I say one of the top bad mistakes was the Atari Jaguar.
It was just too little to late , both the Genesis and the Super Nintendo had already been released and not only had the superior library's but where also cheaper by $50 PLUS it had to compete with the 3DO (already mentioned to be a flop too). It had big controllers the probably didn't do much but scare away buyers. Plus IT'S library failed in comparison in every way (at launch and the systems end). Several large games for the system bombed hard.
Like their main sales slogan "Do the math" These things just did not add up. Here you have a name which died in 1983 during the crash and then suddenly comes back exactly one decade later. To this new generation of gamers Atari meant squat and to the last generation it was just the system they had before nintendo. It was released as a underdog with nothing accept power behind it. Developers complained it was hard to develop games and the released product had flaws in the hardware.
It's probably up there with 3DO in bad moves in the industry. But hey, at least they tried.
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