^Once the userbase became smaller in relation to the PS1, SEGA was dead, it then became a self-fulfilling prophesy, 3rd parties stopped some projects because of tech issues, userbase growth/confidence slowed, 3rd parties held back even more projects, userbase growth really slowed, 3rd parties jumped, console dies.
It was the userbases slow growth after the first 6months/year for SEGA. I think the PS2 was a bitch to program at first but the userbase made it viable for developers to put the work in.
It's just business in the end, some things play against you (difficult to program) and some things go your way (rapidly expanding userbase)
One thing is for sure once 3rd parties jump ship like they did for a once big game console company like SEGA its over for that generation, and if they jump ship for the next one or two generations then a once strong console company like SEGA will find it unprofitable to continue... this particularly true if a company is making losses with their hardware sales