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How Xbox Could Have Helped The Dreamcast Survive

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There have been rumors for years that Microsoft planned to buy Japanese game maker SEGA. But did you know SEGA hoped to make the original Xbox compatible with Dreamcast games?

The SEGA Dreamcast was launched in late 1998 to great fanfare. The console — featuring dial-up online — was years ahead of its time. Then the Sony’s PlayStation 2 launched, and the SEGA console never recovered.


SEGA Chairman Isao Okawa was not willing to go down without a fight. “Before Mr. Okawa passed away,” tweets former Microsoft exec Sam Furukawa, “he visited Gates several times, to see if it would be possible to add Dreamcast compatibility into the Xbox.” According to Furukawa, Okawa was offering the SEGA assets to Xbox, it seems, which would create a path for Dreamcast customers to migrate to the Xbox.

Even if the Dreamcast was dying, this move would keep the platform alive and maybe even give it a second wind.


Okawa insisted that internet was indispensable for the Dreamcast games, it seems, but Microsoft didn’t want an internet connection for the Dreamcast titles and negotiations fell apart.

(Of course, Microsoft pushed online gaming for its own Xbox titles; however, one has to wonder what expenses it would incur by not only making its Xbox play DC games, but play them online.)


Furukawa says that Okawa negotiated with Gates himself, but he was unable to work out a deal to pass on the Dreamcast customers. Before Okawa, Furukawa adds, he gave over roughly US$ 900 million from his personal fortune to SEGA in order to keep the company afloat.

Okawa passed away in Tokyo on March 16, 2001 due to heart failure. He was 74. The Dreamcast went out of production later that year. The chairman who followed Okawa decided that SEGA should focus on software production.


SEGA of America exec Peter Moore, the man who has admitted to making the decision to stop producing the Dreamcast, joined Microsoft in 2003.

CSK Holdings, the company Okawa created, owned the major stock share in SEGA until 2004 when CSK’s shares were bought by Sammy, a pachinko company. And Microsoft continues to struggle in the Japanese market.


Furukawa is currently a professor at Japan’s Keio University.

幻に終わったXboxのドリームキャスト互換・今明かされるその理由 [Kotaku Japan]