The Future

By most accounts, 2001 will be a monumental year for the games industry. Aside from the imminent launch of two major industry-shaking console systems--Microsoft's Xbox and Nintendo's GameCube--Sega, a company whose very name (to some) is synonymous with gaming, has gone through a radical metamorphosis. Many may mourn Sega's withdrawal from the hardware market, and with good reason: Those gamers invariably grew up with Sega being almost a household name, with its consoles and games seeming inextricably linked. The thought of a Virtua Fighter game running on a non-Sega box seems nearly blasphemous to the dedicated fan. Couple this with the Dreamcast's splendid software library, which really did much to inspire faith in many of those whose allegiance to the company was flagging, and the vexation of the fans seems perfectly justified.

click to enlarge

Unfortunately, the writing's been on the wall for a while. Sega's division of its internal development groups into semiautonomous studios was a really big hint. Also, who could forget the "rumors" throughout the industry regarding Acclaim's alleged plans to publish a PS2 version of Crazy Taxi? And the recent, wholly ungrounded, to-do about Nintendo's buying out Sega? With rumors like that in the air, many canny industry watchers were simply awaiting the fateful announcement.

Peter Moore Discusses Dreamcast WM: 300K 100K 56K RM: 300K 100K 56K

And come it did. Peter Moore, Sega's president and CEO, officially dropped the bomb, to no one's surprise, in the early morning of Wednesday, January 31, 2001. While Sega of Japan indirectly confirmed much during a press conference the previous week, many were waiting to hear it directly from the US horse's mouth. After all, compared to the dismal sales that the Dreamcast experienced in Japan, its stateside prospects seemed comparatively bright.

click to enlarge

At any rate, Sega cited the growing costs of supporting a hardware platform as the chief motivation for its restructuring. To quote Peter Moore, "The real truth about the video game industry is that it is becoming harder and harder to turn a profit with a hardware platform. The average loss on a piece of video game hardware is between $50 and $200. By the time the system hits shelves, most hardware companies are in the hole due to warehousing, shipping, and marketing costs. With increased development costs, someone is going to have to pay, but it certainly won't be the consumer." Moore also cited the large coffers enjoyed by console-market newcomers (relatively speaking) Sony and Microsoft as a reason for the restructure: "With the hardware game becoming increasingly competitive--especially for companies like Sega, whose pockets are not as deep as our competitors'--we've chosen to place our bets on our software, our heritage, and our proven track record." In fewer words, Sega considers the Dreamcast to be the deadweight that is keeping it from realizing profitability--which it hopes the strength of its games will help it achieve.

 

« Previous Page

Show me more »