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Sega's Online Strategy: A complete failure?

By Talez in Op-Ed
Wed Feb 13, 2002 at 10:31:38 AM EST
Tags: Internet (all tags)

On the 9/9/99, Sega of America launched what would be the great white hope for the company, the Dreamcast. Well, it wasn't all white... sorta off-white... with an orange swirl logo. Anyway, the point is that the Dreamcast launched with a modem and the online console gaming revolution was officially underway.

Sega of America (SOA) have made some pretty big cockups in their time. From the launch of the Saturn to the scrapping of the US version of Shenmue 2, there is no denying that the only thing more incompetent than SOA are Sega Ozisoft. The Dreamcast was there. It had great specs, great games, a great dev kit and great developers backing it up. And then SOA managed to pull an "Atari" and completely screw it all up.

The Dreamcast had a killer app. It was called Phantasy Star Online. For anyone that hasn't played it, you basically wander around an exquisite 3D world with 3 other people and try to collect items by dropping monsters to the floor over and over. It's high action yet latency tolerant, interesting enough to keep you going for hundreds of hours and if it takes hold of you, it probably will ruin your life. Sadly this killer app arrived only 12 months too late. Or the rest of the lineup didnt last the 12 months until it arrived. Either way, before this game, things sucked.

The rest of Sega's online strategy was a paltry attempt to cash in on the mobs of people that wanted to play games online but didn't want to pay $1500 for a l33t machine to do it. Why was it paltry? Because Sega didn't even try to cash in.

While I am not an economics expert, I do know that trying to maintain servers that require large amounts of monthly capital on a fixed pool of revenue is kind of like trying to ration water in the sahara desert. It's a sheer exercise in futility, merely delaying the inevitable draining of the available resources. They tried to offset the costs by subsidising it from the failed sega.net ISP venture but in the end, they finally clued in and decided to slap a price tag on online gaming. Of course, when you give people lots of something for free, get them hooked and then jack up the price, you tend to get met with hostility and resistance. Rather than paying what would normally be seen as a reasonable price, most of the punters will just go elsewhere to get their kicks.

The solution to this would have been to implement a proper system from the start. Nobody is going to miss $5/month out of their pocket. They probably won't miss $10/month either. If they were looking for an ISP they would probably be quite happy to pay $25/month for access to online gaming and a low latency connection to the game servers.

An ideal way would to have a base plan that charges just enough to keep the servers running. $5/month for access to the servers that require minimal maintenance (eg, every FPS available on the Dreamcast and Daytona 2K1) would have probably been a decent balance between accessability and economic viability. For the blockbuster games that require a more active role from Sega (eg NFL2K1, NBA2K1 and PSO), these should be classified as a more premium game and the appropriate charges should be laid on top of the base price. For their extra money, gamers should be able to expect tournaments sponsored by Sega with prizes, a ladder/ranking system for players and guarenteed uptime of the servers. Maybe I'm living in a fantasy but this seems reasonable doesn't it?

The only big problem that lots of people have with this system is that they dont have a credit card which, for some strange reason, is all that Sega will accept for online gaming. What they should have done is accepted pre-payement by cheque or money order.

Another method would be to manage sega.net accounts through gaming stores. There are hundreds of them around the US. Why not use them as signup points for sega.net? A gaming store can take a written application, payment for the service and sign them up. Then SOA would give these gaming stores commission for every user they sign up. I know that this would be a better option for the 13-25 age group that have been alienated from online console gaming because they lack a credit card.

Last but not least, the browser, Planetweb. It was a brilliant concept at the time. You could just send out new CDs with every new version of the browser. The problem with that approach is you need the CD. You also need to pay to send out the updates. However, if Sega had stuck in a measly 8M of flash memory (which would have cost a minimal amount in large volumes) for storing the browser, things might have been alot simpler. For one thing, the browser could be downloaded and then updated in a matter of minutes rather than the days that a normal CD would take to arrive in the mail. Another thing is that with the browser being in flash, you wouldn't need to wait for it to boot. If there was any space left over, you could use it for storing plaintext email. You also can't lose the CD either ;)

While PSO has proved that online console gaming can work, I think any console maker needs to take a good, hard, long look at SOA's mistakes and make sure they dont get claimed by the traps of trying to offer too much for too little or making things too plain. To succeed in the online console market, a console maker needs to have something unique, good access to the product and most importantly, credibility.


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Have you tried online console gaming?
o Yes and I didn't like it 3%
o Yes and I didn't see the big deal 5%
o Yes and I quite enjoyed it 10%
o Yes and I do it regularly 1%
o Yes and I installed a seperate phone line for my console! 1%
o No but I intend to 16%
o No because I dont have a console 46%
o No because I dont play games at all 15%

Votes: 60
Results | Other Polls

Related Links
o Also by Talez

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Sega's Online Strategy: A complete failure? | 15 comments (13 topical, 2 editorial, 0 hidden)
Good stuff! (4.00 / 1) (#1)
by Scott Robinson on Wed Feb 13, 2002 at 03:56:31 AM EST

It makes me sad sometimes how badly managed Sega of America is. They have a tendency to fire their best marketers and testing departments. They also love localizing and releasing some of the worst imports.

As an owner of a broadband adapter specifically for PSO, I'd have to say I still love the game ... even though the servers have gone to crap.

Thanks for the writeup. I hope there is discussion on the topic.


have you ever played jet grind radio? (2.00 / 1) (#2)
by delmoi on Wed Feb 13, 2002 at 04:52:50 AM EST

How can you say things sucked before PSonline? Have you ever even heard of Jet Grind Radio I mean, like the coolest game ever made!?

more then enough reason to get a DC, IMO.
"'argumentation' is not a word, idiot." -- thelizman
You misunderstand (3.00 / 1) (#5)
by Talez on Wed Feb 13, 2002 at 08:47:27 AM EST

I meant online gaming sucked...

The games before PSO were indeed very good :D

Si in Googlis non est, ergo non est
[ Parent ]
Word. (2.00 / 1) (#3)
by axxeman on Wed Feb 13, 2002 at 05:33:08 AM EST

And don't even get me started on their PC conversions.

Desperately need Egyptologist. Can you help?

Chicken and egg type dilemma... (3.00 / 1) (#4)
by uberkludge on Wed Feb 13, 2002 at 08:30:11 AM EST

Sega.net's subscription and payment policies were troublesome... but half the problem was the lack of support for online games. I mean, the Dreamcast came with a modem from day one, and most of the online games (the three or so there were) came out near the end of the console's life. No one even tried to incorporate online play in their games without Sega's support, and no one bought into Sega.net because there were no online games to play. With the exception of PSO, of course...

Er, what? (4.00 / 1) (#13)
by Inoshiro on Thu Feb 14, 2002 at 05:00:20 AM EST

I own ~40 Dreamcast games. At least 20 have interesting online capabilites (Shenmue's stat rankings, for example). Of those, a large percentage have the good stuff: head to head playing (Next Tetris, Chu Chu Rocket, etc). There were a *lot* of games which had the capabilities.

The problem comes from the fact that maintaining online connections/servers involves costs. That's why webrot is so persistant. That's why, despite Shenmue 1 being a cool game, almost the entirety of the passport disc is now USELESS because they are shutting down the "online" portion of game. There isn't anyway you can enter an alternate server, which would (potentially) allow people to keep their data updated onto new systems as people step in. Which is a shame, because I didn't know there were 20 other people in my province who had played and enjoyed Shenmue's passport disc.

[ イノシロ ]
[ Parent ]
I agree... (3.50 / 2) (#7)
by glip on Wed Feb 13, 2002 at 09:55:41 AM EST

Sega's Online Strategy: A complete failure?


Just like Sega's console, and a large portion of their games. It's too bad, 'cos I'd like to see them succeed...

I used to think so. (none / 0) (#15)
by FredBloggs on Thu Feb 14, 2002 at 12:12:49 PM EST

The megadrive was good. Not sure about the cd add on, or the saturn, or the dreamcast...

But the software is cool. I`m waiting for Sonic on the GBA (UK release). Lets hope that side of the company (is there another side now?) doesnt go the same way...

[ Parent ]
Oh, come on (4.50 / 4) (#9)
by Ken Arromdee on Wed Feb 13, 2002 at 10:35:12 AM EST

Not releasing Shenmue 2 wasn't incompetence. They were paid off by Microsoft to not release it--Microsoft paid them for it to be an Xbox exclusive.

Don't confuse "it was bad for the customers" with "it was bad for the company". It was a completely legitimate decision that no doubt gained Sega more money than they lost.

Sega Did Learn (Somewhat) From Previous Mistakes (4.00 / 2) (#10)
by Tenseiken on Wed Feb 13, 2002 at 04:17:53 PM EST

Sega.net was not Sega's first attempt to bring online gaming to their consoles.

In 1997, Sega released the Netlink add-on to the Sega Saturn. This allowed Saturn owners to access the Internet, and most importantly, to play games with other Netlink owners.

Unfortunately, there were a total of 5 Netlink games released in the United States before the Saturn's demise. Most of these games could only be bought directly from Sega as well. Of these games, only two (Duke Nukem 3D and Saturn Bomberman) were from third party developers.

The Netlink did not have a central server; you had to directly connect to other players to play a game. Sure, Sega had online lobbies where you could meet other players, but the actual gaming was not run over the Internet. Gamers were limited to playing people within their own area code, or to pay for long distance phone calls.

For the Dreamcast, Sega did implement the Sega.net service, which allowed players to play games over the Internet. Sega also included a modem with the system instead of users having to buy a separate accessory to play online (although later Saturn consoles did ship with the Netlink). The first Internet multiplayer game for the Dreamcast (Chu Chu Rocket) came out about six months after the Dreamcast's release. The only real blunder, IMHO, was that Sega should have released an Internet capable game during the console's launch.

Sega.net wasn't perfect, but it was much better than the ill-fated Saturn Netlink.

Pirating (3.00 / 1) (#11)
by geekmug on Wed Feb 13, 2002 at 06:47:24 PM EST

Does anyone consider the loss in revenue because the 1GB GD-ROM CDs tended to be easily turned into 700Mb CDRs? I know that the PS has the same pirating problem, but DC requires no modification to make it play a CDR version of a game. I know this doesn't directly relate to online game consoles, but it's just a thought...

-- Why reinvent the square wheel?
Playstation didn't need hardware mod either (4.00 / 1) (#12)
by fluffy grue on Wed Feb 13, 2002 at 09:41:53 PM EST

The modchip in the playstation was just to make it so you didn't have to use the swap trick, which is the same thing you have to do in the Dreamcast to make it boot arbitrary CD-Rs, though the swap-able period on the Dreamcast is a lot longer. :)

At the time that the Playstation was around and still gaining popularity, the thought of an average home user having a CD-R drive, much less the ability to send CD images over the Internet, was pretty laughable. Also, doing the initial rip of a Dreamcast GD-ROM wasn't very easy (only a very few drives could do it), and really I don't think Dreamcast piracy did much to Dreamcast game sales. Sega just got tired of trying to compete on two fronts; it was obviously a losing battle.

What'd be really cool is if they were to release a proper Dreamcast SDK for pretty cheap, though. It's not like they're going to be making any more money on Dreamcast games at this point.
"Is not a quine" is not a quine.
I have a master's degree in science!

[ Hug Your Trikuare ]
[ Parent ]

Naaah. (none / 0) (#14)
by FredBloggs on Thu Feb 14, 2002 at 12:01:13 PM EST

"The modchip in the playstation was just to make it so you didn't have to use the swap trick"

That only worked on the very earliest playstations.
What suprised me was that a friend worked out a way to detect modded playstations but Sony absolutely do NOT allow this code to be used. If a game doesnt work when Sony tests it on a modded playstation, they won`t allow its release.

[ Parent ]
Sega's Online Strategy: A complete failure? | 15 comments (13 topical, 2 editorial, 0 hidden)
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