| Dream
Cast: Sega's Last Hope?
Sega wants to be the nightmare on Sony and Nintendo's street. With the launch of its new 128 bit video game console, Dream cast, reclaiming the #1 spot from its video game maker rivals. In addition to video game hardware, the company makes video and PC game software, arcade games, and Pico multimedia educational games. Sega also operates about half a dozen theme parks in the US, Europe, and Japan, and it is opening entertainment complexes, which offer movie theaters, karaoke, spas, bowling, and food stands. (2) The company, a distant 3rd in video game consoles, is retiring its aging and unsuccessful Sega Saturn console to introduce Dream cast. The console was developed with partners Microsoft, Hitatchi, NEC, Video Logic, and Yamaha. Sega has pinned its hopes on Dream cast, which is expected to be 10 times faster than current leader 32 bit Sony Play Station, have realistic 3-D graphics, and allow players to compete over the Internet. (2) This site wants to answer the question: "will it work". Will Sega once again rule the video game industry, or will Dream Cast fail like Sega Saturn? Sega's Brief History Sega was established in Tokyo, In June 1960, as Nippon Goraku Bussan Co. Ltd., and was later renamed when the company merged with Rosen Enterprises in 1965. Sega of America, the video game and console producer, was formally established in 1986. (1) Sega's first game console, self titled, was moderately successful in the US until Nintendo released its bit system. While Nintendo ruled the US, Sega retained most of the market share in Europe with its own 8 bit system. In 1989 Sega introduced Genesis, a 16- bit game system. By 1991, when Nintendo finally came out with a 16 bit console, Sega had already sold more than a million Genesis systems, and captured most of the market share. (5) Successful games such as the no-holdsbarred version of Mortal Kombat out sold Nintendo's cleaner version two to one. In 1995 Sega Saturn and Sony Play station both hit the market, followed shortly by Nintendo 64. Even though Sega tried new innovations for Sega Saturn (like Net link, letting players connect to the Internet), the console was an overall disappointment. Sales paled compared to Sony's Play station, and software makers complained that it was difficult to develop games for the platform. (2) By 1997, Sega had lost it's majority of the market share reduced to a lowly 5% behind Sony and Nintendo. The failure of Saturn, mergers that fell through, and the Asian economic slump caused the company to incur a loss for the fiscal year 1998. (5) The following is a financial summary of Sega from the Genesis era until 1998. Numbers in millions
As can be seen from the table Sega has experienced a decline in sales and net income since around 1993-1995. Most of this decline can be attributed to the release of Sony Play station and Nintendo 64. Sega Saturn was a huge failure and lost Sega it's market share. Last year in 1998 Sega had to cut it's labor force in the US by 30%, in order to free up revenue to finish the production and marketing of Dream Cast. (6) Sega Genesis If Sega is to be successful again, they must recapture the excitement and profitability of their game console. To regain that kind of success Sega will look a Genesis, their most successful console to date, and try to imitate some of the factors that made that project a hit. one, and perhaps the most influential, factor is that of timing. Genesis was the first 16 bit game on the block. They used a large marketing plan to drum up demand and then Genesis took off in sales. A second but equally important factor that made this project a success was the wide selection of games available. Sega spent a lot of money to make sure Genesis's games were abundant and popular. (5) Sega Saturn If Sega is to prevent past mistakes they must learn from the Sega Saturn project. Saturn was a console Sega put out in order to compete with Play station and Nintendo 64, which were released first. The console had a long wait until it was everywhere in America, and by that time Sony had most of the market followed by Nintendo. Saturn had other problems though, especially with the games. Programers complained that Saturn games were too hard to make, and after the profit margin on them remained low many independent game producers stopped making them. (5) Sega Dream Cast  Dream Cast Thus Far So far Dream cast has been a big success in America. One month before the console hit the store shelves Sega received an order for over 300,000 units. The Dreamcast managed to sell over 372,000 units after four days on sale, surpassing the previous record holder, Nintendo 64, which took six days to hit 350,000 when it launched three years ago. Total revenue for the machine now lies at approximately $132,712,000, branding Sega's machine an instant success. (14) Equally as impressive as the hardware sales were related software sales during the first four days. It appears that Sega's strategy of 18 games at launch has worked out tremendously well, with first and third party titles selling at an average ratio of three pieces of software for every system sold. (8) The title NFL 2K is Sega's best selling game to date. Will Sega's Strategy Work? Now we've come to the question for which this site is dedicated for. Will Sega's plan to revitalize the company fly on the wings of Dream cast? After researching the issue I feel that Sega will survive, and that Dream cast will continue to be successful. Sony, the current industry leader, debuts PS2 next December. If Sega is firmly established with the American consumers before PS2 becomes available, I feel, Sony's debut won't be a big deal. No one is certain as to the outcome of the game industry in the next couple of years. What I conclude, and what I hope you agree with, is that Sega has put Dream cast into the best possible situation for success. Review Questions 1. Why has
Sega's net income decreased every year since 1993?
Additional Sites of interest References 1.
Sega Homepage-**** http://www.sega.com/-provides
valuable information on new products, as well as basic company information.
An excellent site for the company's future projects. Dreamcast, Sega's
new game console, debuts this year. This site is also a good source
for information about other products, such as games, that Sega sells.
2.Hoovers-**** Hoover's. (1999).
Hoover's Handbook of World Business. Austin, Texas. Business Press
Provides a complete overview, history and financial record of Sega. Records
sales and net income since 1989. Allows the reader to see what activities
3. Moody’s - ****Arnold,
w., Cox, B., Hastings, S., Hoang, J., &
4 . AT&T-**** http://www.att.com/press/item/0,1193,599,00.html provides valuable information about the strategic agreement AT&T and Sega have together. AT&T will provide the internet service for Sega's Dream cast system. At&T views this agreement as an opportunity to expands internet provider service. 5.Sega Heritage-**** Lefton,
T. (1999, August 09). Sega flags heritage, not technology.
6. San
Francisco Chronicle ***
7. CBSMarketWatch-
***http://cbs.marketwatch.com/archive/19990910/news/current/consum
8.
AssociatedPress-*** http://dailynews.yahoo.com/h/ap/19990913/tc
9. SunSpotOnline-***http://www.sunspot.net/cgi-bin/edito
10.
Salon.com-*** http://www.salon.com/tech/review/1999/09/14/dreamcast/index.html
provides
information about the hype Sega has created about its new machine. Also
included is a critical review about the game and some of the problems Sega
has had with the internet hookup. TAT, Sega's partner in providing internet
service is working fast with Sega to correct the
11. Freep.com-***http://www.freep.com/tech/gameguy/qg
12. Nintendo-***
http://www.nintendo.com/provides
information about Nintendo, Sega’s
13. Sony Play station- ***http://www.playstation.com/index.htmlprovides information about SonyPlaystation, Sega’s biggest competition. Currently Play station has the biggest market share in the U.S. Play station will launch PS2 this year. Games and other information are available on this site. 14.Sega’s Demand-*** Sega Dream cast brings strong demand into battle with Sony’s new Play station. (1999, June 02). Wall Street Journal, p. B14c provides us with information about demand so far and a brief overview of Sega Co.So far Sega has received 2.4 million orders for Dreamcast by US retailers. Sega is having trouble filling the orders because of its recent downsizing 15.Sega Rentals-**Sega Dream cast rentals to precede sales start. (1999, July 12). Twice, p.46provides us with information about the preliminary strategy employed to start demand for Dreamcast. Hollywood Video will rent out 10,000 units of the new system two months before the system goes on sale. 16.Sony and Nintendo cut prices-**
Wilson,
W. (1999, August 23). In transition, Sony and
17.Sega challenging PCs-**
New
video game machines will challenge PCs. (1999,
Rating system: ****= Highest possible rating ***= Good source **= Average source some good information *= Poor source maybe some information
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