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Sega admits 1999 loss will double to $411m

Dreamcast sales failed to meet expectations - and then some

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A rather sorry Sega admitted today that sales of its Dreamcast games console aren't sufficient to save the company from serious losses for the soon-to-be-complete current financial year. Sega has, of course, been in the red for the past two years and 1999/2000 was always going to follow the trend. But while Sega originally said it expected its losses to total Y19.8 billion ($181.45 million), it now reckons they'll hit Y44.9 billion ($411.47 million), more than double the earlier figure. Oh dear. Not the sort of news you'd think Sega would want to have to put out less than a week ahead of rival console vendor's Sony's PlayStation 2 launch. Sega specifically blames the increased loss on poor Japanese sales, despite rather stronger sales in the US and Europe. The reason? Apparently, Japanese buyers have been less than keen on the Dreamcast's Internet access than their overseas counterparts. Given the current Japanese fad for Internet-based cellphones, that's perhaps not surprising, but we would be surprised if Net access is the driving force elsewhere. Sure, Dreamcast owners are making use of the facility, but console gamers tend to be more interested in gaming technology than peripheral options. Sega's problem at home has been Sony's clever premature introduction of the PlayStation 2 last year, which immediately cast a cloud over the Dreamcast. The upcoming arrival of a more powerful alternative was less of an issue overseas because of the length of time it takes console vendors to launch in the US and Europe, and the high level of brand loyalty among console owners. So, Sega is now saying it will have sold 600,000 Dreamcasts in Japan between September 1999 and March, rather less than the 1.1 million it was hoping to sell. Analysts cited by Reuters reckon it has little hope now of boosting sales in Japan, but its chances overseas are stronger, if it plays the Internet card. We're not so sure. Once the PlayStation 2 launches in Japan and we get screenshots and in-game movies appearing on the Web, and imported machines slowly make their way into the US and Europe, it's likely to engender the kind of 'wait and see' attitude that appears to have struck Japanese buyers. That said, Sega has little choice but to push Dreamcast's Internet access in the time it has between now and the US and European PlayStation 2 launch in the autumn. To do so, it plans to sell more shares to shareholder CSK and use the proceeds to fund the expansion of its online network, according to Reuters. ®

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