I don't think it did.

When talking about the Dreamcast, the history is usually described as it lacking third party support and didn't sell and yada yada. EA is often brought forth as a prime example because they jumped ship (because their blackmailing on Sega failed, BTW true story)

But looking back and analyzing the system, I just don't see it. I mean it didn't sell all that well but it would have probably easily been Sega's second best-selling console.

And as for the games. It got a solid resident evil, it got arguably the best fighters of that generation (soul calibur and marvel vs capcom 2). Lack of EA sports was more than compensated for with their own solid sports games (of which NFL2k2 outsold madden). Virtua tennis 2 is easily my favourite sports game of that generation. It got support from PC devs with quake and the like. Believe it or not the original fable was originally in development for the dreamcast. It was cheap, it had lots of games, and was infinitely more developer-friendly than the PS2. After the  PS2 hype had died down and with maybe some more exclusives like a panzer dragoon, it wasn't in too shabby a position. Third parties gave it decent support.

Sales? Almost ten million in two years. Looking at LTD sales may make it seem like a failure, but that's not bad at all for a sega system. In fact, it's in line with the megadrive.

So why did it fail? Sort answer, because the saturn bled sega dry. Sega was already out of resources before the dreamcast even released. It had to be an ultra smash hit for sega to even survive as a company. And even when they left hardware, they wouldn't have survived if an executive hadn't donated $300 just so he wouldn't have to see his old workplace go bankrupt. Any other console manufacturer would have been in a comfortoble position with a console like the dreamcast. Wii U is doing  much worse and Nintendo isn't in the red.

What do you think?

I don't anyone claimed that the Dreamcast failed because of sales alone. What sparked this thread to begin with?

Sega reduced the price of the Dreamcast to have a competitive edge over the Playstation 2, but they couldn't pull enough sales from software and SegaNet to balance the loss.

Sega blew their money on not one but TWO Shenmue's...

It failed because the PS2 was clearly going to crush it. But more than that, SEGA's poor leadership killed the DC - not the sales.

SEGA made lots of mistakes before the Dreamcast which they were still paying for, and DC simply was not expanding rapidly enough to fix SEGA's problems.

SEGA's management had a clear trend of jumping the shark and not valuing business partnerships well (e.g. "32x/SEGA CD is no more, get the Saturn" "hey everybody Saturn is launching today btw" "Saturn's not the future, Dreamcast is" "DC isn't growing fast enough to fix our business, we're out of hardware")

Sega didn't have the capital to see a console gen through. It is what it is. Making extravagantly expensive games like Shenmue didn't help either I'm sure. Spending 47 million producing a Dreamcast game sounds ludicrous. That's a good sized AAA budget for today's standards, so it would have been astronomical then.

Microsoft also offered them a parachute by offering a place to put a good chunk of their games. So that egged on their decision to retreat from the console market. But those titles ended up dying on the vine due to the market making a drastic change around this period. Sega kind of lost their place in the gaming scheme.

Sega was mortally wounded before the Dreamcast. All that money spent on the Sega CD, the 32X, the Neptune, the lackluster developement of the Saturn, making not one, but two Shenmue games (their budget was tremendous), SegaNET, and a lot of other things meant that the Dreamcast couldn't have fought the competition even if its sales were decent. The PS2 just nailed the final nail in the coffin.

They made a system where you could burn the games. Everyone was burning media back then. I was so amazed when I got home and saw a burned disc of Marvel vs Capcom 2. Unbelievable. EA deal and no DVD drive killed it.

It was one of the best systems I ever played and owned

it failed not cause of sells but Sega almost going out of business.

True story, President knew NA sales were fucked, but decided to concentrate on the Japan marketing. The president was a complete fuck up with no fucking business sense. Also the whole online gaming was way too early, i was on dial up internet (BT) it £1 for ten minutes.