Why MS didn't buy Sega.

[MrSega]

So do yall think that if MS had bought Sega the Dreamcast wouldn't have died? with Microsoft's immense amount of money they had/have available, they could have just started a huge marketing campaign for Dreamcast and the money would have just rolled right in.

It was an option. But not in SEGA's future or best interest. I'm glad Mircosoft didn't go through it.

SEGA's finances are getting better and better, they can succeed at anything if they put their mind and money to it.

[kool kitty89]

So do yall think that if MS had bought Sega the Dreamcast wouldn't have died? with Microsoft's immense amount of money they had/have available, they could have just started a huge marketing campaign for Dreamcast and the money would have just rolled right in.

If MS had wanted to get in with the DC, then buying out Sega outright wouldn't have been the only option. Offering a hefty contracted partnership without a complete merger would have been less risky and more attractive to all parties involved due to the greater autonomy that could be retained.

The DC's big weak points were Sega's weakened PR (initially) and funding. The existing marketing/management largely remedied the former problem, and only the latter became the deciding factor in sustainability of the platform. (need to spend money to make money)

It would have been really interesting if something like that had happened . . . and if it worked out, who knows how the following platform would have gone. (Sega and MS splitting or staying together, what sort of timing on release, design, etc)

From a consumer/enthusiast perspective, sure Sega would have been heavily influenced by MS, but given how bound Sega ended up being by their financial situation (and exclusivity deals made with MS -and others0 as it was), it may have even been better overall from that perspective too.

A lot of you guys are over-valuing what Sega was beyond 1996. It wasn't huge and successful. It was a huge, absolutely toxic company, propped up and bailed out for half a decade. Not worth buying.

I was talking about the late 1980s for Sega in the context of Nintendo buying them out . . . in the context of the Dreamcast era, Nintendo kind of had their hands full competing on their own side of things. Taking on the mess that was Sega at the time would have been a huge risk and not have made all that much sense in general.
I may have misread that post I was responding to originally though . . . maybe got too caught up in that side topic of of Nintendo's monopoly.

Nintendo had like $3 billion more in the bank than SEGA - They could have bought CSK share in SEGA, if they really wanted too at any time. In the end I think the MS deal feel threw because it would have been seen has an Western corp talking full control of a Japanese corp (which never goes down well) and MS would have no real interest in SEGA AM divisions or its 500 odd Arcades in Asia (at the time)

Again, I was thinking in a different context with that Nintendo comment . . .

As for MS, aside from actually buying Sega out (with the financial risks and potential conflicts of interest involved), it sill may have made plenty of sense to aim at Sega as the Japanese distributor/brand for the Xbox. Sega may not have been in a good place at the time, but if they could be seen to be reasonably able to restructure things as well as competently utilize funding provided by MS (for marketing, etc), then that could have been far more effective than what ended up happening with the Xbox.

It's the sort of thing Atari Inc should have done decades earlier . . . and failed to do competently (Japan distribution/marketing outsourcing ended up crap with the 2600), and it's the exact sort of arrangement that Sega had offered Atari Corp for the Mega Drive in mid 1988 . . . or Nintendo with Warner Communications (targeting Atari Inc) in early 1983. (except with the MS case, Sega would have been relatively desperate, MS with a huge amount of resources, and the target being Japan -far less costly to market for than the US- so the dynamics would be a bit different)

[MrSega]

@kool kitty89. Knuckles Duster seems to have a reputation for pointless banter(through comment cherrypicking) and baiting repartees. I kinda see why him and TrekkiesUnite are infamous around these parts.

And as for Nintendo buying SEGA in 2001. Pretty much impossible. Nintendo had lost capital in Japan to Sony and its N64 wasn't exactly a global success commercially.

[kool kitty89]

@kool kitty89. Knuckles Duster seems to have a reputation for pointless banter(through comment cherrypicking) and baiting repartees. I kinda see why him and TrekkiesUnite are infamous around these parts.

He had a reasonable point though . . . and it also made me realize my previous comment had been made out of context. (it still stands in the way I'd intended it though -ie why Nintendo didn't try to buy out Sega as part of their monopolistic strategies)

And as for Nintendo buying SEGA in 2001. Pretty much impossible. Nintendo had lost capital in Japan to Sony and its N64 wasn't exactly a global success commercially.

Yes, it would have been a senseless risk for Nintendo to take at that point. There's lots of support for MS's PoV, but not Nintendo.

Nintendo's focus on their own console market and their handheld monopoly at the time made tons of sense. Granted, they made some odd choices in the GC overall. (going with the mini DVD format didn't really have advantages other than aesthetics -and that's arguable too- . . . drive components would probably cost more -less common/standard- and disc capacity was greatly reduced; and then there's some mixed problems on the 3rd party relations in general -something Nintendo never fully opened up to- and some mixed issues on marketing)
As it was, I think Sega would have had a good chance at outselling the GC with the DC had they had the funding to keep that thing going. (had they never dropped out of the handheld market, they might have made a huge impact as Nintendo's only sustained competition there -probably one of the biggest losses Sega took in the mid 90s with the 32-bit transitional mess)

[tz101]

Sega was a boat anchor that would have drug any company down in an acquisition at that time. Microsoft and Nintendo both realized this and did the smart thing. It really is that simple.

[MrSega]

Sega was a boat anchor that would have drug any company down in an acquisition at that time. Microsoft and Nintendo both realized this and did the smart thing. It really is that simple.

Agreed!

And I also agree with KoolKitty that Dreamcast would have likely outsold Gamecube. It was a much more economical easier to program system. DC also had online implementation GC did not. Problem was is that SEGA had wasted the investmentmoney that could have been used for DC on GameWorks.

I've always found SEGA's one demensional view on Handhelds odd. I've often wondered why they never invested in "Game Gear 2".

[Knuckle Duster]

Agreed!

And I also agree with KoolKitty that Dreamcast would have likely outsold Gamecube. It was a much more economical easier to program system. DC also had online implementation GC did not. Problem was is that SEGA had wasted the investmentmoney that could have been used for DC on GameWorks.

I've always found SEGA's one demensional view on Handhelds odd. I've often wondered why they never invested in "Game Gear 2".

Gamecube had a broadband adapter and Phantasy Star Online.

Sega invested in NGPC & offered connectivity to the Dreamcast. None of it was a priority because they were already financially choked to death.

[MrSega]

Gamecube had a broadband adapter and Phantasy Star Online.

Sega invested in NGPC & offered connectivity to the Dreamcast. None of it was a priority because they were already financially choked to death.

PSO was the only GC game with online connectivity. Had Dreamcast kept going,Sega Net would have been an invalueable feature.

[kool kitty89]

Sega was a boat anchor that would have drug any company down in an acquisition at that time. Microsoft and Nintendo both realized this and did the smart thing. It really is that simple.

I don't see that . . . Sega was in a state of recovery at that point, it just needed some extra push to be able to really compete. (the whole "spend to success" thing is pretty necessary and the first couple years of any newer gen console will be spent taking net losses as an investment in long-term profits, the problem was that Sega wasn't in a position where they could sustain that)

An outright buyout of Sega (either during the DC years or immediately after) certainly makes less sense in some respects than a looser contractual partnership sort of arrangement, as I've already argued. But, in the context of a potential partnership, there's plenty MS would have gained from such a venture.
Hell, I'd argue that MS joining Sega on a joint venture with the DC could have ended up with far greater market penetration than the Xbox itself had, let alone the DC. (and that's if MS didn't try to get involved back when the DC's hardware was in development . . . if they'd actually pushed for integrated WinCE/DirectX support as a primary feature, things might have fared a bit differently too -X86 wouldn't be a necessity, but going with a GPU that catered well to DirectX would probably mean Ati or Nvidia being the most attractive at the time)

Hell, and as it was, the Dreamcast was the best option for cross-platform PC/console development out there prior to the release of the Xbox itself. (be it Windows CE ports or properly optimized PowerVR native DC games, it was way better than any of the older consoles or the PS2)

PSO was the only GC game with online connectivity. Had Dreamcast kept going,Sega Net would have been an invalueable feature.

In the context of Sega's situation historically, Sega was too liberal with some of the investments they made in the DC years. SegaNet would be one of them . . . not the push for internet connectivity mind you, but the push for their own ISP with the massive investments required for that on top of bundling the model with the system. (or, much worse, the huge hits taken by the rebates offered with SegaNet contracts)

Relying on 3rd party ISPs would have worked plenty well, and I'd even argue making the modem an accessory . . . perhaps a relatively inexpensive accessory and bundled with the full internet kit out of the box (browser, keyboard, Typing of the Dead, etc), and certainly offer deluxe bundles with the system itself and special deals/bundles once major online supporting games got released. But keeping the modem lower key for the early months (when it wasn't really useful) and then pushing it harder and maybe making it standard. (and probably offering upgrades to broadband around 2001/2002)
--At very least don't offer the sorts of crazy rebates they did with SegaNet . . . and the price drop to $100 really made no sense either. (at $199 it was already way cheaper than the PS3, and driving it into the PS1/N64's price range wasn't going to help things -actually investing money in tougher advertising to counter Sony's might have made more sense --if Sega was going to pour money anywhere, that made the most sense at least)

OTOH, in the context of something like MS investing heavily as a partner with Sega, pushing SegaNet and making the modem (and later Broadband adapter) standard should have worked out fine. Albeit, I still doubt it would have made sense to offer rebates like they did.
--And to Sega's credit, they managed to get considerable online game support relatively quickly compared with XBL, in spite of online gaming still being a bit iffier at that time. (and constrained by the modem too)

[stu]

@kool kitty89. Knuckles Duster seems to have a reputation for pointless banter(through comment cherrypicking) and baiting repartees. I kinda see why him and TrekkiesUnite are infamous around these parts.

HA HA Pot meet Kettle!

I don't think anyone has quite such a reputation as you MrSega, you're a fine one to be accusing others of "having a reputation" and "being infamous".

I bet if you ask anyone on the Official Sega forums and on Dreamcast-Talk they'll be only too glad to warn others about you constantly trolling both forums with made up bullshit and hijacking threads with your own worthless crap. Especially as you were BANNED from both sites.

[TrekkiesUnite118]

How am I infamous? Or do you just say that about all your enemies people who disagree with you?

Yeah I get into debates with TA a lot, but that's mostly because he makes stupid blanket statements constantly.

[Team Andromeda]

it sill may have made plenty of sense to aim at Sega as the Japanese distributor/brand for the Xbox

But you could have done that far cheaper than spend 2 billion dollars on SEGA you could have just bought the likes of Capcom, also SEGA had some 500 Arcade centres in Asia which offering MS next to nothing in terms of pushing the X-Box . If MS really wanted to win Japan at the time, they could have just bought Squaresoft/Enix and not only bag FF and DQ but also use Square distributor network across Japan

but that's mostly because he makes stupid blanket statements constantly

Go back to emu mate :P .

It's the sort of thing Atari Inc should have done decades earlie

Atari the ones that turned down the rights to the Famicom for the USA and the rest has they say is history.

Yes, it would have been a senseless risk for Nintendo to take at that point

Yep but Nintendo had the war chest to do it . Even to this day they're one of the few corps with billions of 'actual' cash reserves in the bank.

[bultje112]

Gamecube had a broadband adapter and Phantasy Star Online.

Sega invested in NGPC & offered connectivity to the Dreamcast. None of it was a priority because they were already financially choked to death.

so did dreamcast, years before that

[Knuckle Duster]

so did dreamcast, years before that

Pay attention:

And I also agree with KoolKitty that Dreamcast would have likely outsold Gamecube. It was a much more economical easier to program system. DC also had online implementation GC did not. Problem was is that SEGA had wasted the investmentmoney that could have been used for DC on GameWorks.

I've always found SEGA's one demensional view on Handhelds odd. I've often wondered why they never invested in "Game Gear 2".

Gamecube had a broadband adapter and Phantasy Star Online.

Sega invested in NGPC & offered connectivity to the Dreamcast. None of it was a priority because they were already financially choked to death.

Not saying the GC had a great online setup, I'm saying it did have a modem and online functionality.

It was also how you could exploit PSO & boot pirated GC games.

[MrSega]

I don't see that . . . Sega was in a state of recovery at that point, it just needed some extra push to be able to really compete. (the whole "spend to success" thing is pretty necessary and the first couple years of any newer gen console will be spent taking net losses as an investment in long-term profits, the problem was that Sega wasn't in a position where they could sustain that)

An outright buyout of Sega (either during the DC years or immediately after) certainly makes less sense in some respects than a looser contractual partnership sort of arrangement, as I've already argued. But, in the context of a potential partnership, there's plenty MS would have gained from such a venture.
Hell, I'd argue that MS joining Sega on a joint venture with the DC could have ended up with far greater market penetration than the Xbox itself had, let alone the DC. (and that's if MS didn't try to get involved back when the DC's hardware was in development . . . if they'd actually pushed for integrated WinCE/DirectX support as a primary feature, things might have fared a bit differently too -X86 wouldn't be a necessity, but going with a GPU that catered well to DirectX would probably mean Ati or Nvidia being the most attractive at the time)

Hell, and as it was, the Dreamcast was the best option for cross-platform PC/console development out there prior to the release of the Xbox itself. (be it Windows CE ports or properly optimized PowerVR native DC games, it was way better than any of the older consoles or the PS2)



In the context of Sega's situation historically, Sega was too liberal with some of the investments they made in the DC years. SegaNet would be one of them . . . not the push for internet connectivity mind you, but the push for their own ISP with the massive investments required for that on top of bundling the model with the system. (or, much worse, the huge hits taken by the rebates offered with SegaNet contracts)

Relying on 3rd party ISPs would have worked plenty well, and I'd even argue making the modem an accessory . . . perhaps a relatively inexpensive accessory and bundled with the full internet kit out of the box (browser, keyboard, Typing of the Dead, etc), and certainly offer deluxe bundles with the system itself and special deals/bundles once major online supporting games got released. But keeping the modem lower key for the early months (when it wasn't really useful) and then pushing it harder and maybe making it standard. (and probably offering upgrades to broadband around 2001/2002)
--At very least don't offer the sorts of crazy rebates they did with SegaNet . . . and the price drop to $100 really made no sense either. (at $199 it was already way cheaper than the PS3, and driving it into the PS1/N64's price range wasn't going to help things -actually investing money in tougher advertising to counter Sony's might have made more sense --if Sega was going to pour money anywhere, that made the most sense at least)

OTOH, in the context of something like MS investing heavily as a partner with Sega, pushing SegaNet and making the modem (and later Broadband adapter) standard should have worked out fine. Albeit, I still doubt it would have made sense to offer rebates like they did.
--And to Sega's credit, they managed to get considerable online game support relatively quickly compared with XBL, in spite of online gaming still being a bit iffier at that time. (and constrained by the modem too)

I would also agree with the point that although in 1999, SEGA/CSK was in red, they definitely were on their way to being profitable again, Dreamcast was doing very well outside of Japan and despite PS2 looming over them, SEGA's 3rd party support was still pretty strong. The problem being thanks to GameWorks, SEGA's core Arcade global market and Dreamcast's rushed,messy Japanese launch, the damage had already been done. Even by the end of 2000, SEGA's final ace in the hole was to liquidate GameWorks' investment money and dissolve its joint Venture with Dreamworks SKG and Universal(the investors were already considering the deal a complete failure) that right there could have provided $2 billion in emergency cash for Dreamcast and could have saved Sega's Away27 AM3/AM4 division from dissolving. To Isao Okawa, GameWorks was too much of a sacrifice, so he decided the best thing was to just quit while they were at it.



As for Sega Net and the rebate program, I remember SEGA feeling intense pressure from Sony to cool of the immense hype of PS2, so they rushed to judgement despite the fact that they were running out of investment money and went for broke on the rebates, while it did help keep DC sales going, it couldn't save them in Japan, Sony had launched PS2 in March and pretty much overtook the Japanese market instantly.

Still again, SEGA knew several times and again and again, emergency funding was needed and that GameWorks was where it could be found, but Iwajiri was more interested in a partnership and buyout which is where Mircosoft and Toshiba came in.

Also remember, when Dreamcast hit the US in September 1999, SEGA had $800 million in cash left, in order to go forward, they needed at least $2 billion, SEGA just blindly spend its remaining CSK investment money on a bunch of underfunded accessories for DC as well as a console upgrade solution for it to go up against Xbox and Dolphin( the name Gamecube was choosen in July 2000) but again, SEGA didn't think it over carefully and knew they were running low on funding. I would say that DC's launch in Japan was pretty much the last straw. Because had it done well there, Dreamcast would have certainly lasted 2 years longer or so. Again, had GameWorks NEVER existed, it would have been very successful worldwide and probably would have beaten Gamecube and given SEGA the financial ability to launch another console in the 7th gen around 2005-2006.

The funny thing about the Sammy Corp buyout is that it took SEGASammy a full 4 years to completely clear out SEGA from debt and by mid 2008, SEGA finally begin to return to almost complete profitability, I personally think a Toshiba or some other merger or maybe even a Universal merger would have climbed SEGA out of debt much faster.