IGN Retro had an article about Sonic X-treme. Really good read...
http://retro.ign.com/articles/877/877660p1.html
As a kid i obviously did not know whats going on with Sega internally, but I was always really sad there was no good Sonic games for my Saturn. So I find things like this really interesting to read...its like finding out why your dad left you when you were a baby :)
Some highlights - From the way things sound below, it almost seems that Yuji Naka is partly responsible for the downfall of the company.
"When Yuji Naka visited STI to see what they were doing with the franchise he helped build, he simply said, "Good luck." The rivalry between SEGA of America and SEGA of Japan would continue to strain the development until its eventual cancellation. "
"When Sonic Team leader (and NiGHTS programmer) Yuji Naka got wind that his code and tools were being lent to STI, he was furious. Sonic Team had an uneasy rivalry with STI, and Naka was protective of work. He put down an ultimatum: Take back the code and tools, or say goodbye to Yuji Naka. SEGA obliged, and X-Treme was cost valuable weeks of development at the worst possible time."
"A few months after X-Treme's cancellation, Sonic Team released Sonic Jam, a compilation that featured a playable 3D Sonic stage. That 3D level never became a full game, but it did serve as a big middle finger to STI. It was Naka proclaiming, "We could have done it if we wanted to."
"SEGA themselves are hardly even the same company they once were, and Yuji Naka seems to have left for good this time. Much of Sonic X-Treme's staff remains reclusive. For them, the ordeal remains a painful memory of unimaginable stress, pressure, and ultimate disappointment."
