4 reasons, imo. 1) Sega released too many systems too quickly, leading fewer people to want the latest upgrade. In *less than a decade* they released the Genesis, 32X, Sega CD, Saturn, and Dreamcast. Nobody was buying a new Sega console every 1.5 years. 2) Just as it was becoming industry standard to sell consoles at a loss, then make up the profits in game sales, Sega released the Dreamcast with weak privacy protection. I had multiple friends who bought a Dreamcast but had a library of pirated games. 3) This was around the era where Sonic, once the widely beloved mascot of Sega's flagship game franchise, was starting to be seen as a little cringe by some. The games were no longer top of their genre (some were outright bad design and poor programming), and internet communities of sexual deviants were forming fandoms around the Sonic characters. It was weird. 4) Nintendo was putting out games that would be instant classics, and the PS2 had a massive library and crazy marketing. Sega would have had to bring their A game to even hope to compete, yet they had all the above problems.