it actually did fail because of sales
but also mismanagement from Sega. the reality is that Sega was already in poor financial standing PRIOR to the Dreamcast. essentially what they did was put a bunch of money hoping to smash it out of the park with Dreamcast, gambling their company (at least in terms of the future hardware capability)
they spent a lot of money in developing the Dreamcast, to get it out before competitors that generation. the Shenmue titles (especially 1) were infamously expensive too
if you look at their sales, the sales don't justify the kind of risk and investment Sega took. especially in terms of Shenmue (although possibly that can partially be attributed to a short system duratin)
bear in mind though Sega had essentially failed with the Saturn when looking at sales and its doubtful they made much of any money in that generation, even if the Saturn Japanese sales were much stronger than the West
the only thing its failure can be truly blamed on IS sales. Sega's expectations must have been that the device was going to pick off and fly and sell at Playstation like levels based on what the put into the system/Shenmue
and we all know the Dreamcast sold okay for its first year but its literally plummeted as soon as the Playstation 2 arrived which indicates sales were the issue. that was before there was even strong talk of the Dreamcast being discontinued
Sega already was destined to fail based on their decisions the last few generations. just flipping to new hardware whenever they weren't getting the sales they wanted and then not properly developing a good software library for said new hardware expansions (Sega CD, 32x, Saturn, etc.)
its not surprise that they could not keep ahead of all of their previous mistakes
what would have been quite interesting is if Sega had bundled their system with a DVD player and went down a route like that (as opposed to the weird Windows build). based on the PS2 people were quite excite to advance in getting a multi-media gaming system at the time
