The Dreamcast had a very short life; officially less than 3 years, although it felt like 4 because the Dreamcast continued to be sold in the US after it was officially discontinued.  I was recently part of a discussion where someone asserted that piracy was the major contributing factor to the failure of the Dreamcast, and I disagree.  The Dreamcast failed to achieve long-term acceptance, in my opinion, primarily because of the competition of the PS2.

The PS2 followed a long, very successful run of the PS1 and had more pull with Sony fans (Dreamcast sales dropped sharply in the USA when the PS2 USA launch date was announced).  Additionally, the PS2 was backward compatible with PS1 games, and was also a DVD player, both of which were very appealing.  Finally, some major developers and publishers did not support the platform (most notably Electronic Arts and Squaresoft), having been burned by Sega’s mismanagement of various aspects of prior consoles (such as announcing the Saturn early, which killed 32X sales, and also by the Saturn being very difficult to write code for due to its use of multiple processors).

If you were a brand-agnostic consumer with a choice between the PS2 and the Dreamcast, and you were trying to figure out which one was more special, you had a choice between a console that could play games on the internet (something only computer gamers cared about in 1999), or a console that could play hundreds of the previous generation’s games as well as DVDs. That was a one-two punch that the Dreamcast could only overcome through brand loyalty to SEGA, and it did so, admirably, for 3 rough years. Piracy was a problem for Dreamcast only after the Dreamcast was already on its way out, not the other way around.

I don’t view the Dreamcast as a complete and utter failure, but rather as a console that had a shorter-than-expected lifespan.