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Mr Puggsly said:

Well the Saturn was like $400 at launch (not sold at a loss) while the Dreamcast was only $200. Also, we can presume the price to game development went way up from Saturn to Dreamcast. Shenmue for example had one the biggest budgets of the time.

I guess their efforts to make the Dreamcast competitively priced and cutting edge just cost them too much money.

it's true, dreamcast was heavily sold at a loss. sega expected software sales to make up for it but piracy ended their hope and sega became software only.