Japan'S Sega Corp yesterday said it would cease production of its loss-making Dreamcast console in March in a dramatic refocusing on video game software. The world's third-biggest maker of game hardware and software said shutting down Dreamcast would generate 80 billion yen in extraordinary losses, leading to a record net loss of 58.3 billion yen in the current year to March 31st.
Analysts viewed the decision as a crucial step towards profitability for a company facing four straight years of losses.
Dreamcast, introduced in 1999, faced fierce competition from smoother, faster machines produced by rivals Sony and Nintendo. Sega said it would stay in the software business, throwing a lifeline to Sonic the Hedgehog and other characters and games that became synonymous with the world's first Internet-compatible video game machine.
Sega said it would develop games for Palm's handheld computers by the end of the year.
Mr Peter Moore, president and chief operating officer of Sega of America, said the games would probably be geared towards handheld devices with wireless connections, so that consumers can download games either on a pay-per-play basis or via subscription.
