Editing Dreamcast (section)

=== Competition ===
[[File:PS2-Fat-Console-Set.jpg|thumb|The [[PlayStation 2|PS2]] provided tough competition for the Dreamcast.]]
Though the Dreamcast launch was successful, Sony held 60 percent of the overall video game market share in North America with the PlayStation at the end of 1999.<ref name="BBC"/> On March 2, 1999, Sony revealed the first details of the [[PlayStation 2]] (PS2), which [[Ken Kutaragi]] said would allow video games to convey unprecedented emotions.{{sfn|Kent|2001|pages=560–561}}<ref>{{cite magazine |last=Parkin |first=Simon |date=June 25, 2014 |title=A history of videogame hardware: Sony PlayStation 2 |url=http://www.edge-online.com/features/a-history-of-videogame-hardware-playstation-2/ |url-status=dead |archive-url=https://web.archive.org/web/20141129031500/http://www.edge-online.com/features/a-history-of-videogame-hardware-playstation-2/ |archive-date=November 29, 2014 |access-date=March 5, 2015 |magazine=[[Edge (magazine)|Edge]]}}</ref> Sony estimated the PS2 could render 7.5 million<ref>{{Cite web |date=2003 |title=Reaching for the Limits of PS2 Performance: How Far Have We Got? |url=http://www.technology.scee.net/sceesite/files/presentations/PSP/HowFarHaveWeGot.pdf#page=32 |url-status=dead |archive-url=https://web.archive.org/web/20031210074645/http://www.technology.scee.net/sceesite/files/presentations/PSP/HowFarHaveWeGot.pdf#page=32 |archive-date=December 10, 2003 |access-date=May 29, 2022 |publisher=[[Sony Interactive Entertainment|Sony Computer Entertainment Europe]]}}</ref> to 16 million polygons per second, whereas independent estimates ranged from 3 million to 20 million,<ref name="Gamecube or PS2?">{{cite web |last=Casamassina |first=Matt |date=November 3, 2000 |title=Gamecube Versus PlayStation 2 |url=https://ign.com/articles/2000/11/04/gamecube-versus-playstation-2 |url-status=live |archive-url=https://web.archive.org/web/20141104021340/http://www.ign.com/articles/2000/11/04/gamecube-versus-playstation-2 |archive-date=November 4, 2014 |access-date=November 14, 2014 |website=[[IGN]] |quote=}}</ref>{{sfn|Kent|2001|page=560}} compared to Sega's estimates of more than 3 million to 6 million for the Dreamcast.<ref name="EGM115"/><ref name="Unified"/> The PS2 would also use the [[DVD-ROM]] format, which could hold substantially more data than the Dreamcast's GD-ROM,{{sfn|Kent|2001|page=561}} and would be backwards-compatible with hundreds of popular PlayStation games.<ref name="Finn"/>{{sfn|Kent|2001|page=561}} Sony's specifications appeared to render the Dreamcast obsolete months before its US launch, although reports later emerged that the PS2 was not as powerful as expected and difficult to develop on.<ref name="Innovation and competition"/><ref name="Gamecube or PS2?"/>{{sfn|Kent|2001|pages=561, 568–569}} The same year, Nintendo announced that its next console, the [[GameCube]], would meet or exceed anything on the market, and Microsoft began development of its own console, the [[Xbox (console)|Xbox]].{{sfn|Kent|2001|pages=563, 574}}{{sfn|DeMaria|Wilson|2004|page=313}}<ref>{{cite magazine |last=Parkin |first=Simon |date=June 27, 2014 |title=A history of videogame hardware: Xbox |url=http://www.edge-online.com/features/a-history-of-videogame-hardware-xbox/ |url-status=dead |archive-url=https://web.archive.org/web/20141121024245/http://www.edge-online.com/features/a-history-of-videogame-hardware-xbox/ |archive-date=November 21, 2014 |access-date=March 5, 2015 |magazine=[[Edge (magazine)|Edge]] |quote=}}</ref>

US Dreamcast sales—which exceeded 1.5 million by the end of 1999<ref>{{cite web |last=Davis |first=Jim |date=January 11, 2001 |title=Sega's sales fly despite business woes |url=http://news.cnet.com/Segas-sales-fly-despite-business-woes/2100-1040_3-235509.html |url-status=live |archive-url=https://web.archive.org/web/20141031031716/http://news.cnet.com/Segas-sales-fly-despite-business-woes/2100-1040_3-235509.html |archive-date=October 31, 2014 |access-date=October 30, 2014 |website=[[CNET|CNET News]] |publisher=}}</ref>—began to decline as early as January 2000.{{sfn|Kent|2001|page=566}} Poor Japanese sales contributed to Sega's ¥42.88 billion ($404 million) consolidated net loss in the fiscal year ending March 2000, which followed a loss of ¥42.881 billion the previous year and marked Sega's third consecutive annual loss.<ref name="2000 report">{{cite web |title=Sega Corporation Annual Report 2000 |url=http://www.segasammy.co.jp/english/ir/pdf/ir/kako/sega_AR_all_2000.pdf |url-status=dead |archive-url=https://web.archive.org/web/20070925210504/http://www.segasammy.co.jp/english/ir/pdf/ir/kako/sega_AR_all_2000.pdf |archive-date=September 25, 2007 |access-date=December 9, 2014 |publisher=[[Sega]] |pages=10–12, 18}}</ref><ref>{{cite news|url=http://news.bbc.co.uk/2/hi/business/659554.stm |title=Sega warns of losses |date=February 28, 2000 |work=[[BBC News Online]] |access-date=November 10, 2013 |url-status=live |archive-url=https://web.archive.org/web/20131111081448/http://news.bbc.co.uk/2/hi/business/659554.stm |archive-date=November 11, 2013}}</ref> Although Sega's overall sales for the term increased 27.4%, and Dreamcast sales in North America and Europe greatly exceeded expectations, this coincided with a decrease in profitability due to the investments required to launch the Dreamcast in Western markets and poor software sales in Japan.<ref name="2000 report"/> At the same time, increasingly poor market conditions reduced the profitability of Sega's Japanese arcade business, prompting Sega to close 246 locations.<ref name="2000 report"/>{{sfn|Kent|2001|page=582}}

Moore became the president and chief operating officer of Sega of America on May 8, 2000.<ref>{{Cite web |last1=Kennedy |first1=Sam |last2=Trueman |first2=Doug |date=May 8, 2000 |title=Sega announced new president, COO Peter Moore |url=https://www.gamespot.com/articles/sega-announced-new-president-coo-peter-moore/1100-2565545/ |access-date=July 3, 2022 |website=[[GameSpot]] |language=en-US |archive-date=July 3, 2022 |archive-url=https://web.archive.org/web/20220703220433/https://www.gamespot.com/articles/sega-announced-new-president-coo-peter-moore/1100-2565545/ |url-status=live }}</ref> He and Sega's developers focused on the US market to prepare for the upcoming launch of the PS2.{{sfn|Kent|2001|pages=578–579}} To that end, Sega of America launched its own internet service provider, Sega.com, led by CEO Brad Huang.<ref name="Superhero" />{{sfn|Kent|2001|page=571}}<ref name="SegaNet launch" /> On September 7, 2000, Sega.com launched [[SegaNet]], the Dreamcast's [[Online games|internet gaming]] service, at a subscription price of $21.95 per month.<ref name="SegaNet launch">{{cite web |last=Satterfield |first=Shane |date=September 7, 2000 |title=SegaNet Launches |url=http://www.gamespot.com/articles/seganet-launches/1100-2625699/ |url-status=live |archive-url=https://web.archive.org/web/20150713030636/http://www.gamespot.com/articles/seganet-launches/1100-2625699/ |archive-date=July 13, 2015 |access-date=October 30, 2014 |website=[[GameSpot]]}}</ref>{{sfn|Kent|2001|page=579}} Although Sega had previously released only one Dreamcast game in the US that featured online multiplayer, ''[[ChuChu Rocket!]]'',{{sfn|Kent|2001|page=579}} the launch of SegaNet combined with the release of ''[[NFL 2K1]]'', with a robust online component, was intended to increase demand for the Dreamcast in the US market.<ref name="SegaNet launch" />{{sfn|Kent|2001|pages=578–579, 581}} The service later supported games including ''[[Bomberman Online]]'', ''[[Quake III Arena]]'', and ''[[Unreal Tournament]]''.<ref name="gamasutra1" /> The September 7 launch coincided with a new advertising campaign to promote SegaNet, including advertising on the [[MTV Video Music Awards]] that day, which Sega sponsored for the second consecutive year.{{sfn|Kent|2001|page=579}}<ref>{{cite web|url=http://www.thefreelibrary.com/Sega.com+Launches+the+World's+First+Online+Console+Gaming+Network%2c...-a065062861|title=Sega.com Launches the World's First Online Console Gaming Network, SegaNet|work=BusinessWire|date=September 7, 2000|access-date=December 3, 2014|url-status=live|archive-url=https://web.archive.org/web/20141209074409/http://www.thefreelibrary.com/Sega.com+Launches+the+World%27s+First+Online+Console+Gaming+Network%2C...-a065062861|archive-date=December 9, 2014}}</ref> Sega employed aggressive pricing strategies around online gaming; in Japan, every Dreamcast sold included a free year of internet access, which Okawa personally paid for.<ref name="Okawa PSO">{{cite web|url=http://www.gamestm.co.uk/uncategorised/behind-the-scenes-phantasy-star-online/ |title=Behind The Scenes: Phantasy Star Online |work=[[GamesTM]] |access-date=October 24, 2014 |url-status=live |archive-url=https://web.archive.org/web/20141021063050/http://www.gamestm.co.uk/uncategorised/behind-the-scenes-phantasy-star-online/ |archive-date=October 21, 2014 |date=February 16, 2011}}</ref> Prior to the launch of SegaNet, Sega had already offered a $200 rebate to any Dreamcast owner who purchased two years of internet access from Sega.com.<ref>{{cite web |last=Thurrot |first=Paul |date=April 4, 2000 |title=Sega unveils plans for free Dreamcast, online gaming |url=http://windowsitpro.com/windows-server/sega-unveils-plans-free-dreamcast-online-gaming |url-status=dead |archive-url=https://web.archive.org/web/20141031032052/http://windowsitpro.com/windows-server/sega-unveils-plans-free-dreamcast-online-gaming |archive-date=October 31, 2014 |access-date=October 30, 2014 |work=Windows IT Pro}}</ref><ref>{{cite web|url=http://www.thefreelibrary.com/Sega+Announces+Formation+of+New+Company%2c+Sega.com%2c+Inc.%3b+Offers...-a061234970|title=Sega Announces Formation of New Company, Sega.com, Inc.; Offers Rebate On Sega Dreamcast Hardware for SegaNet ISP Subscribers|work=BusinessWire|date=April 4, 2000|access-date=December 3, 2014|url-status=live|archive-url=https://web.archive.org/web/20141209052348/http://www.thefreelibrary.com/Sega+Announces+Formation+of+New+Company%2c+Sega.com%2c+Inc.%3b+Offers...-a061234970|archive-date=December 9, 2014}}</ref> To increase SegaNet's appeal in the US, Sega dropped the price of the Dreamcast to {{US$|long=no|149}} (compared to the PS2's US launch price of {{US$|long=no|299}}) and offered a rebate for the full {{US$|long=no|149}} price of a Dreamcast, and a free Dreamcast keyboard, with every 18-month SegaNet subscription.<ref name="RetroinspectionD" /><ref name="SegaNet launch" />{{sfn|Kent|2001|page=579}}