The Sega Dreamcast is an odd beast. Technologically, it is an evolutionary product: faster than its predecessors, better sound, more colors, etc. Conceptually, though, this is a revolutionary product. Why? Because of the most low-tech component that it contains: it’s 56k modem. The console market has made attempts at modems before (X-Band), but nothing has been as thoroughly supported as the Dreamcast’s modem is. The results will not be just better multiplay, but a whole new business model for console systems.
The console market has long been defined by the Bic Razor (at least I think it was Bic…) method of business, which was to sell the razor at a loss and make all the profit by selling replacement blades. The console system is easily adapted to this model, and the model is beneficial for both producer and consumer: the producer can pack $250 worth of technology in a box and sell it for $200, and know that they’ll make it up by charging $5 for each game sold. Mean while, the consumer is getting a better product at the same price.
This business model will be altered slightly to include online service. Sega and its competitors have the potential to setup online service providers (with or without general Internet access), and charge a relatively minor fee of $10 a month. Now, consider this: Sega has already pre-sold 200,000+ Dreamcasts, and it would have exclusive access to this market. Assuming only half of the owners subscribe (which is on the low end, in my opinion), that’s 1 million dollars a month in revenue, something Sega could use badly.
Now, all of this is dependent on two things: the quality of the online service and the quality of the online games. The first is a pretty simple affair, as online service is almost a routine to setup. Given that Sega knows exactly how many units are in any particular area and that they all operate at 56k, it should be simple to calculate the maximum throughput needed.
The second area, getting quality online games, is a different matter. Nintendo was rather iron-fisted when it came to licensing N64 game rights, and at the beginning they had a requirement that games take advantage of the systems 3-D capabilities. Obviously, this helped lead to the low number of early titles, which is something Sega will want to avoid, so I doubt that they will be quite so demanding. I am willing to bet, however, that they throw in some sort of incentive for developers that create an engaging online experience.
Now why is this revolutionary? If Sega chooses to do this, and does it well, they will be able to lower the fees that they charge game makers for the right to create a game. This will make Sega much more attractive to developers, and possibly pull away a gem or 2 from Nintendo and Sony (nothing on the order of SquareSoft, though). Nintendo and Sony will have to follow suit, and the console market will be forever changed.
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