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The Day the Dreamcast Died

Fifteen years ago today, Sega ended production of the Dreamcast. We talked to some of the people who witnessed its rise and fall firsthand.

This article first appeared on USgamer, a partner publication of VG247. Some content, such as this article, has been migrated to VG247 for posterity after USgamer's closure - but it has not been edited or further vetted by the VG247 team.

Fifteen years ago today, Sega officially pulled the plug on the Dreamcast and ceased production. Jake Kazdal remembers the moment Sega decided to exit the console business well - he was there.

Kazdal, who would go onto found 17-Bit (Skulls of the Shogun, Galak-Z), had been at Sega for roughly two years by January 2001. As a young developer, he had worked with Tetsuya Mizuguchi on experimental games like Space Channel 5. Then, one day, it was all over.

"One day Mizuguchi called the whole studio into our meeting room and everyone was like, 'What's going on?'" Kazdal remembers. "He said, 'The truth is that the Dreamcast is gone. Done. We're going to stop making hardware.' The room was like a funeral. It was so somber. All of these old-school dudes who had been at Sega for years and years were standing there with mouths open. No one was moving, no one did anything, no one said anything. It was dark and heavy."

Mizuguchi's announcement spelled the end of Sega's involvement in the console business. Sega formally ended production on March 31, 2001 and became a third-party developer. A few months later, Microsoft launched the Xbox. No one really knew it at the time, but gaming had changed forever.

A sense of joy

Sega originally developed the Dreamcast as a kind of hail mary after the failure of the Sega Saturn. By being first to market, they hoped they could steal momentum from the PlayStation and build up a base before the inevitable PlayStation 2. As they had with their other consoles, Sega leaned heavily on arcade ports like Crazy Taxi, but they also showed an experimental streak that set them apart from more conservative developers.

Kazdal joined Sega of Japan in January 1999, a little more than a month after the Dreamcast's initial Japanese launch. He quickly fell in love with the Dreamcast, which he came to regard as the spiritual successor to the Super Famicom—his favorite console of all time.

"[The Dreamcast] was a nice looking machine. It had colorful buttons. It had that sense of joy and lightness. It had happy boot-up music and stuff. It was a kind of interesting era where it was cleaning up, it was before the PS2... PS1 stuff was always really janky looking, I thought. Splotchy and big polygons. No anti-aliasing. Low-res tech issues and stuff like that, but it kind of established what 3D was and what it could do. So the Dreamcast was like, here's 3D done right. It looks nice," Kazdal says. "Everything was nice and mature and clean looking and there was anti-aliasing on it. Sega was at such a heyday back then with their arcade stuff."

Soul Calibur.

The Dreamcast made a name for itself among hardcore gamers with better than arcade perfect ports of Soul Calibur, outstanding sports games like NFL 2K, and oddities like Seaman. Hardcore gamers admired its cutting edge online technology, which was far beyond anything that had been seen on a console on that point. Mostly, it was cool. If you owned a Dreamcast, you had a kind of hardcore cachet that didn't exist with competitors like the PlayStation or Nintendo 64.

It also benefited from some incredible development talent. At Sega of Japan, Kazdal found himself working side-by-side with a host of veteran developers, many of whom had worked on his favorite games. In those days, Sega was still home to legendary developers like Yu Suzuki, who had worked on After Burner, Space Harrier, and other arcade classics. Kazdal was a huge Panzer Dragoon fan, and he was thrilled to find himself on the same team as a host of veterans from that series. "Panzer Dragoon was one of my favorite games ever. Both the original Panzer Dragoons, but [Panzer Dragoon Saga] especially was such a magical title and basically the whole team was ex-Saga people. The art director on Rez was the artist on Saga, so I just thought that was a little too much for me to handle."

In addition to finding himself alongside very talented designers, Kazdal benefited from Mizuguchi's desire to build a new division that could be hip and relevant. Mizuguchi was the head of Sega's AM3 division at the time, which was responsible for the development of Sega Rally, but he left to create this new division, which he wanted to base out of Tokyo proper.

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"I don't know if you've ever been to Sega's HQ. It's gross. It's industrial boring wasteland. There's four restaurants: a family restaurant, a ramen shop, convenience store, and one other divey sort of lunch place, but that's where everyone goes to eat because that's all there is." Kazdal explains. "It's just a boring horrible industrial area. There's nothing cool. Mizuguchi-san was convinced that if we were going to be hip and relevant and be into modern pop culture and modern entertainment, we need to be in the heart of all of that stuff so he convinced Sega Headquarters to allow him to bring his team right into the heart of Shibuya, which is like the heartbeat of young Tokyo."

Kazdal followed Mizuguchi to Shibuya, earning him the jealousy of veteran game developers like Gregg Tavares, who was with Sega AM1 at the time ("He was just like, 'Dude, what is wrong with you? Why are you so lucky?' I was like, 'I don't know,' Kazdal remembers.) In Shibuya, Kazdal worked on Space Channel 5 - Mizuguchi's inventive rhythm game, which he remembers as "totally hip and totally different," particularly in the way it appealed to young women.

Kazdal was happy, and so was the Dreamcast's small but ferverent fanbase. Its marketing had an insurgent feel to it as Sega positioned itself as the outsider against the behemoth that was Sony. Retailers weren't biting, though, and for all its cool software, the Dreamcast just wasn't catching on. The end was near.

End of an era

The PlayStation 2 loomed over the Dreamcast through most of its existence. Everyone knew it was coming soon by 1999, and when Sony unveiled the system's (admittedly incomplete) specs, it was clear that it would be far more powerful than Sega's upstart console. The PlayStation 2 launched in 2000, and rumors began to swirl that Sega was ready to get out of the console business.

Tellingly, Sega chairman Isao Okawa said that Sega was on its way out of the hardware business as early as November 1999 - a mere two months after its American launch. Two years later, Mizuguchi held the meeting with Kazdal's team. Kazdal remembers, "Mizuguchi-san, I don't know if you've met him, but he's like the most happy, positive, optimistic guy you'll ever meet, and he was just, you know, defeated."

In the U.S., then-Sega of America president Peter Moore held a telephone press conference and told journalists that the Dreamcast would cease production by March 31. Sam Kennedy was EGM's West Coast editor at the time (in the years that followed, I worked with Sam at 1UP), and while he doesn't remember being on Moore's call, he was nevertheless quite close to Sega of America—so close, in fact, that he was literally in the same building with them while at GameSpot. "The folks at Sega were great with the press, and I had strong relationships with a good many of the folks there. SOA was a vibrant place at the time full of good people. It also didn't hurt that while at Gamespot I actually worked two floors down from them (the same building that Zynga is headquartered in today), so it often was as easy as riding up the elevator to grab them for a comment."

Much as he liked Sega, though, Kennedy wasn't surprised by the news. "The forces were simply against Sega. EA not developing on the platform surely had some impact. But the simple fact that Microsoft had intentions to enter the console space made it clear that it would be a brutal, costly battle for Sega to stay involved. Fifteen years later, one can't but help but second guess or wonder where the once-giant Sega went wrong; but at the time, the future couldn't have seemed more rosy for Sega to rid itself of its console shackles and become a dominant third party alongside EA or Activision."

Back in Japan, Kazdal and company were preparing to take advantage of the move with Rez, which Mizuguchi had been developing for the Dreamcast. "I have this shirt that I almost wore today that says, 'Sega x PS2 = ?' and on the back it says, 'Rez.' It was literally the first one."


Mizuguchi himself was saddened by the demise of the Dreamcast, but his disappointment was tempered by the prospect of a fresh beginning. "In the name, there's dream, then no more Dreamcast. Definitely bummed. But, at the same time as a game creator and our team, what that meant was that we were not limited to releasing our games on one console or hardware, so we were able to up the chances of more people getting to experience what we're putting out as a game, so, we were quite feeling positive about that. So it was both. We were sad, but then at the same time, kind of happy that more people can play our games."

Mizuguchi continues, "The reality is that any piece of hardware, there's going to be kind of an expiration date. Especially back then, and today, too, to a certain extent. But, it's like, you put out a hardware piece, there's going to be a time where that cycle ends and a new hardware's going to come out. So, it just felt like, maybe it ended a little too soon, but sooner or later it was probably going to happen."

Rez launched on the PlayStation 2 the following year; and while it's regarded as a classic in many circles, Kazdal admits that he still prefers the Dreamcast version. "I still prefer the Dreamcast version because I'm big into visual aesthetics. A lack of anti-aliasing in the Sony hardware has always driven me nuts. It just drives me nuts. The sparkle and glitter on the edges of things – I just hate it. So the Dreamcast version of Rez looked much nicer because it was all anti-aliased. Anti-aliasing was built into the hardware. It wasn't very expensive. The frame rate was lower, I think it was 30 frames per second on the Dreamcast. It was very smooth and beautiful looking. To me, the PlayStation version always looked more janky. I mean it's crisper, but not in a good way necessarily. The framerate [on the PS2 version] was a lot faster. It felt more alive and I love games with a really good framerate. Over time, I've really learned to appreciate the PlayStation version, but I was sad."

He wasn't alone.

Once Sega went third-party, the idealism around the Dreamcast mostly dried up. Kazdal's post-Dreamcast period with the company reflected those changes, "I was the lead environment artist in this GameCube adventure game. It was really cool. Then Sega America wouldn't sign off on it, so it just fell apart. They just shuffled that whole team back on to Astro Boy, which was kind of getting going. We were just starting to get folded into the Sonic Team. It was the first licensed product I worked on where there was no real creative vision. Well, it's not like there wasn't a creative vision, the director was Takashi Yuda, who had done Space Channel 5 and stuff like that, but he was kind of handed the package and told, 'You direct this.' Everyone was like, 'Huh.' And after Rez and Space Channel 5 and all of these quirky games that we were so passionate about, most people were like, 'Yeah, I'm out.' That's when people really started peeling off. I was the last person to leave of my own accord before the division sort of crumbled and was officially sucked into Sonic Team."

Sega's decline only strengthened people's positive memories of the Dreamcast. Today, it is one of the few consoles to have what seems like a 100 percent approval rating. Some of it is pure nostalgia for a bygone era, but the Dreamcast was just incredibly good for certain genres. If you were a fighting game fan circa 2001, then the Dreamcast simply couldn't be beat. For a lot of people both in and out of the industry, though, it was also about what the Dreamcast represented as the culmination of some 25 years of arcade game development. Sony and Xbox wanted to own the living room, but Sega's only goal was to make a great videogame machine; and in that, they succeeded.

"We knew it was too good to last. The hope was that Sega could hold on and sustain a decent market share alongside Sony and Nintendo, but there weren't enough gamers willing to support the platform. That stung a bit. That such a console with so many brilliant gamer's games couldn't survive; it was a sign that, for better or worse, things were changing," Kennedy told me over email. "Frankly, for those of us in the games media, we wanted Sega in the mix for what Dreamcast represented. In many ways, Dreamcast felt like the antithesis to the PS2, which was seemingly all about high-cost, high-fidelity, mass-appeal gaming experiences. There was a purity to the Dreamcast era that we knew was gone."

When word came down that the Dreamcast was dead, Kennedy commiserated over drinks with the Sega team. "Yes, there were the tears for the end of an era and the loss of jobs. But remembering back, I think the tone was just as celebratory. Sure, the Dreamcast didn't ultimately win in sales. But what the console represented—and what Sega and its teams pulled off in this rare window—was extraordinary. So much so that we still fondly celebrate the console and their efforts 15 years later."

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