SEGA's history with their previous console and console add-on completely burned consumers. There was the 32x addon for the Genesis and the SegaCD which SEGA did not support very well. This burnt consumers. There was also a lot of fighting between SEGA of Japan and SEGA of North America at this point.

They then did a surprise launch for the $400 Saturn months earlier than expected. Retailers were not prepare, developers were not prepared and consumer were not prepared. Due to the shortage of available units SEGA only allocated unit to big box retailers. K.B. Toys was so angry that they vowed never to sell the Saturn and really never sold it. Developers did not have their games ready for the surprise launch and were pissed off about it.

SEGA handles the launch so badly that at E3 that year for the Playstation keynote on the upcoming launch Sony just went up on stage and said "$299" and left the stage after. Here is the clip https://www.youtube.com/watch?v=ExaAYIKsDBI

The Saturn was horrible to develop for due to its complex and cobbled together design and SEGA's development tools were lacking and developer had to make their own tools. Sony on the other hand made sure developers got everything they need to take advantage of the system. SEGA then prematurely announced the death of the Saturn before the Dreamcast was even officially announced.This was a fuck you to developers once more who still had games under development for the system. The Saturn did not even get an original Sonic game....likely really

SEGA later would announce the Dreamcast and got everything right with this console but at this point the damage was already done. Consumer wanted nothing to do with SEGA, developers were skeptical, EA never supported the Dreamcast and SEGA had already burnt through all their cash. Their president had to bail them out with his own money, he would later die.

Sony and the Playstation 2 hype machine was now in full effect. People were waiting to see what Sony could offer to compete. Sony was promising Toy Story graphics and all sorts of nonsense and people ate it up, foregoing the Dreamcast to wait for the Playstation 2 launch the following year.

There was an in depth analysis of Dreamcast sales done a very years ago and it was determined that the sales of the console did not increase when the system was "cracked". This meant people were just NOT buying the console period as opposed to buying it to just play pirated games. So it was not the piracy that killed it.

SEGA just could not compete against itself and Sony any longer.

> Case in point: it was Dreamcast's ability to be hacked and run CD-ROMs illegitimately which probably killed it.

I'm not convinced. I only heard about the ability of playing regular CD-ROMs on Dreamcast way after it was already dead. If anything Dreamcast is a great example of terrible mismanagement by SEGA.

And if CD copying killed the Dreamcast then the PSX would have been dead 3 times over. I knew tons of people that shared burned games for that one.

I think the SegaCD, 32X and Saturn killed the Dreamcast. Maybe if they had done market testing before manufacturing and marketing and abandoning several different systems that people didn't buy they wouldn't have been so badly in debt by the time Dreamcast launched.

Adding to this - for much of the pre-digital distribution era, piracy+retailers+rentals sucked out nearly 80% of the profits of the ecosystem. It made it impossible to break even as a studio unless you had a top 20 title released that year. The economics always sucked there - publishers fund development against royalties, break even happened after recouping this advance plus whatever costs the publisher larded on, per-unit royalties were often as little as a few bucks per game sold, and the publisher owned the IP. As a studio you had to get a continuous string of big hits as a single flop might put you out of business.