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Released in Japan to a subdued reception, the Dreamcast enjoyed a successful U. launch backed by a large marketing campaign, but interest in the system steadily declined as Sony built hype for the upcoming Play Station 2.
Sales did not meet Sega's expectations despite several price cuts, and the company continued to incur significant financial losses.
contributed to Sega's financial problems, which saw the company's revenue decline between 19 as part of an industry-wide slowdown.
Furthermore, Sega's focus on the Saturn over the Genesis prevented it from fully capitalizing on the continued strength of the 16-bit market.
Nintendo's long delay in releasing a competing 3D console and the damage done to Sega's reputation by poorly supported add-ons for the Genesis (particularly the Sega 32X) allowed Sony to establish a foothold in the market.
The Play Station was immediately successful in the U.
It was the first in the sixth generation of video game consoles, preceding Sony's Play Station 2, Nintendo's Game Cube and Microsoft's Xbox.
The Dreamcast was Sega's final home console, marking the end of the company's 18 years in the console market.
In contrast to the expensive hardware of the unsuccessful Sega Saturn, the Dreamcast was designed to reduce costs with "off-the-shelf" components, including a Hitachi SH-4 CPU and an NEC Power VR2 GPU.
In 1997, Irimajiri enlisted the services of IBM's Tatsuo Yamamoto to lead an 11-man team to work on a secret hardware project in the United States, which was referred to as "Blackbelt".
Accounts vary on how an internal team led by Hideki Sato also began development on Dreamcast hardware; one account specifies that Sega of Japan tasked both teams, Sato and his group chose the Hitachi SH-4 processor architecture and the Video Logic Power VR2 graphics processor, manufactured by NEC, in the production of their mainboard.