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After the launch of the Nintendo 64, sales of the Saturn and Sega's 32-bit software were sharply reduced.As of August 1997, Sony controlled 47 percent of the console market, Nintendo controlled 40 percent, and Sega controlled only 12 percent.Sega announced that Sonic Adventure, the next game starring company mascot Sonic the Hedgehog, would arrive in time for the Dreamcast's launch and promoted the game with a large-scale public demonstration at the Tokyo Kokusai Forum Hall.As more than half of its limited stock had been pre-ordered, Sega stopped pre-orders in Japan.Neither price cuts nor high-profile games were proving helpful to the Saturn's success.As early as 1995, reports surfaced that Sega would collaborate with Lockheed Martin, The 3DO Company, Matsushita, or Alliance Semiconductor to create a new graphics processing unit, which conflicting accounts said would be used for a 64-bit "Saturn 2" or an add-on peripheral.

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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 also the first console to include a built-in modem for Internet support and online play.The Saturn was a CD-ROM-based console that displayed both 2D and 3D computer graphics, but its complex dual-CPU architecture made it more difficult to program for than its chief competitor, the Sony Play Station.S., in part due to a massive advertising campaign and strong third-party support engendered by Sony's excellent development tools and liberal licensing fee.Sony's success was further aided by a price war in which Sega lowered the price of the Saturn from 9 to 9 and then from 9 to 9 in order to match the price of the Play Station–even though Saturn hardware was more expensive to manufacture and the Play Station enjoyed a larger software library.

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