In the late 1990s, Sega was starting to face stiff competition not only from their longtime home console rival, Nintendo, but also from the popularity of Sony’s PlayStation. Following the objective commercial and critical failure of the Sega Saturn console, Sega would release a new system that would turn into their swan song in the hardware market – the Dreamcast.

Rumors of a new piece of Sega hardware started swirling as early as 1995, though the original thought by many was that it would be an add-on piece to the Saturn. The Dreamcast’s development involved a collaboration between several different teams, including people from IBM; the console was known under various codenames such as “Blackbelt,” “Whitebelt,” and “Dural.”

A leading factor in the Saturn’s commercial failure was that it was expensive to produce, so Sega opted for a much different approach. They built the machine based on hardware that was in line with most computers of the time, which ended up reducing the cost to produce the Dreamcast. Sega was also convinced by economist (and future CEO of Sega.com) Brad Huang to include a modem, a feature that would prove somewhat revolutionary at the time.

Sega was confident in their Dreamcast at launch, and the system ended up drawing much of the public’s interest – thanks largely in part to the promotion of Sonic Adventure, a game that would launch shortly after the console itself. The Dreamcast launched in Japan on November 27, 1998, and the company had hoped that the system would move at least a million units in its first three months in order to gain a hold on the market before the new Sony and Nintendo consoles launched. However, less than 900,000 moved in that time period.

In North America, the system launched on September 9, 1999 (the 9/9/99 date was heavily hyped by marketing) for $199. More than 225,000 units moved in the first 24 hours – a sales record at the time – and by that holiday season Sega held a solid 31% share of the video game market in North America.

This initial wave of interest didn’t last, though. Between the lackluster Japanese sales and the fact that Sony and Nintendo both came on strong (plus Microsoft entering the market later in that console generation), the Dreamcast quickly entered a state of decline. Isao Okawa took over as president of the company in May of 2000; he had previously advocated that the company abandon the console business entirely and instead focus on software.

On January 31, 2001, Sega made the announcement that they would completely discontinue the Dreamcast and no longer make any home console hardware in the video game industry. The system ended production on March 31, 2001, and would eventually be cleared out of stores at the abysmally low price of just $49.95.

The Dreamcast’s failure is largely credited to hype for the PlayStation 2, as well as a lack of support from major third-party developers such as Electronic Arts. However, the system maintains a significant following even today, and has been listed as one of the greatest consoles ever by publications such as IGN. The fact that it was the first to break into online gaming for consoles and the first to introduce now-commonplace features like second-screen technology and voice chat has helped maintain its status.

For more on the Dreamcast and other Sega consoles, pick up The Overstreet Guide to Collecting Video Games, available now.