licensing fee.Sony's success was further aided by a price war in which Sega lowered the price of the Saturn from 9 to 9 and then from 9 to 9 in order to match the price of the Play Station–even though Saturn hardware was more expensive to manufacture and the Play Station enjoyed a larger software library.Released in Japan to a subdued reception, the Dreamcast enjoyed a successful U. launch backed by a large marketing campaign, but interest in the system steadily declined as Sony built hype for the upcoming Play Station 2.Sales did not meet Sega's expectations despite several price cuts, and the company continued to incur significant financial losses.contributed to Sega's financial problems, which saw the company's revenue decline between 19 as part of an industry-wide slowdown.Furthermore, Sega's focus on the Saturn over the Genesis prevented it from fully capitalizing on the continued strength of the 16-bit market.Irimajiri hoped to sell over 1 million Dreamcast units in Japan by February 1999, but less than 900,000 were sold, undermining Sega's attempts to build up a sufficient installed base to ensure the Dreamcast's survival after the arrival of competition from other manufacturers.Prior to the Western launch, Sega reduced the price of the Dreamcast to JP¥19,900, effectively making the hardware unprofitable but increasing sales.

However, of the four games available at launch, only one—a port of Virtua Fighter 3, the most successful arcade game Sega ever released in Japan—sold well.

Neither price cuts nor high-profile games were proving helpful to the Saturn's success.

As early as 1995, reports surfaced that Sega would collaborate with Lockheed Martin, The 3DO Company, Matsushita, or Alliance Semiconductor to create a new graphics processing unit, which conflicting accounts said would be used for a 64-bit "Saturn 2" or an add-on peripheral.

As recounted by Shiro Hagiwara (a general manager at Sega's hardware division) and Ian Oliver (the managing director of Sega subsidiary Cross Products), the SH-4 was chosen while it was still in development and following a lengthy deliberation process because it was the only available processor that "could adapt to deliver the 3D geometry calculation performance necessary." Knowing that the Sega Saturn had been set back by its high production costs and complex hardware, Sega took a different approach with the Dreamcast.

Like previous Sega consoles, the Dreamcast was designed around intelligent subsystems working in parallel with one another, Chinese economist and future CEO Brad Huang convinced Sega chairman Isao Okawa to include a modem with every Dreamcast despite significant opposition from Okawa's staff over the additional cost per unit.

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is a home video game console released by Sega on November 27, 1998 in Japan, September 9, 1999 in North America, and October 14, 1999 in Europe.